The Crisis of the Middle Class and American Power

http://www.stratfor.com/weekly/crisis-middle-class-and-american-power

by ph0rque • 14 years ago

100 148 14 years ago

silentmars2• 14 years ago

Decent basic points, but superficial and often missing the real underlying trends. For better analysis on the same general ideas, I recommend:

http://www.ribbonfarm.com/2011/12/08/acting-dead-trading-up-... http://www.ribbonfarm.com/2011/06/08/a-brief-history-of-the-...

(ribbonfarm is my favorite blog)

magoghm• 14 years ago

Thank you for those links. Interesting analysis.

pvdm2• 14 years ago

The ideas are ok but the writing is too dense, too verbose. Not my cup of tea.

CleanedStar• 14 years ago

When Karl Marx wrote Capital in 1867, he said capitalism would never be able to get rid of credit bubbles, financial crises, high unemployment etc. He said that over time the problems would get worse and worse with greater and greater financial crises. Here we are about a century and a half later and you just have to look at the housing bubble, the bank crisis, TARP and the government bailout, unemployment in the US and Europe and the Arab countries which helped cause the Arab spring to see how prophetic he was in this respect.

Marx and Engels wrote that the world has seen five economic systems. Each system collapsed due to internal contradictions. The first system was hunting-gathering, then Babylonian/Greek/etc. style slavery, then feudalism, and then capitalism. They saw the Paris Commune as the harbinger for the next economic system which would replace capitalism.

The central contradiction in capitalism Marx spells out clearly in Capital, although its a little too much to explain in a comment. Basically workers create $240 of wealth every eight hour work day, but are only paid $200 a day. The $40 goes to profit, to get more capital, to make more commodities. But what is happening here - the worker is shorted $40 a day, and what happens with that money is commodities are made. Who are going to buy all these commodities when workers are not getting all the wealth they create? Well credit fixes that in the short term but creates a bigger long term problem.

The communist manifesto says "the commercial crises that by their periodic return put the existence of the entire bourgeois society on trial, each time more threateningly". I certainly feel this way. So apparently does Stratfor. On this point, the left and right are in agreement.

seiji• 14 years ago

Please keep writing more around here. We need people like you and comments like this.

martinced2• 14 years ago

No we don't.

These are poisonous words made by people dreaming of a world made of slaves. Dreaming of a world where the word "freedom" would be forbidden.

The last thing we need now in a time of crisis is socialists or communists trying to push their agenda.

tsotha7• 14 years ago

Much of Marx's critiques of capitalism make some sense. The problem is nobody has come up with a better system for lifting people out of poverty.

pjzedalis3• 14 years ago

Why does capitalism have to lift anyone out of poverty? The opportunity to own assets and control your own production sometimes provides the means to do so. Just because enough impoverished people are not becoming rich per year does not mean capitalism is not working as intended.

frogpelt• 14 years ago

There will always be impoverished people. Capitalism provides the best opportunity to choose not to be.

InclinedPlane4• 14 years ago

Anyone who thinks that the recent financial crisis is due to a fundamental failing of the free market just has not been paying attention, or has an ideological ax to grind. The latest economic crises are mostly the result of bad government policies and excessive government debt.

scarmig8• 14 years ago

Government policies, perhaps, though mostly in the sense that it creates the regulatory environment that finance works in. But government debt? Hardly. It may have been a headwind due to issues in Europe, but the core cause was overleveraged financial firms.

tsotha7• 14 years ago

It's actually a good example of the market working by correcting imbalances in the economy (agreed that the government is mostly responsible for those imbalances). You can either get the pain over with or stumble along zombie-style like the Japanese have been doing.

ucee0545• 14 years ago

This is such bullshit.

When AIG and Lehman went down, the crisis had already hit. That's what was meant by "financial crisis". The government actions to abilout AIG only happened after. So you have your timelines backwards.

And the NINJA mortgage issuers (like Goldman's Countrywide) weren't issuing dodgy mortgages because the government was taking on the risk, they were doing it because they could offload the risk to chumps like AIG and Lehman.

Pure systemic free-market failure. Basically the banks were trusted to regulate themselves, and the risk controls all over New York, Frankfurt and London were pants. If we still had the heavy regulations of the 1970s, none of it would have happened.

silentmars2• 14 years ago

Bit of a sloppy analysis... The $40 that the worker is "shorted" doesn't disappear into some magic portal that leads to another dimension where rich people secret it away from the economy. It goes to the workers at the bank, or to other businesses that get capital to pay their workers, or perhaps the owners of the company so they an buy a few commodities themselves.

quanticle• 14 years ago

In theory, yes. In practice? Well, so far it's tended to accumulate in the coffers of banks and corporations, to moulder and rot.

scarmig8• 14 years ago

Marx, however, was and is historically inaccurate. Both in his understanding of the past and his predictions of the future. Check out Immanuel Wallerstein or Fernand Braudel for more accurate, careful, and relevant histories that're not just glorifications of the ruling class.

