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Class War Within a Class War

Several people I’ve been reading for years have stumbled on to variations of the same theme: that the real class fight in America right now is between the very wealthy and those just below that threshold rather than between rich and poor.

My colleague Dave Schuler, writing it his own digs, was struck by a long passage from Joseph Schumpeter’s 1942 masterwork Capitalism, Socialism, and Democracy which begins with the sentence, “One of the most important features of the later stages of capitalist civilization is the vigorous expansion of the educational apparatus and particularly of the facilities for higher education. ” The upshot of the rest is that we create more people who are ostensibly qualified for white collar and intellectual pursuits than we have need for while at the same time denigrating blue collar and non-intellectual employment. This manifests,  Schumpeter asserts, in unemployment or underemployment among this class and, ultimately, resentment of the capitalist system itself.

Anne Applebaum points to a growing class divide. She argues that the emphasis on the phenomenally well-off top 1 percent misses the real problem. Rather, the “American upper-middle class . . . is now sociologically and economically very distinct from the lower-middle class, with different politics, different ambitions and different levels of optimism. Thirty years ago, this wasn’t the case. A worker in a Detroit car factory earned about the same as, say, a small-town dentist, and although they might have different taste in films or furniture, their purchasing power wasn’t radically different. Their children would have been able to play together without feeling as if they came from different planets.”

One could argue that a dentist actually ought to earn considerably more than an unskilled assembly line worker. But Applebaum argues that we’ve lost a sense of community with this inequality:

“Middle America” also once implied the existence of a broad group of people who had similar values and a similar lifestyle. If you had a small suburban home, a car, a child at a state university, an annual holiday on a Michigan lake, you were part of it. But, at some point in the past 20 years, a family living at that level lost the sense that it was doing “well”, and probably struggled even to stay there. Now it seems you need a McMansion, children at private universities, two cars, a ski trip in the winter and a summer vacation in Europe in order to feel as if you are doing minimally “well”. You also need a decent retirement fund, since what the state pays is so risible, as well as an employer who can give you a generous health-care plan, since health care is so expensive.

That’s overstating it more than a little bit. But it’s certainly true that our points of comparison have changed, with the elites striving to emulate the lifestyle of the rich and famous rather than to be a step ahead of the salaryman.

Glenn Reynolds points to an essay he wrote more than eight years ago during the most intense period of the angry debate over the Iraq War:

I can’t help but notice that anti-Americanism, and the various manifestations of what some have called Transnational Progressivism, are most common among people who, well, have state-supported managerial or intellectual jobs, the people who made up what Milovan Djilas and others called the “New Class” of bureaucrats and managers in the old Communist world. Not surprisingly, the New Class was deeply concerned with matters of status and position, and deeply opposed to things that might have led to competition on merit. There’s nothing new about such a view, which predated communism: As David Levy and Sandra Peart note, it’s an attitude that even in the nineteenth century was characteristic of anti-capitalists and anti-semites – and, nowadays, there’s a lot of overlap between anti-capitalists, anti-semites, and anti-Americans.

A common thread among anti-semitism, anti-capitalism, and anti-Americanism is the fear of being outdone by people willing to work harder. It’s not surprising that such a fear exists among a disproportionate number of those who take state-supported jobs. It’s thus not surprising, then, that New Class sensibilities are so often anti-American and anti-capitalist, and increasingly (or perhaps I should say, once again) anti-Semitic, too. The New Class, in this regard, as in many others, is like the old haut-bourgeoisie.

He adds, “The New Class is characterized as much by self-importance as by higher income, and is far more eager to keep the proles in their place than, say, Applebaum’s small-town dentist. It’s thus not surprising that as its influence has grown, economic opportunity has increasingly been closed down by government barriers.”

Now, I disagree with much of Glenn’s analysis here but I think he’s right on this point: We’ve created in recent decades a class of people who have a sense that they’re entitled to a posh lifestyle because they’ve achieved certain credentials, the gaining of which tends to lead them to view the world through a radically different lens than their fellow countrymen. Hell, I’d argue that Glenn and I are on the fringes of that class ourselves.

Kenneth Anderson takes this analysis a couple steps further, arguing that this New Class is now seeing their station under threat.

The problem the New Class faces at this point is the psychological and social self-perceptions of a status group that is alienated (as we marxists say) from traditional labor by its semi-privileged upbringing — and by the fact that it is actually, two distinct strands, a privileged one and a semi-privileged one.  It is, for the moment, insistent not just on white-collar work as its birthright and unable to conceive of much else.  It does not celebrate the dignity of labor; it conceived of itself as existing to regulate labor.  So it has purified itself to the point that not just any white-collar work will do.  It has to be, as Michelle Obama instructed people in what now has to be seen as another era, virtuous non-profit or government work.  Those attitudes are changing, but only slowly; the university pipelines are still full of people who cannot imagine themselves in any other kind of work, unless it means working for Apple or Google.

Now, like Reynolds and myself, Anderson is actually living that sort of life–he’s a tenured law professor at American University–making aspersions against those who prefer it to manual labor rather uncharitable. But the psychology of the diagnosis nonetheless strikes me as correct: We’ve defined “success” and “the good life” in such a way as to exclude almost everybody. As desirable as it may be to work in the knowledge creation or policy making worlds, there are simply fewer of those jobs than there are qualified people who want them.

Much of the rest of the essay strikes me as incoherent hippy punching but this analysis of Occupy Wall Street strikes me as plausible if overbroad:

OWS is best understood not as a populist movement against the bankers, but instead as the breakdown of the New Class into its two increasingly disconnected parts.  The upper tier, the bankers-government bankers-super credentialed elites.  But also the lower tier, those who saw themselves entitled to a white collar job in the Virtue Industries of government and non-profits — the helping professions, the culture industry, the virtueocracies, the industries of therapeutic social control, as Christopher Lasch pointed out in his final book, The Revolt of the Elites.

[…]

The OWS protestors are a revolt — a shrill, cri-de-coeur wail at the betrayal of class solidarity — of the lower tier New Class against the upper tier New Class.  It was, after all, the upper tier New Class, the private-public finance consortium, that created the student loan business and inflated the bubble in which these lower tier would-be professionals borrowed the money.  It’s a securitization machine, not so very different from the subprime mortgage machine.  The asset bubble pops, but the upper tier New Class, having insulated itself and, as with subprime, having taken its cut upfront and passed the risk along, is still doing pretty well.  It’s not populism versus the bankers so much as internecine warfare between two tiers of elites.

Megan McArdle is reminded of George Orwell’s observations on the changing social conditions in England before and after World War I in Road to Wigan Pier:

Before the war you were either a gentleman or not a gentleman, and if you were a gentleman you struggled to behave as such, whatever your income might be.  Between those with £400 a year and those with £2,000 or even £1,000 a year there was a great gulf fixed, but it was a gulf which those with £400 a year did their best to ignore.  Probably the distinguishing mark of the upper-middle class was that its traditions were not to any extent commercial, but mainly military, official, and professional.  People in this class owned no land, but they felt that they were landowners in the sight of God and kept up a semi-aristocratic outlook by going into the professions and the fighting services rather than into trade.  Small boys used to count the plum stones on their plates and foretell their destiny by chanting “Army, Navy, Church, Medicine, Law”; and even of these “Medicine” was faintly inferior to the others and only put in for the sake of symmetry.  To belong to this class when you were at the £400 a year level as a queer business, for it meant that your gentility was almost purely theoretical.  You lived, so to speak, at two levels simultaneously.  Theoretically you knew all about servants and how to tip them, although in practice you had one, or at most, two resident servants.  Theoretically you knew how to wear your clothes and how to order a dinner, although in practice you could never afford to go to a decent tailor or a decent restaurant.

