20 Years of Economic Stagnation for the Middle Class — What are you going to do about it?

“…today one hour of work at the end of 2013 produces 169.8% of the output that one hour of work produced in 1980…

It does not matter how many dollars you have or are paid.  What matters is how much time you must spend working to earn a gallon of gasoline, rent, electricity or water for a month, food to feed your family and so on.  That is, what matters is how much what you have and earn buys in material goods and services.

“Your purchasing power isn’t stolen through “inflation” per-se.  If you are paid $20 tomorrow for an hour of work instead of $10 but the price of everything doubles you can say “inflation” was 100% (as expressed in prices) but it doesn’t matter because you get paid twice as many dollars.  (Of course it matters a great deal if you saved those dollars from previous work, which is why inflation is bad and deflation is good — but we’re talking about the “Average Joe” that saves nothing.)

“In short only purchasing power matters as measured by a monetary invariant — such as an hour of work or a BTU of energy…

“The “wedge issues” that are often raised, whether they be “gay marriage”, “pot smoking”, “gun rights” or whatever else are a damned sideshow.  Do you really care about “gay marriage” if you are so damned poor you’re living under a freeway overpass in a refrigerator box, gay or straight?  Do you really care about gun rights if you can’t afford a gun no matter how little they cost because your income is insufficient to pay for food, water and a place to take a crap?

Not only have the productivity of the average worker gone up since 1980, it has gone up 10% since 2007. So much for the “Great Recession”. Where did that 10% go? Not into the pockets of Big Business, although I am sure crony-friends of Clinton, Bush, and Obama have received their fair share. No, into the bottomless pit of government corrupt spending.

People complain about the un-sustainability of government spending, I do agree it is un-sustainable. However, the reason why we are limping along when we should be in heap of rubble is because the government has used deficit spending, debt, and monetary policy to rob the people. How long will that last? Until it doesn’t.

read more:  http://market-ticker.org/post=229165

About fafc

The goal of the “Find a Free Country Project” is to research, explore and find a safe and secure free country outside the USA, that is not too large, has a relatively open immigration policy, has a friendly business climate, has a non-intrusive government committed to freedom, and then move to it.
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8 Responses to 20 Years of Economic Stagnation for the Middle Class — What are you going to do about it?

  1. Croatian Capitalist says:

    Two questions:

    1. Do you think that the USA will go bankrupt in the remotely near future?
    2. If so, what do you think would happen then (just in the USA, I am not asking about the effect on the rest of the World)?

    • fafc says:

      1. I try not to guess on time. I don’t know who said this, but “Things decline slowly until… they don’t.” The problem is that the bankruptcy of the USA is no longer in the hands of the USA. It has just gotten too bad. It is in the hands of Russia, China, and the Oil Shieks. Our national political system and government is completely dysfunctional and incapable of the smallest degree of reality. The only thing that holds us up is the fact that the USD is the global currency of choice for everyone from oil barons to little old ladies in Africa hiding a few dollars away for a rainy day. This is based on the emotional sentiment that the USA is a safe currency. Once that sentiment is lost, for whatever reason, the USD will collapse. So how long are the US debtor nations willing to prop us up? That is the question.
      2. As to what happens when the USD dollar collapses, so much depends upon how well prepared we are. If we are producing enough energy to meet our needs, things might go well. Everyone’s dollar denominated savings will be wiped out. We won’t be able to import anything, but our imports should go up based on price alone. There could be some political shake up. Perhaps even a national disintegration as the states that produce wealth refuse to provide for the states that only produce welfare voters. I think we will descend into civil war.

  2. Croatian Capitalist says:

    Well, I am of course hoping that there will be no civil war, but rather a “restart/reset”, meaning the introduction of small government, low taxation, cutting/reducing welfare for people who are perfectly capable of working, etc., which should mean that the people cut from government jobs and welfare will start looking for and be willing to do more or less any job, so that would probably mean that the government would finally be forced to deal with illegal immigration, so that the American citizens cut from government jobs and welfare could take over the jobs the illegal immigrants are doing now.

    The reason I asked these questions is because bankruptcy is the only way out that I see for Croatia, our current politicians are incapable of fixing the country (Croatia has been in recession for the last 5 years, and is the only EU country in such a situation), the private sector is under real strain here, we have a very high tax burden, we have to support around 1,3 million pensioners, 95000 people on social welfare, 400000+ unemployed people, over 475000 public sector workers, etc., the current situation is totally unsustainable, but the biggest problem in my opinion is the socialist mentality of most of the common people, which leads to socialists being elected, which leads to bad economic policies being kept and new ones introduced, which in the long run leads to economic ruin, so the only way out I see is that Croatia declares bankruptcy and that the EU puts a capitalist technical government in charge of Croatia, and starts fixing the country (by lowering the very high tax burden, by removing hundreds of thousands of moochers from the government budget, by removing red tape, by getting the judiciary in order, etc.). There was even an article in a leading Croatian newspaper a few days ago that stated that if Croatia doesn’t achieve economic growth, that the EU will take direct control over running Croatia in 2016, I hope that they will, because I don’t see another way of fixing the country, we don’t have even 1 real capitalist party here, and even if we did, the majority of voters would never vote for it.

