Two Countries, Both American

There’s an important new book by Peter Temin, professor emeritus of economics at MIT, titled The Vanishing Middle Class: Prejudice and Power in a Dual Economy.  It paints a depressing  portrait of America and the evaporation of what used to be a healthy middle class.

His assertion: America is no longer a single country. Instead, we are two separate nations, and those nations have dramatically different resources, expectations and fates. As a post to the blog of the Institute for New Economic Thinking put it,

In one of these countries live members of what Temin calls the “FTE sector” (named for finance, technology and electronics, the industries that largely support its growth). These are the 20 percent of Americans who enjoy college educations, have good jobs and sleep soundly knowing that they have not only enough money to meet life’s challenges, but also social networks to bolster their success. They grow up with parents who read books to them, tutors to help with homework and plenty of stimulating things to do and places to go. They travel in planes and drive new cars. The citizens of this country see economic growth all around them and exciting possibilities for the future. They make plans, influence policies and count themselves lucky to be Americans.

The FTE citizens rarely visit the country where the other 80 percent of Americans live: the low-wage sector. Here, the world of possibility is shrinking, often dramatically. People are burdened with debt and anxious about their insecure jobs if they have a job at all. Many of them are getting sicker and dying younger than they used to. They get around by crumbling public transport and cars they have trouble paying for. Family life is uncertain here; people often don’t partner for the long-term even when they have children. If they go to college, they finance it by going heavily into debt. They are not thinking about the future; they are focused on surviving the present. The world in which they reside is very different from the one they were taught to believe in. While members of the first country act, these people are acted upon.

According to Temin, the two sectors have entirely distinct financial systems, residential options and educational opportunities, and their inhabitants have very different experiences when they get sick or interact with the law.

Worst of all, those in the low-wage sector have no way out. American social/economic mobility may have been real once, but it is a myth today.

A review of the book in the Atlantic was titled “Escaping Poverty Requires Almost Twenty Years with Almost Nothing Going Wrong.”  The reviewer cites Temin’s assertion that racism, abetted by deliberate policy choices, produced these separate nations:

The upper class of FTE workers, who make up just one-fifth of the population, has strategically pushed for policies—such as relatively low minimum wages and business-friendly deregulation—to bolster the economic success of some groups and not others, largely along racial lines. “The choices made in the United States include keeping the low-wage sector quiet by mass incarceration, housing segregation and disenfranchisement.”…

Many cities, which house a disproportionate portion of the black (and increasingly, Latino) population, lack adequate funding for schools. And decrepit infrastructure and lackluster public transit can make it difficult for residents to get out of their communities to places with better educational or work opportunities. Temin argues that these impediments exist by design.

The book does offer a way out– suggestions for remedying the hopelessness of those trapped in low-income America.

He offers five proposals that he says might help the country return to more equal footing. Some are fairly clear levers that many before him have recommending pulling: expanding access to and improving public education (particularly early education), repairing infrastructure, investing less in programs like prisons that oppress poor minorities, and increasing funding for those that can help build social capital and increase economic mobility. But other suggestions of his are more ambitious and involve fundamentally changing the cultural beliefs that have been reinforced over generations. Temin advocates doing away with the belief that private agencies can act in the interest of all citizens in the way that public entities can, and should. His final recommendation is to address systemic racism by reviving the spirit of the Second Reconstruction of the 1960s and 1970s, when civil-rights legislation helped to desegregate schools and give black Americans more political and economic power.

I agree that changing the culture is imperative; but it is also an incredibly slow and difficult process.

If someone knows how, I hope they’ll share….

25 thoughts on “Two Countries, Both American

  1. Hmm; interesting first paragraph of the blog today. The title of Mr. Temin’s book gives the feeling of “things to come” but the quoted areas from his book are more “black and white” (not referring to race per se) with no shade of gray. The middle class in indeed declining but I don’t believe it is vanishing….but it can if current conditions continue we will indeed become a country with a pronounced caste system. Or maybe I misunderstood his hard-line definition. I do disagree that the desegregation of the 1960s and 1970s being beneficial more than temporarily. How many young blacks (or any minority) do we see in power today? Those with a voice in government are the older generation who took part in or supported the civil rights battle – and it WAS a battle. At the time desegregation was instituted, red-lining and white-flight began in an attempt to maintain separation of the races on the home front.

    Being part of the once middle-income America, where my family has been trapped for generations, some are barely hanging on to low-middle-income status. Mr. Termin’s 20/80 percent figures do not reflect our (using “our” inclusively) actual situations today but can foretell our future. The on-going protests, rallies and marches aimed at the current administration are covering all issues regarding the dwindling civil rights for all of us, of all races and economic levels.

