How the Bubble Destroyed the Middle Class
finance.yahoo.com
finance.yahoo.com
When the middle-class in America was booming, you would have had to be crazy to leave America. Good job. Nice car. Family and a house? You're set! Why leave?
Another way of viewing what has happened in the US over the past 20 years or so, is that the US middle-class is falling back to earth. Now the average middle-class family in America could move to just about anywhere in Europe and enjoy a pretty similar lifestyle to what they currently have in the US. Sure, gas is still more expensive and clothing is still a bit pricy, but it's nothing like it was in the 80s and early 90s. (I still remember seeing electric razors advertised for the equivalent of $150 on my first trip to Germany when the equivalent model in the US would've cost no more than $50.)
Take that one step further, and the average American family could now potentially consider a move to one of the BRIC or CIVITS nations, and they would find themselves with only slightly less access to the luxuries they might expect in the US.
Why is this important? Because I think that for the first time in the history of human kind, we might just be reaching the point where the choice of where to live and work could be made based solely on things like the climate or the culture instead of on things like "Can I eat?" or "Will I have a roof over my head?"
That would be a world I would want to live in...
I'm a pretty solitary guy most of the time, but I do feel we stand to lose a lot if the sense of "we have something special here, we need to cultivate and protect it accordingly" vanished.
I don't think many people in Europe spent a large amount of time wishing they lived in the US, I don't think many do now. Europe is not some sub-standard America. When the pound was strong (2:1 against the dollar), British people could come to the US and have comparable, if not better, buying power than Americans. There was not a large number of people wishing they could live in the US. Nice place to visit, though.
Consuming stuff, and attaining status based on it, is not unique to America, but my experience shows its more highly-prized. It's a good, visual metric for your progression, and I get that. When I lived in New Zealand, it was positively brutal to be a consumer of much of anything. I was on an above average wage (as my first job), and I still couldn't really afford much in the way of furniture or electronics. However, my quality of life was so good, it didn't matter. They had a wonderful community, a relaxed working atmosphere, and good people.
Americans could move to NZ tomorrow (particularly those in IT). You're trading in one idealism for another, but it certainly never had anything to do with "Can I eat?" or "Will I have a roof over my head?" but "What do I value?"
Personally, as a Brit, I'm quite enamored with burritos, Costco, and sunshine, so I like it here in CA. But that's a choice I made, and it never had anything to do with how much money I have.
Lack of old culture? Lack of proper healthcare for everyone? Lack of decent unemployment benefits? Being stuck in your own little bubble? (No tastful bread? ;))
Do not misunderstand me, I do like the US for its nature and kind citizens. But many would never trade their life for a life in the US. Even if they were given the choice of a 'booming middle class life'.
Your comment was kind, so please interpret this as a kind reply. When I used to interpret for official visitors to the United States from China, I could take them to a cemetery in the city of Boston where there are graves that were dug before the founding of the Qing Dynasty in China. Harvard University, for example, dates to the Ming Dynasty.
Similarly, here in the United States we use the ROMAN alphabet, a cultural survivor now more than 2,000 years old, and the Indo-Arabic decimal place-value numeral system (just as much of a new upstart in Europe as it is for any American), and Gregorian chant and other music that precedes the use of musical notation anywhere in the world. We have plenty of old culture here.
The United States also has new culture such as ragtime, jazz (various genres), blues, soul, rhythm and blues, rock and roll, and hip-hop music that compare favorably in the aggregate to traditional music from anywhere in the world, broadcast media and motion pictures that were largely invented here but now enjoyed around the world, and this cool thing called the Internet that links all of us together on Hacker News.
Your point is well taken. A lot of countries offer a lot of interesting lifestyle features. I would return to Taiwan (where I met my wife, and where I last lived a decade ago) at the drop of a hat. My oldest son is very interested in living in Norway, a land my ancestors left for Minnesota a century and a half ago. It's wonderful that more and more what country a person lives in is a matter of choice rather than solely a matter of birth. The trade-offs involved in living in one country rather than another involve many interesting incommeasurable issues.
I do not disagree that there are no traces of old culture. However, go to any random city in, say Europe, the middle east, or Asia. Chances are high that you will easily find artifacts from the roman age until now. Most of the US is new, in many cities you'll have to work hard to find something older than one hundred or two hundred years old. This is not a criticism, but many people appreciate cities and artifacts that are old ;).
Also, with respect to culture in the other sense, the difference is huge. US city centers tend to be boring (with notable exceptions such as New York), since much of the activity is in the outskirts, and are only reachable by car. Compare this to many other countries, where city centres are cramped with pubs, small theaters, etc, and people tend to hang around until the early morning. I liked some cities int this respect (e.g. Portland), but in comparison it's still a bit dull.
The United States also has new culture such as ragtime, jazz (various genres), blues, soul, rhythm and blues, rock and roll, and hip-hop music that compare favorably in the aggregate to traditional music from anywhere in the world,
It's just marketed a whole lot better. E.g. I am into jazz mostly, and American musicians are the most well-known. But Europe had (and still has) a lively avant-garde scene, which was at least as progressive is the scene in the US. In Africa, mostly isolated and in parallel, what resembles modern jazz developed (e.g. check out the excellent Ethipiques series). One good example is Getatchew Mekurya from Ethiopia, who developed his own weird flavor of jazz, that sprung directly from traditional ethiopian music. Anyway, I digress. The rest of the world had thriving and progressive music scenes, but often failed to package is for mass consumption.
broadcast media and motion pictures that were largely invented here
Are you kidding? Ever heard of Nosferatu, Battleship Potempkin, Le voyage dans la lune?
but now enjoyed around the world
Hollywood movies are often looked down upon as superficial, but 'ok if you want something easy'.
and this cool thing called the Internet that links all of us together on Hacker News.