Looking at your example, it fails to explain why wages rose for 200 years before the alleged stagnation hit (sure, you can hack some Leninist stuff on about imperialism, but it's mostly unconvincing). Worse, Marx's grand scheme of progress is pretty flawed: even in one lifetime, people readily shift to and from one economic system to another, and each system relies upon and coexists with its predecessors and successors.

Wide swaths of life and economic activity aren't subject to what Marx described as capitalism, and as capital increasingly tries to squeeze more and more value out of people, people increasingly shift to using exit as a means of liberation. Look around you, and you can see it: that's what's most marvelous about the era we live in.

alexqgb2• 14 years ago

Braudel is a fantastic historian in his own right, but especially important in this context in that he started his career as an overt Marxist who wanted to contribute to Marx's theory by supplying the actual history on which it depended. That is to say, a history told not from the perspective of popes and princes, but one based on material data about the world's great systems; macro-economic factors like weather patterns and the price of grain. This was supposed to be the vantage point from which the nefarious dynamic of capital would reveal itself most clearly, with the underlying data providing an empirical basis for Marx's economic theory, thereby grounding the whole enterprise in reality.

As it turned out, materialist history did provide a very revealing perspective, but not the one Braudel anticipated. Quite the opposite. Among its many revelations was the unavoidable fact that Marx's assertions about history simply weren't supported by the facts. Over time, Braudel found his reverence waning. Eventually, his loss of faith turned into outright rejection. That said, were it not for Marx, Braudel's absolutely brilliant history may never have been written. And that would be a shame, since the materialist approach that Braudel pioneered has become more relevant than ever in our own data-driven age.

http://www.amazon.com/Civilization-Capitalism-15th-18th-Cent...

pjzedalis3• 14 years ago

What you are describing is Roulette.

martinced2• 14 years ago

Because socialism or communism works so much better right? People are especially envious of the great freedom people in North Korea are enjoying? Same as Cuba? Venezuela? Argentina? (wanna change your currency to another one in Argentina to hedge yourself against a very strong inflation? you can't, because the socialist state won't let you do that)

What's next after Karl Marx? That the homophobic racist murderer that was the Che Guevara was correct?

The thing that saddens me the most on a forum supposedly made of entrepreneurs trying to create wealth is to see that there are so many people who are still failing for the poisonous words of a corrupt few who would have just loved to rule the earth: be it Kim-Jong Ill or Kim-Karl Marx, it makes me very very scared.

The first thing socialists and communists tries to do is to ruin everyone and reinforce the power of the state.

I choose freedom. Even if it means bubbles and crises.

I prefer that to slavery.

"Better dead than red".

Thankfully I'm not alone.

rayiner2• 14 years ago

You know, a reactionary living in 19th century might have said "because democracy works so much better right? People are so envious of the great freedom people in France are enjoying." With the memory of the French Revolution fresh in their mind, they probably would have been reasonable to say so.

mixmastamyk• 14 years ago

Afraid of ideas and discussing them, eh? You've also thrown together several orthogonal concepts, displaying a lack of understanding common to folks who watch too much corporate television.

I'm no lefty, but you make a lousy case.

anigbrowl8• 14 years ago

Reaching for extreme examples at the outset is a sign that something is amiss with your argument.Observing that capitalism might have structural flaws is not a call for the implementation of soviet-style communism, and your ideological tone is debasing the discussion. Please chill out, and show a little more respect to other participants.

mathieuh2• 14 years ago

Your comparison of North Korea with Marx shows unequivocally that you don't have any clue what you're talking about. It is actually laughable how wrong you are. Maybe you should read some Marx before dismissing something you don't know the first thing about.

ucee0545• 14 years ago

You really can't tell the difference between socialism and communism?

socialism = Norway, communism = North Korea

So you think Norway and North Korea are identical?

Or are you under the delusion that Norway is badly managed? Do you think people get dragged to the Gulag there?

You better shut off the Fox News and go read a book.

pyre2• 14 years ago

  | Kim-Jong Ill or Kim-Karl Marx

I seriously doubt that Karl Marx would have approved of North Korea. Just because someone calls themselves 'Communist' doesn't necessarily mean it's so. There are plenty of dictatorships that call themselves "The Democratic Repubic of X" or something like that. Just because democracy is in the name doesn't make them democratic.

(Oddly enough, Marx probably would have approved of the Khmer Rouge. He was really into violent upheaval to transition between forms of government.)

  | The first thing socialists and communists tries to do is to
  | ruin everyone and reinforce the power of the state.
  |
  | I choose freedom. Even if it means bubbles and crises.
  |
  | "Better dead than red".

