Treasury: Income Mobility Substantial. Pew: But Not Enough.

November 13, 2007 8:22 PM

A new U.S. Treasury Report (press release) reports that tax returns from 1996 to 2005 show that income mobility in the U.S. is "considerable," with rising earnings, and top earners who often stumble. The WSJ crows. Pew releases its own research (reports, press release) on income inequality today with a multi-decade outlook, but summarizes the findings as that American families' income mobility is still highly dependent on their parents' position. Forbes and a The New Republic blog try to reconcile the reports. Meanwhile, blacks appear to be downwardly mobile.
posted by shivohum (45 comments total)

MeFi: Class mobility within America
posted by Blazecock Pileon at 8:25 PM on November 13, 2007 [1 favorite]

There was an interesting piece on NPR this morning regarding "downward mobility," which covered the same ground as the WSJ piece (last link). My take is that it's basically due to the demise of the manufacturing sector and its associated blue-collar jobs. Since minorities were heavily invested in blue-collar manufacturing, it makes sense that their incomes would have taken a major hit when that entire sector all but disappeared.

I'm as much at a loss for a solution as anyone else, at this point. I think it's probably too late to rebuild the manufacturing industry; we're too addicted to cheap Chinese stuff to ever go back to buying our consumer goods from firms that pay employees a First World middle-class wage.

To be frank, I'm not really sure where we go as a nation from here. The central tenet of free trade is "comparative advantage," or the idea that business goes to whomever does it most cheaply. But one thing I don't hear any reassurances on is exactly what the United States has a comparative advantage in producing. (Besides lawyers.)

The current economic malaise is a symptom of a deeper problem, which basically comes down to the hole we've been digging ourselves into for a few decades now. I question whether it's even possible to climb out.
posted by Kadin2048 at 8:41 PM on November 13, 2007 [2 favorites]

To be frank, I'm not really sure where we go as a nation from here.

Down.
posted by Avenger at 8:46 PM on November 13, 2007 [2 favorites]

But one thing I don't hear any reassurances on is exactly what the United States has a comparative advantage in producing.

T-bills.
posted by pompomtom at 8:50 PM on November 13, 2007 [2 favorites]

But one thing I don't hear any reassurances on is exactly what the United States has a comparative advantage in producing. (Besides lawyers.)

What's wrong with having more people in the service/professional industry? Otherwise, it'd suck real hard if CNC lathes became as cheap as laptops and free for use in libraries in 30 years.
posted by amuseDetachment at 9:11 PM on November 13, 2007

Otherwise, it'd suck real hard if CNC lathes became as cheap as laptops and free for use in libraries in 30 years.

Speak for yourself.
I could make TONS of rad stuff if I had free lathe access.
posted by Senor Cardgage at 9:21 PM on November 13, 2007

we're too addicted to cheap Chinese stuff to ever go back to buying our consumer goods from firms that pay employees a First World middle-class wage.

A simple solution, in my mind, would just be to charge higher taxes to people who make all the money off of outsourcing, and then use that money to subsidize people who have lost their jobs. Trying to fight economics is just going to cause inefficiency and waste.

It seems like there are a lot of ways to fix this, but America has an obsession with "welfare" being bad that other modern countries do not. It's like if you're not working your a bad person even if we don't really have anything for you to do.

But one thing I don't hear any reassurances on is exactly what the United States has a comparative advantage in producing.

Military equipment.
posted by delmoi at 9:25 PM on November 13, 2007 [2 favorites]

Heeeeeeere comes isolationism.
posted by Bighappyfunhouse at 9:25 PM on November 13, 2007

What's wrong with having more people in the service/professional industry?

Nothing, except that services tend not to be exported; so the "service industry" tends to just be an internal market. If everyone in this country is working in the service industry, selling their services to each other, while simultaneously importing tons and tons of hardgoods (and oil, and computers...) from abroad, I don't see how it can possibly be sustainable in the long run. It seems too much like economic masturbation.

