Cafe Hayek: The vanishing middle class

« With Such Standards, Everyone is Heroic | Main | The People's Romance» Russell Roberts

February 05, 2008

The vanishing middle class

Russell Roberts

Here is a very nice video from Reason.TV of Drew Carey talking about how the middle class actually is alive and well. Although I like the economics, I also like the clips from Dobbs et al relentlessly trying to scare people.

Posted by Russell Roberts in Standard of Living | Permalink

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/t/trackback/23120/25832326

Listed below are links to weblogs that reference The vanishing middle class:

Comments

I like reason.tv too, but this video pits one set of anecdotes against another. That someone describes himself as a gardener or works in law enforcement tells me little about his "middle class" status. If "middle class" means "everyone who's not a Fortune 500 CEO", it's one hell of a large class. In reality, this usage is not common, and comparisons with 1900 wear thin after a while.

I spent last night posting Ron Paul signs at polling places in low rent districts. The actual middle class is vast. Do these people have cell phones and cars my father would have envied when I was a kid? Sure they do, but I didn't see many speed boats. This video made no effort to paint a picture of middle income people, individuals with incomes in the low 30s.

I'm happy that cell phones are now commonly affordable and that affordable mp3 players are much more useful today than affordable record players were a few decades ago, but these facts do not contradict an assertion of wage stagnation, and they don't contradict an assertion of rising productivity and rising output without corresponding rises in the median income of individuals, and they don't account for 7500 people lining up for 400 jobs at Wal-Mart.

Posted by: Martin Brock | Feb 5, 2008 4:11:46 PM

The video was anecdote-heavy, but it still had a central point: "Wage stagnation" is not necessarily relevant. All that matters is what you can get for your time. Changes in dollar compensation are much less important than changes in cost of goods in labor-hour terms. If you get tired of comparisons to 1900, try comparisons to 1990 -- they are also impressive (eg cell phones' upfront and subscription costs).

On the Wal-mart front, I'm not sure we know enough about those 7,500 people to say that it's a bad thing. The number of people applying does not have any bearing on the more important factor: the desperation of their search. If there are 20 applicants for every opening in DeKalb County, yes, that's a likely to indicate a problem. (How many applicants is the 'right number' to show up for 400 jobs?)

Also, on the difference between Drew Carey's speedboat anecdote and yours: it isn't necessarily meaningful. The ratio of driveway-stored boats to marina-stored boats is different everywhere and it depends on a lot of factors. Coastal geography, weather, and tides here in the northeast are not conducive to ramp-launching boats the way those happy Californians were doing it. It may also be that you're in an area that doesn't have any good places to go speedboating. Not many yachtsmen even among the rich in Nebraska, for example.

Posted by: Eric | Feb 5, 2008 5:41:46 PM

Drew should drop by Cleveland, to see if Cleveland still rocks.

Some inner ring suburbs of Cleveland may become ghost towns when the foreclosure rate makes the cities unliveable (of course it is the workers fault).

And when the recession hits full stride somebody in California will do a booming business in the repo of boats and motorcycles, it always happens.

Let's see what all of those happy middle class Americans do at the polls.

Posted by: save_the_rustbelt | Feb 5, 2008 5:41:54 PM

This video is complete bunk. I'm middle class, making a little less than $60K/yr, and the middle class squeeze is real. Last year, I could barely afford the four weeks of vacation I took, two of which were cross country, my new car, another week of time share, new wardrobe and house renovations. I mean how am I expected to afford all that and a 60 in. flat screen TV, with 1000W surround sound, and PS3? Someone should do something!

Posted by: Ken | Feb 5, 2008 6:30:43 PM

Also, on the difference between Drew Carey's speedboat anecdote and yours: it isn't necessarily meaningful.

Necessity is a very rare bird. If you want to assume that wage stagnation in recent decades isn't meaningful, you can do that, but Carey's video doesn't substantiate this point. I'll stick with the Census Bureau.

Posted by: Martin Brock | Feb 5, 2008 6:51:53 PM

Let's see what all of those happy middle class Americans do at the polls.

I think that's a foregone conclusion. A recession can only make matters worse for Republicans. They need to catch Hillary in bed with a female goat, pronto. Barack in bed with a white woman probably isn't enough.

I'm gonna have a drink ...

Posted by: Martin Brock | Feb 5, 2008 6:56:35 PM

No, I haven't had one already.

Posted by: Martin Brock | Feb 5, 2008 6:59:25 PM

One more blockquote.

Posted by: Martin Brock | Feb 5, 2008 7:02:35 PM

Ken,

we feel your pain :)

However, there is a sense in which the middle-class is indeed being squeezed: by the government. The problem is that most people in the middle-class are on a fixed income and whenever taxes rise (which they always do, see latest AMT problems) they're the one with fewer options. I'm sure this is not what the pundits mean.

Posted by: Unit | Feb 5, 2008 9:17:28 PM

Martin,

I haven't seen anyone claiming that the inflation-adjusted median wage is changing much, so stagnation is a given. Neverthless the standard of living of wage-earners appears to be improving (a position which has better support than this video; some of that support is referenced by this blog and in the Easterbrook econtalk).

"Standard of living" is difficult to measure, but one good way is in the value of a labor-hour. If you get more/better stuff for the same amount of labor, you're better off -- regardless of the dollar value of your wage. That appears to be the dominant trend.

But it would be good to see the support for the argument that there is a stagnating wage problem: specifically, that a stagnating inflation-adjusted median wage has resulted in a declining or unchanging standard of living for the people who earn it.

Posted by: Eric | Feb 5, 2008 9:20:40 PM

The problem with elitists is that they don't live in the trenches. So, they know not what they speak of. Anyone who says the middle class is alive and well is completely clueless. And, is overlooking the data. This argument of a declining middle class has never had merit. Until now. For the first time in recorded history, wages for the bottom 80% are stagnant to declining. Of course, you aren't in that category are you?

Posted by: MalcomX | Feb 5, 2008 9:41:30 PM

MalcolmX --

In the bottom 80%? No. But I accept the premise that the median wage is stagnant. (What is not clear is whether the bottom group is consistently comprised of the same people each year -- for example I was in it before 2006 but not after -- but I'm going to leave that doubt aside for now.) Again, I accept as a given that the inflation-adjusted median wage has not changed appreciably in years.

What I was asking Martin, and now you, for is evidence that stagnant wages are hurting the standard of living of median wage earners, or that their standard of living is stagnating along with the median wage. My hunch is that while the middle classes' wages were stagnant their standard of living improved greatly leading up to this year despite that stagnation. Again, this is at the median income -- 50% of the population earns more, 50% earns less. That should represent the middle of the middle class.

