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REBUILDING THE MIDDLE CLASS

Posted by Tim Bryce on July 11, 2012

– Two distinctly different approaches for putting the country back to work.

(Click for AUDIO VERSION)
To use this segment in a Radio broadcast or Podcast, send TIM a request.

There is a tendency in this country to label people in accordance with their political beliefs. Although we still say “Democrat” and “Republican,” we’re more inclined to say “Left” and “Right,” or “Liberal” and “Conservative.” Not too many people proudly proclaim themselves as a “moderate” or “independent” anymore. I have found those who call themselves such are actually closet liberals. And “progressives” fool nobody but themselves as “arch-liberals.” Nonetheless, I find such labels distasteful and only clouds the issue at hand. In the end though, we use such monikers to express how fervently we believe in our principles. I’ve often been accused of being a conservative in such a way as to malign my character; that being a conservative is a bad thing. Actually, I tend to identify myself more as a Capitalist as opposed to anything else, and, as such, possess a deep distrust of Socialism and Communism. To my way of thinking, the individual has the freedom to try and better his/her station in life. Hopefully they will succeed but there are no guarantees and the risks can be great, but I have seen Capitalism succeed more times than it has failed and has proven itself to be the lynchpin of American growth throughout our history.

Regardless of your classification, everyone is cognizant this next election cycle is about rebuilding the economy and getting the country back to work. Ultimately, it is about rebuilding the middle class and there are two distinctly different visions being offered as to how this should be accomplished. First, understand that the American middle class is the economic engine not only for the United States but most of the world. Until a few years ago, it enjoyed a high standard of living not simply because it could spend more, but because it could earn more than most of the world. Outsourcing jobs overseas and the recession though changed all of this. According to a recent study by the Fed, the median family net worth dropped a staggering 40%(1). Suddenly, the middle class realized they couldn’t earn as much as before and, consequently, couldn’t spend as much, thereby affecting their standard of living. Life as they knew it changed; they could no longer afford to send their offspring off to college, retirement plans had to be put on hold, and in general they had to make do with less. Most learned to tread water for the first time, lucky to have a job and a roof over their heads, surviving paycheck-to-paycheck. Others were not as fortunate and home foreclosures and bankruptcies soared.

To solve the problem, the left wants to offer the middle class more stimulus money, and more unemployment benefits such as food stamps, all of which requires more massive government programs and control. To pay for this, taxes are to be raised and regulations tightened on business. In reality, American business is already paying the highest tax rate in the world (in excess of 39%) and increased regulations are still scaring jobs offshore. This approach may give the middle class money to spend but does nothing in terms of enhancing the earnings of workers. Entitlements also have the tendency of creating dependencies and discourages the incentive to work. In a nutshell, entitlements are supplanting the concept of earnings which is a dangerous development, both psychologically and economically.

On the other hand, the right wants to solve the problem by expanding the middle class’s earning potential by putting them back to work, not on unemployment. By having more money, they will be able to resume the standard of living they are familiar with and spend accordingly. It will also have psychological benefits as opposed to creating a society of government dependents. To do so, they propose lifting the government regulations that stifle business and encourages the deportation of jobs overseas. They also wish to lower the tax rate thereby stimulating job growth by allowing companies to invest at home. This, of course, will result in a smaller government.

Both sides, left and right, understand the need for a middle class, but they cannot agree on how to cultivate it and herein lies the ideological rift polarizing the country. Whereas the left wants to enslave it through massive government and more regulations on business, the right wants to free it through less government and less regulations. So far, history is on the right’s side. Only by freeing business can you rebuild the middle class. Somehow, I am reminded of the old expression, “The business of America is business.” Government does not create business (or jobs for that matter). Instead, it should plow the way to allow business to flourish. By encouraging business, the government helps its citizens earn more, thereby causing the middle class to grow.