She sees the same sort of thing mirrored in her own circles and the disdain for the folkways of those on the outside:

It’s not entirely crazy to suspect, as Orwell did, that this has something to do with money.  Specifically, you sneer at the customs of the people you might be mistaken for.  For aside from a few very stuffy conservatives, no white people I know sneer at hip-hop music, telenovelas, Tyler Perry films, or any of the other things often consumed by people of modest incomes who don’t look like them.  They save it for Thomas Kinkaid paintings, “Cozy cottage” style home decoration, collectibles, child beauty pageants, large pickup trucks***, and so forth.
In part, obviously, this is a reaction to the politics of it, since uneducated white people of modest means vote (and attend church) very differently from the hyper-educated but modestly remunerated people in New York or DC.  A group of people who are quite empathetic, even tender, in writing about the financial difficulties of lower-middle class whites as workers, can also be quite vicious about them as voters and consumers.
And they’re worse when it comes to the tastes of people in successful-but-not-intellectual people like sales(wo)men. The vehemence makes it seem, at least in part, like a way to say “I may have their incomes, but I’m not like them.  I’m better.”
The next several paragraphs are personal reflection that I commend to you. A very inadequate summary: When she was working as an IT consultant on Wall Street during the height of the dot.com boom, she sensed a lot less resentment towards the very rich than now. She believes this was because the middle class had more cause for optimism and because hey were comparing themselves to their high school classmates, who they had easily surpassed in lifestyle, rather than to the bankers. Additionally, because most of her colleagues had come from working class backgrounds and lacked fancy degrees, they “didn’t feel entitled to be very rich.”
She notes that, at a recent reunion of her University of Chicago business school class, she realized that she is much happier with her lifestyle than most of those who had gone on to make a pile of money in the financial sector. While they’re much better compensated, they work ridiculously long hours doing a very stressful job they hate while she makes a reasonably comfortable living doing what she once did as a hobby.
But of course here’s the difference between me and the outraged lower-upper-middle-class: I chose it.  I decided to have terrible grades and major in English, and then job hop in New York before settling down as an IT consultant.  After business school, I picked a job at the Economist instead of searching for something that might have enabled me to move up the food chain from ramen.  And at each step I understood perfectly the risks I was taking, the things I was giving up–if anything, I was too pessimistic.
The people at the We Are the 99% blog didn’t choose it.  They didn’t see it coming. Yes, yes, maybe they were naive about the possibilities of a fulfilling and secure life in the field of non-profit environmental management.  Probably they should not have sunk tens of thousands of dollars into acquiring a BFA.  But these mistakes didn’t usually used to be crippling.  They were a drag, as you paid off those huge student loans with your tiny little income.  (Ramen and cheese doodle surprise again?  Yummmmmm . . . )
Unfortunately their choices became utterly, horrifyingly disastrous just at the moment when we had a terrible financial crisis that spiked our unemployment rate up to 10%.  We can argue about exactly who is at fault and to what extent, and how much longer our public sector spending would have been sustainable without the financial crisis.   But whether or not you think their reaction is empirically correct, it certainly isn’t surprising.  To them it looks like a bunch of greedy, stupid bankers stole the jobs that they were entitled to.  And why the hell do a bunch of thieves get to drive around in BMWs while I take the bus?
I’m much closer to Megan’s than to the Reynolds-Anderson attitude towards Occupy because I can see why these people are so resentful.
Not too many years ago, I’d have been on the other side of this one. Having grown up in a working class family and gone to colleges that lend very little prestige to my resume, it’s hard to work up much sympathy for the pampered kids with Ivy League degrees whining about their lot in life. But, as much as those who’ve had some success in life like to point to their own hard work and sacrifices, the fact of the matter is that a lot of factors beyond our control had just as much impact. Like Megan, my career path has been highly unusual with lots of twists and turns, ultimately leading to my making a decent living doing something that I want to do. And, yes, both of us prepared ourselves to take advantage of unexpected opportunities and took some risks along the way. But we didn’t do anything to earn the advantages of relatively high intelligence, good health, or a good home life that encouraged achievement. Nor, frankly, can any of us control timing. It’s certainly worked against me more than once. My Army career was cut short by the post-Cold War drawdown and I finished my PhD at a particularly inhospitable time. But those are minor blips compared to graduating college right into the face of the worst economic crisis in two generations.
While one can certainly question the wisdom of going deep in debt to get a degree in Women’s Studies or Elizabethan Poetry from a fancy school, the fact of the matter is that these people were quite attractive to employers in precisely the kind of jobs that the New Class analysis makes fun of until the bubble burst. Given that most of the world’s top economists failed to see it coming, it’s perhaps a bit much to expect 17-year-olds embarking on college to have done so.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He earned a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. Just nutha ig'rant cracker says:

    I think you’re finally beginning to get it. The social fabric is beginning to fray (actually, it’s probably been fraying for a long time now but we’ve only begun to notice), and thinking in the conventional terms about opportunity and distribution of wealth are no longer working to hold the system together. The big problem is where to go from here. Personally, I don’t see that Obama’s jobs program addresses the problem in an effective manner–and economic recovery may be outside the scope of what government can accomplish if the downturn is systemic, as some economists believe it is. On the other hand, the right has only a road to Latin America to offer–with more tax cuts for the people at the top and more “creative distruction” to replace higher wage jobs with lower wage ones. Doesn’t look promising.

    Like or Dislike: Thumb up 1 Thumb down 0

  2. Hey Norm says:

    “…When she was working as an IT consultant on Wall Street during the height of the dot.com boom, she sensed a lot less resentment towards the very rich than now. She believes this was because the middle class had more cause for optimism and because hey were comparing themselves to their high school classmates, who they had easily surpassed in lifestyle, rather than to the bankers. Additionally, because most of her colleagues had come from working class backgrounds and lacked fancy degrees, they “didn’t feel entitled to be very rich…”

    First – resentment is the wrong word. Frustration is far more appropriate. During the dot.com boom practically everyone was doing well. Well in the way that investments were providing income that masked the stagnant wages of the middle class. After the dot.com bubble it was the real estate bubble. Today, with no bubble to mask the flat-line that is middle-class income, the truth of the last 30 years has been laid bare.

    “…Thirty years ago, this wasn’t the case. A worker in a Detroit car factory earned about the same as, say, a small-town dentist, and although they might have different taste in films or furniture, their purchasing power wasn’t radically different…”

    Now of course their purchasing power is radically different. Why? Because for 30 years we have been attacking workers. Continuously we have attacked the right to collectively bargain, which reduces wages…while at the same time providing a steady stream of tax cuts for the wealthiest. The inevitable shortfall is always funded by reducing services and investments that benefit the poor and middle class (investment in education, in infrastructure, etc.)…while at the same time we shield investment banks and large corporations from the consequences of their recklessness. Then when the inevitable crisis hits…we again tighten our belts instead of asking more of the people who have been on the recieving end. This cycle started with Reagan and has been going on for 3 decades.
    This is not about who has a lake house in Michigan, or who has a boat, or an RV, or whatever…it is not about jealousy or class envy…it is about those who have benefited over the last 30 years, largely at the expense of others, pulling the ladder up behind them.

    Like or Dislike: Thumb up 15 Thumb down 3

  3. OzarkHillbilly says:

    I just have to point out that

    Thirty years ago, this wasn’t the case. A worker in a Detroit car factory earned about the same as, say, a small-town dentist,

    is ridiculous on it’s face. 35 yrs ago, a buddy of mine in HS invested years of his life and thousands upon thousands of dollars to become a dentist. I became a union carpenter. While we were both “middle-class”, there was a big difference in our lifestyles.

    Like or Dislike: Thumb up 3 Thumb down 0

  4. bro43rd says:

    @Hey Norm: This is a direct consequence of the creation of a central banking system in the US and the final nail in the coffin, the de-linking of gold from the dollar. Government monetary policy enabled all participants. Blaming the rich is akin to treating the symptoms not curing the cancer. Strike the root, End the Fed and fiat currency.

    Like or Dislike: Thumb up 3 Thumb down 11

  5. Andy says:

    Excellent post. One thing to keep in mind is that these young college graduates started college before the economy went off a cliff. They had different assumptions and expectations and one can’t blame them for not predicting the state of the economy today.

    I would, however, question the judgment of anyone who, at this point in time, started an loan-financed Ivy League BFA degree program.

    Like or Dislike: Thumb up 3 Thumb down 0

  6. Liberty60 says:

    First, it is gratifying to see finally, at long last, a discussion of the most sacred taboo in American society, which is social class.

    For all of my life there has been the myth that anyone could ascend in wealth as “far as his wit and wisdom.”
    We now know that is not true, at least in contemporary America; we also know that the 1% have not enriched themselves via hard work and skill, but cheating and rent-seeking.

    Perhaps the 5% feel more rage simply because they see it up close and personal; while people living in the projects can only read about the 1% as if they were living in a foreign land, the 5% actually went to school with them, and see them at work- as they teleconference in from their vacation home of course.

    Oh, and can we drop the “degree in Women’s Studies or Elizabethan Poetry” canard? It is as absurd as “young bucks buying T-bone steaks with welfare”. Has anyone ever documented ONE SINGLE member of an Occupy movement with such a degree?

    In our Occupy group, the organizers consist of an architect, a ER physician, a lawyer, a corporate trainer, and UC college students majoring in biology, business, law, and the like. We have retirees who have started up and run their own successful businesses, managers and engineers.

