The Systemic Train Wreck of the American Middle Class

George Rebane

“The truth is that we don’t know how to fix the US labor market – we are in uncharted territory,” says Peter Orszag, Mr Obama’s former budget director, now a vice-chairman of Citi. “It would help to spend more on retraining and on infrastructure and to have a more rational immigration system. But these wouldn’t fundamentally transform the situation for the middle class ... It is not yet clear what, if anything, could.”

This is how Edward Luce concludes ‘Can America regain most dynamic labour market mantle?’ in the 11dec11 Financial Times.  The article itself presents an excellent analysis of the systemic problems in the American workforce which have long been delineated in these pages (to a blizzard of reproach and denial from our Leftwing readers).

While President Obama and his liberal congressional cadres are out there demagogging the decline of the middle class as the fault of capitalism and the Republicans, the inescapable facts point to much deeper and more serious reasons why our middle class workforce is in irreversible decline.  None of it, of course, will make a dent in the herd of voters who are convinced that it is the system that is working against their right to sell for ‘fair wages’ whatever marginal or worthless skills they have left in their kit.  Such is the sum and stuff of populism.  But in a deeper sense they are right – it is ‘the system’ of 21st century Earth that is definitely against them.

And as Orzag eerily echoes the 1939 lament to Congress of FDR’s SecTreas Morgenthau (“… we simply don’t know what to do.”), no one has a plan to reverse this fundamental trend - it is not certain that such a plan even exists.  And by that I mean that neither the Republicans nor Democrats have put anything on the table, or discussed in their vaunted think-tank journals anything that softens the inevitable impact of advancing technology and a competitive global workforce on the expanded panoply of ‘rights’ on which the American worker has come to believe he has a perpetual draw.

Before the developed western countries do stabilize in some new competitive arrangement within the global economy, then to the extent that each of us got into socialized hock there will be hell to pay.  But then you already knew that, didn't you?

Comments

[Russ Steele]

It is interesting that the government agencies that have no clue how to fix the problem are the very organizations the people fear the most. According to the latest Gallop Poll:

Americans' concerns about the threat of big government continue to dwarf those about big business and big labor, and by an even larger margin now than in March 2009. The 64% of Americans who say big government will be the biggest threat to the country is just one percentage point shy of the record high, while the 26% who say big business is down from the 32% recorded during the recession. Relatively few name big labor as the greatest threat.

I was surprised by the low union ranking in the poll, the fear of big labor is at a historic low, yet public sector union are responsible for much of the economic misery being experienced by state, county and city government. In CA they are the big gorilla in the room when it comes to political and economic reform.

More details HERE, including some graphics.

[Todd Juvinall]

We invent things and then to put them together the "thing" is sent to a lower wage place to be put together. That is the reality of the planet and America's middle class cannot compete. Labor is treated very differently in other places and we even see China shipping stuff to be put together to Bangladesh and Vietnam. Money is like water and will seek its own level. We have passed too many laws and too many regulations on our people to remain competitive. So how do we fix it? We have to do what that great "middle of the road" Republican said back in 2003 while running for Governor here. We need to blow up the boxes and start over with these intrusions of government into every aspect of our lives.

I have always chafed at the government demanding under threat of jail that every employer become their tax collector. If we got rid of that one thing and made people individually responsible to pay their own taxes we would see an overnight change in how Americans think about government and freedom from its clutches.

[George Rebane]

RussS 728am - I think the reason unions have yet to be feared more is that their share of the workforce is small. The Left has successfully deflected and denied the outsized impact that public service unions have on government debt, unfunded liabilities, and efficiency of services. Also, the impact of unions on big business is hidden - e.g. the rapid decline of manufacturing, especially automotive, was greatly aided by unions.

[bill tozer]

Seems the middle class is taking on a new direction. In my father's day, a cop or tv repair man could buy a house and support a family with mom staying @ home with the kids. In my young adulthood, a fellow could buy a house, raise a family, and mom would have a part time job. Now, a fellow can buy a house, raise a family and see his wife if they both get off work at the same time. My kid got all excited that the world was going to hell in a hand basket recently. I told her than even in the Great Depression, 3 out of 4 people had jobs. Her Grandpa must have thought the end times were here when just about every country in the world was at war. Now, 76 out of every 100 people are working, give or take. But, unless one gets a skill, she will have to live a life of dead end jobs and roommates to help with the rent. Manufacturing is contracting, even through the average American worker's output is 3 times that of the Chinese worker. This is America and we will always have the winners and losers. I remember 30 or so years ago when the talk was all about forgiving Africa and South America's debt and the libs trying to shame us for being so wealthy and we need to lift the standard of living in the 3rd World countries. They did not realize that by lifting the standard of living in poor/undeveloped countries, our standard of living would decrease. Wish I bought more stock in Wriggly chewing gum. In India, chewing gum is a sign of wealth and Wrigglys is selling like gang busters there. My tv remote is made in Vietnam of all places. Don't think any remotes are American made anymore. I see the middle class going the way of the VCR. Some will upgrade and buy DVD players, while others will use duct tape to keep their VCRs going. Winners and Losers. Ball is in our youth's court.

[Douglas Keachie]

"A" student or the instructor of a german ROP heavy equipment class. Ever see a 32,000 lbs excavator do a head stand? Shamelessly borrowed from somebody at Towntalk, where he posted it it for DM entertainment, but Walt and others may enjoy it too. I think they left out where they put pins in place to secure the bucket, but maybe it is indeed a "free climb."

http://www.youtube.com/watch_popup?v=RobaJKGMMiE

[bill tozer]

A fool and his money are quickly parted. Think that saying is about 3500 years old. More on the current thread concerning public sector workers, it is interesting that those drawing guaranteed 6 figures yearly pensions for life see no problem with the current system. Blame Wall St and blame the private sector for failing to put down more track under the runaway train. http://www.startribune.com/local/135374348.html

[George Rebane]

BillT 554pm - "Blame Wall St and blame the private sector for failing to put down more track under the runaway train." You are a silver tongued devil indeed Sir William - bravo!