Decline of the U.S. Middle Class?

[charlie]

I think JohnBlake is on the right track with his analysis
of the outsourcing problem. My experience as an engineering manager fits his description very well.

If we can continue to be on the leading edge of technology we will be OK. The problem is that we
are losing ground on education. I think that is the
key to the survival of our way of life.

Cheers,

Charlie

[unclemick]

My take on education is slightly jaundiced:

Circa 1966 - 'forget all that crap you learned across town at the U. of W. - there's only one way and it's the Boeing way - And since you're in R&D - if you produce good data - the results may show up in the design manual.'

I want to revisit the "gun" issue briefly (my No. One
hot button). Most states allow concealed carry.
A few (including Illinois where I live) do not. In fact,
it is illegal to own a handgun in Chicago and some
suburbs. Bleeding heart liberal types have been chipping away at The Second Amendment for years
and this will continue. Even if you do not own guns,
or wish to, private ownership of firearms (I am speaking
broadly as there is little I would ban outright) is what
protects all of those other rights we hold so dear.
Speaking of the Bill of Rights, the Second Amendment is "First among Equals" in protecting your other rights.
It is naive in the extreme to expect the government
(any level) to protect you.
I think it was Franklin who
said "those who give up their freedoms for a little security deserve neither."

John Galt

Bleeding heart liberal types have been chipping away at The Second Amendment for years
and this will continue. Even if you do not own guns,
or wish to, private ownership of firearms (I am speaking
broadly as there is little I would ban outright) is what
protects all of those other rights we hold so dear.

Absolute peanuts compared to what John Ashcroft has done over the last 4 years!

Hi Cut-Throat! I won't defend him (Ashcroft).

John Galt

[Marshac]

If we can continue to be on the leading edge of technology we will be OK. The problem is that we
are losing ground on education. I think that is the
key to the survival of our way of life.

I agree 100% with you. I also think that the US is missing the boat in terms of biotech research which, IMO, is the next "big thing". I have been reading about several companies moving operations overseas (europe) due to the US' restrictions on stem-cell research... regardless of what your ethical position on this matter may be, the simple fact is that companies are moving.

I also agree that a major problem in the US is our deteriorating educational system. The main problem is that we talk about how important schools and education are, but politicians rarely actually put the funding where their mouth is (nor do voters want to actually pay for it!). Take Bush for example. NCLB (No Child Left Behind) is a huge burden for schools, and has some very high stakes.... which were supposed to be mitigated by increased funding.... of which only a small fraction has actually shown up. Bush also promised additional funding ($250M) for community colleges...then cut the CC budget by $151M... it's lip service, and BOTH parties have been shown guilty of it. Here in Washington state we had a voter initiative that REQUIRED COLAs for teachers each year.... our (democratic) governor suspended these COLAs due to budget concerns. Some of the teachers I remember the most from high school have since left teaching.... not because they retired, but because they could no longer afford to continue teaching. With the traffic problems around Seattle, teachers can no longer commute to work in a timely manor, and their teaching jobs don't pay enough to allow them to live closer to their job.... so they quit. Mercer Island ($$ area) proposed building "teacher housing" to address this problem... Come On! Perhaps if we really decided to care, and to PAY for quality education, real reform would happen, but in typical American fashion, we want everything, but don't want to pay for it. How many people do you know that have voted down a school levy because they "don't have any children", or "don't have any children going to school anymore"? The real poop will hit the fan here in a few years with the emergence of "charter schools" and "school voucher" programs.... These programs will only serve to drain money away from an already underfunded school system. Sorry for the rant, but I talk to teachers every day as part of my job.... These are the issues that come up all the time. Unfortunately, if you figure that there is an 13 year lag-time (K->12th grade) between when we decide to make changes, and when we begin to see real results, we need to make changes ASAP.... How else can the US hope to compete against China, or India in the global economy? What sets our labor pool apart from those in other countries anymore? Why do we warrant such high salaries? There is no special reason why US citizens have such a high standard of living... the rest of the world doesn't "owe" us a thing.... Once people in the US wake up to this fact, it may be too late.

Yes, but the labor pool, just got a lot bigger (due to technology) and a lot cheaper. Someone made the point that a rising tide lifts all boats. But in reality that's not true. For the tide to rise on one side of the globe, it falls on another. There is no increase in water in the Oceans. And I believe that this will happen with the labor pool also.

My understanding is that there can be an increase in the water in the oceans. GDP can be raised throughout the world, all at once. I think that this happens because of improvements to 'productivity'. Hopefully, as manufacturing (and more recently, information tech. professions) move out of the country, US workers move on to even better jobs. We saw this happen in the 1990s as manufacturing jobs were in decline, but information technology jobs accelerated.

I agree that GDP isn't a very good measure of the economy. Its like measuring a company's health my looking at revenue (not profit). A better measure is GDP per hour worked. Then adjust for resources used, and environmental destruction. Other metrics are used in combination, but generally it seems like everyone looks at GDP growth.