    @bro43rd: I suppose a real economist could unpack your comments thoroughly, but fixing the source of our problems as a shift in monetary policy is flawed in that it proposes that political problems are mechanistic in nature, without human action and purpose.

    Monetary policy doesn’t legislate laws that protect Goldman Sachs while allowing Lehman Bros. to fail. Policy doesn’t direct trillions of dollars to crony firms in the military-industrial complex, while starving colleges and aid to hungry children.

    The world we live in is the result of moral choices and actions that people take.

    Like or Dislike: Thumb up 6 Thumb down 0

  7. Hey Norm says:

    @bro43rd…
    Advocating for linking the $ to gold is too ridiculous to even discuss.

    To be clear I’m not blaming the rich…I am a fairly well off white collar professional myself. I am blaming the powerful…both economically and politically…that have perverted the system to their benefit, and the benefit of their overloards, at the expense of others. The so-called 1% wields un-due power in their ability to influence policy. Always have, always will. I’m OK with that…it’s the world as it exists…and as a fiscal conservative I am not interested in de-constructing the system. However…for the last 30 years their power has been wielded in a very destructive, rather than a productive, manner. Policy needs to revert to being productive. Todays Republicans have completely perverted the conservative program…they have lost their way…but not in the way they think. On the debate stages over tha last few months you have seen no one who gets it…or if they do…are interested in changing it. And so they need to be defeated.

    Like or Dislike: Thumb up 2 Thumb down 1

  8. john personna says:

    I don’t meet many New Class folks with the “state-supported managerial or intellectual jobs” here in the OC, unless you count cops and teachers. It is possible that they made that jump though, as high wages were layered on what were formerly moderate wage but very secure jobs.

    While I like the story and selections well enough, I wonder if it isn’t a little OWS-NY centered, rather than discussing the fan-out and national resonance. I mean, we don’t really have many trying to make it out here with an MFA.

    I don’t think I even knew what an MFA was until I was 40. :-)

    Like or Dislike: Thumb up 2 Thumb down 0

  9. ponce says:

    White people problems.

    Like or Dislike: Thumb up 5 Thumb down 2

  10. WR says:

    I think all these great intellects — wow, both Glenn Reynolds and Megan McArdle! In all their combined writings, they’ve probably been right about something at least once — miss the biggest reason why the top 5% are now rebelling. It’s because their lives have been targeted by the 1% in a way that’s never happened before. Because until recently the super-rich have contented themselves with transferring the wealth of the bottom 95% into their pockets by freezing wages, destroying unions, elminating the safety net and all the other tactics that have already been discussed. But there’s no more money to steal from the bottom, so it’s time to go after those directly underneath them. Which means bankrupting state universities and defunding the programs that the upper middle class have depended on.

    It’s too bad the 5% didn’t see this coming when the oners were busy destroying the working class. But then, “I wasn’t a Jew” tends to apply in lots of cases.

    Like or Dislike: Thumb up 15 Thumb down 1

  11. Janis Gore says:

    Even in good times, advice about how to proceed with an education is touchy. If one takes then current advice at the outset of the “college project,” by the time it’s complete conditions may have changed. Not to mention competition within the cohort that took the advice at the same time.

    Like or Dislike: Thumb up 0 Thumb down 0

  12. JKB says:

    Well, of course, the economy could absorb the educated but unskilled when it was doing good. Just like the tech bubble and the housing bubble, the higher-ed bubble bubbled along till it hit a snag and suddenly everyone’s eyes see what was in front of them the whole time. Worse, these kids today, don’t want a job, they want a job that lets them follow their passion, a job that isn’t boring, a job that makes a difference. Hey, they may even want a pony.

    In down times, reality hits hard. I was “fortunate” enough to enter college in a terrible economy, Jimmy Carter’s economy. I was fortunate enough to have followed a STEM major. Why because I knew I needed a job and philosophy or whatever wasn’t going to cut it. My brother the carpenter had a philosophy degree. On the other hand, we had 20 years of booming economy in which you could make a good living even with your liberal arts degree, move around in jobs and generally be unconstrained by the needs of eating and a warm place to sleep.

    They say what can’t continue will stop, and so it did. Now, we have a bad economy in a generation and some are finding fluff doesn’t sell.

    I’m reminded of this quote:

    I must study Politicks and War that my sons may have liberty to study Mathematicks and Philosophy. My sons ought to study Mathematicks and Philosophy, Geography, natural History, Naval Architecture, navigation, Commerce, and Agriculture, in order to give their Children a right to study Painting, Poetry, Musick, Architecture, Statuary, Tapestry, and Porcelaine.
    Letter to Abigail Adams, May 12, 1780

    Which is all well and good. Many have reached the grandchild position. But if you look at the quote pragmatically you will see that unless daddy and granddaddy built a sound family fortune, the granddaughter with her MFA degree isn’t going to live, economically, better than her parents. Why? Because she doesn’t have any skills that are valuable unless there is wealth to burn.

    Like or Dislike: Thumb up 3 Thumb down 2

  13. Rob in CT says:

    Nice fantasy, JKB. When there are something like 6 job seekers for every job opening, the idea that people won’t settle for a boring job just won’t hunt. It simply isn’t true.

    Most people – the vast majority, I suspect – end up in jobs they do not find personally rewarding. It’s why they pay us to come to work, you know? Hardly anyone I know loves their job. Few do, and generally recognize they are lucky.

    It may be that we should have more STEM grads and fewer liberal arts grads, sure. But right now even if you magically transformed every unemployed person into a STEM grad, they still wouldn’t have jobs! If some of them (with their new magically-granted STEMiness) did get jobs, they would likely do so at the expense of people currently employed.

    Like or Dislike: Thumb up 4 Thumb down 1

  14. bro43rd says:

    “it is about those who have benefited over the last 30 years, largely at the expense of others, pulling the ladder up behind them.” Sounds like a blame the rich statement to me, but I must be silly for seeking to place blame at the root of the problem. And I’m sure you can cite economist after “keynesian” economist why $ can’t be linked to gold/precious metals just as I can cite plenty of economists that support such a thing. What has caused the education bubble that drove costs sky high and created this situation? EASY MONEY from guaranteed federal student loans (about thirty years ago fitting your own timeline). Before a cure can be decided the ill must first be diagnosed. To blame anything other than EASY MONEY is foolish and expecting government intervention to do anything other than muddying the water further is ludicrous.
    @Liberty60 Money may not make the world go around, but it does make DC go around. Getting back to a true free market in education (w/out subsidies or guaranteed loans) would be a step in the right direction. It’s time we learn that governmental central planning is a failure, in medicine, education, economy, etc,etc. A return to true free markets is the only answer we haven’t tried earnestly for the last century or so. We’ve tried socialism only to find it creates massive social problems, why not try liberty?

    Like or Dislike: Thumb up 1 Thumb down 6

  15. Hey Norm says:

    @JKB…

    “…Now, we have a bad economy in a generation and some are finding fluff doesn’t sell…”

    No JKB…we have the worst economy in 3 generations…since the Depression. And it is not just a cyclical downturn…it was caused by people who have consistently benefited at the exxpense of others. You may be correct that “it” could not continue…but it couldn’t continue because one group of people have recieved all the benefits and one group has paid all the cost. The wealthy pay historically low taxes and their companies are de-regulated. Workers have seen their right to bargain for wages undercut, and investment in things that help them up the ladder, like schools and infrastructure that provides jobs, slashed.
    The inequality that exists today has not existed since just before the depression. And the inequality that exists today has been on the increase since Reagan and the failed policies that so-called republicans now treat as catechism.
    It’s really not hard to see the paralells, and the connections.

    Like or Dislike: Thumb up 3 Thumb down 2

  16. Janis Gore says:

    At any rate, I’ve never read Schumpeter, even if I’ve heard his name often over time. Used at Amazon for less than 6 bucks. Thanks, y’all.

    Like or Dislike: Thumb up 0 Thumb down 0

  17. Rob in CT says:

    That’s right, folks. Back in the day, when we were on a gold standard, income/wealth inequality wasn’t a problem! And oh, there were no financial panics either!

    Except, of course, that simply isn’t true. The gold standard does nothing to curb inequality and it does not prevent bubbles and financial panics.

    Are you familiary with the 19th century, bro? The real one, not the fantasy one where everybody got a pony.

