THE DISAPPEARING MIDDLE CLASS IN AMERICA (PART II)

THE DISAPPEARING MIDDLE CLASS IN AMERICA (PART III)
Billionaire Buffett’s observation that the class war is over and that his side won is almost on the mark – there are still some of the middle class who have survived to date, though dwindling day by day. How to increase their ranks other than by increasing the taxes on the wealthy and regulating their businesses in the public interest rather than their bottom lines? Let’s take a look at what we have to confront other than their money and political influence; let’s look at the middle class in economic history.
We have had capitalism or a variant of it since Fertile Crescent days when (finally) agricultural surpluses released us from the daily necessity of hunting and gathering. Such release enabled us to pursue other new and different avenues of human expression in the arts, in wars, in matters intellectual, and inevitably and among other such pursuits, commerce. We have been at it ever since. Utopians such as Marx and Robert Owen who sought to organize economies around a social model came and went as the innovation and invention of the Industrial Revolution and times since provided enormous new wealth for the taking, and the capitalists of that day and this were and are on hand to take it to their coffers undeterred by such theories calling for reform.
The capitalist greed of the Industrial Revolution and mistreatment of the laboring class as portrayed by Charles Dickens in Oliver and David Copperfield was never in any real danger of succumbing to the ravages of a new social and economic order of equality as envisioned by a wealthy philanthropist like Owen or a firebrand like Marx. Just as now, capitalists of that day and age had the money and the political clout to maintain a status quo economic structure, and with political assistance along the way and fortified by fable and myth in the larger society and with waves of new wealth available for the taking, they have been fabulously successful – though never more so than today.
Perhaps the first and only real “middle class” we enjoyed before the post-WW II era came about by happenstance, immediately after the Black Plague decimated Europe in the 14th century. With a great shortage of labor and social upheaval, a middle class emerged – by accident. There have been few if any “accidents” since then inasmuch as such sharing of the wealth is intolerable to the capitalist class. The threat of fascist takeover provided by WW II forced capitalists to share new wealth provided by the economy in order to save their system. From the time hostilities began in December, 1941, until about 1974, the economy’s new wealth was in fact shared. Result? A booming economy, a rapidly expanding middle class, an explosion in higher education fueled by social mobility etc. Our economy, finally, was performing for everyone. Opportunity abounded. I, for instance, a coal miner’s son, became an attorney.
The capitalist class decided circa 1974 to regress to their Industrial Revolution and Gilded Age ways in which they hogged all the new wealth created by the economy, employing corporate hacks to manufacture such catchphrase words as “free enterprise” and other such catchwords and propaganda for public dissemination to cover their greed. They had perhaps not had much incentive to pillage their companies and rip off their workers when they paid income taxes at a rate of 91 percent, as they did in WW II, so the next step was to reduce their income tax rates, and six years later that opportunity came with the election of Reagan.
Nirvana! He reduced the taxes of the rich and corporate class dramatically, which encouraged them to pillage their companies and rip off their workers even more since their rate of tax had been slashed and their take home pay was correspondingly increasing by leaps and bounds via such conduct. Corporate profits and executive compensation have soared since Reagan’s tax cuts: CEOs have become celebrity magicians (and tyrants) in the international marketplace, family median wages have either stagnated or gone south, unions have been de-fanged with outsourcing and right to work laws, and with additional tax cuts by Bush and with control of our political process by the rich and investment class since Reagan’s disastrous tax cuts for those who didn’t need them, and still don’t, the middle class is on its last legs. (I have often blogged on “new feudalism” as descriptive of this new and evolving socio-economic organization of our society.)
Thomas Piketty, a French economist in his new blockbuster book (Capital in the Twenty First Century) which is all the rage in economic circles, argues that the rise of the post-WW II middle class in America and Western Europe was, as was the Plague, a happenstance. He writes that the rise of the middle class was created by two things: the destruction of European inherited wealth during the war and higher taxes on the rich, most of which were rationalized by the war. He thinks that this brought wealth and income at the top down and raised working people into a middle class.
I don’t see how the destruction of European old wealth factors into a diagnosis of how the middle class arose in our country, since our old wealth was not destroyed during the war, but it is as clear as can be to me that his second factor is spot on. It was high war and post-war taxes on the rich and corporate class (varying from 74 to 91) percent that accounts for the rise and expansion of our middle class, and, of course, the current policy debacle of ridiculously low rates of tax on such a class today that explains the continuing demise of the middle class. It works both ways.
In my view, we are with such tax favoritism for the rich literally defining not only whether we will expand the remnants of our middle class, but since the rich-poor future of a banana republic and Third World status is clearly awaiting us via continuation of such inane policies, we are simultaneously imposing a new (yet old) form of organization of our society which carries many of the earmarks of the feudalism practiced by our ancestors in Northern Europe. Surely by now we should be able to come up with more democratic ways to share the wealth than those of Charlemagne!
We can do better – much better. To paraphrase an old and oft-quoted statement of Justice Louis Brandeis, “You can have the wealth in the hands of the few, or you can have democracy, but you can’t have both,” I offer “We can continue down the road to oligarchy by our refusal to fairly tax those who compose it, or we can choose to do what is necessary to take the road to a more people-oriented and less greedy society where we have an expanding middle class and mobility of working class people to graduate into the middle class, but we cannot travel both roads.”
Creation of a middle class is a choice, not a happenstance; its continuation will not be handed to us by those who profit from its absence. We have to fight for it without letup, so let’s get on with it. GERALD E