As I said, it would be great to see the data supporting the other side of this point, so if you have it, by all means link to it.

Posted by: Eric | Feb 5, 2008 10:46:38 PM

But it would be good to see the support for the argument that there is a stagnating wage problem: specifically, that a stagnating inflation-adjusted median wage has resulted in a declining or unchanging standard of living for the people who earn it.

The negative savings rate is a problem, but I don't accept the premise that no change in real median income over 30 years, while real GDP doubles, is hunky dory, even if the median income buys better toys. Payroll taxes and other taxes are higher over this period.

Posted by: Martin Brock | Feb 6, 2008 12:17:40 AM

Eric, If you have some meaningful definition of "median living standard" other than the real, median income measured by the Census Bureau, you can describe it. I can't possibly show you anything about a term as vague as "living standard". I agree that the price of record player 30 years ago buys a qualitatively superior mp3 player today, but I don't know how much extra "living standard" this improvement is supposed to buy.

Posted by: Martin Brock | Feb 6, 2008 12:23:19 AM

Some facts...

There will always be people who are dissatisfied with their lives.
There will always be politicians who promise to help the people who are dissatisfied with their lives.
These politicians will seldom actually help anyone but themselves, because only seldom is the political environment the true source of the dissatisfaction.

Posted by: Randy | Feb 6, 2008 6:25:35 AM

I haven't seen anyone claiming that the inflation-adjusted median wage is changing much, so stagnation is a given. Neverthless the standard of living of wage-earners appears to be improving.

But if the standard of living of median wage-earners is improving then the method of calculating inflation-adjustment for wages is failing to factor in those elements that are responsible for the improvement in living standards.

It's contradictory to say that median wages are stagnant but the median wage earner is better off. If the median wage buys more and better stuff now, and the median earner lives better now, then wages are NOT stagnant -- the measurement method is faulty.

Posted by: Slocum | Feb 6, 2008 8:19:03 AM

If the median wage buys more and better stuff now, and the median earner lives better now, then wages are NOT stagnant -- the measurement method is faulty.

http://www.econlib.org/library/Columns/y2008/Jasaygdp.html

"If GDP will not grow as one would wish, use an alternative that will. Referring to the teaching of the communist sociologist Edgar Morin, Mr. Sarkozy reminded public opinion that gross national product was not the same thing as well-being, and that it took many other variables than material production to make a civilisation and a high quality of life. On the league tables of these other variables, France ranked much higher than on the GDP table."

What you're doing here is exactly what Sarkozy does in France. Simply replace "GDP" with "median income".

Posted by: Martin Brock | Feb 6, 2008 8:58:57 AM

Martin,

Slocum made the point I was leading to -- that changes of what we call "real" wages do not measure well-being. (Particularly true of median wages, which are earned by different people each year.)

The video uses another standard, the cost of goods in labor-hour terms, to show that quantitatively people are better off than before (I just wish they gave more data, including more recent comparisons).

The idea being that if you can buy the same stuff with fewer hours at the office, you're better off because you have more leisure and all the same stuff as before. That seems like a clear "standard of living" increase.

Posted by: Eric | Feb 6, 2008 9:21:10 AM

I'm not sure what kind of garbage Mr. Sarkozy plans to include in his "new GDP" measure, but the goods-per-labor-hour is a very simple measure that removes some measurement problems but keeps the well-being aspect.

What is this fixation on fiat currency measures?

Posted by: Eric | Feb 6, 2008 9:27:23 AM

(Also, it would be a failure of logic to conclude that our exchange of a bad measure for a better one is the same as France's exchange of an unfavorable measure for a favorable one on the grounds that the better measure is also favorable.)

Posted by: Eric | Feb 6, 2008 9:30:31 AM

Eric,

I like the idea of the cost of goods in labor-hour terms, but even better would be the cost of goods per productive labor hour. That is, not just how much time we spend at the office, but how much time we spend actually working. The factory workers of the 50s and 60s didn't spend a lot of time surfing the web, if you know what I mean.

Posted by: Randy | Feb 6, 2008 9:50:03 AM

Slocum made the point I was leading to -- that changes of what we call "real" wages do not measure well-being. (Particularly true of median wages, which are earned by different people each year.)

Right. Just like Sarkozy in France. You employ a Leninist propoganda tactic here, not any sort of economic science.

Median income tell us what a person in the middle of the income distribution receives and is above what half the population receives. Different people receive this income each year, but half the population receives this income or less every year.

The video uses another standard, the cost of goods in labor-hour terms, to show that quantitatively people are better off than before (I just wish they gave more data, including more recent comparisons).

No, it doesn't. The video alludes vaguely to this measure, but it quantifies nothing. You won't find any measurement of median "labor-hours" in the video. What's the median number of hours worked for wages each week? You can't answer this question from the video, because the answer's not in the video.

The idea being that if you can buy the same stuff with fewer hours at the office, you're better off because you have more leisure and all the same stuff as before. That seems like a clear "standard of living" increase.

It might be a "standard of living" increase if it were occurring, but you provide no evidence whatever that it's occurring. Most people don't work in offices anyway. The very fact that you frame the issue this way indicates that you aren't discussing individuals receiving $30,000 annually. You're describing your own anecdotal experience.

Posted by: Martin Brock | Feb 6, 2008 10:12:16 AM

I'm not sure what kind of garbage Mr. Sarkozy plans to include in his "new GDP" measure, but the goods-per-labor-hour is a very simple measure that removes some measurement problems but keeps the well-being aspect.
What is this fixation on fiat currency measures?

Real, median income is not a fiat currency measure. It does adjust income for purchasing power. You and Sarkozy have at least two problems, 1) you're vague and don't quantify anything and 2) your analysis is post-hoc, i.e. you respond to a stagnating measure by looking around for some other measure that might not be stagnating.

Economists settled on real, median income as a measure decades ago. It's not rising, so economists apologizing for the status quo today need another measure.

Posted by: Martin Brock | Feb 6, 2008 10:21:59 AM

Whew MalcomX!

That's a pretty broad sweep of time, care to revise your statement just a tad so as to avoid hyperbole? You took in a lot of people in a lot of places through a vast sweep of time and I doubt seriously you have the data to back it up.