Furthermore, even if technology creates new ways of exporting services, there's no real reason why we here in the U.S. are going to be better at doing it than, say, the Chinese, Indians, Brazilians, or anyone else; in fact, it's probably easier for another country to compete in an 'exportable service' sector than in manufacturing, because of the lower capital investment. And their per-employee costs are a lot lower.

If I'm missing something critical here that's going to keep the party going for a few more generations, I'm all ears, but I'm just not seeing it.
posted by Kadin2048 at 10:00 PM on November 13, 2007 [3 favorites]

Who is the commissar of the treasury these days and did he require them to include a statement that explained that "market forces" are just a theory?
posted by Kid Charlemagne at 10:16 PM on November 13, 2007

If I'm missing something critical here that's going to keep the party going for a few more generations, I'm all ears, but I'm just not seeing it.

Well, if you ask the current Federal Reserve Chairman, all we need to do is print more money to pay off our ever increasing debt ... then we can keep buying all those groovy poison-laced toys and Plasma TV's from China in perpetuity.

Unless, of course, something happens in one of our debtor countries (or maybe they just get uppity and want some Plasma TV's of their own) which causes them to call in some of our cash, while they refuse to take payment in our worthless Monopoly money.

At that point, a man from the Government will go around to houses in the US and forcibly extract the gold from your jaw so it can be melted into ingots and shipped to China.

Unfortunately, I'm only slightly exaggerating.
posted by Avenger at 10:51 PM on November 13, 2007

Krugman did a nice rebuttal to this.

Basically, the WSJ used bad math.
posted by Tacos Are Pretty Great at 10:52 PM on November 13, 2007

we're too addicted to cheap Chinese stuff to ever go back to buying our consumer goods from firms that pay employees a First World middle-class wage.

There's a market for more expensive organic foods, purchased by people who care more about their family's health than their cash-on-hand. There is a growing trend in the toy market along the same lines (witness Melissa and Doug products) and so opportunity exists there, at least.
posted by davejay at 11:13 PM on November 13, 2007

If everyone in this country is working in the service industry, selling their services to each other, while simultaneously importing tons and tons of hardgoods (and oil, and computers...) from abroad, I don't see how it can possibly be sustainable in the long run.

I agree wholeheartedly, but that's not really the status quo. The US is exporting a whole lot of non-manufacturing stuff, such as media and legal/financial expertise, and while we have our own opinions on it (like the ridiculousness of current copyright law), it's not going away anytime soon. What's the difference between China selling the US televisions and the US selling china business expertise (or the content on the TV) in terms of daily survival? The only real difference is the TV uses raw materials.

No doubt about it, the future is about raw materials -- commodities like oil, copper, or even water. The future, however is NOT about manufacturing. Just because manufacturing needs raw materials doesn't mean it's important. The moment China gets developed enough so that they're too expensive for significant manual labor, multi-nationals will just look for African/Latin-American countries that also have soft-dictatorships.

I would be very surprised if one of the biggest change this century isn't the decline of the importance of fiat currency to be replaced by social capital and commodities.

(also, Senor Cardgage, I would very much like one too...)
posted by amuseDetachment at 11:34 PM on November 13, 2007

There was an interesting piece on NPR this morning regarding [black] "downward mobility," which covered the same ground as the WSJ piece (last link). My take is that it's basically due to the demise of the manufacturing sector and its associated blue-collar jobs. Since minorities were heavily invested in blue-collar manufacturing, it makes sense that their incomes would have taken a major hit when that entire sector all but disappeared.

kadin, a group of us were discussing this today and came to the same conclusion (manufacturing jobs).

As for where we go from here for good paying jobs for people without a lot of education, I've heard white coat is the new blue collar. With some fairly simple vocational training, most people can do certain jobs in science labs, and at least in the last decade in the San Francisco Bay Area, labs have been looking to move into formerly industrial space. That, and food production (eg, ClifBar). I'm also kinda into the Apollo Alliance -- there's a lot of work that needs done making the country more sustainable -- but I don't quite know how the funding will work out.
posted by salvia at 12:17 AM on November 14, 2007

But one thing I don't hear any reassurances on is exactly what the United States has a comparative advantage in producing.

delmoi wrote: Military equipment.