As I said, it’s not really about Democrats versus Republicans, left versus right, or liberals versus conservatives. In reality, it is about socialism versus capitalism. And as any confirmed capitalist will tell you, don’t give the middle class more entitlements, give them jobs, and the economy will take care of itself. Give them a purpose in life, not an addiction.

Keep the Faith!

Note: All trademarks both marked and unmarked belong to their respective companies.

Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

For Tim’s columns, see:
timbryce.com

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Copyright © 2012 by Tim Bryce. All rights reserved.


NEXT UP: 
FRIDAY THE 13TH – Why some people are afraid of it, while others love it.

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8 Responses to “REBUILDING THE MIDDLE CLASS”

  1. Tim Bryce said

    An F.M. of Texas wrote….

    “Excellent!!! I would like to reprint this on The Lexington Libertarian.”

    Like

  2. Tim Bryce said

    A G.L. of Tampa, Florida wrote…

    “Wow., awesome, you certainly hit the nail right on the head on this one!!!!!!!!!!Hopefully America will wake up while there is still time.”

    Like

  3. Tim Bryce said

    A K.B. of New York City wrote…

    “Nice job on this one – I agree completely..”

    Like

  4. Tim Bryce said

    A J.R. of Michigan wrote…

    “That quote: “The business of America is business.” is from a quiet president from my home state, Calvin Coolidge.”

    Like

  5. Tim Bryce said

    A B.H. of Boulder, Colorado wrote…

    “Not too many people proudly proclaim themselves as a “moderate” or “independent” anymore.

    I am now, and have always been (mostly because of my military service background) been an “independent” voter. While I TEND to see things more in line with republicans, there are a few issues on which I simply cannot agree with the mantra of the evangelical Christian segment that seems to dominate the party. On the other hand, I don’t buy into the largess of the democratic party either. Sometimes, I simply wish that on the ballot we had an option to vote for “go back and try again” or “none of the above”.

    I have found those who call themselves such are actually closet liberals.

    When I was about to get married (at 20) back in 1967, my father took me aside and gave me a piece of advice on how to make a marriage work. He said people THINK and SAY that marriage is a 50-50 proposition, but it’s really not. It’s more like 75-25. Both sides give 75 and take 25. I told him that didn’t add up, and he shook his head and simply said “I know, but that’s the way it works.” Many years later (before my wife died) I understood what he meant. Both sides THINK and BELIEVE they are giving 75 and taking only 25 – and thus believe they are contributing more than a fair share to make the marriage work. BUT, they are both really contributing closer to 50-50 – it’s a PERCEPTION thing…not a reality thing. I think it’s pretty much the same with politics. Both sides SAY they are moderate and willing to compromise, but what is moderate to one side is extreme to the other…and these people have no vested interest in real compromise to make their marriage work…they figure they can outlast the other side.

    As I said, it’s not really about Democrats versus Republicans, left versus right, or liberals versus conservatives. In reality, it is about socialism versus capitalism. And as any confirmed capitalist will tell you, don’t give the middle class more entitlements, give them jobs, and the economy will take care of itself. Give them a purpose in life, not an addiction.

    Brings to mind the old adage, “give a man a fish and you feed him for a day; teach him how to fish and you feed him for life.””

    Like

  6. Tim Bryce said

    A J.D. of Tampa, Fl;orida wrote…

    “Labels” are simply a starting point for understanding a person’s point of view. If someone proclaims themselves a liberal, I will know where they stand on many issues. The problem, though, is that very few people are “purist” in their labels. That’s where it gets confusing. I’m a libertarian. I like the label – but I’m not a hard “L” libertarian. I disagree with a few issues. Likewise, Many people might be fiscally conservative but socially liberal, or the other way around.

    The labels I have a problem with, ironically, are the class labels. This may be the same problem you have with other labels: they tend to pigeon-hole people into categories that we see as fixed and unchanging, when in reality, it’s all fluid. Ideas can change. Positions can change. Most importantly, class mobility can change. Everyone should see America as place to move up in class, throughout your life.