This just seems to be an opinion born of privilege. Would you adhere to "better dead than red" if the death came from starving in the streets (while people born into money like Paris Hilton live it up) rather than some romantic idea of fighting off foreign invaders and living in the hills (i.e. Red Dawn)?

anigbrowl8• 14 years ago

Basically workers create $240 of wealth every eight hour work day, but are only paid $200 a day.

But workers don't create that much wealth in a day by themselves; they need plant and material to create the product or service that is sold. The buildings they work in, the machinery that they use, the raw material they consume, are equally important inputs to production and it is these which are supplied by the capitalist.

malandrew• 14 years ago

Yes and no. Of the $40 the worker is shorted, a portion goes to the capitalist and a portion goes to the buildings they work in, the machinery they use and the raw material they consume. The benefits of those things accrue to the capitalist even though it was finance with the value created by the labor of the worker. Only the upfront costs to begin a business are attributable to the capitalist. All the growth of that business is attributable to the value created by the work being marshalled by the capitalist.

kamaal2• 14 years ago

I think Marx went into over simplification when it came to issues like these.

Even in this case, and in most cases. The workers are actually are super fortunate to even have and opportunity to make $200 without taking any risks at all. Everything is built ready, all the investments and risks are born by somebody else. All you do is work(Im not saying that's easy or insignificant, but it is individually insignificant to the larger scenario where somebody has built a big industry- your contribution are small but are compensated), and at that kind of financial security forgoing 1/6th part of your earnings is hardly a problem.

cantankerous4• 14 years ago

I think an important detail to consider, if I remember it correctly, is that Marx is assuming that there's a moral imperative to consider when paying workers based on the value of their work because they aren't able to create this kind of value on their own in an industrialized society because the means of production is otherwise owned/controlled by a powerful establishment (bourgeois or something). An agreement between labor and management/capitalism is required to make sure that the workers' are able to take home a pay they find adequate considering the value they create. I think a way Americans have been able to strike this balance in the past is via labor unions. This probably isn't so much the case any more.

yk3• 14 years ago

So the buildings get paid? Marx did work under the assumption of the "Labor theory of value" [1], which states that only labor adds value to raw products, and that only humans are paid. So the price of a consumer product may be broken down into labor costs, raw material, R&D, long term investments etc. But each of the non labor points can be broken up further and in the end you end with only labor.

19th century economists did then follow this thought to construct the market backwards, that is some were trying to model markets based not on utility of a product and demand, but purely on labor costs.

[1]https://en.wikipedia.org/wiki/Labor_theory_of_value

philwelch• 14 years ago

Plus, an individual worker might create $240 of wealth for the customer, or he might create $160, or he might create -$160. The big driver of the gap between value created and wage paid is the level of risk assumed. You cannot capture all the value you create in the economy without also capturing all the risk. People who try to do this are called "entrepreneurs" and they often end up insolvent.

seliopou2• 14 years ago

> The central contradiction in capitalism Marx spells out clearly in Capital, although its a little too much to explain in a comment. Basically workers create $240 of wealth every eight hour work day, but are only paid $200 a day. The $40 goes to profit, to get more capital, to make more commodities.

The labor theory of value just doesn't make sense. The only system in which it does is a communist system. And even then, if somebody values the commodity more than the value of the labor that went into producing it, they'll pay that price to acquire it on the secondary market.

kamaal2• 14 years ago

So to summarize Marx was against growth?

Because if you say we should go down to zero profits, then we get nothing to invest further. Needless to mention the enterprise/corporation/etc itself will have no motivation for growth, why should they when there is nothing to gain?

rdtsc6• 14 years ago

That is all well and good. But is there a real world example of an economic and social system that works that is not based on capitalism? And by works here I don't mean just GDP, maybe also life expectancy, crime, health stats, education level, general happiness if available.

Basically if I get a free pass and resource to move anywhere, I where do I go find this "better" place that moved beyond Capitalism and is free of these contradictions.

I hear North European countries are a pretty good place to be? I've never been there. What makes that better and how far are they both from the current Capitalist system that US has and also how far are they from Marx's ideal?

adamauckland2• 14 years ago

North European countries are social democracies with incredibly high income tax (roughly 30%).

I don't think you can tax your way into getting societies like these. The world wars gutted large parts of the population and society had to change.