And labor: The Pentagon's New Map for War and Peace [TED video] by Thomas Barnett.
posted by cenoxo at 12:48 AM on November 14, 2007

Did the treasury study do any control for lifecycle effects? The bottom quintile in any given year is going to include a bunch of well-educated 25 year-olds just starting out in internships. Ten years later they'll all have well paying jobs, and so appear to be highly upwardly mobile. The reverse would be true for retirees. Comparing mobility conditional on age could be more accurate.
posted by thrako at 12:55 AM on November 14, 2007

Also, in talking about this today, I came across the National Economic Development & Law Center, which is focused on reducing the income and wealth gaps. For the past three years they've hosted "Closing the Racial Wealth Gap" (conference presentations at the bottom).

The Ford Foundation's website also has some interesting links and information about recent grants. Eg, the Ella Baker Center got $100k for their Green-Collar Jobs Campaign "aimed at building community support for environmentally friendly jobs in Oakland" (they're working with the Apollo Alliance in Richmond, I believe).
posted by salvia at 12:58 AM on November 14, 2007

But one thing I don't hear any reassurances on is exactly what the United States has a comparative advantage in producing.

Entertainment. We're still leaders in movies, TV, music, etc. (although with illegal downloads and piracy cutting into long term profitability, we'll have to see about that...)
posted by MythMaker at 1:02 AM on November 14, 2007

Nothing, except that services tend not to be exported....

Surprisingly quite a lot of services - especially the financial and professional sort - are 'exported'. In places like the US, the high-end service sector (for instance, Wall Street) makes an enormous positive contribution to the balance of payments.

That said, it's still not enough to offset the cumulative effects of a population that wants cheap, Chinese-made flatscreen TVs in all five bathrooms - and buys them on credit.
posted by rhymer at 1:08 AM on November 14, 2007

I think clearly we live in a two-tiered income economy. We definitely don't have a layer of solid middle-class manufacturing employment jobs anymore for workers to fall back on when they're looking for work. Manufacturing has simply passed into history in this country, so like England, we've been reduced to being a 'consumer culture'.

There was an interesting series of articles in the WSJ this summer about how important an American Economist, a politically influential college professor, who calls himself 'a 'free-trader right down to his toes' is also bewildered now and wondering about his own advice in the shape it has left this country.

So what you have left is either minimum wage service/dead end jobs, I guess higher paid teaching/sales jobs and high tech Engineering/Computer/Legal work, all of which are steadily being encroached upon by outsourcing. There was another article in the WSJ this year that lamented the fact that todays young people, for the first time in America's history are LESS educated than the previous generation.

A friend of mine, computer programmer who had been unemployed for four years up until recently says he thinks the US is turning into a third-world nation. Or allowing that to happen. It's eerie.
posted by AngryVICTIM at 2:19 AM on November 14, 2007

a population that wants cheap, Chinese-made flatscreen TVs in all five bathrooms - and buys them on credit.

[Quote:]

Mad Magazine summed it up with the statement, “The only reason a great many American families don’t own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments.”

posted by DreamerFi at 3:14 AM on November 14, 2007 [1 favorite]

Does everyone forget, in threads like these, everything they read in other threads about oil production tailing off at the same time worldwide demand rises, which leads at once to higher energy prices and hence rising transportation costs?

The game of selling flatscreens cheaply on the other side of the world from where they were manufactured depends on shipping costs being negligable. When that ceases to be true, game over. Manufacturing locally becomes much more attractive.
posted by jfuller at 4:19 AM on November 14, 2007 [1 favorite]

In places like the US, the high-end service sector (for instance, Wall Street) makes an enormous positive contribution to the balance of payments.

Which is starting to move away -- Dubai, London and Tokyo are becoming the trinity of Finance.

Manufacturing locally becomes much more attractive.