"For the first time in recorded history, wages for the bottom 80% are stagnant to declining. Of course, you aren't in that category are you?
Posted by: MalcomX | Feb 5, 2008 9:41:30 PM"

I was born (1941) in the trenches, when my dad was discharged after WWII we spent several years looking up to see how dirt poor people lived so well, I have lived in the trenches, I have spent my time as lower middle class, but it wasn't until in the heart of the Carter recession that I began my climb up to really solid middle class.

I won't say Houston is a template for everywhere else in the USA, but here in Houston there has been a steady economic boom since the late 80s. Some will say no because they were in industries that suffered the dot.com bust, but most I know have found other jobs long ago. What is relevant to Houston is this. I drove around the Beltway perimeter last thrusday going to a job on the North side. I completed on full 180degress of travel on that beltway, and virtually from beginning to end there is new construction of businesses, manufacturing, tall office buildings, huge warehouse complexes, business parks, brother it just goes on and on, and it is obvious that this is not being done on low skill labor or low technical labor.

Perhaps the people who are struggling uncomfortably where they are need to learn what I did as a child; and, that is when I sat down and found myself uncomfortable I got my ass up and moved.
or
In the old country tail: The old farmer was sitting on his front porch in a rocking chair and down the porch from him was his coon dog just howling with regularity. Finally the man's wife came out asked the old man if the dog was sensing something like a stranger coming. The old man said, "Naw woman, he's just sitting on a nail and too damn lazy to move, so he just howls about it."

In essence MalcomX most people are the cause of their situation and only they can change it. The truth is we all have exactly what we want in life, if this were not true we'd be working on changing it.

Posted by: vidyohs | Feb 6, 2008 10:41:40 AM

Gulp!
"I completed on full 180degress of travel on that beltway"
this should read:
I completed a full 180 degrees of travel on that beltway"

Posted by: vidyohs | Feb 6, 2008 10:47:27 AM

Martin,

Apologizing for the status quo? That's an interesting perspective.

Posted by: Randy | Feb 6, 2008 10:51:27 AM

The theory here apparently is that the middle class is so stupid they are rushing to the polls in massive numbers because of the medias influence on them.

The theory is right but for the wrong reasons. Mass media saturates the average American with the message they need more and more and more. Indeed they spend more and more on things they don't need and bigger houses. Advertising WORKS that's why a Superbowl add cost a million buck a minute. But to keep up (which the number of foreclosure suggests they aren't) they work MORE family hours and have less time off. They commute further distances to live in affordable housing. They have more and better things but they have more debt and less savings and decreasing benefits and stagnant wages. The system completely rigged by men of money with access to cheap American dollars direct from the Fed to spur more buying and more debt and greater taxation to pay the debt.

But the bottom line is the midde class HAS figured out they are being ripped off and they're going to the polls NOT because of an impression they get from the media but from the real life they are living. And guys like Drew Carey trying to tell them to shut-up and be thankful will be stampeded by the democratic process as it swings back in favor of the people and away from the economic royalist.

Posted by: muirgeo | Feb 6, 2008 10:57:28 AM

Muirgeo,

Not sure I follow. Are you saying that masses of people are going to vote for democrats in the hopes that they will be forced to want less things? I guess I can see how that might seem rational to a democrat...

Posted by: Randy | Feb 6, 2008 11:12:07 AM

The negative savings rate is NOT the problem. It is a symptom. A symptom of negative wage growth and people trying to maintain a standard of living they used to have.

Posted by: MalcomX | Feb 6, 2008 11:40:47 AM

Apologizing for the status quo? That's an interesting perspective.

If you consider the meaning of the words, it's a literal description.

I definitely reject the straight-line theory of economic development in nominally "Capitalist" economies. Things sometimes get worse. Things got worse in the seventies, and state policies in the preceding decade played a role.

I reject the theory that neo-conservatism (or whatever we're calling Bushnik policies these days) is anything like classical liberalism.

I reject the idea that global "free trade" agreements actually liberalize trade in the classical sense. These agreements globalize particular forcible proprieties and expand the territory over which particular corporatist tinkerers may operate.

The WTO creates international patent monopolies while corporatists expand the scope of patents to easily replicated software algorithms and incredibly broad "business processes". U.S. courts overwhelmed by patent disputes essentially hand authority over these disputes directly to the U.S. patent office. One party, Communist states with nominally "liberal" economies have huge current account surpluses with the U.S. and increasingly dominate patent applications. Solicitations for military and other state research contracts increasingly emphasize the value of these global monopolies. U.S. corporatists increasingly sell business processes to proprietors in one party states.

I can provide specific evidence for all of these assertions. We can argue about the import of these developments, but the developments are undeniable, and they're probably the tip of an iceberg, but I don't read a word about it in this forum.

Posted by: Martin Brock | Feb 6, 2008 11:42:06 AM

I'm just thinking that one very large element of the "status quo" is the desire of the political class to maintain its revenue stream. It forces children into schools in order to increase productivity and establish the habit of regimentation, establishes programs to funnel a large percentage of national earnings into the hands of their favorites... you get the idea. It just seems me that those who claim to want to change the status quo are actually its defenders, and vice versa.

Posted by: Randy | Feb 6, 2008 12:01:28 PM

They commute further distances to live in affordable housing. They have more and better things but they have more debt and less savings and decreasing benefits and stagnant wages. The system completely rigged by men of money with access to cheap American dollars direct from the Fed to spur more buying and more debt and greater taxation to pay the debt.

Or it could be bad local tax policy that forced people and businesses out of urban centers (e.g. Baltimore's property tax rate is double the surrounding counties), which caused sprawl. Or the recent raising of regressive local taxes, which increase the cost of living for the middle class. And this was not to pay debt, for to pay for useless increased governmental spending at the state level. Now, at the federal level we have to pay for military - about $600 billion worth. Muirgeo, I see runaway government as a key problem, and not the CEO of Coca Cola.

Posted by: Mcwop | Feb 6, 2008 12:06:22 PM

Martin --

I reject all of those things too. (Except maybe the problems of doing business with undemocratic regimes and selling business processes; I'm not sure about those.) I just want people to look at a wider range of measures before making statements like, "life is getting worse for middle class Americans." Nevertheless, the developments you describe are indeed undeniable.

The point I was making in reference to your first post was that CPI doesn't tell the whole story about changes in purchasing power, therefore "real" wages don't tell the whole story. (I just tried to post a bunch of links to other data, but for some reason it didn't work. Just search Cafe Hayek for "CPI" and you'll see some actual research and a good number of anecdotes in the linked posts. Maybe that post will show up later.)

By all means, let's change the status quo. But we need to be careful going around 'fixing' this and that on the basis of weak data.