    Maybe my views are effected by spending Mothers Day with my 22 year old grandson who graduated from Ball State University last week with an engineering degree and a number of honors amassed in high school and at BSU. He has a contract for a job which begins on Wednesday but six months from last Saturday the payments on his $35,000 student loans (co-signed by his parents) begins…whether he is employed or not. That is the balance due even with his Presidential Award of $18,000 his junior year in high school. They are obviously not part of the 20% but not (yet) part of the 80% Mr. Temin described. My grandson’s honors included Leadership in Energy and Environmental Development and Habitat for Humanity; if Trump & Co. get their way and repeal the EPA, how long will he and countless others be needed in his field even with honors?

    We aren’t at a 20/80 Percent division yet but are headed that way.

    “I agree that changing the culture is imperative; but it is also an incredibly slow and difficult process.

    If someone knows how, I hope they’ll share….”

    I don’t have the answers, Sheila and others, but I do believe the protests, rallies and marches are the first steps on the path to changing our culture to prevent that 20/80 division. Has this country ever before been so organized, with various groups of people coming together, in their protests of the status quo, the obvious loss of the middle class and to force change in the questionable leadership, sans law and Constitutional protection?

  2. Nothing can begin to change until the GDP gets above 3% and that looks like a dream at this point.

  3. It seems that the low wage sector can be divided into urban and rural segments, as well. Both suffer from the same lack of opportunity. What makes change so difficult is that the rural segment of the low wage sector continuously votes against its own economic interests. They have been turned into culture warriors by their politicians and their pastors.

    Maybe the DNC should be buying time on conservative media to explain in 1 minute segments how progressive policies will help rural voters more than urban dwellers.

  4. The vast amount of money in this country has ended up in too few hands. The wealthy class has been very successful at creating tax loopholes and safe havens to the point that their money is no longer re-invested into our economy.

    Many may disagree with me, but I don’t consider the stock market to be an investment in our economy that creates jobs or better wages. The stock market rewards the C Suite executives, the Boards of Directors, and the wealthy elite that have the money to invest for short term gain.

    The middle class has shrunk and those that are clinging to the lower level of the middle class are hanging on by a thread. The threat of losing everything is a daily stress for them. Far too many people have lost full time jobs that enabled a middle class livelihood. Those of us in our 50s and 60s who lost those jobs are now working at low wages or can’t find employment at all.

    Our economy has replaced good jobs with low wage service jobs that offer no benefits. It seems that the elites in power are incapable of realizing that they have created a country of slaves who are unable to pay taxes and afford food and shelter. This will not last forever. The oppressed will eventually revolt!

  5. Off today’s subject, but wanted to let others know this:

    I called Senator Donnelly’s office last week to request/suggest that now is the perfect time to start holding town halls in the rural counties that bleed red. The person I spoke with said that he is very busy and has some town halls scheduled. He couldn’t tell me when or where they are going to be, which made think that there really isn’t a schedule. The only times that he has visited my county has been to visit businesses to create press releases. Have never known him to hold any town halls.

    I have recently been getting multiple requests for money from him via email and facebook. If he wants to even think about holding onto his job he needs to step up to the plate and get out to see the people he supposedly represents, mot just business owners.

  6. After reading this I often wonder how intelligent people can defend the terrible practice of private school vouchers and funding of charter schools. Vouchers are nothing more than state sanctioned racism and discrimination; and charter schools do nothing for students that can’t be done in the regular public schools with the proper funding. It is clear to me that the 20% do not want the 80% anywhere near their world.

  7. You would be correct, Teresa Kendall. They have theirs and don’t want to pay for public goods – PERIOD. They see their tax dollars going to support “lazy bums and drug ridden members of society.”

    When they live and pay taxes in Carmel, they get to see the nice amenities which go along with their property taxes, but they want to minimize state and federal taxes. They’ve been getting their way since the early 80’s when Margaret Thatcher and Ronald Reagan ushered in Neoliberalism. If they privatize public schools, they won’t have pay high wages in public schools for kids who will only make it through high school and work in the service industry. Why not just set them at computers? It’s cheaper. Vouchers allow them to use their tax dollars to send their kids to private schools.

    The problem is the 80% no longer can rely on the press or political parties – both cater to the 20%.

  8. The investment/donor/political class has engaged upon a class-war against those below them for decades. That was the entire impetus of Limbaugh’s radio program,to strengthen beliefs supporting those at the top. One expects such beguile from Repubs. Unfortunately,the Democratic Party has been conspicuously absent and impotent for the past three decades and has allowed the investment/donor class to rape and pillage. Democrats love the monies that flow to them via the donor/investment class,so, they too have given in to the demands,desires and wishes of the donor/investment class. The Democratic Party as it stands today is not the cure. Plus,we’re learning much about the machinations of the current Vichy-Democrat Party (DNC) via the current lawsuit against it.