And US policies are making US exports unattractive. The recent Dubai Air Show stands out. With the USD at ~1.47 EUR, Boeing aircraft are stupid cheap compared to Airbus. So, after the show, the order books come out.

What happened? Boeing, 0. Airbus, $50 Million in orders. Never mind the costs -- nobody want to have anything to do with the US, esp. if you'll actually need to travel to the US.
posted by eriko at 5:07 AM on November 14, 2007 [1 favorite]

jfuller writes "When that ceases to be true, game over. "

True enough, but factor in also manufacturing cost. Cheap + Cheap = Less Cheap , but Still Cheap + Still Cheap = Still Cheap
posted by elpapacito at 5:20 AM on November 14, 2007

fuller - that assumes that the cost of shipping becomes higher than the cost of manufacture and shipping in the United States. I agree with you in principle, but so far this hasn't been the case. As it is, if it costs you $.25 to make your widget in China and the shipping costs go up $1, that's still cheaper than the total cost in the US being roughly 5x that plus shipping costs in the US.

We may, at some point, hit that tipping point, but we're still not there yet.

eriko's comments about the aircraft industry isn't exactly true: while Boeing products may be stupid cheap, the sale may not have been due to cost but product differentiation: Airbus may have offered them something in their product that Boeing did not.

And also, when speaking of currency misalignments keep in mind that sometimes this can work to the US advantage: Daimler-Benz and BMW setup manufacturing plants in the US to help hedge against currency swings and Volkswagen will most likely announce a new US plant next spring as a result of the exchange rate.

It's not that we don't manufacture anything in the United States anymore, we just don't manufacture much low-value product (think: plastic crap) here anymore.
posted by tgrundke at 5:31 AM on November 14, 2007

Since minorities were heavily invested in blue-collar manufacturing, it makes sense that their incomes would have taken a major hit when that entire sector all but disappeared.

I really wish people wouldn't bring up this canard. Manufacturing growth hasn't been as strong as the rest of the economy. But it's silly to say that a sector producing USD1.5-2 trillion has disappeared. I'd be quite happy with a trillion or two in the bank myself.

It certainly is true that manufacturing's share of employment has been falling, even if its absolute level hasn't. This is more or less a consequence of increasing productivity and capitalization, and a shift out of low-value-added manufacturing, like minor consumer goods.

At any rate, it's quite possible for manufacturing to be of decreasing importance in the US economy, and for US manufacturing output to remain staggeringly huge.
posted by ROU_Xenophobe at 6:07 AM on November 14, 2007

But one thing I don't hear any reassurances on is exactly what the United States has a comparative advantage in producing.

What you're saying here is "I don't understand what comparative advantage' means." Comparative advantage does not mean "We can make it cheaper here than anywhere else." The comparison in comparative advantage is not between countries, but between goods.

Say that I can make a widget in one hour, and a doodad in two, and that you can make a doodad in one minute, and a widget in two. You are better at making both widgets and doodads than I am. You can make both widgets and doodads more cheaply than I can.

But I still have a comparative advantage in widgets.

Why? Because I can take an hour to make a widget, and trade it to you for a doodad. You get something that would take you two minutes to produce by working for one minute. I get something that would take me two hours to produce by working for one hour.

This is why it is called "comparative advantage" and not "absolute advantage."
posted by ROU_Xenophobe at 6:15 AM on November 14, 2007

What happened? Boeing, 0. Airbus, $50 Million in orders. Never mind the costs -- nobody want to have anything to do with the US, esp. if you'll actually need to travel to the US.

Wouldn't that mean something like "Boeing didn't make any sales, and Airbus sold one or two planes"? I mean, it's not like $50 million buys you a lot of airliner.
posted by ROU_Xenophobe at 6:17 AM on November 14, 2007

davejay: Every Melissa & Doug product we own (and we own many) is made in China...
posted by zeoslap at 6:24 AM on November 14, 2007

Sorry. I'm fighting a cold, and it was early. The order was $50 Billion.