Posted by: Eric | Feb 6, 2008 12:18:29 PM

Are you saying that masses of people are going to vote for democrats ...

Yes.

... in the hopes that they will be forced to want less things?

No. They want things more.

I guess I can see how that might seem rational to a democrat...

The Democratic and Republican parties are two peas in a pod. The difference between a two party state and a one party state is one party, and this distinction ultimately is meaningless. We cycle between waves of futile expectation, expecting one party to unwind the forcible proprieties of the other, while the network of these proprieties only becomes ever more complex and tangled. Most people wander around looking for a tightly woven patch in this tapestry, and when we find ourselves at a joint in the network where lots of cash flows at the moment, we purchase as many rents as we can or we just consume and hope for the best.

We reached a point for while where inflation mostly affected the price of these rents, so we have very low interest rates on long term Treasuries for example. We're now approaching a turning point in the baby boomers' demand for rents. They'll now gradually accumulate less and sell more. We might hope for a new generation of buyers to take up the slack, but median income growth stopped soon after the baby boom ended. [Of course, it wasn't really the end of a boom. It was the start of a bust.] If the stagnation creeps to ever higher income percentiles, something seems unsustainable.

Sure, mp3 players are much nicer than 45s on a turntable, but I don't expect the mass of people to give up their mp3 players to buy a few shares, and they can't effectively buy 45s or turntables at any price anymore. Will people rising in the corporatist hierarchy buy these shares? I don't know. If we are selling rights to produce for U.S. consumption to Chinese and other proprietors, I just don't believe that the corporatist administration can remain long in the U.S.

A couple of decades ago, when this demographic trend was driving rent prices up, I heard lots of talk about it. I remember it well. Now that we're approaching the end of the buying phase of this trend, the silence is deafening. Or maybe I've just stopped listening. I don't know. I've hardly seen television in years.

Posted by: Martin Brock | Feb 6, 2008 12:39:39 PM

Martin:

People like you have been predicting the Socialist Democrats sweep to power due to Reagan's "thrashing of the middle class" for 20 years now. It hasn't happened yet. Billy boy signed NAFTA and welfare reform. Billary will not do any better or worse. Face it, neither your hero Ron Paul or space alien Kucinich are going to be President.

Posted by: FreedomLover | Feb 6, 2008 12:45:41 PM

Martin:

Tell me how to raise the median income in this country.

Posted by: FreedomLover | Feb 6, 2008 12:49:29 PM

I'm just thinking that one very large element of the "status quo" is the desire of the political class to maintain its revenue stream.

I'd say that's just about all of it, but the "political class" certainly is not limited to employees of the federal and state governments, elected and otherwise. It's not like there was no state in the feudal period.

It forces children into schools in order to increase productivity and establish the habit of regimentation, establishes programs to funnel a large percentage of national earnings into the hands of their favorites... you get the idea. It just seems me that those who claim to want to change the status quo are actually its defenders, and vice versa.

If you're talking about the bickering voices that the two major parties direct at each other, I completely agree. Tragically, if the Libertarian party became a significant force, it would soon succumb to the same, stagnant, inbred dialectic. I hate to be fatalistic, but that's how I see it.

Posted by: Martin Brock | Feb 6, 2008 12:51:00 PM

Tell me how to raise the median income in this country.

I've suggested a progressive consumption tax repeatedly. It's not a panacea in isolation, but if adopted, it would slash income tax revenue, from the wealthy specifically, and hopefully slash state spending with it. If so, it would free resources currently bound up in the Federal planning apparatus. It would also change the consumption profile and leave market forces to explore a wider variety of more common goods rather than a variety of less common goods. This change would affect employment as well. Median income has risen under this type of arrangement in the past as a matter of fact.

I've suggested a system of parental support and private investment to replace Social Security. I'd go further and forbid Treasury securities in the accounts.

I've suggested privatizing education by creating a negotiable propriety in a portion of people's educational value. So basically, your parents pick educators for you when you're young, and you owe these educators a percentage of your income for a period thereafter. If you don't produce, these educators have an incentive to sell their entitlement to other educators who might profit by educating you otherwise.

If we've essentially sold exclusive rights to produce for U.S. consumption, we just need to default on these obligations. We sold you the right, but we were lying, and we aren't buying the right back from you now, unless you just want us to print some money for you. Sorry about that. Hope you'll go on trading with us anyway.

I don't say a word about any Federal spending or expanded central authority or statutory wages. I don't say a word about limiting competition, quite the contrary. I don't say a word about border fences and other restraints of trade.

Posted by: Martin Brock | Feb 6, 2008 1:12:23 PM

And slash the empire. Withdraw U.S. forces from Iraq, sell 90% of the Vatican sized embassy there to local interests, cease construction on the permanent military bases and sell these assets as well. Sell 'em cheap at a nominal loss. Do the same with similar resources globally. Free the resources bound up in these organizations to explore a greater variety of goods for more common consumption.

Posted by: Martin Brock | Feb 6, 2008 1:19:10 PM

Martin:

How does a "progressive consumption tax" raise median income? You say you want to eliminate FICA, but what does that have to do with the other tax if you say we have to cut spending anyways? Why not just eliminate FICA, SocSec and cut other spending? Why add in another unfair tax? Any tax that is not flat is inherently unfair and un-American.

Posted by: FreedomLover | Feb 6, 2008 1:19:47 PM

What empire? A few military bases does not an empire make. What tribute are we collecting? Who are the regional governors of the American Provinces? I thought this was an empire. You lost me there. Also what is this thing about "greater variety of goods"? When I look at the retail space online and brick-mortar I see a virtually infinite variety of goods, so what are you blathering about?

Posted by: FreedomLover | Feb 6, 2008 1:21:42 PM

"...but the "political class" certainly is not limited to employees of the federal and state governments..."

The way I think of it, it comes down to owners (rent collectors) and tenants (rent payers). The political class is the owners.

"...bickering voices that the two major parties direct at each other..."

There's really only one party. They are only arguing amongst themselves over how to split up the rents they've collected. Neither is the least bit interested in collecting less rent. Its what they do, not what they say, that counts. Libertarians will never be in charge, because you can't be in charge without collecting rents, and the more you collect the more power you have. Libertarians can only point out what should be obvious - that too much power in the hands of the political class is a threat to liberty.

Posted by: Randy | Feb 6, 2008 1:33:47 PM

apologies if someone already brought this up (didn't have time to carefully read every post)

"stagnating" wages don't include benefits and incentive compensation. Strange, because those two components are growing as a percentage of total comp. And, of course, people in all classes change over time. One year they may be classified as above average, another below and another average income. Thus, it seems meaningless to talk about "the middle class" as if they are some unchanging lump of humanity.