True, ARPAnet was invented in the US, but the 'interface' that we all use was invented by a Brit in Geneva ;). Sure, it had its precursors, but the point is, that in contrast to popular belief, the US did not bring us to modernism. It's a collective contribution.
The rest, I agree with. It's important to highlight progress when it's made, though.
Since then, America has stagnated and thrown its creativity into foreign wars, over-leveraged mansions, and corporate welfare. Barriers to innovation and competition have proliferated in our last leading industries with RIAA, MPAA, and software patents. The effects of building oil-dependent infrastructure have come home to roost with peak oil arriving in 2005.
The result is that America now offers about the fifteenth highest standard of living in the world. We still have a much nicer place to live than China or Brazil or Russia, of course; there are over 200 countries in the world so fifteenth is in the top 10%. For the first time, though, America has been definitively passed by France, Japan, Germany, Switzerland, Norway, and other top quality of life nations.
The New York Times this week reported that Mexican illegals are now finding they have a better quality of life returning home to Mexico. [1] That doesn't mean our quality of life has dropped below Mexico's; it means the premium for being illegal is now greater than America's advantage at the margin. There are even some classes, such as college educated middle income professionals, where quality of life in wealthier parts of Mexico is already objectively higher than in many parts of the USA. (Mexico is probably about 35th in worldwide material quality of life)
Oil prices are still rising, congress is intent on more and more protectionism and supporting nationalized companies like GM, housing prices are still not rational, the banking sector is a more deeply entrenched oligopoly, old line monopolies that want to leach on the creative industries of coastal California by blocking broadband expansion and running patent shakedowns are in charge of the courts, it's still illegal to build the kind of low-oil walkable sustainable neighborhoods that would reduce oil import dependence as we aim for $10 or $20 a gallon gas, affordable local and high speed rail is still prohibited by federal (FRA) regulations that prohibit European and Japanese innovations here, congress and the president are playing chicken with national finances instead of trying to fix them, occupational licensing is on the rise, and I haven't even mentioned health care.
I'm not saying you should look into getting that Mexican work visa now and beat the rush. America has many advantages still. The state universities are the best in the world, the business climate is generally supportive more than parasitic or bureaucratic (a surprisingly rare thing in other nations), the labor market is still relatively flexible, the nation is a uniquely large market united by a common language and currency, the dollar is stable (for now), we have the best natural open land preserves in the world, and the people are entrepreneurial.
We're not going back to undisputed number one but America can do fine among equals. If you want to go somewhere else though, you don't have to give up your income and luxuries anymore; just don't expect to lord your superior citizenship over the locals who are -- on average -- richer than you are.
[1] http://www.nytimes.com/interactive/2011/07/06/world/americas...
(Or, the two parts of you advice on how to enhance the graph are mutually exclusive, the origin on a logarithmic graph is at minus infinity.)
The headline is a bit misleading, however. It's not that the bubble destroyed the middle class. The bubble was a way for the middle class to continue living a happy life despite the fact that there income share was continually being reduced. Instead of consuming on income, they consumed on the housing bubble.
So it's not the bubble that destroyed the middle class - the article basically says so itself - it just delayed the inevitable and made the decline much more spectacular.
Edit: this is relevant because their evidence that the middle class is shrinking comes in the form of a drop in the share of total income earned that accrues to the middle quintile, from 17% to 15%. That's an interesting result, but it doesn't really say anything interesting about the "middle class". In my book, if you have to go into work every day or you can't pay the mortgage, you're middle class. You have a job, you have secured debt, you own your home, and your income comes from employment. I will bet you that a much larger span of that spectrum, up to and including most of the top 5%, meet that description. Those at the top might be "upper middle" and enjoy a lifestyle that others envy, but that doesn't make them upper class.
Consider: do you really think everyone making 88K or more should be considered "upper class"?
The classic "American Dream" lifestyle is typically defined as home ownership, two cars in the garage, three squares a day and sufficient disposable income to be able to comfortably afford to raise children and save for retirement.
So, assuming this works as a definition of "middle class", anyone not capable of all of the previous due solely to financial constraints is therefore "lower class".
Based on my experience, $120k annual household income in a low cost of living area barely squeaks over the bar if you use this metric. $175-$200k annual household income seems more realistic to me given the retirement clause.
Where the line gets drawn for "upper class" is harder to define, but I think we can all agree an upper class exists.
"And make no mistake, the middle class has been ruined: Its wealth has been decimated, " ... They only lost 10% of their wealth? That's not so bad. Oh wait, they mean completely destroyed, not decimated.
But, I agree with you decimate has long had alternative meaning of "destroy almost completely"
If enough people use it that way, it becomes the correct usage, of course. It is how languages (d)evolve.
47 per cent of Americans can't raise $2000 in 30 days without selling an asset...with nearly one quarter of $100k-$150k households reporting they wouldn't be able to find $2000...Only the final one-fourth said they definitely could find a way to make the payment: http://www.huffingtonpost.com/2011/03/17/could-you-come-up-w...
The statistics cited are from the Brookings Institute: http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2011...