As to product differentiation? Hardly -- other than the A380/747X, A&B basically offer the same line of product. Fleet commonality is a much more likely answer, but two of the buyers fly both A & B, so that's not an issue.
posted by eriko at 6:24 AM on November 14, 2007

Um Eriko... Boeing Reveals Order Blizzard at Dubai Airshow
posted by zeoslap at 6:33 AM on November 14, 2007

I really wish people wouldn't bring up this canard. Manufacturing growth hasn't been as strong as the rest of the economy. But it's silly to say that a sector producing USD1.5-2 trillion has disappeared.

Hmm. That statistic makes me want to look at what is counted as "manufacturing" and how the value of the sector gets counted. Could a bajillion jobs for semi-profitable logging and assembly companies have gotten rolled into a half dozen manufacturing jobs for very-profitable Silicon Valley chips? (Just one idea.)

In my neck of the woods -- the San Francisco Bay Area -- it is certainly true, just ask any city councilmember what's happening to industrial land in their city. Very few of the big manufacturing employers are still around (a few are). So, maybe it's just shifted from one location to another? If those areas that it shifted from are also where minorities live, then it would still help explain the widening income gap.
posted by salvia at 8:06 AM on November 14, 2007

"The central tenet of free trade is "comparative advantage," or the idea that business goes to whomever does it most cheaply. But one thing I don't hear any reassurances on is exactly what the United States has a comparative advantage in producing."

It could be that what is currently being referred to as "free trade" doesn't meet the original definition. At a Brookings Institute symposium in 2004, Paul Craig Roberts offered an interesting analysis (MP3).

Page 8: "And now I'll turn it over to Craig, because I've been told just five minutes each, to go over the theoretical parts of this where Ricardo--the assumptions that Ricardo assumed in his own world may not be true in our 21st century world."
posted by cousincozen at 8:28 AM on November 14, 2007

Well at least the chocolate ration was raised from 7 grams to 4 grams.

You know, I don’t get it. I walked into Abt (electronics store in the Chi burbs, nice fish tank) with enough riding on my hip in cash to buy a very nice plasma screen television. We checked them out and my wife and I looked at each other and simultaneously sort of said “What the hell do we need with a plasma screen t.v.?”
So we got a cheap old-style tube t.v. about the same screen size for a fifth of the price.
Sure, plasma looks better, does it look a few grand better? No.*
The more money you spend for your stuff the less money you have working for you.

*(Of course, that doesn’t apply to intrinsic needs like health - is an organic tomato a few bucks better than HyperGlobalCompuNetCom’s genetically engineered tomacco? Yep.)

But this “standard of living” we’re looking at and the pain of loss we’re anticipating is an illusion. Got a full belly? Clean water and decent food, a roof over your head and heat in the winter and air conditioning in the summer? Congratulations you’re ahead of 90% of the people on Earth. Everything else is gravy. (Plasma t.v.’s are hyper-cherry on top third round of dessert style gravy.)
Oh, no, I can’t drive aimlessly for days on end in America anymore because gas prices are so high. I can’t drive a gigantic overweight monstrosity of a vehicle and pretend I’m an action hero.
(I can’t wait to see Mahindra’s Axe on the streets). Meanwhile the actual pain, like a multimillion dollar hit if (God forbid) your mom gets cancer and you want her to die with some dignity and comfort, goes unnoticed. Income doesn’t equal wealth. We’re a weathy nation, it’s not your take home, it’s the artificial lifestyle.
Reminds me of something Clinton said about giving people ‘jobs.’ (No pun/allusion int’d). I thought at the time, and still think - because the problem has obviously gotten worse - that people need careers, not jobs. If you’ve got a career your salary matters less because you’re not living hand to mouth like you are when you’re working a job.
Just seems like we’re steeped in this illusion of what prosperity is (not that straight take home is a bad indicator, but I’d rather make $35K for 10 years than make $50K one year, nothing the next year, make $40k the next year, and so on and on being uncertain about the future)
posted by Smedleyman at 8:28 AM on November 14, 2007 [1 favorite]

Couple points I noticed (please note I don't how much about economics)

1. business owners are going to do anything to make sure that they can make a product cheaply and sell it expensively. So if they can go to China/third world, make it, import it, and sell it for 5x profit then they are going to do this. The only way I see to combat this is, the market for this crap is US. The government will have to step in and do what is the best for the people for a change and make importing this crap more expensive than just simply making it here.