    Like or Dislike: Thumb up 8 Thumb down 2

  18. Moderate Mom says:

    I think one of the biggest differences between now and then is how one reacts to the realization that one’s expectations are no longer operable. Before, when you couldn’t get a job doing what you wanted to do, you looked for other opportunities and were willing to change your expectations. Now, rather than picking oneself up and dusting off, it seems the OWS protesters would rather complain about the injustice of it all than to retrench and explore other options and directions.

    I put myself through college, working full time, all the while driving towards the goal of getting into law school. I did, and within a year had figured out that I really hated law school. However, the work experience I had earned while an undergraduate, working in the mortgage division of a bank and preparing loan closing documents for a law firm, along with my degree in Finance, allowed me to change direction and get a great entry level position working for an Investment Bank, specializing in mortgage securities.

    My children, on the other hand, seem more like the OWS. The oldest just finished her Masters but can’t find a job in her field. Rather than looking in another direction, she is currently doing an unpaid internship in her field. Her excuse is that all her friends that took something “temporary” are still stuck in those jobs, and she doesn’t want that. Of course, she would be unable to do this without her parents’ financial support. We’ve given her until the end of her internship to find a paying job, with benefits, in her preferred field, but after that, whether or not she has a job, we’re cutting funds completely off. It’s time to grow up and change direction if that’s what it takes to earn a paycheck.

    Like or Dislike: Thumb up 3 Thumb down 2

  19. Rob in CT says:

    Seriously… pre-New Deal: bubbles & financial panics galore, tons of inequality.
    New Deal through 1980s: business cycle recessions but it doesn’t look like bubbles & financial panics to me. The “great compression.”
    Era of deregulation: rising inequality and household debt, bubbles (dot com, real estate), and the worst financial panic since the Great Depression. Easy money from the Fed seems to have played a role in blowing the bubbles.

    Of course I grant that the above is not a rigorous study, but I really don’t see how you look at the past ~100 years and decide that the problem is going off the gold standard and the existance (rather than the policy of) the Fed.

    Like or Dislike: Thumb up 4 Thumb down 0

  20. Hey Norm says:

    @ bro43rd…
    No…it’s not blaming the rich.
    There are wealthy people who believe in helping the less-fortunate.
    And then there are wealthy people who believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry — especially environmental regulation. And there are politicians like McConnel and Cantor who will do whatever they want no matter the harm it does to the economy specifically or the country in general.
    I am blaming people who have used their station in life…often achieved more through luck than hard work…to pervert the system to the benefit of few, at the expense of many.

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  21. bro43rd says:

    @Rob in CT: Yeah Rob, because the fiat system in use now is such a deterrent to the PTB. At least when something of real value is used to back money, government is restrained in it’s interventionism. And do you mean the 19th century where the American SOL underwent it’s greatest improvement ever, yeah that one. The 19th century is a credit to free markets and commodity backed money no matter how you try to spin it.

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  22. WR says:

    @JKB: ” Worse, these kids today, don’t want a job, they want a job that lets them follow their passion, a job that isn’t boring, a job that makes a difference.”

    Wow. I never realized what selfish pr1cks these punks were. Imagine wanting to devote your life to something that isn’t boring and that actually makes a difference in the world. How dare they demand that just because they only have a few decades on earth they spend it doing something other than greeting people at Walmart.

    I now see why you loathe all these people who aren’t you. Truly, they are the scum of the earth, what with their expecting to have something like a good life. Don’t they know they should just all shut up so that the rich can enjoy their tax breaks?

    Like or Dislike: Thumb up 9 Thumb down 1

  23. Dave Schuler says:

    I don’t know if you recall, James, but last year I wrote a multi-part series of posts on income inequality over at my place. I think it ran to something like fifteen parts.

    I was baffled then as I am baffled now at the lack of indignation over the income growth of the next 9%. While the top 1% have seen the greatest income growth their aggregate income is just about the same as the aggregate income of the next 9%, the next 9% have seen their incomes grow, too, over the last 20 years even as the incomes of those in the lowest quintile have grown almost not at all.

    One of the questions I asked in my series was why the 99% haven’t taken to the streets? That may be what’s happening now. Or it may be the next 9% or those who aspire to that next 9%.

    Like or Dislike: Thumb up 2 Thumb down 1

  24. bro43rd says:

    @Hey Norm: Sorry Norm, I should clarify my statement. You are blaming rich republicans specifically. One little problem is that republicans are more giving of charity than democrats. Now don’t be confused by this fact I point out and attempt to classify me as a republican troll. This could not be further from the truth, I despise Rs & Ds equally. My point is to bring to light the fact our problems stem from government intervention, not from wealth inequity.

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  25. john personna says:

    @Moderate Mom:

    I think one of the biggest differences between now and then is how one reacts to the realization that one’s expectations are no longer operable. Before, when you couldn’t get a job doing what you wanted to do, you looked for other opportunities and were willing to change your expectations. Now, rather than picking oneself up and dusting off, it seems the OWS protesters would rather complain about the injustice of it all than to retrench and explore other options and directions.

    I’m not sure we should extrapolate from one or two people we know to a whole generation.

    Remember, 18-30 years olds are facing the highest unemployment since the Great Depression and falling wages.

    LOL, did we really raise an entire generation to be idiots?

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  26. WR says:

    @Moderate Mom: What a shock to find that “Moderate Mom” actually works in investment banking — and in mortgage securities, no less. At least we now understand why she’s so desperate to take the blame for the economy off the shoulders of those who wrecked it and put it on the victims — even her own children! Because she is one of those who participated in the destruction of the world’s economy, and is frantically trying to change the subject away from her own responsiblility.

    So she tells her daughter to give up her dreams of a real career in a field that matters, and for which she’s studied for years, and go get a job as a Walmart greeter or a temp typist.

    Her own daughter. Just another victim to be sacrified on the altar of the investment bankers.

    There really is no depths to which these people won’t sink to justify their own greed.

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  27. Liberty60 says:

    @Moderate Mom:

    Wow, you managed to do all that while walking to school in the snow, uphill both ways?

    Like or Dislike: Thumb up 6 Thumb down 2

  28. john personna says:

    @Dave Schuler:

    Don’t the most recent CBO data show significant differences between that 1 and 10 percent?

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  29. Rob in CT says:

    @bro43rd:

    You don’t think that 19th-century prosperity had something to do with continuing to “settle” the continental US? You know, expanding into areas that were empty/undeveloped (and/or simply taking them away from the locals)? That wasn’t interventionist or anything, right? It was all about liberty and stuff! I’m assuming we’re mostly discussing the second half of the century, since to extol the virtues of the first half requires dealing with chattel slavery.

    It’s nice to see you openly pining for the 19th century. I usually have to work a little bit to get libertarians to own up to that.

    Repeated financial panics throughout the 19th century refute the claim that the Fed brings on panics. They happened many times before the Fed. They happened on the gold standard.

    History does not jibe with your theory.

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  30. Rob in CT says:

    working for an Investment Bank, specializing in mortgage securities

    This strikes me as explaining a lot.

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  31. Hey Norm says:

    @bro43rd…

    “…My point is to bring to light the fact our problems stem from government intervention, not from wealth inequity…”

    I would love to see this fantasy fleshed out some. Why do I think you are about to blame the state of the world economy on Fannie and Freddie?

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  32. john personna says:

    @Moderate Mom:

    I don’t suppose your firm was ever directly bailed out … was it?

    (Certainly it was indirectly, as the government made a market for toxic assets.)

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  33. bro43rd says:

    @Rob in CT: We are on the cusp of a great depression, some argue the greatest. And we all know when the other occurred. All under the watch of the FED. When were the great depressions of the 19th century? Facts do not support your theory either, no matter how you spin.
    There was colonialism all over the world during the 19th century, what gave Americans their meteoric rise in Standard of Living as opposed to other countries/cultures? The answer is glaring for those not afraid of the light.

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  34. bro43rd says:

    @Hey Norm: The fantasy is expecting your barkeep to cure you of your alcoholism. Until we ferret out the root of the problem all we’ll be doing is pruning off the dead limbs, but the weed will still be chocking out the good growth we aimed for.

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  35. Rob in CT says:

    The Fed screwed up at the onset of the Great Depression.

    That said, the Fed was created in the aftermath of a previous financial panic – one that was only resolved because JP Morgan stepped in and saved the day. The situation pre-Fed was crappy. The situation post-Fed was less crappy, even though the Fed can screw up.

    Are you seriously asking about depressions in the 19th century, under the belief there weren’t any? Holy crap!