    At this point,the duopoly isn’t working out for most of Americans. Shy of sharpening the guillotines I have no idea as to how to change the rapacious and entitled thinking among the upper caste in America. It’s interesting the professor’s response to the article is to blame those below the upper caste and place the onus upon them. Perhaps a change of thinking should be put upon the upper 20%?

  9. What we can’t seem to get through our heads is that this is the natural order of things. We who grew up in the 20th Century think progress is inevitable. It is not. A large middle class is unnatural. Only because of a couple brief periods of inspired leadership did we end up with what we all think of as “America” or “The American Dream.”

    We either make this happen, or people will tend toward their animal instincts, as they almost always do. Trump is just the alpha male primate beating his chest and flinging shit at you.

  10. From the article >>> The upper class of FTE workers, who make up just one-fifth of the population, has strategically pushed for policies—such as relatively low minimum wages and business-friendly deregulation—to bolster the economic success of some groups and not others, largely along racial lines. “The choices made in the United States include keeping the low-wage sector quiet by mass incarceration, housing segregation and disenfranchisement.”…
    ============================================================
    I totally and strongly disagree that it is the “workers” who make this choice. It is not the “workers” who have lobbyists every where in the political power centers. The choice is made by those who control the wealth, and it is not “workers”.

    From an article in CNN Money http://money.cnn.com/2016/08/18/pf/wealth-inequality/
    The top 10% of families — those who had at least $942,000 — held 76% of total wealth. The average amount of wealth in this group was $4 million.

    Everyone else in the top 50% of the country accounted for 23% of total wealth, with an average of $316,000 per family.

    That leaves just 1% of the total pie for the entire bottom half of the population.

    Families run by adults with college degrees, meanwhile, had a median wealth of $202,000, or nearly four times that of families headed by someone who only had a high school diploma.

    Changes in wealth over time was also very uneven across groups.
    Families at the 90th percentile saw their wealth grow by 54% between 1989 and 2013.
    Those at the 50th percentile only experienced a 4% rise during the same period.
    And those at the 25th percentile actually saw their wealth drop by 6%.
    =====================================================================

    We have a problem with taxation, to be more specific loopholes. These loopholes benefit the ultra wealthy and large corporations.

    As JoAnn pointed out her grandson will now have a $35,000 debt to pay for a college education. Many counties in Europe have a debt free, for the student higher education. The rationale being a highly educated work force is a total benefit to society, which includes the companies that employ them.

  11. Louie posted:

    Changes in wealth over time was also very uneven across groups.
    Families at the 90th percentile saw their wealth grow by 54% between 1989 and 2013.
    Those at the 50th percentile only experienced a 4% rise during the same period.
    And those at the 25th percentile actually saw their wealth drop by 6%.

    That’s not a bug,that’s a feature. Which is why I cannot and will not get out the pom-poms for the DNC .

  12. Interesting. Reminds me of Andrew Hacker’s Two Nations, written back in 1992. It is written primarily around racism, but of course can be applied in a broader context. Things haven’t changed much in the last quarter century, have, they?

  13. William @ 10:52, I agree with your assessment of the Democratic Party. As Eugene Debs said, “The Republican and Democratic parties are alike capitalist parties — differing only in being committed to different sets of capitalist interests — they have the same principles under varying colors, are equally corrupt and are one in their subservience to capital and their hostility to labor.”

    Other than taking money from labor unions and using some union leaders as a stage prop, when is the last time a Democrat has ever spoken out publicly and strongly for labor unions or labor in general???

  14. JoAnn’s grandson may have a $35,000 debt……But that debt can be bundled and sold to investors, and if things don’t work out ..Oh Snap!! The investment class can always receive a bailout!

    Speaking of the investment- class,their ugly war against workers and alternatives….. It’s too bad the workers at Marsh (Sun Capital) couldn’t take control of the stores as workers in Argentina have done with respect to the Recovered Factory Movement.