2. Our population if they want these manufacturing jobs must be willing to accept next to nothing to make this crap. If you really want to make plastic junk here you can't expect a union to make it so you earn 30k a year with health care.

3. The reason no one wants anything American is because of our recent PR. We have President "A monkey could do a better job" and his staff to thank for this one. That retard has made us one of the most hated countries in the world. Not too many people like us. If you think I am wrong go vacation outside the US.

4. Rich people are like money sponges. They will soak up as much as they can hold and only drip a few bucks to the middle class every now and then. Sorry but we have capitalism to blame for this. Well greed plays a big part in this as well. If the government would tax the hell out of the rich and use it for the benefit of the rest of us then maybe the American way of life would greatly improve. Face it the republican way of "give tax breaks to the rich and they'll give raises and benefits to their employees" doesn't work. Rich people from my experiences would rather keep it and not give anything back. So in short tax them to the poor house!

5. Wow what a rant this has become.

6. While we are on the subject, we need to get off the oil dependency. I wish I knew a way around this. It is like charging people for air! However again as long as rich people can make a buck off it, they will hold back any type of evolution to something new, cheaper, and better for humanity in general.

7. Last God I hate rich people..... screwing the world up so they can make a buck!

that is all

Mastercheddaar
posted by Mastercheddaar at 9:05 AM on November 14, 2007

" 7. Last God I hate rich people..... screwing the world up so they can make a buck!"

I don't know. When I meet a really wealthy individual and size them up, more often than not, I sorta feel like an idiot, like, what's my pathetic little malfunction. I could be wealthy like them.
posted by cousincozen at 9:16 AM on November 14, 2007

(replace that period with a question mark)
posted by cousincozen at 9:18 AM on November 14, 2007

Speaking of the manufacutring sector, I remember back in '04 the Bush administration reclassified a slew of jobs - just as "constructing" a burger at a fast food joint - as Manufacturing Sector. Was that ever undone? If not, I'd be very skeptical of any numbers related to US Manufacturing.
posted by absalom at 9:22 AM on November 14, 2007

So, maybe it's just shifted from one location to another?

That's part of it. There has been a substantial relocation of industrial capacity to the union-hating, low-taxing, giveaway-loving South.

Productivity growth and capitalization is also part of it. It takes something like one-fifth the number of worker to generate $1000 in manufacturing that it did in 1950. Watch How It's Made to get a sense of how deeply automated manufacturing is in North America.
posted by ROU_Xenophobe at 9:59 AM on November 14, 2007

“When I meet a really wealthy individual and size them up, more often than not, I sorta feel like an idiot, like, what's my pathetic little malfunction. I could be wealthy like them.”

Yeah, that’s one of those cultural things impressed upon you especially in the U.S. (If you’re so smart, why aren’t you rich?) What your malfunction is, you have a conscience.
I make good money. My wife makes good money. We’re well off, but not really wealthy (the “signs Shaq’s checks” sort of wealthy...hell, we’re not Shaq wealthy either). Pretty much just because we save and carefully invest what we earn without much risk.
Want to be “signs Shaq’s check” wealthy, you have to screw people over, a lot. Obsessively. And take huge perhaps not so legal risks. There’s a slim bit of folks who make it that amount of money on their own (invent something, then invest extremely shrewdly or showbiz equavalent of winning the lottery (Seinfeld) or some such) but for the most part the maxim that behind great wealth is a great crime holds true. You don’t have to do that for a few million. Hell, just work hard, maybe do real estate, etc. You can build a few million or even tens of millions in your life from scratch. (Most people don’t. It’s appallingly hard work and most folks like to notice their kids once in a while)
Half a billion? Nah, gotta screw someone. Or well serve someone screwing someone.And plenty of those folks don’t make it either (the Enron asshats come to mind. Screw some old lady out of her heating oil for the winter and still come up snake eyes, jesus who would want to live that life?)
posted by Smedleyman at 11:17 AM on November 14, 2007 [2 favorites]

To me, there seriously needs to be a re-set in the thinking of corporations in terms of how they view workers/consumers, if we are to have any chance of negotiating around the icebergs of the future US economy.