    The quick version, from Wikipedia:

    The Long Depression was a worldwide economic crisis, felt most heavily in Europe and the United States, which had been experiencing strong economic growth fueled by the Second Industrial Revolution and the conclusion of the American Civil War. At the time, the episode was labeled the Great Depression, and held that title until the Great Depression of the 1930s. Though a period of general deflation and low growth began in 1873, (ending about 1896), it did not have the severe “economic retrogression [and] spectacular breakdown” of the latter Great Depression.[1]

    It was most notable in Western Europe and North America, at least in part because reliable data from the period is most readily available in those parts of the world. The United Kingdom is often considered to have been the hardest hit; during this period it lost some of its large industrial lead over the economies of Continental Europe.[2] While it was occurring, the view was prominent that the economy of the United Kingdom had been in continuous depression from 1873 to as late as 1896 and some texts refer to the period as the Great Depression of 1873–96.[3]

    In the United States, economists typically refer to the Long Depression as the Depression of 1873–79, kicked off by the Panic of 1873, and followed by the Panic of 1893, book-ending the entire period of the wider Long Depression.[4] The National Bureau of Economic Research dates the contraction following the panic as lasting from October 1873 to March 1879. At 65 months, it is the longest-lasting contraction identified by the NBER, eclipsing the Great Depression’s 43 months of contraction.[5][6] After the panic, the economy entered a period of rapid growth, with the U.S. growing at the fastest rates ever in its history in the 1870s and 1880s.[7]

    First, it’s funny that this was literally called The Great Depression. Second, it was admittedly not quite as severe as the 20th century version, but it was clearly very very nasty. It sounds a bit like what we’re looking at now, in fact.

    All without the Fed. All on the gold standard.

    You are operating in a fantasy world.

    Like or Dislike: Thumb up 4 Thumb down 0

  36. @Liberty60: Well, there were several people on the We Are the 99% Blog reporting that they had paid tens of thousands of dollars for BFAs, degrees in English, and similar. As a former English major I’m sympathetic, but when I chose the major I understood that this would make it harder to get a job.

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  37. bro43rd says:

    @Rob in CT: I add that this was after a period of fiat currency, that of the greenback, and it took 6 years to shake the malinvestment from the system. Fantasy in a bizarro world kind of way. We can obfuscate the problems or we can identify them. Continue to treat the symptoms or cure the disease, that is the question.

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  38. Moderate Mom says:

    @WR:

    I worked in Investment Banking in the late 1980’s, before I married and had children. It was back in the days where there were actual underwriting standards for mortgages that were enforced, before Fannie and Freddie started buying shit. Sorry, I was about 30 years too early to the party.

    And yes, a job you hate is a whole lot better than being unemployed. We’ve supported our daughter for 24 years. It’s time for her to be responsible for herself and pay her own way. If you can’t find a job dong what you want to do, it’s time to find a job doing something else, even if it’s just until you find that “dream” job. That’s just part of the responsibility of adulthood.

    Like or Dislike: Thumb up 3 Thumb down 1

  39. Hey Norm says:

    @ bro43rd…

    “…Until we ferret out the root of the problem…”

    Agree…the problem lies in that some people lack the ability to identify the problem…for instance those who believe a commodities based currency is any sort of an answer. Until we can remove ridiculousness from the equation we will not get to the root of the problem.

    Like or Dislike: Thumb up 3 Thumb down 0

  40. Moderate Mom says:

    @Rob in CT:

    Again, in the 80’s, specifically l985-l988. Stringent underwriting guidelines by Fannie and Freddie were followed and every single one of the securities issued during that time paid off long before the real estate market imploded. I know it will hurt to be unable to blame me, but it is what it is. Since the early 1990’s, I’ve been a small business owner, along with my husband, selling component parts for conveyor systems and agricultural implements, which isn’t exactly nefarious.

    Like or Dislike: Thumb up 1 Thumb down 1

  41. Moderate Mom says:

    @john personna:

    Nope. The bank that I worked for at the time was merged into another bank, which was then merged into another bank. It’s Regions now, and I have no idea whether or not Regions got Tarp money.

    Like or Dislike: Thumb up 0 Thumb down 1

  42. Rob in CT says:

    Bro,

    I see libertarianism as utopian. You pine for a bygone era that never really existed (thus, when examples are examined, they weren’t really libertarian – there was always some impurity, aka government) and want radical change. The result, we are told, will be wonderful, even for the poor & downtrodden.

    I don’t buy it.

    Like or Dislike: Thumb up 3 Thumb down 0

  43. bro43rd says:

    Employees of universities/colleges that accept federal monies by way of grants or student loans are just as guilty as those employed by banks and traders. Included with the guilty lot should be employees of all banks, military manufacturers, NASA, subsidized energy providers, etc ad finitum. Where does it end? At the barrel of the government gun, period.

    Like or Dislike: Thumb up 0 Thumb down 4

  44. Rob in CT says:

    @Moderate Mom:

    I think it explains a lot because your reflex will be to defend the industry and pin blame elsewhere (Fannie and Freddie “buying shit” even though they were late to that party). The u/w standards went to shit because, as far as I can tell, subprime was highly profitable and the people writing the loans figured they could simply offload the risk on somebody else.

    I figured you wouldn’t have said you were in that field unless you were out well before the crash. I don’t care about blaming you personally.

    Like or Dislike: Thumb up 1 Thumb down 0

  45. ponce says:

    We’ve supported our daughter for 24 years. It’s time for her to be responsible for herself and pay her own way.

    Or what, Moderate Mom?

    You gonna kick her out and force her to go on the dole?

    Like or Dislike: Thumb up 1 Thumb down 0

  46. bro43rd says:

    I do not wish for a return to a bygone era. I wish for an era of liberty from government intervention into many aspects of life. And to continue to deny the FED has anything to do with the ills of our economy/society is burying one’s head in the proverbial sand. The FED is the ultimate enabler of government intervention, allowing it to spend without consideration of the value of what is purchased.

    Like or Dislike: Thumb up 0 Thumb down 4

  47. Janis Gore says:

    @Moderate Mom: I am not about to beat up on you.

    At a point, you get tired of mothering. “Call if you need something, but not too often.”

    Like or Dislike: Thumb up 0 Thumb down 0

  48. Rob in CT says:

    First, I did not deny that the Fed has anything to do with the ills of our economy. I said the Fed has made mistakes. It’s also done good. The overall result has been, to my eye, better than pre-Fed. An imperfect solution for our imperfect economy/society, if you will.

    I’m sorry, but the Fed as root-of-all-evil just stikes me as odd.

    Second, I agree you don’t pine for a bygone era, though you do overly glorify the 19th century. You want to set up libertopia, and I don’t think it will go nearly as well as you think.

    Like or Dislike: Thumb up 2 Thumb down 0

  49. ponce says:

    I do not wish for a return to a bygone era. I wish for an era of liberty from government intervention into many aspects of life.

    Bro,

    Then stop whining on the government invented, government funded internet.

    Like or Dislike: Thumb up 6 Thumb down 0

  50. john personna says:

    @Rob in CT:

    I think it explains a lot because your reflex will be to defend the industry and pin blame elsewhere (Fannie and Freddie “buying shit” even though they were late to that party).

    It’s actually worse than that. Fannie and Freddie underpinned the industry for decades, before the industry went the alternate offering route for MBS.

    ALISA ROTH: Most mortgages in the U.S. used to be short-term. But when the housing market fell apart in the Great Depression, the government stepped in and 30 years became standard.

    (I used to have a better link for the history of the 30 year mortgage, but can’t find it right now. There are also international comparisons, as our government backed system is not the only government backed architecture in place. See the Danish model, for instance. A good one, though perhaps not with as many New Class jobs for people like Moderate Mom.)

    Like or Dislike: Thumb up 0 Thumb down 0

  51. bro43rd says:

    @Hey Norm: I can budge on the commodity currency by stating whatever the market determines for currency will be ok by me. But as long as the FED is there to monetize government debt the economic issues will loom large over society.

    Like or Dislike: Thumb up 0 Thumb down 3

  52. Moderate Mom says:

    @ponce:

    She can live at home for free. We’ll even feed her, because we’re nice like that. Otherwise, if she wants to continue to reside in a different city, she needs to find a job, any job, and pay her own way. Once again, the responsibilities of adulthood.

    Like or Dislike: Thumb up 2 Thumb down 1

  53. bro43rd says:

    @ponce: Fool, I payed for it, just as I suppose you did to. Where does the government get it’s money to do all this wonderful creating for society? What business is it engaged in to collect this wealth? Socialism is a complete and udder failure as a governing system, constantly taking credit for any advances and blaming capitalism for it’s failures. The internet has flourished despite government intervention into the market, not because of it.