The NHS in the UK was set up in response to having fought a war on their own soil, something which the US has not done in a long time.

pvdm2• 14 years ago

Marx did not mention the destruction of the environment, which is a natural outcome of capitalism. I agree with everything else he said.

jonnycoder• 14 years ago

This article is a great explanation of what I've been thinking all along. The rising tide has been in efficiency and technology but every American is realizing these gains through computers, phones, and access to information. The baby boomers were able to get an education, buy a house, a car, have a kid and go on vacation, and all of those things have been squeezed to the breaking point in the past two generations. On the other hand, you can consume all you want on the internet, and with enough experience, cheat the system and download unlimited music, tv shows, movies, ebooks and software. If you want all the luxuries of the baby boomers, you have to be frugal and prioritize. Education: go to community college and transfer to a cheaper state school. Car: buy a cheap 90s honda. House: save for a down payment, but rent is still the same or cheaper than buying and you have flexibility to move. Kids: that may take more time.

pjzedalis3• 14 years ago

You make it sound like a community college education and 90's Honda are bad things to have. They might not be as nice as your neighbor but it's certainly nicer than 100 years ago, no?

awakeasleep• 14 years ago

This sure fits an interesting middle ground sort of journalism. I don't think I'm quite qualified to describe it, anyone up to help?

For one, it tackles the same insecurity subject conspiracy theorists like Alex Jones approach. However, he keeps it in the realm of rationality. What is the "It"? The main subject seems to be a description of the position and orientation of classes in USA society, and how they're changing.

Now, why is this so different than what other publications publish? I've heard before that Class in America is a touchy subject, and I don't see it mentioned much in The New Yorker, the New York Times, on TV, or in any of the sites I read online.

It seems like something in the idea of Classes conflicts with the Left/Right narrative you hear in 'the media'. Classes should have interests within themselves, not necessarily 100% split among party lines. And the media mostly tells the stories from party perspectives. Does that make sense to anyone? This is confusing to me.

scarmig8• 14 years ago

Class is both very real and very touchy in the United States. But people use the term in a really broken way, typically trying to map arbitrary income groups with classes. Which is convenient for everyone: Democratic-aligned classes can try to maintain their privileged position using class rhetoric to bludgeon Republican-aligned classes, and Republican-aligned classes can deny class altogether and take advantage of real but ignored class rifts within the Democratic coalition.

Of course, the classes at the bottom of the respective coalitions get screwed in the process. Which isn't to say that there's any grand lower-class coalition waiting to be made: disempowered classes align themselves in the partisan coalitions out of genuine self-interest, not out of false consciousness. They're just getting a disproportionately small serving of the winnings.

seliopou2• 14 years ago

> disempowered classes align themselves in the partisan coalitions out of genuine self-interest, not out of false consciousness. They're just getting a disproportionately small serving of the winnings.

To quote John Steinbeck, "Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires."

amcaskill• 14 years ago

Stratfor isn't really a news media company like the times or a tv station. IIRC they sell analysis & forecasting services to governments and large corporations.

The author of this article wrote a book called The Next 100 Years which is a pretty interesting read.

jdunck• 14 years ago

That is their public, shiny face. But they do a lot of intelligence and paramilitary work as well.

http://en.wikipedia.org/wiki/2012_Stratfor_email_leak

batgaijin• 14 years ago

I think it's a lot simpler and sadder than what we want to admit. Most viewers of Fox News are pretty old, and most viewers/readers of liberal media have high paying white collar jobs.

Most people are working multiple jobs and don't interact with politics, so they more or less don't have to be appeased to. They are just trying to pay their bills.

bhntr34• 14 years ago

There's a series of articles about the American middle class with infographics and video here:

http://www.globalpost.com/america-the-gutted-globalpost

gz5• 14 years ago

surprised the corporate agility theme doesn't explicitly include globalization displacing former US-based middle class jobs? globalization has positive economic consequences for the US as a whole, but not to key parts of the displaced middle class, at least not yet?

pdonis2• 14 years ago

One thing I don't see addressed here (or in other articles linked to in this thread): corporate governance. Abusing the standard corporate governance model, where shareholders delegate to a Board of Directors, is one of the key ways that rich people game the system.

chii• 14 years ago

can you explain a bit more about this? i dont understand how delegating to a board is an exploit.

pdonis2• 14 years ago

Delegating in itself isn't, but it opens up a security hole as soon as corporate executives realize they can game the system by becoming board members--both in their own companies and in each other's companies. If you look at most corporate boards today, they are composed of executives of other companies, and their main function is to allow said executives to rubber-stamp each other's golden parachutes.

svdad• 14 years ago

I hope his analysts are better than he is. This is shockingly insubstantial analysis coming from the CEO of Stratfor.

mchannon2• 14 years ago

I'm confused about the perceived dichotomy of taxation and private investment.

If the government threatens to take their cash, wealthy individuals and entities will find ways to use that cash to further their wealth instead of giving it to the government.

So if the government's taxes are too high, the wealthy won't have the money to invest, but if the taxes are too low, the wealthy have a no-risk, stable return on their cash- sitting on it.