    • fafc says:

      Bankruptcy would work, but you hit upon the problem: the people. Detroit is currently in bankruptcy. It will come out of bankruptcy more or less debt free, with a smaller government with new contracts all around. However, they will have the same people. The same people who voted over and over again for corrupt politicians who looted the city (most of whom are in jail right now). I suspect within 10 years they will be back in the same situation or worse.

      As for the USA, there is no evidence in history of a nation economically collapsing and somehow rising up again. Unless the USA reforms itself prior to collapse, I see little hope of improvement. When you look at Rome, you see a slow economic collapse that preceded the political collapse. The political leaders had no reason to reform the economy since that would only threaten their political power. Roman emperors did not fear foreign invaders (despite the myth), nor did they care about economic collapse. What they feared was other Roman generals threatening to overthrow them. Politicians in the USA are at that point. They don’t care about the future of the USA, but only care about holding onto power. And they use the remaining economic and political power to buy votes. Bread and Circuses.

      At least Croatia can look to Europe for assistance, and perhaps the next generation will look around them and see that disaster that the prior generation has created. With a little bit of positive change, and some support from Europe, Croatia could turn around. But like all things, it has to start with the people, from the bottom up, not from the top down. Just look at Greece. Imposed solutions work for the short term, but I am sure the Greeks will put themselves right back into crisis if given the chance.

  3. fafc says:

    I read another theory about why the US middle class has been taking it on the chin even though their productivity has actually gone up: uncontrolled immigration. After Ronald Reagan and the Democrat Congress passed Immigration Amnesty the number of immigrants dramatically increased. During the years 1980 to 2000 which coincided with the increase in immigration you saw a decrease in middle and lower class incomes.

  4. Croatian Capitalist says:

    Well, in regards to Croatia, I am given a little hope by the prospect of the EU taking over and fixing the country up, and by a poll that shows that only 25% of Croatian youth (18-25 year olds) want to work in the public sector, 40% want to start their own business, 35% want to work for someone else in the private sector, so if that poll (even though it should be mentioned that 57% the youths polled are thinking about leaving Croatia) reflects the actual situation among youths, so when they and their children form the majority of the population in the distant future, maybe then there will be an actual chance of a capitalist party winning the elections by a landslide and the country being what it would be today if the Austro-Hungarian Empire didn’t fall apart (a very rich Middle-European capitalist country), apart from the various wars, the socialist takeover of the country in the 1940’s is by far the biggest tragedy to befall this country, it ruined the mentality of people, successful communities like the Italian and German ones for example mostly were either expelled or killed by the communists and their property was confiscated (and their world-class companies were turned into fifth-rate socialists mammoths which only survived until the 1990’s thanks to American (and of other capitalist countries) loans), Jews who wanted to leave for Israel had to sign off all of their property (without any compensation of course) over to the communist Yugoslav government to be allowed to leave, etc. In any case, I have decided to leave, I want my (future) children to grow up in a successful pro-business country, and Croatia isn’t going to become that for at least a couple decades more (even if the EU fixes the finances, the mentality of the majority of people isn’t going to change for decades).

    I agree in regards to the Greeks, they are the only more hard-core socialists in Europe than Croats in my opinion, but hopefully the EU will force them to behave properly for a long enough period of time for the mentality of the people there to change.

    As for history, it depends how you define “economic collapse”, the Russian Empire for example went bankrupt in 1839, but it recovered and was the second biggest empire in the World after the British Empire at the time just before the Soviet takeover, and the Soviet Union managed to become a superpower as well, then after the Soviet Union collapsed the Russian Federation went bankrupt in the 1990’s, and has since Putin’s ascent to power in 2000 rapidly recovered and will probably become a superpower in more or less every way in the coming decades.

    But yes, your current situation is probably more akin to the situation of the Western Roman Empire in the late 4th century or early 5th century than it is to the situation of the Russian Empire in the 19th century.

    • fafc says:

      The problem is will. Where there is no will to fix the problems, they will just be avoided until there is no longer an ability to resolve the problem.

  5. Croatian Capitalist says:

    I agree with your first sentence, that’s why I think that bankruptcy (even though it would obviously be better that the EU appoints a capitalist technical government to run the country even before bankruptcy) is the only way out for Croatia, because the moochers outnumber the producers of wealth, so you can’t change anything (not on the national level anyway) by voting for as long as that is the case.

    As for the USA, I have never lived there (I only spent about 10 days as a tourist in New York and New Jersey), so I can’t really judge the will (or lack of thereof) and mentality of Americans in regards to fixing problems, but I hope that you will fix your problems, because it would be a big shame for a country that was once so great to go into the dustbin of history.

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