You cannot continue to exert downward pressure on salaries and pay, cutting benefits, etc. while, at the same time, expecting said workers/consumers to shoulder ever-increasing levels of debt (in the form of healthcare costs, higher education costs, etc) Not to mention the non-stop demand (need?) for consumers to continue buying crap they don't need.

It's a classic cake-and-eat-it scenario. On one hand, business NEEDS consumers to consume. The financial market, despite the crocodile tears about the low level of saving, DEPENDS on people racking-up debt. On the other hand, business seems to be working overtime to lower pay and offload benefit costs to the very same consumers, thus lowering their ability to cope with their increased costs.

Something has to break.
posted by Thorzdad at 11:26 AM on November 14, 2007

Something has to break.

Absolutely right, and eventually it will be capitalism that breaks. It's simply not sustainable indefinitely. Capitalism requires growth; stagnation is death. And the more imbalanced the wealth distribution becomes the more the system becomes a Ponzi scheme heading toward it's conclusion.

America's monstrous middle class has been the secret to our success. It has been an economic engine powerful enough to hide a lot of our weaknesses and keep the house of cards from falling. Why do you think Bush urged citizens to help the war effort by going shopping? Spend, spend, spend. Grow, grow, grow.

The problem is that the powerful and elite in our country believe, or pretend to believe, that our success is the result of some magical free-market system. Nothing could be further from the truth. The middle class arose from workers who were brave enough to rise up, organize, and take their share. Sensible politicians shored them up with legislation that supported and defended their position - legalized unions, usury laws, workplace protections, etc.

Most of that has been severely weakened, if not destroyed. For example, you are much more likely today to be an employee-at-will than a union employee. You are probably shouldering a much larger percentage of your "employer-given" insurance than you were ten years ago. You are probably working more hours, and you are definitely more productive per hour, than you did ten years ago. Do the math = If your pay has risen 10%, but your productivity has risen 20%, who is getting screwed? Not just you; the whole system gets hurt. It concentrates resources where they are least needed and, therefore, least used.

What's good for GM is good for America has never been true.
posted by Benny Andajetz at 4:04 PM on November 14, 2007 [1 favorite]

"Yeah, that’s one of those cultural things impressed upon you especially in the U.S."

Actually, it's more that often times they don't seem that exceptional. At all. Just lots and lots more driven. And it's not that they're exceptionally remorseless and/or mercenary. Money and acquiring money is all they think about. I think most of the time, when people fail to become financially successful and secure, it's mostly their own fault. You and other commenters are making reference to the immensely wealthy, but who cares! The aspect of living in the United States that is most beneficial to a citizen is the availability of relatively cheap (or at least affordable) land. You can make your stake, locate and move to an area where it is affordable to live indefinitely (you know, where a thousandaire can live like a king), and enjoy live.

Of course, if you want to be able to buy a twinkle-toed yuppie coffee on a regular basis, perhaps as you saunter over to the art museum, I guess you could be fucked. I, too, think there's going to be a nasty economic collapse in the US. However, I think it's going to require a triggering event, and to me, that's going to be the consequences of peak oil, which lie in the very near, if not immediate, future.
posted by cousincozen at 7:40 AM on November 15, 2007

FWIW, I've published an op-ed today inspired by this posting that includes additional information. It puts the United States in a global context, comparing income mobility in the U.S. to income mobility in European countries and Canada. The results aren't pretty, but then you could probably guess that from my question on AskMefi.

Apologies if I'm not allowed to make comments linking my own writing--it's thread-related and I thought it would add value to this discussion.
posted by laconic titan at 4:16 AM on November 21, 2007