In Memory of the American Middle Class

May 30, 2016

By: Bobby Casey, Managing Director GWP

This is Memorial Day weekend. Many Americans will be barbequing and fondly remembering the fallen members of the US military. I will not be among them. Don’t get me wrong: I love me some grilled meat! But I’m not much for nationalistic pageantry.

I don’t tow the patriotic lines about how our military fights for our freedom. They don’t. It’s one thing to sincerely believe it, it’s another to say that it’s true. Every single time Americans have gone to war, our recovery leaves us all a little less free. From our very first Revolutionary War through to our seemingly endless war in the Middle East, every single one has necessitated more taxes, more regulations and more restrictions on the common man.

We like to point to the despot, but the reality is, they would never have gotten away with the genocides and democides that they did were it not for the willing cohorts. So I will not be having any solemn moments reflecting on the nobility of the US military.

I’m part of the remaining generation who must find what freedom remains in the world. That’s no easy task either! It’s like a scavenger hunt crossed with a puzzle: the pieces can be found all over the world and if you do it right, you can put them together for your own life.

The middle-class is being chipped away a small percentage at a time. On the one hand you have some falling into the poorer ranks, but despite our political handicaps, a greater percentage have moved up in their socio-economic standing.

“[Steven Pressman in a 2015 report for the American Institute for Economic Research] pegs the drop from a middle class that included nearly 60% of American households in the late 1970s to 51% by 2013.

“But it’s important to note that not all of those once-middle-class households went south. In its own report on the shrinking middle class, Pew Research found that the percentage of upper-income households has expanded faster than those at the bottom. Some 14% of Americans were included in the above-average income tiers back in 1971, compared with 25% in the lower groupings, according to Pew. Last year, the above-average tiers had grown to 20% and 29% at the bottom.” (Source: USAToday)

There is promise to this, but it should be disconcerting that the lower tier isn’t moving up into the middle class the way the middle class is moving up in their ranks. The bottom tier is at a near 30%, and somehow this passes as economic recovery?

The dwindling middle class is a problem. It should be robust, and instead it is flat-lining… nay, free-falling. What’s even worse is the behavior of our remaining middle class and its spending habits. Sadly, the only thing defining our middle class is employment and income. It used to entail discretionary spending at certain levels.

The left would have you believe that the 1% can afford everything, and we need only leave the bill at their doorstep and demand payment. Not true. Even if we could successfully tax them at 100% we’d not have enough to pay down our debts as a nation. More importantly, it’s a shameful proposition that people would look to anyone to pay their way in life as a grown adult.

So the rich can and will only spend so much. The middle class might not spend as much per individual as the rich, but where it lacked in individual wealth, it made up for in sheer volume. Well, the bulk of their spending is going toward two things that are hardly discretionary: healthcare/insurance, and rent.

Nationally, the debt per median household is up from 170% in 2008 to 263% in 2015. In other words, it went up an entire median income in the last seven years. Moreover, the median household income has slipped several percentage points since 2000.

“Americans are generally making less money than they did in 2000. The median income of U.S. households in 2014 was $62,482 compared with $67,673 in 2000. Earnings for all groups — low income, middle class and upper income — suffered during that time.

“For instance, the upper-income group earned median annual income of $173,207 in 2014, down 7 percent from more than $186,000 in 2000. Middle-class and lower-income families saw their incomes shrink 6 percent and 10 percent, respectively.” (Source: Zerohedge)

Not only are Americans not making as much, they aren’t producing as much. As we’ve discussed here on multiple occasions, companies are fleeing the US regulatory and tax regimes for more economically friendly jurisdictions.

Okay, so the U3 unemployment numbers are back to their Bush era levels, but jobs are leaving the US and the ones replacing them are low level jobs in service and hospitality. Sure the DOW and S&P are at a decent place, but the middle class aren’t benefiting from the stock market. They aren’t investing. They surviving.

This isn’t a call for higher wages. This is a call to reevaluate a few things.

It’s time to take off the star-spangled glasses, and stop romanticizing the tag-lines of the United States. If you can’t sell lemonade, shovel a driveway, or braid hair without permission from the state, you aren’t free. Full stop. The fact that ridesharing has become so highly politicized that states like California are looking to put price controls on it or cities like Austin have banned them altogether demonstrates that the government elites do NOT want to recover.

They don’t want prosperity. Specifically, they don’t want YOU to prosper. At every single innovative turn, the state is there to put the kibosh on it. You play by the rules and get ahead? The rules suddenly change. So the very backbone of innovation – the middle class – cannot thrive here under these conditions. It’s literally designed to preserve a particular sliver of crony rich, and maintain dependence among the poor.

Here’s where your money is going:

• $6.3 BILLION EPA (Environmental Protection Agency) slush fund
• $80 BILLION slush fund in “Overseas Contingency Operations” for the Department of Defense and another $2.7 Billion in earmarks
• Hundreds of millions of dollars in government advertising itself to its own damn people
• $16.8 BILLION on a drug war (amassing at about $500 per second)
• $4 TRILLION in regulations
• $20 BILLION in 2012 for individual tax compliance; $4.4 BILLION in business and non-profit tax compliance (this doesn’t include the tax burden itself… just preparation and filing costs)

Feel free to get pissed off at any time. You’d be well within your rights. Where’s the wealth going? That tiny list is not even the tip of the iceberg. It’s barely the chill coming off of it.

54% of federal discretionary spending – nearly $600 BILLION per year – is spent on the military. And for what? A war racket? I’m meant to mourn the loss of the men who dared not question their government, but rather blindly followed orders and carried out the wishes and desires of a few blood thirsty cronies? No. The United States has suffered a great loss… but it’s not the lives of the military. It’s her middle class, the value of her currency, and her economy.

The US is no place to keep your wealth, and it has a punitive disdain for the middle class. Get out while you can.

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