The best thing about the United States is that people are more free here to change the circumstances of their life than in any other country I've very lived.

As for the military empire....the amount we spend on military pales in comparison to the amount we're spending on entitlement programs. This notion that we can somehow pull back within our borders and ignore the rest of the world is fantasy, but making people pay for their lunch seems much more do-able to me.

Posted by: Methinks | Feb 6, 2008 1:43:36 PM

I find that liberals are usually running on fumes when they rant about the "American empire". I have to put up with that all the time.

Posted by: FreedomLover | Feb 6, 2008 1:59:38 PM

FreedomLover --

While the variety of goods may seem infinite to you, it is only because you don't have the imagination to picture an even wider array. The cost of paying for the war(s) crowds out investment in more peaceful endeavors.

Many other things the government does crowd out other investment, too. Entitlement programs are the worst offenders -- but they're part of a separate debate.

On the other hand, many functions of our military apparatus make it very useful, like protecting shipping from pirates in the Strait of Malacca and protecting poor foreigners from genocide. So as with everything it appears to be a bit of a mixed bag, and I will leave the rest of the theorizing to people who know something about artillery. But I don't like wars, particularly ones that would have been so easy to avoid (in this case we could have avoided it by not invading Iraq).

By the way, congrats to Randy and Martin for agreeing so vehemently about the lack of differences between the two major political parties. I disagree too -- I think that there aren't any important differences between the two major parties! ;)

Posted by: Eric | Feb 6, 2008 2:25:20 PM

How does a "progressive consumption tax" raise median income?

You must have missed that part. See above.

Why not just eliminate FICA, SocSec and cut other spending?

I do propose to eliminate most of the payroll tax, the 10.7% that funds Old Age and Survivors Insurance, and to eliminate this portion of the Social Security program as described above and here:

http://www.knology.net/~marbrock/psupp.htm

Why add in another unfair tax?

The progressive consumption tax is not another tax. It's a reform of the income tax. Basically, it keeps the progressive income tax, simplifies it by taxing all income alike (including capital gains, dividends, rents, etc.), adds higher marginal rates at higher incomes and creates an individual investment account (like an IRA) with unlimited contributions to shelter income from the tax. You may earn a billion dollars in a year and pay no tax if you reinvest all of it. This consumption tax replaces the income tax. The higher marginal rates don't collect more revenue. They collect less, because that's what they're supposed to do.

Any tax that is not flat is inherently unfair and un-American.

Yea, oh god of "fairness", speakth that we may know thy will.

Here's how fair I want to be. I want Bill Gates to pay less tax than you do. He pays no payroll tax now, because he earns no wages. If he consumes relatively little going forward, he'd also pay less consumption tax than you, and I think that's completely fair.

Posted by: Martin Brock | Feb 6, 2008 3:05:33 PM

Here's another eminently fair proposal. If you own a house in the U.K. and you're well able to support yourself, you may move equity here and immigrate with a fast track to citizenship. Let's encourage all of the wealthy retirees on Earth to move here and buy our houses.

Posted by: Martin Brock | Feb 6, 2008 3:18:33 PM

Eric:

You look at our current military expenditure as somehow not necessary. I think the high cost is dictated as much by American interest in keeping the world safe for commerce as much as American public opinion dictates that we don't use excessive force. If we carpet-bombed Iraq it'd be a lot cheaper dollar-wise, but the American people would have not stood for it morally. Basically $200-$300 billion is the "lets not be cruel" expenditures.

Posted by: FreedomLover | Feb 6, 2008 3:19:52 PM

What empire? A few military bases does not an empire make.

You obviously haven't counted lately.

What tribute are we collecting?

You need to ask the people around the bases.

Who are the regional governors of the American Provinces?

They're diplomats and generals.

I thought this was an empire.

You thought correctly.

You lost me there.

You seem lost, but I didn't lose you.

Also what is this thing about "greater variety of goods"?

That's "a greater variety of common goods", goods available to a large number of people. "Greater" is the opposite of "lesser". I'm sure how else to explain that to you.

When I look at the retail space online and brick-mortar I see a virtually infinite variety of goods, so what are you blathering about?

You'd have seen that a century ago too. Just look at an old Sears catalog. This fast is irrelevant. If you believe the variety of goods doesn't change and grow, we must live on different planets.

Posted by: Martin Brock | Feb 6, 2008 3:28:39 PM

Martin,

"...free resources currently bound up in the Federal planning apparatus."

Works for me. Keeping the money in the private economy most likely would increase median income. But I still don't see any need to restrict how people spend the increase. With more money available, they will spend it, and the investment money will follow the wants, simultaneously making investment itself more attractive to those who prefer to invest.

Posted by: Randy | Feb 6, 2008 3:29:59 PM

I'm not suggesting that we should have carpet-bombed Iraq instead of invading it to save money.

If we were interested in not being cruel we could have stayed home and put the money to another (hopefully private rather than public) use.

Posted by: Eric | Feb 6, 2008 3:40:59 PM

Keeping the money in the private economy most likely would increase median income.

I think so.

But I still don't see any need to restrict how people spend the increase.

I don't think you follow the model of government I advocate. I want wealthy people to replace the Federal regulatory bureaucracy. The replacements are still the government, but their authority is less centralized, and they answer to our votes as consumers and employees and to a lesser extent as jurors hearing tax evasion case. We don't cast these votes for five minutes every two to six years. We cast them every day. That's real democracy.

Wealth is not simply about accumulating entitlement to consume. Only the less wealthy see it this way. The wealthy govern resources. They're lords. That's their job. It's the job they want. The job need not entitle them simply to direct every resource at their disposal toward their personal consumption, and in my of thinking, it should not.

We limit the salaries of Federal bureaucrats and subject them to many regulations for this reason, but I don't want this central planning approach or the type of job security that Federal bureaucrats have. A true market proprietor's job is only as secure as his success at working within the bounds of propriety to satisfy free consumers and employees. Lords are supposed to be servants of common people in this way. That's the theory behind the British monarchy anyway. Sure, the theory is political and self-serving, but that doesn't mean we can't try to reform states in this direction. It's a never ending process.

With more money available, they will spend it, and the investment money will follow the wants, simultaneously making investment itself more attractive to those who prefer to invest.

Right. Under a progressive consumption tax, they won't invest in castle building. They'll invest more in other things. It has happened, and it can happen again.

