70's Suburbia

Luke: A certain point of view?
Obi-Wan: Luke, you’re going to find that many of the truths we cling to depend greatly on our own point of view. Anakin was a good friend. When I first met him, your father was already a great pilot. But I was amazed how strongly the Force was with him. I took it upon myself to train him as a Jedi. I thought that I could instruct him just as well as Yoda. I was wrong.

A lot of what is true depends on how we view our selves, others and the world. Our perceptions as it were.  First off, please read CraneStation’s current diary.

There now.  A lot has been said and written about the disappearance of the Middle Class. But just who are the middle class ?

When I grew up my family was considered middle class. As were our milk man and mail man and most doctors and lawyers and low level engineers and police and blue collar factory workers and small businessman and on and on. We drove American made autos and lived in your typical neighborhoods.

The rich were those who were those who were CEOs and bank owners and Wall Street speculators and such.  Over the years, however this has changed but the perceptions and points of view of who is and is not middle class has become obscured.  It does not fit the reality we now have. Even though those I mentioned above still view themselves pretty much the same, the incomes of those in these areas has diverged significantly.

Who do we ourselves consider rich ?  Who middle class ?  I consider now anyone who makes over 150k a year rich but as has been noted a number of times, those in that income bracket do not. Not only that but where one is located has a large amount to do with that as well.

Here in Cleveland my retirement income makes me comfortably middle class but in NYC I would be considered lower middle of lower class. Or in areas of LA or Denver.

The incomes of the so called professionals and white collar workers have gone up markedly sine the 1970s, where as the incomes of the trades and blue collar and civil servants has not but most of these white collar professionals consider themselves middle class. So when THEY speak of middle class, they are referring to themselves and those like them, NOT those under them.

Income gaps.

My perception is that those who make over 150k a year and have stock portfolios to be rich. But they would not. And again in certain areas of the country they would not be viewed as such.   So who is right ?

I guess it depends on your point of view.

Woodbridge Mall – Flicker

There seems to be some disconnect with people in this country concerning their finances. I was raised that if I was low on dough or lost my job or was about to, that prudent thing to do was to watch my finances and spend only on necessities and plan accordingly. Using credit only for emergencies and/or what was necessary to get some other employment. With the current economic condition, this should be considered especially true. But as David Sirota points out, this appears to be lost on a good many in this country.  In fact one would even think that everything is back to normal.

In 1977, two Boeing 747s collided on an airstrip in the Canary Islands. According to accident investigators, those who survived the initial blast in one plane had time to escape before a fire consumed the wreckage. But eyewitnesses reported that many remained in their seat looking perfectly content–as if nothing was wrong.

Not surprisingly, dozens of these dazed victims were burned to death, and the episode became a reminder of the so-called normalcy bias–a cognitive phenomenon whereby many who are faced with imminent disaster instantly convince themselves that everything is normal and that they don’t have to modify their behavior.

Unpleasant as this anecdote is to recount, it exemplifies the psychology at the root of one of America’s most destructive traits: our obsession with materialism and consumerism. To extrapolate the metaphor, if our damaged economy, record-low savings rate and sky-high personal debt levels are that smoldering plane about to explode, then America’s “shop till you drop” normalcy bias may be engineering yet another avoidable tragedy.

The most recent holiday binge exemplified the impending crisis. Despite persistent unemployment, flat wages and higher prices for necessities (food, health care, etc.), America nonetheless went on its usual post-Thanksgiving buying spree.

A glance at new data from the holiday season tells this story. After Black Friday’s now-annual melee of hyper-aggressive shoppers, the Washington Post reported that Christmas saw credit card purchases jump 7 percent over last year. Meanwhile, the Federal Reserve bank reported that consumer borrowing surged to pre-recession levels; Forbes reported that online holiday spending hit a record; and the Los Angeles Times reported that “consumer spending “grew faster than people’s take-home incomes” as households “cut their savings rate (to) support their purchases of cars and other goods and services.”

In the face of such self-destructive behavior, it’s worth asking: Why is overconsumption still the preferred “normal” in America? The flippant answer is that it’s simply hard for shopaholics to break old habits. But while that’s certainly true, it’s not the whole story when enablers are everywhere.