I think this is exactly what we're seeing- low taxes and low inflation are encouraging inefficient use of capital- putting it neither into consumption nor investment.

Just as a wave of unemployment lays the basis for a more efficient workforce, couldn't a new wave of inflation (since taxes are politically impossible) right the ship?

AnthonyMouse2• 14 years ago

The idea has possible merit, but I want to complain about how you're getting to it. For one thing, the implication that inflation is politically easy is probably not true. There is a large contingent of the right (e.g. the Ron Paul crowd) who are always running around talking about auditing the Fed and how fiat money is ruining everything, etc. More strategically, the people who have the greatest incentive to fight inflation are money lenders who own outstanding fixed rate debt, i.e. banks, and as we've learned recently the banks are not exactly without political influence. Though granted increasing the rate of inflation probably is politically easier than raising taxes.

The second thing I want to question is this:

>So if the government's taxes are too high, the wealthy won't have the money to invest, but if the taxes are too low, the wealthy have a no-risk, stable return on their cash- sitting on it.

How does sitting on cash generate any return at all? You have to invest it in something to cause the value to increase, unless the value of money itself is actually increasing (i.e. a period of deflation), which is almost invariably its own brand of near-immediate catastrophic meltdown.

But you're on the right track, because the problem at present is that they invest their money in safe investments, like treasury bonds, as opposed to higher risk private investments.

The relationship between the investor purchase of government debt and economic growth is very squishy: It's effectively investing in the government. Higher demand for government debt reduces the interest rate the government pays. The money not paid in additional interest by government is then put back into the hands of Congress which it can use to either reduce taxes or fund additional programs at the same level of outstanding debt principal. If the government uses the money wisely then it helps the economy; if they use it inefficiently (or just less efficiently than private enterprise would have) then it hurts.

Naturally this leads to all of the arguments about who should get tax cuts and whether government spending, or what kind of government spending, is better for the economy than putting the money in the hands of private enterprise.

But the other compounding factor is that the normal way we know of to cause inflation is for the Fed to print money and buy government securities with it. This will certainly drive private investors away from government securities, because you simultaneously have the Fed bidding down nominal the interest rate and the inflation reducing the real returns at a given nominal rate, but that doesn't mean you don't you still have the same amount (or more) of capital being "invested" in the government (i.e. the real interest government pays on capital goes down not up), it's just that the Fed is doing the investing with newly created money instead of private enterprise doing it.

Furthermore, if you drive the private investors away from government securities, the question becomes what they invest in instead. This is the flip side of the "who should get tax cuts and what should taxes buy" question: If investors tend to take their money and invest in R&D then we're in business. If they tend to do commodity speculating with it then we're in trouble.

It pretty much seems to come down to this: We need to find a way to get investors to invest in things that help the economy. "Quantitative easing" may cause them to do that either if the default private alternative to government securities is economically beneficial, or if we can arrange for it to be using e.g. tax incentives or government subsidies.

mchannon2• 14 years ago

I think we're grokking the same here, but one disconnect:

You're presupposing that the wealthy want _some_ return on their wealth, and I think that in many cases, that simply isn't true.

Take a look at all of the money stranded offshore that corporate America is waiting on Uncle Sam to allow into the US without taxing- that money is probably not earning much if anything; think of the tinpot dictator or the kleptocrat who squirreled away a nest egg in a Swiss or Cayman bank account, and think of the smuggling kingpin south of the border with a swimming pool full of cash.

They all share the following in common- highly liquid and inefficiently invested wealth. They have little hope of increasing the value of this wealth by investing it or consuming with it because to do so requires a big hit to its dollar value (taxation or risk of seizure). The best return (for them) is to let it slowly (in our case very slowly) inflate until a rainy day comes.

The only practical and sure-fire way to bring that money back to productive use is to redistribute it via inflation.

jeffdavis4• 14 years ago

I would be interested to see more statistics and trends of people over time. Many of the statistics I see divide people into classes by income, but ignore the fact that the people within those classes change.

For instance, let's say that people in the next generation decide to go to college for 10 more years, leaving at 32 rather than 22. Then, when they get out, they make 50% more income than the previous generation. Overall, they might be better off throughout their life; but the statistics will make it look like there is a huge lower class (who are in fact just young and haven't reaped the benefits of their education yet).

The more our earning is concentrated to a small part of our lives, the more it will look like class divisions. And depending on how the accounting is done, the upper classes may consist largely of people with temporarily high incomes (from inheritance, selling a house, etc.).

[None of the above is meant to imply that there is not a problem. Just that statistics can be deceptive, and can hide the real solutions from us.]

