During his State of the Union address, Joe Biden lamented the slow demise of the American middle-class in terms that recalled Donald Trump’s infamous “American carnage” inaugural.
“For decades, the middle-class has been hollowed out,” Biden said, bewailing closed factories and jobs shipped overseas. “We lost our pride, our sense of self-worth.”
He’s not wrong. Neither was Trump when he made the same points. I’d argue Biden cares more than Trump ever did, but that’s largely irrelevant to the “left behind,” as Biden called the countless millions of Americans who see no path to economic prosperity in an era when good-paying jobs for the poorly educated simply don’t exist.
You can tell their story, as I did again in “Exiles,” but you can’t save them. Not without overhauling a system we steadfastly refuse to admit is broken beyond repair, despite voluminous evidence that attests to the irredeemability of American-style capitalism. As Ray Dalio put it, during an irritable 2019 exchange with CNBC’s incorrigible Joe Kernen, “One way or another you’ve got to engineer the goddamn thing to get results.” He was talking about capitalism, which Ray generally agrees needs a rethink in America.
Biden, while speaking to Congress on Tuesday, was characteristically upbeat about the country’s prospects. He called Americans “optimistic, hopeful, and forward-looking,” a characterization I contend becomes less accurate virtually by the month.
But Americans do tend to be optimistic (and here that means totally unrealistic) about one thing: The odds that they too can become rich in a system that increasingly reserves its rewards for a smaller and smaller percentage of the populace. As the old saying goes, Americans don’t see themselves as the exploited proletariat they most assuredly are, but rather as “temporarily embarrassed millionaires.”
A Gallup poll released on Wednesday showed that despite a near record share of survey respondents describing their financial situation as worse versus a year ago, 60% nevertheless expected their plight to improve going forward. That’s generally always been the case. “Americans have tended toward optimism when projecting their future financial situations in all Gallup readings since 1977,” the color accompanying the poll results noted.
That’s unfortunate, because although a small percentage of Americans have surely seen their financial situation improve year after year, most have experienced little improvement to speak of, and many have seen their situation worsen materially.
As regular readers will attest, I’m very upfront about “chart crimes” when I suspect I might’ve committed one. The figure above may well fit the “chart crime” description for several reasons. First, it’s apples to oranges. It plots the cumulative change in real hourly wages for middle-class workers indexed to 1979 against the Gallup series over the same period. Suffice to say it’s not obvious why you’d chart those together, unless you were just trying to save space.
In addition, I could’ve used a tighter upper-limit for the left y-axis. But if you have a gripe with the chart, and that’s your gripe, I’d gently suggest you take a moment to consider what the red line shows: The cumulative change in inflation-adjusted wages for middle-class workers in the richest nation on Earth is less than 10% looking back almost half a century. To compress the scale would be to insult workers by optically trivializing an objectively bad outcome. The whole point is to show how poorly wages have performed for everyday people.
All of that to say the visual is meant to convey the contrast between hope and reality. Nothing more, nothing less. Its purpose is almost purely evocative. Regular people haven’t gotten an inflation-adjusted raise in four decades, and yet year after year, a sizable percentage of the populace expresses optimism about the future.
If you’re inclined to suggest the Gallup poll might be skewed by the expectations of the rich, I’d note that according to Gallup, “Americans from different economic backgrounds are equally optimistic about their personal finances in the coming year.” Of course, that breakdown surely varies in the historical series shown in the chart, but in January, at least, lower-income Americans were the most optimistic group.
That latter point is notable in the context of the breakdown by economic cohort for responses to the question about Americans’ finances today versus a year ago.
61% of lower-income Americans said their situation had deteriorated over the past year, versus just 42% for those making $100,000 or more. Things never get better for low-income cohorts. Why should next year be any different?