  15. As a happenstance, I have just published a two-part blog that treats the difference between those in the real economy and those in the parasitic economy and our subsidization of such as Walmart and McDonald’s bottom lines paid for by those in the real economy. Fifty two percent of Walmart employees and hundreds of thousands of McDonald’s employees are on the public till. We are paying what is necessary for such employees to survive while adding to the corporate bottom lines, and perhaps worse, are by our benificence allowing our pathetic low wage economy to become a fixture. When workers are not paid a living as opposed to a minimum wage. aggregate demand in the larger economy is, as now, stifled. I take note of what Shelia’s piece today has to say about causes, but for me the cause of our underperforming economy is that our politicians refuse to pass a law equating living wages with minimum wages. The State of Washington and Seattle have decreed a $15 an hour minimum wage and the state is number 1 in economic growth and the growth of small businesses. Contrary to the dire predictions of right wing think tanks and low-wage aficionados, business is great. The workers have more money to spend and the economy is all about demand, without which the market underperforms, as it is now. Incidentally, with the bump in demand, businesses in Seattle and the State of Washington are more profitable than before, as I note in Part II of my blog, so higher wages are good for their bottom lines as aggregate demand outstrips higher wages paid, so what’s not to like?

  16. Nancy; your suggestion to Donnelly to begin holding Town Hall meetings is along the lines of comments I posted on Dana Black’s Facebook page this morning. We all know why Republicans seem to have STOPPED holding Town Hall meetings but…why haven’t Democrats STARTED holding Town Hall meetings. What better time to start strengthening the entire Democratic party in their home states than when the Republicans are at a weak point due to outright hostility. We, and the entire DNC and all elected Democratic Congressmen and Congresswomen can “rest on what they believe to be their laurels” but…that is how we got here today.

    You are also correct about the begging for money; I rarely bother to read E-mails these days…no matter the subject listed, it always begging for money. Why should we pay them more to continue doing as little as possible. IF they are doing anything “behind the scenes”; out with it! We need and have a right to know what they are doing.

  17. Well said JoAnn. If Donnelly refuses to show up in the public arena, he has absolutely no chance of retaining his job. After what someone in his office told me on that phone call, I have no illusions about him being able to keep his job. He seems to have become too far removed from the people he is supposed to be representing.

  18. Nancy; my granddaughter is getting married June 3rd in Bloomington, her fiance’s father’s best friend is John Gregg. I am hoping he will attend the wedding; the fiance’s family are staunch Republicans…this should be interesting. If you hear of a riot at a wedding in Bloomington on June 3rd, look for my name among the combatants…lol! He made so few public appearances both times he ran (but did little campaigning) for governor, I have a few choice words for him.

  19. The middle class IS shrinking and while a larger proportion of blacks suffer poverty, most who suffer shrinking incomes and opportunity are white.

    It strikes me that the original argument for school vouchers was to help poor children trapped in inner city failing schools. Said the sponsors – give them the same advantages of wealthier families to escape to better opportunities. Yet many of those same voucher supporters in the state legislature had no similar sympathy or arguments for those trapped in the inner city by lack of public transportation AND voted against giving Indianapolis residents (inner city and suburban townships alike) a chance to even VOTE on a local public transit system.

    The suburbanites have theirs and some don’t want to part with any of it to raise the tide for all. But I often think the population at large is more sympathetic than our legislature to promoting the welfare of everyone.

  20. JoAnn, If you end up needing bail money maybe Sheila can solicit donations from readers on this blog.

  21. There are several ways to address the inequities that have developed over the past 40 years. Living wages, labor unions, civic engagement. We can look back at how Roosevelt handled the Great Depression remembering that the inequity is greater now than it was then. We can look abroad to those European countries that are thriving and incorporate some of their measures like national health programs. But first we have to recapture our government from the corporate oligarchy. I don’t think we can depend on the courts for that.

  22. BSH; get a grip, of course I won’t create a scene at my granddaughter’s wedding. I will, however, make it a point to speak with John Gregg if he is there – would you pass up an opportunity like that? I can’t speak for the groom’s wealthy, Catholic, staunch Republican family who live in a small southern Indiana town and have taken full control of this extravaganza of a wedding.

  23. Gee, I didn’t know BSU had engineering degrees. As for public schools, a massive pit of wastefulness and inefficiency, raising taxes to feed them just means poor kids will have even less opportunity to get ahead. However, a big fat belt of bureaucrats will get good jobs doing nothing. The Soviet Union called them social parasites. Anyone from Indianapolis is familiar with IPS, and realizes that a 50% budget cut in the 1950’s would have been highly positive, so surely we wouldn’t want to step back to yet more overspending. Remember that (American style) unions exist to help their members at the expense of the general public, and did the things that Citizens United now permits others to do. Especially consider the effects of unions on minorities, although they supported left wing democrats the quid pro quo was shelter from public actions that might help minorities get good jobs. Things like Sparrow Point Shipyard were common, but looking at the all black Pullman Porters union getting merged into a non existent portion of the UTU is especially illustrative. Lots of fake BFOQ’S elsewhere too.

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