EDIT: Specifically, I think it would be interesting to divide people into classes like: "X% of people will see an income over $80K sometime during their lives". That seems like a better indicator of opportunity to me.

scarmig8• 14 years ago

You see that same issue when people complain that X% of the population doesn't pay income taxes: it's true, as far as it goes, but it ignores that people nowadays have extended periods of studenthood, sabbaticals, and partial retirement (among other things). The daughter of two professors working on a PhD in mathematics is not of a lower class than a high school educated waitress, despite making a similar amount.

I dug up this paper, which seems like it might address it. Going to dig into it sometime after work: http://economics.sas.upenn.edu/~manovski/papers/accounting_f...

jeffdavis4• 14 years ago

Interesting, thank you (haven't read it yet, but the first page looks promising).

bhntr34• 14 years ago

It's an interesting argument that I've heard many times in different ways. I'm inclined to think there's some truth to it.

But when you look at trends, income is stagnant, wages are stagnant AND measures of social mobility are low as well as studies that show a lack of evidence for second and third generation immigrants being significantly better off.

That plus the (admittedly anecdotal) evidence that single earner lower middle class families who own their homes and cars are much rarer seems to indicate that the shrinking middle class is a reality (measured mostly by some vague "quality of life" metric.)

So it's complicated. The most compelling argument I've heard is that necessities are getting more expensive relative to general inflation (gas, food, housing) On the other hand, what you get for your money is much more advanced now technologically. So it's not like we're strictly speaking worse off even if our relative purchasing power has decreased.

jeffdavis4• 14 years ago

"It's an interesting argument that I've heard many times in different ways."

I wasn't making an argument; merely asking for numbers and explaining why the existing numbers may be deceptive.

"a lack of evidence for second and third generation immigrants being significantly better off."

Do you have some numbers to back that up? I'd like to see them broken down by country of origin, if possible.

rdtsc6• 14 years ago

> The expectation of rising real incomes was built into the American culture

Ah that's the classic propaganda line:

    "I am not poor, I am just pre-wealthy."

...So I sure don't want to vote for anything that would jeopardize my wealthy position when I get there.

The key in all of this is ability to manipulate the people into believing and voting in a particular way. US has no shortage of zombies who don't think on their won. Blame the education system, blame the system as a whole, I don' t know. As long as people don't base their votes on reality they will end up voting against their own good because they are being manipulated.

Basic health care, tax cuts for the super rich, trickle down wealth, futile wars, all this things are being delegated (via votes) from un-informed people to the politicians via a manipulative process. I see this within my own extended family, I see it on the streets, in the stores, in school and at work.

acabal4• 14 years ago

I've said for a long time the basic problem in the States isn't capitalism vs. socialism or rich vs. poor, but rather educated vs. uneducated. I think I'm not being out of line to claim that on the average an American's high-school-level education is pretty poor. People who are victims of poor education don't know history (which is rich in examples of past policy), can't think critically or reason about potential outcomes, and don't know to sometimes be healthily skeptical of things they're told.

Those kinds of people will never be able to vote in their best interests because they have no idea what their interests even are, because they're easily manipulated, and because they're incapable of reasoning critically about even the most basic policy decisions. That's how you wind up with people holding up picket signs saying "Obama=socialism" on one side and "Keep your hands off my Medicare" on the other.

The problem is basic education.

bhntr34• 14 years ago

> I think I'm not being out of line to claim that on the average an American's high-school-level education is pretty poor.

The thing is that it's not really that true. Here's a typical article on Huffington Post bemoaning the American education system: http://www.huffingtonpost.com/2012/07/23/us-students-still-l...

But if you read it carefully, the truth is that we're not getting worse. We're just not getting better as fast as others. We used to be the best. Now we're in the middle. We're not worse than we were 60 years ago. We're better. Other countries have just gotten better much faster. Which is a trend that applies to a lot in America these days.

Education IS improving. So, I think anything that tries to relate an absolute decline to "the failure of our schools" is wrong. Maybe that's not your point though.

The thing is that what you describe at the beginning of your post is actually typically human. Experiments have shown we all have cognitive biases that make us bad at "being skeptical" and "reasoning about potential outcomes" or using past examples to predict future events (even when we're well educated.) Humans are just not good at doing that stuff. We can overcome our biases but that's not really taught in school. You can read about a lot of it at http://lesswrong.com/

So I don't think it's that helpful to bundle up people who struggle with cognitive biases as "Those kinds of people" There's a chance that "our kind of people", aka people who read hacker news, are much better at being rational but it's probably because we've taught ourselves to think like computers! Because that's a big part of what being a hacker is.

jeffdavis4• 14 years ago

"Those kinds of people will never be able to vote in their best interests"

What happened to voting in the interests of the entire population?

maratd3• 14 years ago

> US has no shortage of zombies who don't think on their won.