    There will always be a group of people who, by definition, are in the middle. But complacency with that position is antithetical to growth and improvement. THAT’s the mindset, I think, that keeps poor people poor, the middle class from creating wealth and moving up. People see “the evil rich” as a roadblock to their mobility, instead of looking within to improve their own condition and position. When people begin to realize that starting today they could work to be higher in status, that’s when we’ll recover.

    Like

  7. Tim Bryce said

    An A.V. of Melbourne, Florida wrote…

    “Love that simple block diagram! … It simply points out to the obvious solution! … The last couple of paragraphs points to the solution: “Only by freeing business can you rebuild the middle class. Somehow, I am reminded of the old expression, “The business of America is business.” Government does not create business (or jobs for that matter). Instead, it should plow the way to allow business to flourish. By encouraging business, the government helps its citizens earn more, thereby causing the middle class to grow…. don’t give the middle class more entitlements, give them jobs, and the economy will take care of itself. Give them a purpose in life, not an addiction.” “

    Like

  8. Tim Bryce said

    A J.P. of Toronto, Ontario wrote…

    “I seem to recall a time, when other classes were identified. Firstly, the “wealthy class.” This would include successful professional people, prosperous medium or small business owners, and so on. Above that was the “truly rich,” which needs no further description. Below the “wealthy class” was something called “the white collar class.” These people wore, if male, a white shirt and tie with a jacket or suit to work. Mid-level or junior managers, teachers, police officers, and so on. My father, a traveling salesman of industrial chemicals wore a white shirt and tie to work, so he was a “white collar” worker. The next group where what we called “blue collar” workers. These people did not wear a tie, usually, and wore open neck shirts of different colours. The skilled trades, the worker on the assembly line in a factory, the owner of the local hardware store – these were “blue collar workers.” Below that were the “working poor,” and finally the unemployed or “welfare class.”

    It seems to me in recent discussions of the American economy the concept of the “blue collar worker” has, somehow, gotten all mixed up with the “white collar worker.” Are these not too different categories that need to be maintained?

    It could get socially complex as well. In that great series, All in the Family, Archie Bunker was clearly the epitome of the classic “blue collar worker.” It was not just how much money he did or did not have, but his whole education, interests, values and personality. If Bunker had won some fantastic lottery and suddenly become a billionaire, he would still not “fit” at a garden party given by the Kennedys of Hyannisport, for example. His son-in-law, Mike, was more than a classic sixties “liberal,” although he was that. He also represented a person who, in full maturity, would become at least a fully “white collar” worker, a whole different economic and social class than Archie, no matter his political beliefs.

    I think the real problem is with the decline of the blue collar worker on assembly line or in sales or in marketing and so on. The “American working man,” another label for blue collar, was indeed among the best paid and best living of working men in the same kinds of jobs anywhere on this planet. That seems to be what has been lost. Heaven knows, the USA seems to have enough lawyers, communications specialists, politicians, bureacrats and soldiers of one kind or another. I also think evolving technology has a lot to do with this. Recently, Ford built a big new factory in I think Brazil. Everyone screamed, ” A-ha! Exporting American jobs overseas, eh!” In fact, the new plant in Brazil was almost entirely automated. Sophisticated robots, managed by small teams of computer engineers in white gowns, did everything, almost. The assembled car was not touched by human hands, it seemed, until a driver got in at the very end and drove it off the assembly line! Sorry, Archie Bunker or William Bendix in “the Life or Riley,” but no machinists, pattern makers, riveters or fitters required. Not a screwdriver, hammer or human-hand device in the whole place…no matter where it is actually located.

    The problem, in a post industrial society, become what to do with or about those vast numbers of ordinary people or ordinary abilities. Many cannot “move up” to highly skilled technical or managerial roles. Many slowly sink into working poor levels, or even the welfare class. They are not a small group. In the past, the vast assembly lines, where thousands worked three shifts in giant factories and took home good wages to solid, “blue collar homes” solved the problem in the era of the mature, industrial, smokestack economy. Alas, the world has changed in this respect.”

    Like

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