Needless to say, the Gallup results were colored by partisanship. Republicans were far more likely to say they were worse off versus a year ago compared to Democrats, which could reflect falling stock prices, but given the distinct possibility that more low-income voters now identify as Republicans thanks to the Trump/populist effect, it may also reflect Main Street’s struggles with inflation. The partisan nature of what should be objective responses (either you’re financially better off than you were 12 months ago or you aren’t) undermines Biden’s faith in the prospects for national unity.
The irony in all of the above is that if Americans would take a step back from the culture wars and other largely meaningless ideological disputes, they’d see that the one thing most people have in common is economic precarity. Maybe it wouldn’t be such a bad thing if the middle-class suddenly stopped being optimistic about their economic prospects over the next year. The sooner lower- and middle-income people stop seeing themselves as “temporarily embarrassed millionaires” whose fortunes are bound to improve, the sooner their fortunes actually will improve assuming the process of internalizing the depressing reality of life in a broken system translates into collective political demands for real fixes.
The second most memorable day in my grad school education was fueled by an amazing three hour guest lecture by an esteemed psychology prof, a staunch behaviorist who had spent his career studying what makes people and animals tick. The first few minutes were spent describing an experiment in which he created a situation proving that animals, and by extension, people, don’t know what’s good for them. In this study he trained lab rats to seek food in a maze which he gradually enlarged until following it to the end to get the food burned up more energy than each serving of food that would be provided. In other words, he easily trained his subjects to willingly engage in behavior that would inevitably result in their deaths from starvation.
The course in which this prof was guesting was an advanced course in systems theory and the management of adaptive systems (humans and rats both can be defined as adaptive systems). The rest of his lecture was equally mind-blowing, at least to me, and went on to show countless ways that humans constantly act contrarily to their own best interests and fail to adapt to change (drug addicts, smokers, overeaters and alcoholics are easy examples). I sat in this room, spellbound, back in April, 1969. I could never forget what I was learning then and now looking at the consequences of what’s happening today in our world of COVID, crumbling infrastructure, climate change, decreased civility, income inequality, and too many other situations to count, the mistakes we make compound themselves and continue to prove that prof was right about everything he said.
Sadly, both then and now, there was nothing optimistic about his picture of the world. This prof had found through dozens of repetitions of his research that living entities respond to changes in their environment with only a short-term view, changing their behavior more than once a second. He argued the only benefit that comes from trying to take a longer view, such as that supposedly gained from planning for the future, is the momentary satisfaction of being thought of as a visionary. Another stunning illustration of the way we humans seek short-term rewards can be found in Elon Musk’s acquisition of Twitter. If he had any level of vision at all, he would have walked away from that urge, but he just couldn’t.
BTW, the best day was the one when I walked into the office of the Graduate School and got to turn in my signed, approved, damn dissertation, which I exchanged for a doctoral degree and a gorgeous silk hood to wear over my academic regalia.
Why do Chinese kids really apply themselves to their studies while our kids don’t (for the most part). I don’t know if a compulsory course in basic economics for 9th graders would do any good or not? A visual of life in a trailer park or sleeping on the street for those with no demanded skills. While there is still time to apply oneself and not throw the years away A job at McD will help provide funds for further education while Mom and Dad are still providing the basics but minimum wage jobs won’t get you the lifestyle most envision for themselves even with two incomes.
Good question. I think there are many reasons, but first I’d look at your assumption that Chinese students approach school differently. Residents of the United States mostly interact with rich Chinese kids who trained in hyper competitive prep “schools” so they could go to an American university. This is not a representative sample. I think the fact is most of us here don’t know how most Chinese people approach school. As far as why American kids are disaffected and don’t buy in to school, I don’t even know where to begin, the list of reasons is so god damn long.
What makes you think that Chinese kids really apply themselves to their studies? In my younger days I spent a few years teaching at a good school in China and honestly didn’t see much difference. There’s a bigger emphasis on spending hours staring at textbooks, but that rarely translated to academic achievement.