A human being is at the most juvenile when he encounters a view contrary to his own and ascribes it to stupidity.

If only everyone was as enlightened, as educated, as brilliant as he ... then everyone would understand.

No. Grow up.

I will never be wealthy and I will still continue to vote for a fair tax system. A flat tax system. Because everyone should pay the same, regardless of status or income.

I won't always be healthy and I will still continue to vote against a socialist healthcare system. Because everyone should pay for what they use, no more and no less. Not just with healthcare, but with everything.

You don't believe what I believe? That's fine. But how dare you ascribe my beliefs to ignorance? That in itself, is ignorance distilled. The refusal to even consider anything but your own stunted views.

anigbrowl8• 14 years ago

rdtsc's not talking about you personally, but about the median voter. Many political arguments are founded in ignorance (in contradiction of available data or in defiance of logic), and observing this fact is not equivalent to a judgment of people who happen to hold the same opinions.

Having said that... Because everyone should pay the same, regardless of status or income. [...] Because everyone should pay for what they use, no more and no less.

These are perfectly valid opinions to hold, but to express them as if they were facts is to assume the correctness of your premises. I can see why you hold those positions, but I can also think of compelling arguments for the opposite positions.

ucee0545• 14 years ago

Because your views are stupid. Easy example: a homeless tramp dying of ebola.

(You can substitute a bunch of other diseases naturally occuring in the USA if you like)

You'd normally want to pack that guy into a medical isolation unit pronto. You probably won't save him but at least you'll stop other people from catching it from him.

But no! maratd vetoes this because it's not fair. The hobo should pay for his isolation unit and until he can, he should be kicked out into the streets to act as a plague vector.

Rinse and repeat for all the other issues you haven't thought about properly.

sliverstorm2• 14 years ago

I will never be wealthy and I will still continue to vote for a fair tax system. A flat tax system. Because everyone should pay the same, regardless of status or income.

Trouble with a flat tax system is the poor can't afford the tax rates the nation's current expenditure would require. It would work O.K. if the expenditure was much lower, but I see no way to get from here to there.

Aside from that, I've come to believe that a flat tax system isn't actually fair. The less income someone has, the more taxes cut into basic living expenses (because a greater portion of that person's income is spent on basic needs). On the other hand, someone with large incomes sees no tightening of basic living expenses because they make enough that the money lost to taxes falls solidly into the "extra income" region.

I'm not very good at describing this idea yet, but I tie it back to the idea I have happened upon that (for example) a 25% raise to a person making $40k is in terms of spending power much more than a 25% raise. This is because discretionary income is much smaller than $40k. The new $10k can be considered added discretionary income (assuming the person was meeting basic needs before) thus making it in effect much larger than a 25% bump.

scarmig8• 14 years ago

A flat tax? That's a bit too socialist for my tastes... should a man making $100k per year really be forced to pay twice as much as a man making $50k per year, just for being more productive? Wouldn't a head tax be better, since everyone would then pay equally? Plus you would not have the disincentive effect on marginal labor of your "make twice as much, pay twice as much" scheme.

Also, why should I be forced to pay for your military and your police force? Shouldn't it be my choice to consume what I want?

rdtsc6• 14 years ago

> I will never be wealthy and I will still continue to vote for a fair tax system.

What makes you think that's fair? I didn't say what is fair or not, you brought that into the discussion. Do you think marginal utility doesn't make sense. Why is linear, percentage based, tax "fair"? Seems rather arbitrary to me.

> I won't always be healthy and I will still continue to vote against a socialist healthcare system. Because everyone should pay for what they use,

Ok except that the world where each individual is isolated and should just get what they need for themselves by paying and nothing more is a fantasy world. Exactly the kind of a situation I was talking about. Turning human lives and their health into a marketable commodity is craziness. Letting emergency services handle terminal heart patients, which would have been managed better by preventive care is insanity. Checking people's accounts before pulling the ambulance to the door is a pretty scary society, and maybe you evaluated it and decided to vote for that, I decide not to. Starting wars just to fuel the military industrial complex, is craziness. Letting old people die of hunger and neglect is craziness.

> You don't believe what I believe? That's fine. But how dare you ascribe my beliefs to ignorance?

I dare because it seems at least some of your beliefs are crazy and are hurting not only yourself in the long run but others. Maybe you'll say that you don't care about others, and it shouldn't matter what happens to them, and I say that's crazy as well.

mimog• 14 years ago

> But how dare you ascribe my beliefs to ignorance?