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  54. Moderate Mom says:

    @Moderate Mom: @Rob in CT:

    It’s not quite a clear cut as you try to make it. This gem is up on Memeorandum this morning and provides a little context to Fannie’s and Freddie’s role in the toxic securities:

    http://news.investors.com/Article/589858/201110311638/Housing-Crisis-Obama-Clinton-Subprime.htm

    Now, given your obvious views, I don’t expect you to agree with any of this, but it certainly provides food for thought on what happened in the mortgage markets.

    Like or Dislike: Thumb up 1 Thumb down 0

  55. john personna says:

    @Moderate Mom:

    Again, in the 80′s, specifically l985-l988. Stringent underwriting guidelines by Fannie and Freddie were followed and every single one of the securities issued during that time paid off long before the real estate market imploded.

    This is a really strange thing to tell us supporters of that old system.

    We know that the old, stringent, system worked for decades.

    Would that it had remained the model in place!

    (Though certainly anyone working in that should understand that they are working in a government managed marketplace.)

    Like or Dislike: Thumb up 2 Thumb down 0

  56. Drew says:

    So much grousing, whining, blaming……..

    We’ve had super-rich barrons forever. Circa 1900 steel, textile, financial and railroad barrons…………and now internet, entertainment, financial, and communications products barrons.

    And yet in 1900 there basically was no middle class. But a middle class arose. (And despite all the complaining, todays middle class and poor are so much better off than in 1900 its mind boggling.) But no one seems to want to acknowledge that the real attack on the middle class is the natural evolution of foreign economies and the competition they represent.

    The sports analogy would be to scream at the refs all night………..while the other team systematically and ruthlessly slaughters you.

    Rather than deal with that issue – which will not go away, and probably will get more intense – easier to bitch about the rich, and scheme to take their money away. Further, its all government solution oriented, without ever stopping to think that it is government power that enables rent seeking, monopoly and bailouts.

    This thread is amazing. Somewhere between pure folly and self destructive. If you really want to deal with these issues stop taking promises of candy in exchange for votes from those very politicians who have been enablers in setting up this whole dynamic. (Query: Is Barack Obama in bed with Wall Street and large corporate or not?)

    If you can’t bring yourself to that conclusion stop whining about the rich and look in the mirror.

    Like or Dislike: Thumb up 3 Thumb down 5

  57. Rick Almeida says:

    @Liberty60:

    …fixing the source of our problems as a shift in monetary policy is flawed in that it proposes that political problems are mechanistic in nature, without human action and purpose…

    This is exactly the key assumption of Austrian School economics (Austrian business cycle theory), and it’s been so thoroughly discredited empirically in the profession of economics that it’s adherents essentially are left with only a religious attachment.

    Note that bro43rd’s posts all simply assert the same premises over and over again. There is no empirical support for the Austrian school.

    Like or Dislike: Thumb up 2 Thumb down 0

  58. john personna says:

    @Moderate Mom:

    The bad thing about that article is that it does nothing to provide scale. It doesn’t show, for instance, the relative counts of initiations by the government and private agents during the bubble years.

    Like or Dislike: Thumb up 0 Thumb down 0

  59. Rob in CT says:

    MM: dead link (edit: for me, anyway).

    Drew:

    But no one seems to want to acknowledge that the real attack on the middle class is the natural evolution of foreign economies and the competition they represent

    Actually, people on the Left have been pointing this out for some time. Globalization/outsourcing. When they have, they were told they were stupid whiners who just didn’t understand the free market.

    Gerry W. bangs on about this consistently here at OTB (2 billion cheap laborers). I think this is probably a key factor, yes. However…

    Rather than deal with that issue – which will not go away, and probably will get more intense – easier to bitch about the rich, and scheme to take their money away

    What is the Right’s solution? From where I sit, the Right’s response to these things has been:

    1) Not happening!
    2) Shut up, whiner!
    3) Tax cuts for the rich and less regulation will fix it!

    Who is not dealing with the issue?

    Is Barack Obama in bed with Wall Street and large corporate or not?

    Yes, as is the Democratic Party generally. Lesser of two evils, though. Small comfort, but there it is.

    Like or Dislike: Thumb up 5 Thumb down 0

  60. Console says:

    @JKB:

    There’s a certain conceit in the idea that college seriously equates to skill building in the first place. No matter what your degree. But your point is taken. Some bullshit credentials matter more than others.

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  61. Drew says:

    “What is the Right’s solution? From where I sit, the Right’s response to these things has been……….”

    And the left’s position? Tax the rich and protectionsism. Both self destructive and not a solution.

    So do you have something constructive to offer, or just bitching like an old woman about the right?

    Like or Dislike: Thumb up 0 Thumb down 6

  62. john personna says:

    @Drew:

    And the left’s position? Tax the rich and protectionsism. Both self destructive and not a solution.

    A difference in scale make a difference in kind.

    It is a lie to call a 36% tax rate the moral equivalent of a 75% tax rate, or a 4% tariff the equivalent of 20% protectionism.

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  63. ponce says:

    Socialism is a complete and udder failure as a governing system…

    Don’t tell the Chinese.

    They may stop lending us the money to keep our capitalist system afloat.

    Like or Dislike: Thumb up 7 Thumb down 0

  64. bro43rd says:

    @Rick Almeida: While calling me the kettle Rick doesn’t even realize he’s the pot. Too bad economics doesn’t work like chemistry, where theories can be proven. With an infinitesimal amount of variables, there is no way to prove an economic theory. The only way to distinguish between competing theories is to look at what’s happened since Keynesianism AKA centrally planned economics has been practiced as opposed to what went on before. I advocate for market liberty, as well as personal liberty.
    We’ve all been playing at the same rigged table, should we blame the other players or the house for rigging the game?

    Like or Dislike: Thumb up 0 Thumb down 2

  65. Liberty60 says:

    @bro43rd:

    Where does the government get it’s money to do all this wonderful creating for society? What business is it engaged in to collect this wealth?

    Good question!

    I suppose one could see government as being the monopoly seller of services and goods.

    Military protection, police protection, fire, Coast Guard, FEMA, FAA are all services that the business community depends upon to operate.

    Without roads, bridges, dams, harbors, airports, irrigation canals, water treatment, sewer and storm drainage systems the business world would grind to a halt.

    What private entity could have, would have, created the Interstate Highway system? the international system of air traffic control? Or any one of the systems listed above?

    Speaking of the 19th century- most of the systems listed above were created and championed not by as-yet-nonexistant socialists, but by the business community itself, since they recognized the need for government to complement the private sector.

    The public and private sectors are not antagonistic, they complement and depend upon each other to provide different goods and services, on different basis.

    Libertarianism is the mirror of socialism, in that they both propose that the economy can be effectively run by a sole source, either public or private, instead of the comingling of the two.

    Like or Dislike: Thumb up 5 Thumb down 0

  66. bro43rd says:

    @ponce: That capitalistic system you speak of was abandoned for the socialistic system the majority of the world is engaged in. You can’t have capitalism with fiat money, OIOW if the market doesn’t set the rate of monetary value how could this be considered capitalism?

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  67. Liberty60 says:

    @Drew:

    And yet in 1900 there basically was no middle class. But a middle class arose.

    And how did this middle class arise?

    Test your google-fu-

    Keywords:
    Teddy Roosevelt, Bureau of Corporations, Sherman Anti-trust Act, Davis-Bacon Act, labor unions, Franklin Roosevelt, “I welcome their hatred”

    Like or Dislike: Thumb up 9 Thumb down 0

  68. Hey Norm says:

    @ Moderate Mom…
    That post you linked to, on a very basic level, mis-directs the blame for the financial crisis.
    The post claims that the

    “…wholesale abandonment of traditional underwriting standards — the root cause of the mortgage crisis…”

    While bad mortgages were a small contributor to the crisis for sure…it was not the root cause by any stretch. This nonsense is maddening in it’s small-mindedness.
    The crisis was the result of high risk, complex financial products, conflicts of interest, and a failure by regulators, credit rating agencies, and the market itself to rein in excesses of Wall Street. Blaming all that on lending practices is a joke.

    Like or Dislike: Thumb up 3 Thumb down 0

  69. bro43rd says:

    @Liberty60: Except one major difference, Libertarianism operates on voluntary intuitions, Socialism relies on governmental force to meet it’s ends. I posit that all these “needs” met by government would be delivered by the market were it free of government influence. And yes even defense can be done privately, the FFL has existed for several centuries. I am not saying that government can’t provide positive value to a society, just that it can be done with much greater efficiency by the market.