Posted by: Martin Brock | Feb 6, 2008 6:25:00 PM

"I want wealthy people to replace the Federal regulatory bureaucracy..."

Well, we do have a few philosophical differences, but what I hear from the above is, you want to replace a government that forces people to buy things they don't want, with a government that forces people to make things that other people don't want so the people will still be forced to buy things that they don't want. I don't see the point. Get the government out of the way and let the market do what it does best. Give the people back their money and the market will create a million and one ways to try to earn a piece of it.

"...they won't invest in castle building..."

They will... but if there are profitable investments to be made they will do that as well.

Posted by: Randy | Feb 6, 2008 6:59:01 PM

... you want to replace a government that forces people to buy things they don't want, with a government that forces people to make things that other people don't want ...

No. I never anywhere suggest that anyone make anything that other people don't want. That's you.

... so the people will still be forced to buy things that they don't want.

No one is forced to buy anything. You're making it up.

I don't see the point.

You make the point. It's your point.

Get the government out of the way and let the market do what it does best.

That's what I propose. Plus lords of the means of production may not build themselves castles. The difference between what you propose and what I propose is a prohibition on private castle building and other organization of vast resources for the exclusive consumption of a few. Other differences are your invention.

You propose what we have now plus more lower taxes on the wealthy without the prohibition on castle building. We have plenty of historical precedent for the effect of this reform. It's called the nineteenth century. Then we had the twentieth century. I don't want the nineteenth or the twentieth century.

Posted by: Martin Brock | Feb 6, 2008 10:48:09 PM

I propose that if growth in median income is restricted that it is primarily because the political class is forcing people to buy things they don't want. So just make them stop doing that. This doesn't require any new government programs unless you believe that there is a valid reason to be forcing people to buy things they don't want. I don't.

Posted by: Randy | Feb 7, 2008 5:09:17 AM

The political class governs the employment of resources. Median income is restricted, because the political class directs people to make things they can't buy. You assume that without an income tax, there would be no political class at all, but this assumption is nonsense. The state didn't pop into existence in the twentieth century, and median income did rise in the forties and fifties as a matter of historical fact.

Posted by: Martin Brock | Feb 7, 2008 8:01:41 AM

"You assume that without an income tax, there would be no political class at all..."

Without rent collection the political class could not survive, but that isn't to say that we will ever live in a world where somebody doesn't collect the rent. There's not a square foot of the planet that isn't owned by somebody, and they own it by virtue of their ability to collect rent, transfer the rent into power, and utilize the power to protect their property from all challengers. I understand the reality, I just refuse to buy into the propaganda - you know, the stuff about "we the people" and all that. I'm paying rent, therefore I am not an owner - end of story.

The truth is that both your proposal and my objections to it are completely unrealistic. The owners, the political class, act in their own interest, not in the interest of the tenants. They collect rent because they can, and they will always collect as much as they possibly can. Republican democracy, boiled down, is just a great way for the political class to collect more rent.

Posted by: Randy | Feb 7, 2008 8:23:27 AM

Hell, Randy:

". . . they own it by virtue of their ability to collect rent, transfer the rent into power, and utilize the power to protect their property from all challengers."

Would you object to this scenario if some the of 'they' were private property owners?

Posted by: Gil | Feb 7, 2008 8:47:06 AM

Gil,

Not sure I'm seeing your point. Many member of the political class are huge "private" property owners. What's the point of owning a piece of the world if you can't turn a profit on it?

Posted by: Randy | Feb 7, 2008 9:44:58 AM

...just a thought along the lines of the above. I saw Hillary Clinton on the news last night speaking about having invested $5 million of her own money in the campaign. Get it? Invested. Her word, not mine. And you better believe that she expects to see a return on her investment once in office.

Posted by: Randy | Feb 7, 2008 10:31:28 AM

Posted by: Randy

Randy I pretty much agree. The thing that bothers me most is that the money lenders will be effectively bailed out by the Fed giving them more money while the people who received their predatory loans will lose their homes.

We see this over and over and it's also a big reason for wealth accumulation amongst a small fraction of our population.

Posted by: muirgeo | Feb 7, 2008 11:02:01 AM

... I'm paying rent, therefore I am not an owner - end of story.

Agreed.

The truth is that both your proposal and my objections to it are completely unrealistic.

I'm not sure the proposal is unrealistic. We had something like it only half a century ago. Wealthy men presided over enactment of the progressive income tax. Adam Smith advocated it. Respected (and "conservative") politicians, like Sam Nunn and Pete Domenici, advocate a progressive consumption tax today. Warren Buffet advocates it. It's not just about the powerful vs. the little guy. It's about one set of powerful people, the Federal bureaucracy and the state-industrial complex, vs. another set of powerful people.

The Warren Buffets of the world understand that a progressive consumption tax targets their marginal consumption, but they accept the tradeoff, because they want to govern more of their income. Once you have a million dollar mansion, a hundred million dollar castle really doesn't add much to your well being, but the Saddam Husseins of the world will build themselves palaces with golden toilet seats just because they can. J.F.K. will "inspire" us to the moon and back, just because he can, and Dubya will "inspire" us to reshape the middle east in his vainglorious image, just because he can. If they can, they will, and their will is destructive. We pass laws against this sort of thing.

The owners, the political class, act in their own interest, not in the interest of the tenants. They collect rent because they can, and they will always collect as much as they possibly can. Republican democracy, boiled down, is just a great way for the political class to collect more rent.

History really doesn't support this conjecture, but even if it did, I'm not fatalistic enough simply to surrender.

Posted by: Martin Brock | Feb 7, 2008 11:35:12 AM

Would you object to this scenario if some the of 'they' were private property owners?

They are private property owners. Treasury notes, for example, are "private property", and they're also entitlement to tax revenue. Other rents are more local in scope and more competitive, and I prefer these, but they're still rents.

Posted by: Martin Brock | Feb 7, 2008 11:40:30 AM

Martin,

"I'm not sure the proposal is unrealistic. We had something like it only half a century ago. Wealthy men presided over enactment of the progressive income tax."

I think you need to consider the possibility that they chose to end it because it wasn't working that well - more precisely, that lower rates actually did result in higher revenue.

"It's not just about the powerful vs. the little guy. It's about one set of powerful people... vs. another set of powerful people."

Yes and no. It is true that powerful people compete amongst one another, but what they are competing for is a share of the rent that is paid by the little guy.