The 'Walmartization' of the US economy is a big risk. Those manufacturing jobs paid very well. It's hard to see how the average 'joe' who got a job in the manufacturing industry will be able to find a reasonably paying job in the years to come. If good jobs aren't available, another risk is that these people will become more dependent on the government for things like drugs and health insurance. If people think we're overtaxed now, just wait until there's a huge pool of voters that are making less than $10/hour with no benefits.

[unclemick]

I understand from watching Charlie Rose - Thomas L Freidman (of Lexus And tThe Olive Tree) plans to give it a shot in his next book. The flattening of the global economy theme.

Seafood imports are creaming the locals around here.

[otako]

My understanding is that there can be an *increase in the water in the oceans. *GDP can be raised throughout the world, all at once. * I think that this happens because of improvements to 'productivity'. *Hopefully, as manufacturing (and more recently, information tech. professions) *move out of the country, US workers move on to even better jobs. *We saw this happen in the 1990s as manufacturing jobs were in decline, but information technology jobs accelerated. *

I agree that GDP isn't a very good measure of the economy. *Its like measuring a company's *health my looking at revenue (not profit). * *A better measure is GDP per hour worked. *Then adjust for resources used, and environmental destruction. *Other metrics are used in combination, but generally it seems like everyone looks at GDP growth.

The 'Walmartization' of the US economy is a big risk. * Those manufacturing jobs paid very well. *It's hard to see how the average 'joe' who got a job in the manufacturing industry will be able to find a reasonably paying job in the years to come. * *If good jobs aren't available, another risk is that these people will become more dependent on the government for things like drugs and health insurance. If people think we're overtaxed now, just wait until there's a huge pool of voters that are making less than $10/hour with no benefits.

Better jobs flipping burgers or clerking at Wal-Mart?

There is no truth to the theory that new better jobs are created from jobs that leave this country. *Even during the boom times of the 90's, a lot people lost out as well paying manufacturing jobs left this country. *In comparision to wealth of manufacturing jobs that left this country, a small trickle of new IT jobs were created. *Right now, I don't see any industries present or in the horizon that could employ a lot of people such as IT and manufacturing did in the past. *In the future, a few highly educated people in select government protected industries will gain from direction the economy is moving. *The average joe will lose out against competition from India and China.

Besides, the world is catching up with our education and technology level. *Did you ever consider that new jobs won't be created in this country but in India or China? *I've seen a lot bright and highly educated Chinese workers last time I visted Asia. *

Besides, the world is catching with our education and technology level. Did you ever consider that new jobs won't be created in this country but in India or China? I've seen a lot bright and highly educated Chinese workers last time I visted Asia.

Otako is right on the money here. This is exactly the point I was trying to make. The U.S. had a huge advantage after WWII, with the rest of the world devastated. Things will be different this time.

Not sure how this will affect retirees, nest eggs and such though.

[sgeeeee]

. . .
Not sure how this will affect retirees, nest eggs and such though.

I'm not sure either, but one of my fears is that without wage earners to tax, the government will find a way to tax what they can -- retiree nest eggs.

[otako]

http://www.vdare.com/roberts/labor_arbitrage.htm

For example, Matthew J. Slaughter, a professor at Dartmouth, recently concluded that during 1991-2001 “for every one job that US multinationals created abroad in their foreign affiliates they created nearly two US jobs in their parent operations.”[Globalization and Employment by U.S. Multinationals: A Framework and Facts,” Daily Report for Executives, Bureau of National Affairs, [Subscription] March 26, 2004]

There is no truth to the theory that new better jobs are created from jobs that leave this country.

Hello Mr. Otako,

It appears that you misunderstood me. I don't think that jobs leaving the country mean that better jobs will be available here. Just as I don't think that workers replaced by machines mean that there will be better jobs. I did not put forth that theory.

Companies outsource jobs because it's more efficient for them to do so. Companies will also introduce robots, telephone switches, computer programs, and other technology that replaces workers and makes the company more efficient. Doing so increases profitability, thereby making more capital available. It also frees up labor. When these resources (capital and labor) are put to good use it _may_ make better higher paying jobs available -- that's our nation's challenge.

Think of China and India as 'machines'. We'd be crazy not to use them. If our companies don't, other nations' companies will and the result will be even more dismal. Our challenge is to make use of the global economy in the best way possible.

What else can we do? Isolate ourselves from the global economy? If we do, the results are likely to be much worse than the outsourcing problems we face now. Mainly because of our dependency on oil (and cheap Chinese stuff).

When I was in engineering school the economic climate looked similarly dismal. Everyone was saying 'buy American'. Japan was fiercely competitive in the automotive and electronics industries. There were very few jobs available for me that weren't in the defense industry. A lot has changed since then. The US has a culture and economy that are very good at creating innovative technologies, businesses, and growing the economy. The challenge facing us is to adapt to the global realities and compete through innovation. It's hard to envision what we might do.

