Middle Class

There is no secret about the state of the middle class today: because of the advancements on productivity, labor has basically no power and this means that a larger-than-historically-normal income gap has developed. It’s not the end of the world, as being living in an equitable society and living in a society with a high quality of life are by no means the same thing. But don’t tell that to anyone on the political left, including the old stalwarts: 

http://news.yahoo.com/carter-middle-class-today-resembles-110509535.html

Just to be clear, this is simply false. Carter’s time was more equitable, but the actual material quality of life is not radically different. The disparity between rich and poor doesn’t matter, unless you’re under the impression that making money is morally illegitimate and that rich people should be dis-empowered just for the sake of dis-empowering them. Today’s middle class is not like yesterday’s poor. And although this should be abundantly clear without anyone saying it,  busywork is not the same as work that has a purpose others actually value enough to pay for.

Those people who are deep into poor territory in most measures still don’t have to worry about starving, and for that matter, most of them don’t even consider the possibility of a life without air conditioning. Calling these people poor is like calling fat people “plus-size”. There’s an agenda at work, and it’s not even on purpose.

Pious old men have permission to be pious old men, but sometimes, I wish Reagan were still alive to remind this guy about everything good about the private enterprise system, including its inequalities. And I don’t even like Reagan. 

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10 comments

  1. the gap between rich and poor is entrenched by non productive finance activities, e.g charging interest and investing in shares, enabled by capitalism, but ultimately leading to socialism…

    1. In order to hold this perspective, you have to define work as physical labor in some fashion, like a full-on Marxist. It’s ridiculous. People pay the financial sector to manage money for them. They don’t pay people for grunt labor, which is nearly obsolete.

      Stop mixing your narratives, dude. The gap between rich and poor exists because whatever the economic system is, it comes down to a power game, and poor people suck at it. “Non-productive” labor? Ask someone who lived in the Soviet Union about whether or not having a functional financial system helps your economy.

      It wouldn’t surprise me if you defined a “functional financial system” as one that creates grunt labor jobs so people have something to do, as opposed to one that reinforces its own power. THAT’S socialism.

  2. i mean the benefit derived from fluctuating share prices which is not linbked to any effort on the shareholder’s part, enabling non-productive speculation. i regard “a functional financial system” as one in which investors share profit AND risk (unlike interest based loans).

    1. To be clear: codifying the difference between speculation-driven profits and good ol’ hard work profits gained by researching your investments is impossible. And while your knock on loan interest would warm the heart of any Muslim banker, the main reason why gambits screw people other than the person making the decision is because expectations are rarely rational and manias tend to envelope everyone.

      It’s one thing to be irritated by the ability for Wall Street to manipulate home prices. It’s another to think that everyone doesn’t benefit from a boom when it’s happening, and has no way to insulate themselves from a bust if they suspect it’s coming. Blame is political, so don’t place it all on one side and talk about it as if it’s an objective observation.

      Whatever dreamy system you have in mind, feel free to share, and I can probably tell you why it won’t work. The likely answer will be “because people won’t want something that chokes investment and precludes 4%+ annual growth, so they won’t vote for politicians who would institute it.”

  3. ok. providers of capital (shareholders) have claim on profits arising from whatever the enterprise produces. the right to a share in these profits can be sold on to another party, BUT not at a profit i.e. at same price of initial capital investment (depreciation of fiat money notwithstanding)

    1. are you suggesting stock be sold at a permanent fixed price? because if that’s the case, then the agency or board issuing the stock will just change the profit share by issuing more stock, and the risk-reward “problems” that come from interest based loans will come right back as problems with major investors buying in quantity. In other words, stock will become subject to inflation, like a currency. (for those playing the home game, fiat currency is essentially like a stock certificate in the resources of the issuing country.)

      You can’t enforce fixed prices for an asset when yields are variable without creating black markets. But still, I’d love to see some of the valuation hi-jinks that come from it, though. You’d be better off just trying to stop people from selling shares to other parties, forcing them to hold (in that case, short term investments would get over-valued). Money is a language, good sir. One way or another, people will figure out a way to say what they want to say.

  4. oh that’s another thing: claims to company profits (shares) can only be sold with the consent of all OTHER SHAREHOLDERS… I reckon this is taking it waaaay further back to the drawing board…say, 500 years back… when the stock market was “invented” and the church lifted the ban on interest/usury…

    1. we’re getting remarkably close to the kind of reactionary lunacy I enjoy. To make it work, there would have to be some form of cultural cohesion that bound people together and legitimized the entire mess. And frankly, I don’t think it could maintain itself without some strong, trusted authority presiding over it.

      People would never go for it these days.

    1. Not exactly, but by modern conceptions, not far from it either. Modern culture generally dislikes religion except as a kind of product to improve their spiritual health and nothing more, something that should never be expected of anyone. But that attitude is killing religion. Meanwhile, no matter what’s happening with the rest of the system, people hate it and think that they’re getting a bad deal. It’s ridiculous; this society provides so much, even during a downturn, and people aren’t satisfied.

      I don’t have all the answers, but I’ve come to the firm conclusion that it isn’t the system, it’s the people. It’s psychology. My disgust with democracy wouldn’t be so harsh if there was a moral institution, like a church, legitimizing behaviors and attitudes that made sense within a culture’s value framework, bringing the thing together.

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