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  70. Rob in CT says:

    @Drew:

    From where I sit, the Left’s answers are also lacking, though not as badly. First, they don’t generally deny a problem exists. That helps.

    I’m wary of protectionism, but my faith (and it was faith) in “free trade” has waned. I am now wondering whether there might be something to “fair trade” agreements. Perhaps not – I’m honestly not sure. I do not purport to be an expert.

    Tax the rich: yes. I think tax reform that results in a slightly more progressive tax system will be a good thing. I’m not under the delusion that this will solve all our problems.
    I would also like to see a government that is more willing to break up TBTF entities and I’d like to see smarter regulation of the financial sector that made the recent mess.
    I would like to see a long-term draw down in our military expenditure. I’d rather we invested that money in more productive things (I’d like to take the savings and pay down some debt during good times in preparation for future recessions).
    I think our healthcare system sucks and harms economic growth – seems to me that if health insurance was decoupled from employment we’d have some more risk-taking, and less headaches for businessowners. That, plus cost-savings, is why I’m up for single-payer.

    None of that “solves” the problem of cheap labor overseas, or our vulnerability to rising oil prices, but I think they would be helpful things in general. We have to hope for technological improvements to get us off oil. I seriously don’t know what to do about competition from workers willing to work for pennies. Perhaps transportation costs will rise enough that some production can move back here. I do think that racing for the bottom is no solution.

    Last I heard from you, Drew, is that you don’t actually think there is a problem and think people should quit whining. Isn’t that so? Why ask for solutions, then?

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  71. @Hey Norm:

    The inevitable shortfall is always funded by reducing services and investments that benefit the poor and middle class (investment in education, in infrastructure, etc.)…

    The argument that we’ve been decreasing spending on education and infrastructure is complete bullshit. If we’re going to be doing top-to-bottom reform, we need to look at the outputs from the system as well as the inputs and start talking about why, for the last 30 years, we’ve been spending ever increasing amounts of money on services and infrastructure and continually getting less and less actual value out of it.

    Until we can assure that increasing revenue isn’t just going to be wasted as so much of our current revenue is, there’s no point in increasing it just for the sake of increasing it.

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  72. ponce says:

    You can’t have capitalism with fiat mone…y

    Was it Winston Churchill who said a fanatic is someone who won’t change their mind and won’t change the subject?

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  73. Liberty60 says:

    @bro43rd:
    Back int he day, when I was a conservative, I would always ask my socialist friends for proof-
    Where in the world has your theory ever been tried, on a national scale, and found to work?

    So I ask you the same- where in the world is there a modern industrialized nation that operates according to your theory?

    One that we can study and emulate?

    Oh, and if you want to be taken seriously- the French Foreign Legion??! Really?

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  74. bro43rd says:

    @ponce: Like that is someone whose opinion is or should be valued. Really???

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  75. steve says:

    “(Query: Is Barack Obama in bed with Wall Street and large corporate or not?)”

    Yes. OTOH, the GOP is a wholly owned subsidiary.

    Steve

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  76. JKB says:

    @Rob in CT:

    But we are discussing all the unemployed. We are discussing the wanna be elite who are upset that they aren’t getting high paying jobs in their chosen field of study that let them follow their dreams and challenge them.

    Are Twentysomethings Expecting Too Much?
    They were raised to believe they could do anything, and now they’re demanding more from work than previous generations ever did. Will they change the world or have to lower their sights?

    I notice the #OWS nor the 99% really include those 20 somethings who didn’t go to elite schools but rather went to work or pursued a trade.

    @WR:
    It’s nice to pursue your dreams but that powerful need to eat sometimes interferes. Just as all the 20-somethings in all the previous generations discovered. So pursue your dreams all you want, on your own dime. Oh and, if you take out an ungodly amount in loans, your options shrink as you have to service that debt. Or be a deadbeat. Even if it means, dare I say it, you have to work in a cubicle at a for-profit corporation doing dull work to facilitate oil and natural gas exploration in the US.

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  77. bro43rd says:

    @Liberty60: So the FFL isn’t the model of defense in today’s world, but the idea is the same, I was only providing an example that did occur in the past. As I stated earlier, economics isn’t chemistry, no way to consider all the variables. But just because something hasn’t existed does not make it irrelevant. Or would you have been right there ostracizing Galileo for positing the heliocentric solar system. If not already obvious, I only hope to shed light on the ideas of liberty, maybe sparking that fire to possibly give up statism for individualism and voluntary systems of governance.

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  78. WR says:

    @JKB: “It’s nice to pursue your dreams but that powerful need to eat sometimes interferes. Just as all the 20-somethings in all the previous generations discovered. So pursue your dreams all you want, on your own dime. Oh and, if you take out an ungodly amount in loans, your options shrink as you have to service that debt. Or be a deadbeat. Even if it means, dare I say it, you have to work in a cubicle at a for-profit corporation doing dull work to facilitate oil and natural gas exploration in the US. ”

    Yes, and in your little bubble of fantasy, that’s wonderful. But there’s a problem, which I see first hand. I’m a writer and I teach screenwriting to MFA students. All of them want to make their living as profesional writers, and they all know it’s an enormous crapshoot — and that they’ll have to work at something else until they start making those sales. I think everyone with a liberal arts degree knows that. But there used to be plenty of jobs even in cubicles where you could make a decent living while you pursued your craft at the same time. Don’t know if you’ve noticed, but those jobs don’t exist anymore. Now it’s minimum wage flipping tacos — if they’re really lucky.

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  79. Hey Norm says:

    @ Stormy…
    Spending on Education and Infrastructure is technically increasing…but not as a percentage of GDP…which means it is functionally decreasing.
    Spending per pupil has doubled since 1980. However the GDP has tripled in the same time period.

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  80. Liberty60 says:

    @bro43rd:

    I only hope to shed light on the ideas of liberty

    Lofty thoughts, those are.

    Except on the way to your fingers as you type, those lofty thoughts of liberty get hopelessly garbled into this:

    I posit that all these “needs” met by government would be delivered by the market were it free of government influence.

    This statement delivered without a shred of evidence, without any sort of real world example.

    You are stating that all the examples I mentioned- Military, air traffic control, Interstate Highway System- would have arisen spontaeously from the Free Market, without government intervention?

    What evidence would cause someone to support such a theory?

    In science, when a theory is proposed, it is customary to provide evidence, data that can be repeated.

    For example has anyone observed in the wild a private trans-continental highway system that was built by private funds, wholly without government protection or assistance?

    I can list several examples of private transportation systems (the predecessors to the Erie Canal and the Pacific Electric Red Cars ) that failed due to a lack of government support.

    I can list several examples of transportation systems that succeeded because of public assistance (The Trans-Continental Railroad and the Interstate Highway system).

    Outside of the ivory tower of think tanks, or some fiction novel or another, where does this idea come from, that private is always superior to public?

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  81. Drew says:

    In order:

    “From where I sit, the Left’s answers are also lacking, though not as badly.”

    Rubbish. Its Big govt vs less. Not Dem vs Republican. The left is all about Big Government solutions, a prime contributor to today’s problems.

    “First, they don’t generally deny a problem exists. That helps.”

    Rubbish. The right, and businessmen, know a problem exists and have been proposing solutions for years. But because those solutions don’t involve greater government control, they get rejected.

    “I’m wary of protectionism, but my faith (and it was faith) in “free trade” has waned. I am now wondering whether there might be something to “fair trade” agreements. Perhaps not – I’m honestly not sure. I do not purport to be an expert.”

    I came out of the steel industry. I’ve been through these wars. Wait for govt protectionism and you are dead.

    “Tax the rich: yes. I think tax reform that results in a slightly more progressive tax system will be a good thing.”

    How much? The left always hides behind “slightly more” without acknowledging that the better off bear more of the freight than ever before. And try to pin them down on how much more is slightly, you will get a blank stare……….and then 5 years later, another call for “slightly more.” But talk about spending “slightly less.” Blasphemy!!!!!

    “I’m not under the delusion that this will solve all our problems.”

    And which problems, if any, will it solve?

    “I would also like to see a government that is more willing to break up TBTF entities and I’d like to see smarter regulation of the financial sector that made the recent mess.”

    Of course, who wouldn’t. Then you need to start voting for anyone advocating smaller government, like me. I don’t see that happening. You seem to be a Gig-Go-aphile/Democrat. That’s why I say, with all thy complaining……look in the mirror.

    “I would like to see a long-term draw down in our military expenditure. I’d rather we invested that money in more productive things (I’d like to take the savings and pay down some debt during good times in preparation for future recessions).”

