Why the middle class is failing

lylec305 said:
Was there a timeframe?
More...

China is sitting on $3 Trillion cash in its savings kitty so any tarriffs on them would not hurt much.

Such tarriffs can be implemented quickly. However, seen from immigration bills recently, the Judges of US courts have hindered the executive orders, good or bad, and rendered them useless.
 
slapping a quick tariff without negotiating a trade deal may not be the most effective way, to solve a trade war we may not win. IMHO we can use this to our advantage by thinking thoroughly. China still needs us to purchase their products. And we can use a friendly china to pressure north korea. Sure we need low end jobs but robotics and automation won't help either.
 
China will keep NK on the high, in order to win points from the US on many more areas, time and again.

Just like Pakistan milked US of billions in the name of fighting war on terror. It was the drone war that defeated them (temporarily?) not the Paki generals getting fat wire transfers.

NK already has nukes and medium missiles so it is beyond the need of control. However, if they use these weapons then NK will be "vaporised" by more than a few nations in a hurry.
 
Hooti said:
he said many times -- clearly and directly -- that if it continued more than 10 years or so it would destroy the middle class and eventually the whole economy.
More...
I find it difficult to believe that either Reagan or Thatcher was aware of the long range consequences of supply-side stimulus combined with removal of most of the progressiveness in U.S. tax structure. If you could find a link to a quote, I'd be much obliged.

There is strong evidence that the inordinate, exponential growth of wealth disparity in the U.S (there are some lesser parallels in the UK due to Thatcher) is due primarily to a compounding over time of two factors. 1. Drastic collapse of the upper tax brackets combined with a raising of the marginal rate in the lowest bracket (i.e., the country was, at one point approaching a flat income tax in which nearly all of the progressiveness in the marginal rate structure had been wrung out, and 2. Taxing unearned income at lower rates than earned.

There are other factors as well, but those two factors mentioned above are major ones. This exponential wealth disparity growth is something peculiar to the U.S., and to a less extent the UK. You will see it when you look at other developed countries but to a much less extent.

The normal state of affairs in capitalist countries is for wealth to slowly accumulate at the top end of the wealth distribution. This is because the return on capital is greater than the growth rate of economy. This usual trend is, however, greatly exaggerated in the U.S., due mainly to tax policy. (Globilization is not a significant factor in acceleration of wealth disparity, however, and may actually be a useful counter measure.)

Sound microeconomic arguments are sometimes made based on particular industries, such as the off shoring of assembly line jobs, and the domestic replacement of workers via automation with the consequence that there has been little wage growth in the face of inflation and, at the low end, wages have actually declined in constant dollars.

These microeconomic components are contributing proximate causes of wage malaise among the labor class, but they are not the primary causes of the declining fortunes of the lower half of the middle class. A macroeconomic perspective is needed.

___________________________
N.B. Marx was hugely wrong, but not about everything. The results of his dictum that capital drives out labor are seen in our late 20th and early 21st Century U.S. economy.
 
Last edited:
Why the middle class is failing

Locked in a vicious cycle of debt with no real wage growth.

Real wages have only been increasing for very high income earners.
 
Last edited by a moderator:
I was watching Benanke on fox last night, he said we don't need a personal income tax cut because we are at full employment and consumers don't need to be stimulated, but we need corporate tax cuts to encourage investment, and also infrastructure spending.
 
Because the previous administration(s) allowed companies to out source most of the middleclass high tech jobs. Then they scream there isn't enough local educated personal in the industry. We were made to train h1b's 5-10 at time, then we're let go.
Now, 20 years later, the h1b's are in management and will not hire locals. Large contracts are given to foreign tech companies. Many westerners, will not work for near east companies.
 
lylec305 said:
Because the previous administration(s) allowed companies to out source most of the middleclass high tech jobs. Then they scream there isn't enough local educated personal in the industry. We were made to train h1b's 5-10 at time, then we're let go.
Now, 20 years later, the h1b's are in management and will not hire locals. Large contracts are given to foreign tech companies. Many westerners, will not work for near east companies.
More...
Kyle, the current trend right now is onshoring. Anyone who has worked with devs offshore knows the quality of their code. Not to say there isn't good devs in the developing world, but those lower cost contracts are a classic example of you get what you pay for.

Smaller shops and startups are virtually all onshore. If a local won't work for a mid/near east company that's also their business.
 
You must log in or register to reply here.
Back
Top