Tag: Middle Class

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See what happens when you have a mixed economy and mixed monarchy where no philosophical, intellectual, or moral principles guide the nation? You have government handing out favored legislation to private media companies, then those companies silencing political opposition, but as private companies, therefore not “censorship” per se but by proxy, then state AG’s, left […]

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ACF Critic Series #25: Teachout on ‘Pitfall’

 

The noir series is back: Terry Teachout and I talk Pitfall, the 1948 thriller starring Dick Powell (by then turned to tough guy roles in dark drams) and Raymond Burr (before he turned into the affable champion of justice, Perry Mason). Lizabeth Scott is the femme fatale, but in a very interesting variation, and Jane Wyatt, before she became the adorable wife on Father Knows Best, is a tougher middle-class suburban housewife whose life is endangered by her husband’s restlessness. This is a movie about risk and insurance, about our desire for safety and the temptations of a manlier life when these problems first became apparent in post-war America. It’s as pleasing as interesting now–a remarkable bit of movie-making, done outside the studios, without a great budget, but with a remarkable insistence on getting the story right. This is what middlebrow was when it was taken for granted–serious storytelling about serious moral problems, with very good acting and no nonsense.

Death of the Middle Class – Literally

 

“Sickness and early death in the white working class could be rooted in poor job prospects for less-educated young people as they first enter the labor market, a situation that compounds over time through family dysfunction, social isolation, addiction, obesity and other pathologies.”

I was stunned when I read this article and others describing a study that was conducted in 2015 by Anne Case and Angus Deaton, two celebrated economists, and then updated in a study just released. Our middle class is dying.

Not Just a War on Tax Inversions, but also a War on the Middle Class

 

shutterstock_374291029Does the US government want to help American business or not? Does the administration want to help middle-income wage earners or not? Does Team Obama want to grow the American economy at its historic 3.5 percent long-term trend or not? Apparently, President Obama’s answer to all three questions is “no.”

Those are the real issues behind the Treasury’s latest militant attack on so-called tax inversions, where a US company merges with a foreign firm in order to take advantage of the foreign firm’s lower corporate tax rate. In this case, the attack is aimed at Pfizer, pending the $160 billion takeover of Allergan. Allergan is based in Ireland, which has a 12.5 percent corporate tax rate. Pfizer is based in New York. So the new combined entity will pay the Irish corporate rate, which is nearly three times less than the 35 percent US federal corporate rate. Obviously, a huge savings.

The answer here is simple: Slash the US corporate tax rate and then the problem goes away. It’s by far the highest of the major countries worldwide. We are not competitive. Canada is 15 percent, China is 25 percent and Europe averages 25 percent. These companies owe it to their shareholders and their work forces to act in a fiduciarily responsible manner. But no, Team Obama wants to wage war against them.

Conrad Black Exactly Right: Trump the GOP Nominee

 

Conrad Black is a bit of a curmudgeon and definitely a contrarian but his analysis this morning of the March 15 primaries is very accurate in all regards and I endorse what he is saying in this NRO article. Here’s a sample:

Those who initially saw the Trump candidacy as an exercise in buffoonery and exhibitionism, and gradually accepted it as an insurgency, now see it as an attempt to hijack and ravish the Republican party and even to hoodwink the entire electorate. The alternative interpretation has been that Donald Trump, though a billionaire, had the genius of expressing public grievances in an Archie Bunker style that mocked political correctness and was popularly seen as plain talk from the only candidate not in any way complicit in the terrible blunders of America’s political class since the end of the Cold War.

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The age of the middle class is not the age of the blues. The middle-class character of a community precludes the kinds of experiences whence the blues emerges, as well as the craft required for singing it. If music is supposed to correspond to or to raise to imagination & judgment the deep longings of the […]

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In these latter days, I ask myself on occasion what is the last religion of mankind. We live in a world, increasingly, when, as the philosopher says, one can do whatever one wants in the bed–except smoke. I mean, tobacco. Who is the prophet & what is the prophecy? This is not easy to answer, because […]

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If Only a 1980s Movie Montage Could Bring Back the Prosperity

 

In the movie Napoleon Dynamite, Uncle Rico dreams of returning to 1982, leading his high school football team to state, and getting drafted by the NFL so that he does not have to live in a van. I have a more modest dream of simply returning to the higher standard of living many Americans enjoyed at that time. This may sound like crazy talk as the crass rock of Twisted Sister that we were subjected to in the 80s seems unrefined compared to the elegant Kardashians we watch today but — in many ways — it is true. Few may agree with me on this point. Our very own beloved Ricochet economics contributor, James Pethokoukis, recently put out a post taking issue with the other side’s claims of a shrinking middle class over the last few decades, using inflation adjusted data to prove his case. My issue with these numbers is they are based on arbitrary hedonic quality adjustments to the CPI which – translated to English from Ivy League Econo-speak — is “Don’t believe your lying eyes, this is how good you have it!” So, here is a quick analysis based on good old fashion simple non-adjusted dollars. No magic here.