    Of course, who wouldn’t? And if there is fat in the military budget can you explain why there is no fat in the non-military budget. Last time I heard from the left, cutting non-military spending would result in death, disease and starvation of children and the elderly.”

    “I think our healthcare system sucks and harms economic growth – seems to me that if health insurance was decoupled from employment we’d have some more risk-taking, and less headaches for businessowners. That, plus cost-savings, is why I’m up for single-payer.

    You were on a run, and then flopped. Its the fact that the consumer is not explicitly exposed to price that has made health care costs skyrocket. Govt control will simply reduce costs by limiting access and quality. Its an old story.

    “None of that “solves” the problem of cheap labor overseas,”

    Yes, one of the most vexing problems I see. But as a start our school system is a god-awful mess. Oh, yeah. Mostly public. We could start there.

    ” or our vulnerability to rising oil prices”

    We’ve got a century’s worth of N American petroleum now that oil shale and tar sands are the radar. We could totally put the Middle East on ear. But not as long as the enviro-nuts continue to chant to the sky for solar panals and wind mills. Again, look at the left. They are the problem.

    “Last I heard from you, Drew, is that you don’t actually think there is a problem and think people should quit whining. Isn’t that so? Why ask for solutions, then?”

    The first point is simply false. My point is that whining is for losers. And as you can see from my responses I have general policy directions antithetical to the left. Whining, taxing the rich etc all while pursuing destructive and unproductive policies (mostly aimed at narrow political constituencies) is foolish. Just foolish. Hence my “look in the mirror” whiners.

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  82. Rob in CT says:

    Government can be a problem. It can also solve problems.

    Taxation: my appetite for redistribution via the tax code will wax and wane depending on the circumstances. Given the trend I think tax increases at the top are warranted. This is situational.

    Single-payer health insurance: works pretty well in many other countries. Cheaper, universal, slightly slower than top-of-the-line insurance here. All in all clearly a better deal.

    Drawing down spending in the medium term is something I support, Drew. Big cuts now are stupid, though. I don’t think there is “no fat” but I also know, based on poll data, that the average person has no frickin’ clue as to what we really spend money on and opt for the easy answer of “cut the waste.”

    Military spending isn’t necessarily just “fat” (though it can be!) – it’s a question of allocation of resources. You could be spending that money on weapons and other things that are all pretty good – but it could still be wasteful if you’re directing too high a share of your limited resources to “defense.” I think that we are doing that, and it is not only a poor allocation of resources but it also enables our interventionists to run around the world playing policeman/social engineer.

    Your comments re: oil sound like fantasy to me, sorry. Even if there was that much down there, you completely avoid the issue of the cost of pollution. Oh, right, even bringing up such a thing makes me an “environut.” I see the effects of such things decades down the road (when the insurance claims get made once the contamination is discovered). Resource extraction is dirty work and has real costs. Unfortunately, the Right (including you, apparently) is all about avoiding/hiding those costs. I want to pay for them up-front. If drilling still makes sense with the costs included, I say go for it.

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  83. Drew says:

    Rob in CT –

    I have to be honest. That’s a really lightweight response. And I think that is why I’m in the position I’m in, and others not so well off. I’ve thought longer and harder about these issues; I’ve responded better. I know that sounds arrogant. But at some poit you just have to look at empirical evidence.

    BTW – I used to live in Ridgefield, which I know the NEaster hit hard. Hope you have power and are doing OK.

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  84. Ben Wolf says:

    If not already obvious, I only hope to shed light on the ideas of liberty, maybe sparking that fire to possibly give up statism for individualism and voluntary systems of governance.

    Ah, governance by bumper-sticker. Who knew it was all so simple?

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  85. Rob in CT says:

    Yes, you are correct: it sounds arrogant. I simply think you’re wrong, regarding how much better your answers to the questions of the day are. We both think we’re looking at empirical evidence. I know I am when I look at the long-term pollution/haz waste claims on my desk, for instance. But you have no answer for that other than “environuts” apparently. To me, that’s the non-response of a “lightweight.”

    If you are assuming that you’re doing well whereas I, lightweight, am not… well, you are incorrect. My family is doing very well.

    Thank you for your thoughts regarding the storm. Thankfully, we only lost power for 24 hours. Many others, including friends now staying with us, were not so lucky.

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  86. Hey Norm says:

    @ Rob…

    “…I see the effects of such things decades down the road…”

    Frankly I think you and I saw the effect of such things this past weekend. Glad you have power back. After Irene I feel incredibly fortunate to have not lost it at all this time ’round.

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  87. george says:

    I suspect what’s hitting the 5% is more globalisation than anything else (and this includes STEM graduates). People in India and China have always been as intelligent as Americans, they’re now as well educated, and because their cost of living is much less, they will work for much less. This won’t correct itself until cost of living becomes more or less uniform around much of the world.

    The same thing happened with manufacturing when that became global. People all over the world can do the same work now, but it costs more to live in some places than other.

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  88. john personna says:

    I want to make sure conservatives have their cheat-sheet.

    When anyone says taxes could be a tad higher, shout “class warfare.”

    When anyone says globalization has had negative impacts, shout “protectionism.”

    You shouldn’t have too much trouble. It’s easy, really.

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  89. JKB says:

    @Rob in CT: Taxation: my appetite for redistribution via the tax code will wax and wane depending on the circumstances. Given the trend I think tax increases at the top are warranted. This is situational.

    You might want to notice that they never say, Tax ONLY the rich.

    You know when the income tax started, when they got it through ratification, they tax was only on the very top earners. How’d that work out?

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  90. An Interested Party says:

    So do you have something constructive to offer, or just bitching like an old woman about the right?

    As opposed to your bitching like an even older woman about the left…

    You might want to notice that they never say, Tax ONLY the rich.

    Oh really? Who are the “they” and who else do “they” want to raise taxes on…

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  91. Ben Wolf says:

    @JKB:

    You know when the income tax started, when they got it through ratification, they tax was only on the very top earners. How’d that work out?

    Their incomes increased 250% over the last thirty years while their tax bracket fell from 70% to 35%.

    I’d say it worked out pretty well for them.

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  92. anjin-san says:

    seems to me that if health insurance was decoupled from employment we’d have some more risk-taking, and less headaches for businessowners.

    And people who are not young & healthy or rich would not have insurance.

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  93. Rob in CT says:

    @Hey Norm:

    Yeah, this storm really hammered the Northern/Northwestern parts of the state. We took more of a beating with Irene because we were east of the eye.

    My point regarding pollution is more mundane than freakish weather.

    I have an idea of what it costs to clean up a plume of contaminated groundwater (variable, of course, with depth, extent of contamination and the amount of contamination deemed acceptable for “closure”).

    This isn’t a tree-hugging thing. This isn’t worrying about the spotted owl, or whatever the wingnut “environut” talking point of the day is.

    This is about pollution that directly impacts human health. Even if you don’t give a damn about nature, you should care about what’s in your water, air and food.

    Allowing businesses to externalize the costs of pollution doesn’t actually save society money. It just kicks the can down the road. I figure it’s better to spend some more money up front on reasonable safeguards to cut down on leaks/spills/etc. If the conversation was about what, exactly, is a reasonable safeguard, fine. That’s a good conversation to have. These things can wax and wane. I know that in Indiana, for instance, people are expecting some more flexibility with regard to closure requirements. This is not necessarily a bad thing, as the primary requirement is still to safeguard human health. At the same time, if no people are drinking the water, it’s ok to leave a few parts per million of XYZ contaminant in there to naturally attenuate over a few decades. The result will likely be cheaper cleanups without harming the public. Hurray.

    But if you don’t have the conversation… if all you have is ENVIRONUT!!111!!!, what use are you?

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  94. Rob in CT says:

    @anjin-san:

    Um… I was advocating single-payer universal coverage, anjin-san.

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  95. James Joyner says:

    @Rob in CT: @anjin-san: That was my take-away as well. I’ve thought for years that the reason we would wind up going with a single payer system in the USA is that Big Business would demand it because the current system puts them at a huge competitive disadvantage with the rest of the developed world.

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  96. Rob in CT says:

    James,

    I had a similar thought, but obviously not.

    I’ve concluded it’s not about the businesses, it’s about the individuals who run the businesses (who, being wealthy, would have to pay increased taxes to pay for a governmental plan). The owners don’t want it.

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  97. Bob says:

    @OzarkHillbilly:

    You are absolutely correct and the Detroit auto worker hardly was representative of bkue collar workers. I call BS also.

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