Posted by: Randy | Feb 7, 2008 11:45:50 AM

Martin:

I suggest you worry about your own life and stop obsessing about the "powerful elite". Considering the amount of time you spend posting here and god knows how many other blog sites, makes me wonder if you're neglecting your job.

Posted by: FreedomLover | Feb 7, 2008 1:36:31 PM

I suggest you worry about your own life and stop obsessing about the "powerful elite". Considering the amount of time you spend posting here and god knows how many other blog sites, makes me wonder if you're neglecting your job.

I don't obsess over the "power elite". That's you. I suggest your worry about your own life and stop obsessing over mine.

Posted by: Martin Brock | Feb 7, 2008 6:25:26 PM

I think you need to consider the possibility that they chose to end it because it wasn't working that well - more precisely, that lower rates actually did result in higher revenue.

If you'll present some evidence to this effect, we can discuss it. We've already seen the evidence that real, median income rose during this period. GDP also grew healthily. Higher revenue is not my goal, so I'm not much concerned with that. Lower revenue is my goal.

If you're saying that the Federal establishment is too powerful and will never surrender the power, that's fine, but I'm not playing our game by this fatalistic rule. And you aren't either when it suits you not to play it this way.

Yes and no. It is true that powerful people compete amongst one another, but what they are competing for is a share of the rent that is paid by the little guy.

Then why bother advocating any tax reform or Social Security reform or monetary reform or any other reform? It's a lost cause anyway. Why not shut down this web site entirely?

Posted by: Martin Brock | Feb 7, 2008 6:33:22 PM

Martin:

Why not shut your mouth already? You've shown yourself to be quite useless and anti-libertarian. Be gone, troll.

Posted by: FreedomLover | Feb 8, 2008 1:11:23 AM

Martin,

"Higher revenue is not my goal, so I'm not much concerned with that. Lower revenue is my goal."

Understood, but my point is that higher revenue is the goal of the political class. Many believe that lower rates can lead to higher revenues - I'm just thinking that the political class believes it too. I have no idea whether they are correct or not. We can expect them to keep tinkering in hopes of achieving higher returns. They might even try your way. Certainly many democrats are still proposing a wide variety of rent increases.

"Then why bother advocating any tax reform or Social Security reform or monetary reform or any other reform?"

In hopes of slowing the rate of rent increases. The boss is seldom moved solely by employee dissatisfaction, but he is usually aware of it, and at a certain level of dissatisfaction is wise to take heed. Beligerent employees can ruin any business.

Posted by: Randy | Feb 8, 2008 8:12:06 AM

Assuming that the middle class is fine, what's the point?

The real point is that the middle class should be great!

With the fabulous productivity increases we have experienced with the industrial revolution, we should be able to have what we currently have with a shorter work week.

Why?

Because of all the wealth that political control of resources has squandered in empire, entitlements, subsidies, etc.

Posted by: Sam Grove | Feb 8, 2008 2:14:37 PM

I'm glad that the video came around to point out that the over spending and over extension of credit by the middle class is way out of control and the squeeze is really a fabrication due to spending too much and paying off too little while those pesky interest rates get the best of your borrowing. I went from making $45k a year in 2006 to $70k a year in 2007 and being in my early thirties realize the importance of not over extending myself, especially with a family to look after. I have ZERO credit debt in credit cards, but do have two vehicles I finance, one is almost done, and a third which is paid off, and then my mortgage which is very affordable because I bought a house on a $45k annual income rather than the $70k income, and this will allow me to expand efficiently.

I think the proper soundbyte is the middle class is sinking not shrinking, sinking in debt from buying waayyy too much crap that they wanted but neglected what they could afford. Everyone wanted to go from living with their parents to living like their parents. My parents were smart enough to let me know there was an interim period of growth to go through before I could live in the comfort they do. So all those folks who feel the squeeze from over extension, I say congratulations on surpassing that interim period but now for the rest of your life, you have to live in that interim growth period except there is no going higher because you already hit that phase, unless you do something very innovative to boost your worth and income.

Posted by: Brian-NJ | Feb 8, 2008 7:33:07 PM

Brian,

The median income of a male in 2005 was $31,000. You were doing considerably better at $45k, and I'd say you've now jumped out of the middle class. How did you do it? What was the innovation? Did you really innovate, or did you change job titles? I'm not trying to diminish you here, just looking for the facts. My income profile is similar to yours, but I'm a bit older and receive a bit more income.

Many people do move up in income throughout life. This fact doesn't address the stagnation of middle income wages at all. The same thing happens in a planned economy if established rules of advancement worked this way. I'm sure the same thing happened in the Soviet Union. I don't see how the fact is relevant.

The question is: why does median income hardly change over decades while GDP doubles and higher percentile incomes reflect this growth? This phenomenon is new. It occurs in recent decades but not earlier decades. Apologists for recent decades don't explain the phenomenon at all. They only obfuscate it.

Williams tells us for example that people starting at the 20th percentile experience substantial taxable income increases over a decade, so they end the decade in a higher percentile. For example, college students stop waiting tables part-time and start writing software full-time. He also tells us that people starting at the first percentile experience taxable income declines over a decade. For example, CEOs retire. People's taxable income typically declines when they retire, but they don't cease to be affluent for this reason. It's just that they've earned income earlier and deferred the consumption.

Roberts takes a different approach by discussing family income when individual income is what has stagnated. Family incomes manage to rise anyway as women enter the workforce. This fact doesn't even imply real income gains by individual women, though I suppose women's income has risen. If a woman enters the paid work force, doing work other than her own childcare and housekeeping, and if she also hires another woman to care for her children and/or keep her house, we monetize labor that wasn't previously monetized, but this increase in "income" is illusory in part. The childcare and housekeeping was already happening. It just wasn't counted as "income".

These phenomena don't account for a stagnating median income at all. It's a completely different issue. Juxtaposing statistics this way is politics, not economic science.

Posted by: Martin Brock | Feb 9, 2008 11:38:53 AM

-"The median income of a male in 2005 was $31,000. You were doing considerably better at $45k, and I'd say you've now jumped out of the middle class. How did you do it? What was the innovation? Did you really innovate, or did you change job titles? I'm not trying to diminish you here, just looking for the facts."-

I stopped smoking pot and watching football and before I knew it...(10) just kidding. By the way the (10) is a sarcasm meter, you guys need one here, (10) being totally sarcastic and (0) being dead serious. Anyway, to answer your question it was a combination of having my first child and all the middle class is shrinking rhetoric. I had my daughter in 2004 when I was 30, at which time I was making 36.4k a year as an apprentice electrician and paying $1k a month in healthcare for myself, wife, and newborn(where were you then Hillary?(6)). I never looked to the state for any assistance in my lifetime and don't know if I was even eligible for some aid making that much, my wife brought in about 32k and our mortgage was $11.4k yrly. The first jump was to 45k by joining a labor union, I was always hesitant to join the IBEW because I never embraced the union culture, and always had dreams of owning my own electrical business. The second jump came when I realized I did not want to compete in the contracting market with my own business, it was full of sharks and feared I would lose my morals as well as my shirt, and the small scale stuff would force me to labor long into my life and not receive the returns worth the beating up of my body.