Because they do seem to stem from ignorance with regards to the purpose of a society. Why should I refrain from robbing you if I am sick and hungry whilst you seem to have more than you need? We have entered into a society in order to protect ourselves, which means that even the poorest in our society must have healthcare and food on the table, which again requires all of us to pay a certain amount of our money for things we might not directly need. You might not need healthcare, roads, public transportation etc. but you do need to not be killed and robbed by people who have nothing.

mistermann• 14 years ago

You speak with the confidence of a young man. If it's not too intrusive, may I ask your age and gender?

vor_• 14 years ago

Calling people names because they disagree with a progressive tax structure or mandated health insurance isn't a convincing argument for your side. There are arguments to be made for and against these policies.

In fact, it would be helpful for you to recognize that you are simply one side of a two-sided issue, each side of which believes they are obviously correct and that the other side is too uneducated to know how wrong they are.

rdtsc6• 14 years ago

From a rational point of view I can understand how someone with a high income is against a progressive tax structure. How someone how has millions of dollars stashed in an account votes against a socialized basic care. I don't understand why someone living on government's check, and having poor health due to a financial inability to go the doctor, is voting against it. That is the issue.

The problem I am describing is people being manipulated to vote against their own interest. Religious, fears, fake promises are all used effectively by those in power to recruit and manipulate others to do their bidding for them. That is what is scary.

tsotha7• 14 years ago

>I am not poor, I am just pre-wealthy.

Whose propaganda line? I've never heard anyone in favor of small government say that. There aren't people in the electorate who think they're going to wind up wealthy to swing an election.

The lack of increasing real incomes doesn't have anything to do with "tax cuts for the super rich". It's the combination of globalization and the importation of ten million poor people. If you're doing a job that can be taught to a Central or South American peasant in a few weeks you simply have no power in the labor market.

ilaksh• 14 years ago

Great points in this article and I agree with just about everything.

But I think that to really understand the problem you have to look at things from a wider and more fundamental perspective.

First of all, the United States and what is happening to it does not exist in a vacuum. The US is part of a global system which has a lot of integration.

We need to look at actual human needs and real resource distribution on a global basis to understand the problem and come up with a solution.

We need to tie our financial and business calculations into human and environmental needs in a direct way rather than relying on indirect regulation by government. We also need to come up with a system that factors in massive technological unemployment, including large sectors of the professional workforce.

I think there are probably several different approaches that will work, but you have to get away from the typical 'economic' arguments and go at things from a more fundamental level. I believe the key is to find ways to ensure the application and distribution of technologies that meet human needs. We may need some new types of institutions.

pinaceae• 14 years ago

Related to this, Showtime is currently airing a rather brilliant set of documentaries narrated by Oliver Stone called the 'Untold History of the United States'.

It basically puts this article into broader context, from the entry to WW2 onward.

Would be interesting to know how much different the reception of those documentaries is for a US-educated citizen. They definitely fit to the overall history being taught over here in Europe, but might conflict heavily with the official narrative in the US.

mcantelon• 14 years ago

I'm currently watching that series... interesting stuff. Another must, for any who haven't seen it, is the British documentary series "Century of the Self", about American conditioning specifically.

macavity23• 14 years ago

'Century of the Self' is indeed amazing (as is everything else by Adam Curtis) and can be found for free here: http://topdocumentaryfilms.com/the-century-of-the-self/

It's not specifically about American conditioning though... it starts with Freud (Austria, then UK), wanders off to Edward Bernays (Austria, the US), talks about the US PR/Advertising industry for a while (totally fascinating to bear in mind while watching 'Mad Men' IMHO) and then ends up with Tony Blair (UK) via Bill Clinton.

Thanks for the Showtime documentary pointer - will look that up.

ucee0545• 14 years ago

If we move to a system where half of the country is either stagnant or losing ground while the other half is surging, the social fabric of the United States is at risk, and with it the massive global power the United States has accumulated.

Translation: If half the US citizenry is utterly suffering, we won't be able to keep drone-bombing Yemeni infants, Oh the horrors!

You'd think that preventing the suffering of half of the USA might be an aim in itself.

Also, what's wrong with leaving the Yemeni children alone? Oh, I forgot, we want to provoke more terrorism. Maybe even hit the jackpot and start World War 3.

What a stupid article.

csense• 14 years ago

Globalization is much of the reason.

When unions were strong (c. 1950-1980), they were essentially a monopoly on certain types of workers that were vital to production in many industries.

This monopoly allowed the workers to extract a larger proportion of the value of this industrial production through higher wages.

With the US focus on free trade (c. 1975-present), the unions no longer had a monopoly on labor, since companies could now find labor in other countries. Labor could no longer enforce their favorable monopoly pricing. (They tried, and had some success in the US, but often the "victory" caused companies or factories that paid good wages to their workers to be uncompetitive with overseas companies or factories that did not, and forced to close.)

The bottom line is that I'm very much afraid that globalization and a rising middle class are mutually exclusive, and will continue to be so for several decades.

The Crisis of the Middle Class and American Power

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