David goes on to point the finger at the media and Washington as the enablers of the shop till you drop syndrome.   He calls it Economic Normalcy Bias.  But I think it’s maybe a bit more than this. Consider the professor who has an income in the mid 6 figure range and says he does not feel rich.   When it turns out that his expenses are way over the top, as Brad DeLong pointed out in his blog.

Which brings me to the point of this little essay.  That far too many people in the country do not know how to handle money. This seems to be especially true with those who make the most.  A good number of those who scream the loudest about government spending themselves spend like a drunken sailor.  It seems to be some sort of fantasy mind set that refuses to see what should be obvious. That their life style is quite often far above their income level and yes the media and government encourages it.

But it also keeps people from seeing that there are a great deal of people who cannot indulge in these fantasies but as Dave Pollard, a colleague of Joe Bageant says in his remembrance,  these same people are as much a prisoner of their economic situation and credit cards as those below them.

Joe laments the fact that both affluent and poor are now being brought up with neither the capacity nor the need for self-recognition — for discovering who they are as individuals. Instead, they are given a ‘menu’ of lifestyles to choose from, each with its own defining brand names and ensembles. “Adult yokels and urban sophisticates can choose from a preselected array of possible selves based solely on what they like to eat, see, wear, hear and drive.” None of us can, any longer, “make up his or her identity from scratch.” The upper-middle and affluent suburban “catering classes”, those who support the corporatist centre (orange band in my chart above), are more to blame for its excesses than the working class because the catering classes at least have the education and power to see and resist it. When I published this chart a couple of years ago, it never occurred to me, in my liberal affluent comfort, that many or most of those living on the Edge are not at all able to see the centre for what it is, or to have any inkling that they need to pull further away from it, not aspire to become part of it.

We are all, Joe argues, prisoners of this corporatist political and economic system, caught, more or less, in its web. “America’s much-ballyhood liberty is largely fictional. Three million of us are [in prisons or on parole]…The rest of us are captives of credit, our jobs, our need for health insurance, or our ceaseless quest for a decent retirement fund.”  What’s worse, “You never know you are in prison until you try the door”. And America’s working class in particular has been so systematically dumbed down that they can’t even see the door.

And those at the top refuse to acknowledge that there even is door or that it is locked. As Joe himself states in his last book, those in the upper crust are aware – at least subconsciously – that they too could be on their way down as well.

But back in 2000, before the American economic implosion, middle-class people of both stripes could still have confidence in their 401(k)s and retirement stock portfolios, with no small thanks to the cheap labor costs provided by the rabble out there. And they could take comfort in the knowledge that millions of other middle-class folks just like themselves were keeping the gears of American finance well oiled and humming. Our economy had become fat through financialisation. Who needed manufacturing? We were now a post-industrial nation of investors, a ‘transactional economy’. Dirty work was for  well  Asians. In this much-ballyhooed ‘sweat-free economy’, the white underclass swelled with every injection mold and drill press shipped across the Pacific.

Ten years later, with the US economy as skinny as the running gears of a praying mantis, the middle class — what’s left of it now — is having doubts about its traditional class security. Every day it gets a bit harder not to notice some fifty or sixty million people scratching around for any kind of a job, or working more hours than ever in a sweating, white-knuckled effort to hang onto the jobs they do have. With credit cards melting down and middle-class jobs evaporating, there is the distinct possibility of them slipping into the classes below them.

But they really do not want to believe it. After all there can’t possibly be a white underclass, that’s for blacks and latinos and asians and native Americans.  Besides it’s their own damn fault. (etc.) and the media and Madison Av. and Washington keeps telling them that the situation is under control and they can go on like nothing has happened.  Supporting the two “Official Parties” and back to their obsessive consumerism and materialism.  And they believe it because to do otherwise would would be too upsetting to their little world. So they blame taxes and the poor for being irresponsible and refuse to look at their own house.

That is of course except the college graduates who are flipping burgers at the fast food joint, greeting the under class at Walmart and Kmart and working for yard maintenance companies all the while wondering how they will pay their college loans. The loans they were conned into taking out with the promise of a great job and great pay. They might have a different view. Maybe.