data tableMedian unadjusted household income increased 130 percent from 1982 to 2014. Not bad, you might think. Who wouldn’t want a 130 percent raise? Here’s the problem. Unless you’re into coin collecting, swimming in your money, or lighting cigars with dollar bills, the amount of money one makes is far less important than what it gets you. So, while median incomes rose 130 percent, the price of an average car (Honda Accord) went up 197 percent, the price of an average house went up 330 percent, price of a (supposedly) top-notch Harvard education went up 317 percent, and price of food staples like bread went up 172 percent.

The US Middle Class Hasn’t Stagnated for Decades — And Democrats Should Stop Saying it Has

 

Money_Flickr_8_5_2015-e1438792499478In my new The Week column, I explore “What Democrats Get Wrong About the Middle Class.” Here is a bit:

The problem is that Census data paints an incomplete picture. A University of Chicago poll of top economists earlier this year found that 70 percent agreed that the Census conclusion “substantially understates how much better off people in the median American household are now economically, compared with 35 years ago.” How far off are those numbers? Maybe quite a bit. Feldstein argues that they fail to take into account shrinking household size, the rise in government benefit transfers, and changes in tax policy. They also measure inflation in a way some experts thinks overstates the true rise in living costs. He notes that when the Congressional Budget Office took all those factors into account, it found median household income had risen by 53 percent since 1980, five times as much as the narrower Census figures.

And it could be even higher. A lot higher. A growing number of economists are questioning whether our existing measures of economic growth and inflation are suited to the digital economy. A recent Goldman Sachs analysis suggests we may be understating annual economic growth by nearly a third due to our inability to accurately measure how vastly improved software and hardware are boosting productivity. Likewise, government data ignores the consumer value of free internet services like Facebook, Google, and Twitter. Put it all together, and Feldstein thinks real median household income may have risen by 2.5 percent a year over the past 30 years, not 0.3 percent. That would suggest a doubling of living standards over the past generation. And even those figures ignore welfare gains from rising life expectancy, which economists Charles Jones and Peter Klenow think could equal a full percentage point a year.

Most Voters Still Don’t Think GOP Cares About the Middle Class — At Least Not As Much as Democrats

 

022715pew1Recall the exit polls from the 2012 presidential election. Mitt Romney had a slight edge over President Obama on the economy and the budget. By eight points, voters said they preferred a smaller government with fewer services. Among those who wanted someone with a vision for the future, Romney won by nine points.  Voters who said unemployment was America’s biggest problem sided with Romney.

Just knowing the above data might lead one to conclude Romney must be sitting in the Oval Office right now. But not after viewing this data: Only 47% of voters had a favorable view of Romney vs. 53% for Obama. By 53-43%, voters thought Obama was more “in touch” with people like them than Romney. By a whopping 81-18%, people looking for empathy in a candidate mostly backed Obama. Finally, voters saying rising prices were the biggest problem went for Obama. (Indeed, rising prices pretty much tied with unemployment as the most important economic issue for voters.) These are people for whom affording a middle-class life — including education and healthcare — was a struggle. This is the middle-class stagnation data point.

Now here are some results from a new Pew survey:

Class, Not Race

 

shutterstock_127547669In New Geography, Joel Kotkin proposes a better way to look at what’s happening in America:

Today America’s class structure is increasingly ossified, and this affects not only minorities, who are hit disproportionately, but also many whites, who constitute more than 40 percent of the nation’s poor. Upward mobility has stalled under both Bush and Obama, not only for minorities but for vast swaths of working class and middle class Americans. Increasingly, it’s not the color of one’s skin that determines one’s place in society, but access to education and capital, often the inherited variety.

Worries about upward mobility have been mounting for a generation, and according to Pew, only one-third of Americans currently believe the next generation will do better than them. Indeed, in some surveys pessimism about the next generation stands at an all-time high.

The Problem with “Middle-Out” Economics

 

Last week, I appeared on the PBS Newshour, the video of which appearance was linked to in one of Troy’s recent posts. On the broadcast, my views were contrasted with those of venture capitalist Nick Hanauer, who argues for a “middle-out economics,” the term for a school of thought that claims working people deserve to be privileged more than they are by conventional market exchanges.

Because the broadcast did not exactly allow Hanauer’s arguments and my own to fully engage with each other, I’ve provided my response to Hanauer in this week’s installment of my column for Defining Ideas from the Hoover Institution. My conclusion: the arguments of middle-out proponents present very substantial practical difficulties.