It’s hard to compare systems internationally – especially as China tries very hard to game the PISA assessments – but as a rough rule of thumb, contrast the English skills of your Chinese colleagues with your European or Latin American colleagues, and bear in mind that the Chinese colleagues will have put in a lot more hours to achieve their level.
“…given the distinct possibility that more low-income voters now identify as Republicans thanks to the Trump/populist effect, it may also reflect Main Street’s struggles with inflation.”
I’d add that for some, the difference in Republican vs Democrat response is just reflecting politics, writ large these days: “now that the OTHER party is in control, they’re making my life worse in every way imaginable.”
H-Man, at first I wanted to support the notion that “hoping” things will get better is better for the soul than despair. But as I meandered through your post, I came to the conclusion that was a bad idea because it smacks of entitlement and provides no incentive to add that extra effort since you think it will be coming down the road anyway. From a personal perspective, when my back has been against the wall, the results are always better.
The last graph in this piece made me recall what I always thought was a Hunter S Thompson quote — “Money can’t buy you happiness but it can buy you a yacht big enough to pull up right alongside it.” Google now tells me that was David Lee Roth. Oh well.
H has repeatedly emphasized the wealth hoarding effect in our country and the obvious and not-so-obvoius ramifications thereof. But I wonder what would happen if more people started looking at this extreme concentration of wealth as a form of QT for the real economy (in contrast to just expecting things to get better). Yes, the wealthy still consume, and what wealth/income they don’t use to consume is invested with attendant benefits to the wider economy. But what is the multiplier effect of the wealthy mostly investing vs the rest of us mostly consuming? Having vast amounts of the population living at or near subsistence levels is very expensive — besides reducing consumption, it also increases costs — subsidies, nonfinancial assistance, administration, policing, incarceration, healthcare, courts, even taxes. Profit margins for the overall economy are undoubtedly reduced, even as non-essential businesses form to profit from these voids we tolerate.
The best analogy I can think of quickly is we are running our economy like a giant restaurant that doesn’t pay its workers enough and expects the customers will make up the difference. Our taxes are the tips. I’ve never worked for tips, or in a restaurant/bar, but always found it damn curious how this stucture was alllowed to develop. We’re not really paying our employees, so hope you will take that into consideration when you pay your bill. Wall Street has long mostly abandoned pay for performance, while the unwashed masses are forced to accept performance for hopefully pay.
somewhere ‘systems’ came into conversation … in my old corporate days there was a gospel: ‘the system is producing perfectly the outcomes it was designed to do’
if the outcomes are to change, first must the system …. yet, how much has fundamentally changed since this system arrived on N. America 400 years ago (wealth inequality, opportunity, class and race)?
If you envision a moth flying into a candle, or buzzing senselessly around a porch light, you Wonder how such a stupid species ever managed to survive for millions of years. The fact is that the moth is well adapted to the environment that was present until just a few thousand years ago, when humans started to change it. Human behavior likewise was well adapted to the environment in which it evolved. However, our own success as a species has changed our environment faster than we could ever hope to adapt. People are simply not equipped to manage the complexities and structure of our modern societies and economies. Eventually, if we don’t kill ourselves off as a species first, we will adapt to the changes that we ourselves have brought. Drug addicts will, on average, be reproductively less successful than non-drug addicts. Likewise, people who tend to obesity will have shorter lifespans and tend to have poorer reproductive success.
I cannot speak to other parts of the the country but here in the redness if you are not unrealistically economically optimistic you will likely be considered flawed by the powers that be.
It is not just economics. I overheard a fellow patient complain that our winters are milder, the doctor kindly provided a retort akin to gaslighting. Same setting different doc directed at me this time (someone who has analyzed and integrated local climate data into state and federal reporting) “what do you think about the winter”? “What winter” I said, provoking a seemingly angry reply describing his version of local climate opinion, and providing his irritation at patients who (rightly) note the warmer dryer winters over time.
Never say never, but transforming deeply red cultures even on the margins seems like a false hope.