My point is that this challenge really isn't new. The US usually manages successfully. We did so when the economy changed from agrarian to industrial, and again with automation, and global competition. I don't claim to have a deep understanding of these issues.

What do you suggest? Implement protectionist policies?

--JB

Besides, the world is catching up with our education and technology level. Did you ever consider that new jobs won't be created in this country but in India or China? I've seen a lot bright and highly educated Chinese workers last time I visted Asia.

A fed, working, and educated global populace is a good thing. I don't think our prosperity is a result of poverty and the lack of education elsewhere. If it turns out that this is the case, then a 'correction' is due.

I expect that our energy binge cannot continue. But I don't think that driving a smaller car, and using less energy means a lower quality lifestyle. A good dose of competition is probably healthy in this regard.

What do you suggest? Implement protectionist policies?

JB,

I don't Otako and myself are advocating any 'solution' to this problem. We are just pointing out what could happen.

If it does happen and enough voters are affected, there will be a politician with a 'solution' and will most likely get elected. After all the voting public today believes that you can cut taxes and increase spending. Sounds absurb right?

There is this belief and you seem to have it also, that the U.S. will always be coming out on top. Not necessarily. Just keep your eyes and mind open.

Re. the "voting public", Hitler believed if you repeated a
big lie loudly enough and long enough people would
believe it. Not only that, he proved it.

John Galt

[charlie]

JohnBlake speaks my mind better than I can.

Cheers,

Charlie

There is this belief and you seem to have it also, that the U.S. will always be coming out on top. Not necessarily. Just keep your eyes and mind open.

Actually, don't believe that the US will always come out on top. The inbalance in resource consumption will change. At this time we have a culture, and institutions that are very innovative. If we work hard (ha, ha educate our kids, and play smart, there's a good chance that having China and India come on line can be a good thing -- like a 'manufacturing machine'.

If we continue with the 'walmartization' of the middle class, we're in for some problems. If this happens, I predict that we will resort to wealth re-distribution to fund basic needs -- mainly health care and housing.

I agree that this represents a very big challenge (just like every other change in the global economy.) We need to face the challenge and do the best we can.

My fear is that our people have come to believe that they are 'entitled' to a middle class lifestyle -- a big SUV and 1500 sqft per person home.

Another approach is to use our military to sustain the resources and global climate that our economy needs to flourish. I think this will lead to the decline of the middle class even faster than competing economically.

Eventually, the US will fall as the #1 global economic and military power. Hopefully we'll fall to #2, or #3.

I'm really 'on the fence' regarding the 'globalization' and 'free trade'. I find the idea of using our own resources, and living within our means, very attractive. However, it does not appear to be practical (especially given our dependence on oil). I have not heard any arguments for protectionist policies that make sense to me.

Personally, I really don't care if we fall to #2, or #10. There really isn't such a big difference who 'wins' as long as we can maintain a high quality lifestyle for the people here.

[BigMoneyJim]

I should really stay out of political discussions, but...

Re: Gay marriage, (sorry, misattributed quote earlier!)

Gay "civil unions" with all legal ramifications are only
fair, but the state of "holy matrimony" should be reserved for the union of a man and a woman. To me,
and millions like myself, this is a matter of faith.

I don't see a problem there. The pastor & church perform the holy matrimony part, not the Justice of the Peace. If the church doesn't approve, their pastors won't perform the ceremonies. I don't see why the legal terminology needs to be different for gay vs. traditional marriages/unions/etc.. Legally, call it all marriage, call it all civil union, call it mutual adoption, whatever. The government gives special tax and legal (e.g. inheritance, custody of children) privileges to married couples; I can't come up with a reasonable reason to disallow those privileges to gay couples. Either let the gay couples (and platonic domestic partners) have the privileges, too, or eliminate the special treatment for everyone.

Re: Hitler reference and protectionism: I don't have the link, but I recently read an article about pre-WWI Europe having trouble with protectionism and self-reliance causing serious problems with international relations and economies. Pre-WWII Germany went down that same path. I had always thought it obvious that a country being capable of producing their own food and necessary manufactured goods, but after reading that article I'm not sure it's ultimately a good thing.

As far as the declining middle class and the effect of globalization on my remaining career....I worry about it sometimes, but there's not much I can do beyond living below my means, saving some and enjoying today. Besides, our culture has a history of predicting gloom and doom and then prospering anyway.

(EDITed to fix misattributed quote. One more reason I should stay out of political discussions!)

BMJ,

Please don't stick that quote with me! - I never said anything as stupid as that and I'd appreciate if you would look it up and correct your post!

I could care a less who marries who. When I say *that I believe in Freedom, I mean I really believe in Freedom!

Even for people that I don't agree with!