So, the next jump was by changing careers totally, but somewhat related. I bought Lou Dobbs book 'war on the middle class', I was obsessed with current politics and reading books about Bush and Iraq and Al Queda, living so close to NYC I feared for my family and went on a quest for information. This quest subsequently lead me to Verizon. In the electrical trade I always rubbed up against network guys and was always curious. I am an internet junkie spending more time online than in front of television or reading books. I found out about the new fiber optic network and that they were hiring. It was a job somewhat new for the company, FiOS is a new technology that works off older implementations so there were people who could do it, but the baby boomers were retiring. Having been in a feast and famine, keep your eye on the job culture, I spied this FiOS as being a 'big job'.(in construction the 'big job' always implied safety, you were going to be working there a long time and didn't have to fear the lay off) I took a test, then another test, and got hired at a wage rate equivalent to $64k a year. The rest of the money to equal 70k came from premium hours and overtime.

I suppose the incentive was being the best father and husband. I gather the innovation was haphazard, it was the incentive that led me to the innovation of Verizon and their need for competent skilled technicians on a new technology. (for those unaware of FiOS, it is a service providing fiber optic video, phone, and high speed internet)

I was able to have my wife quit her job and stay home with our daughter and now I am supporting her in one of her dreams, she is opening her own yoga studio in March. Money for that came from cashing out on the house, raising my mortgage from $950 a mth to $1500, which is not too bad and the house is worth it. It was a fixer upper that I spent the last five years beautifying in a wonderful neighborhood.

Sorry for the long response but hey, who doesn't like talking about themselves. Where did you get the median income figures from out of curiosity?

Posted by: Brian-NJ | Feb 10, 2008 12:03:39 AM

Sorry but I wanted to add something. I remember hearing the median income for the state of New Jersey in 2007 was 65k and nationally was averaged at about 45k, I heard the figures on NPR.

When we hear the middle class is shrinking, who is the middle class? Now that I think about it Drew Carey didn't clarify that nor did Lou Dobbs. However, in defense of Lou Dobbs and his "war" what that rhetoric does to guys like me is scare the devil out of us into finding good jobs. By good jobs I mean ones that pay better, offer great benefits and medical, and rescue me from beating up my body. While there are the guys who you see in the trucks and ladders outside, they beat themselves up, but not so much(sleeping in their trucks) I have the benefit of working inside with next generation networking equipment, no tool belt, no ladders, no cold. While I might not agree that the scare the devil out of you news media is the ethical approach, it certainly can produce results.

In complaint to Lou Dobbs and his book, he made me want to hate rich people and immigrants. For a little while it worked, but it was not intuitive to my personality. I don't want to hate Ivan Seidenberg (Verizon CEO)for working hard to get where he is, having a bonus so large for the things he may have implemented for that bonus to be possible, while affording me a wage far beyond what I came in expecting. Do some CEO's cheat and steal? Sure, but so do some of my co workers, I've witnessed guys take home company tools and what not, how is it different?

Immigrants, why the insanity? It is nothing new, here is a quote from 1775:
"It is pleasant to observe by what regular gradations we surmount the force of local prejudices, as we enlarge our aquaintance with the World."
The author Thomas Paine from an American masterpiece 'Common Sense'. Here is a guy saying here is what America is about, freedom, acceptance, and the free trade of ideas, all of which are oppressed from the likes of a King.

I mean not to digress in such a rant but it is all relative. The middle class rhetoric is manufactured nonsense to secure votes for a charlatan republican party making no attempt at persuing the true mission statement of the party. Must we continue to resurface the argument between Socrates and Thrasymachus?

Posted by: Brian-NJ | Feb 10, 2008 12:51:23 AM

Brian,

The $31,000 figure is the median income of an individual male. The figure is here:

http://www.census.gov/hhes/www/income/histinc/p02.html

Your figure is a household or family income figure. These figures are here:

http://www.census.gov/hhes/www/income/histinc/f07ar.html

As today's blog post illustrates (and as I note myself above), "income" can be a misleading figure, because retirees and others confuse the situation.

But something has changed, and the typical "analysis" at this web site doesn't address the change. Look at the median income figure for an individual male. It hardly changes over the last 35 years, since 1973. In the 25 years preceding 1973, the figure doubles. Real GDP more than doubled over the last 35 years, and incomes at higher percentiles reflect this increase.

Posted by: Martin Brock | Feb 10, 2008 11:26:08 AM

Do some CEO's cheat and steal? Sure, but so do some of my co workers, I've witnessed guys take home company tools and what not, how is it different?

CEO compensation has grown explosively in recent decades, and your coworkers' compensation hasn't.

http://money.cnn.com/2005/08/26/news/economy/ceo_pay/

Posted by: Martin Brock | Feb 10, 2008 11:36:46 AM

I feel that Drew Carey makes some interesting points. The point i never took into consideration is how the quality of life has improved. Cell phones, cars, travel by planes have all become a regular part of life; where as it was a luxury 20, 50, 100 years ago. However, one would hope that the quality of life would of improved 100 years later.
One thing though that the video forgot to mention was how long it took the boat owners to save up and buy a boat, or if they had to take out a loan, or how much dept they are in, or if they have kids or married.
Where I live, the people are called, “$30,000 a year millionaires;” because everyone around here buys all the nice expensive things, but on a salary that is considered middle class. So if a person is up to their eyeballs in dept, and works a 60 hours work week, or has two jobs is that really improving the quality of life? Having all that nice stuff isn’t that great if you never get to use it, because you are working all the time.
It is nice that cell phones, cars, and plane tickets are affordable for the “average Joe,” but a lot of people do not buy those things in their means. Like the gardener, he has a $50,000 boat and a hummer, how is that in the means of his salary?
I feel the clip was right in saying that the media does hype up situations, and makes things way worse then they are, but I also feel that many people live way out of their means and the clip forgot to mention all the dept and loans people have to pay.

Posted by: Morgan | Feb 19, 2008 12:53:23 AM