In the midst of the financial meltdown that roiled through 2008, I noticed a message starting to percolate out through the media blaming average, everyday Americans for the problems of the economy. This struck me, because, up until around then, going back generations, the message from these same sources had been very different.
Everyday Americans were told to aspire to the American dream of homeownership - that this was the hallmark of responsible citizenship and within reach for just about everyone. Average Americans were told that they, in the "ownership economy" could expect to "own" a stake in corporate wealth through their 401(k)'s and other investments - and that these were not just a better substitute for a regular pension, but could make for a well-to-do retirement for anyone. And, in general, everyday Americans were told that there was no reason whosoever to question the proposition that every generation in our nation would continue to live better than their parents.
Then, the 2008 meltdown and recession happened. Almost immediately, we started to hear the message change. Now, average, everyday Americans are being told that the reason for our nation's economic problems are that average, everyday Americans have been living beyond their means.
The message about the American dream of homeownership turned into the new mantra: "Homeownership is not right for everyone," we now hear from Wall Street and media pundits. And those speakers for Wall Street elites have replaced their talk of unending prosperity and lavish retirements with discussions of how American consumers got themselves into trouble by borrowing too much, resulting in the present day of reckoning. Replacing the former exuberance about the limitless growth of our Wall Street-run economy is a now a sober lecture about how we all must learn to make due with less.
But is everyone truly making due with less? The middle class and poor sure are:
It is not bad luck that that there is such growing inequality between the wealthy Wall Street elite class, whose wealth has been growing, and most everyone else, whose incomes are hurting and who are now being asked to make all of the sacrifices in a shrinking U.S. economy. This is the result of policies that were intentionally designed to result in this outcome.
You do not have to be an economist to figure out what has been happening. Almost everyone I have spoken to in the city and town I represent about this has wondered how it is that we can have a successful economy in the long term when we are exporting so very much of our manufacturing base. How long, we have asked, can we have decent jobs for everyone when so much of what we buy at the store is manufactured in low-wage places?
That is why so many of us have been questioning the economic policies of our country - Wall Street behavior and government "free trade" laws that have combined to send jobs to the nations (and states) willing to subject their workers, consumers and environment to worse conditions. We questioned why it would be a good idea to have policies that undercut human living standards for no reason other than corporate profit.
But, when everyday Americans have brought this up over the past few decades, our concerns have been brushed-off. We were told that it does not matter that so much of our manufacturing jobs were being exported to low-wage countries (or, often, low-wage places in our country) because every good-paying manufacturing job lost would inherently be replaced with a better paying job doing something else. The U.S., we were told, was to become the brain center of a new "information age" economy in which everyday people would be able to shed their dirty factory jobs in favor of clean office jobs. It was a vision in which the U.S., and American workers, would "mature" to become the governing elite of the world economy, leaving the hard, grunt work to the developing world.
Another thing we were told is that we were not, in fact, giving up our manufacturing base. It was just that our industry was becoming more efficient - more productive. We had turned a corner, technologically, in which we could genuinely produce more for less. And so, we were told, the lost factory jobs in places like New Britain were not so much attributable to exporting jobs to low-wage places, but rather to their replacement with more efficient forms of production that require fewer workers.
And, we were told, those who questioned the exporting of jobs were just chicken-little Luddites - the evidence being that things were going just fine. The office jobs that we were promised seemed to be appearing, and it looked like we really were at the head of a new economy in which all Americans could be both the brains of the world economy and - through our 401(k)'s, etc. - its owners. Many people were - and many still are - persuaded that the Wall Street elites had us on the right track.
Of course, the assurances we received came undone when the mess of derivatives and the debt of our economy all came crashing down in 2008.
The real truth is that, in fact, you cannot have an economy when too little of your manufacturing is done by middle class workers in your own state and country. The real truth is also that the only reasons it looked, for a while, like what the Wall Street elites were telling us was working was, first, because they created a fictional economy floated on exotic investment instruments that made it appear that what people's 401(k)'s, etc., were invested in were real, even though they were not and, second, by creating a massive system of debt in which our country imported a middle class lifestyle by borrowing from other countries. All of this covered-up the weakness of the economy that existed because so much of our manufacturing employment had been exported.
But this is not something we hear so much, perhaps because saying it betrays an inconvenient truth about our economy. The truth is that, for the past four decades, the elites on Wall Street - and the politicians in Washington D.C. who have done their bidding - have been trading away our economic strength for their own profit.
Back in the post World War II era, the moment when our nation was at its zenith of economic strength among the world's nations, according to data from the U.S. Bureau of Economic Analysis, around a full quarter of the value added by our economy was in manufacturing. This statistic, "value added," is important because it shows how much of what is produced by our economy (the Gross Domestic Product) is accounted for by value created by the different sectors of our economy. And so it is important that to know that, when we were truly strong economically, a full quarter of the value added of our economy - and the largest share of it - was in manufacturing. In 1953, 28.3% of our nation's value-added was in manufacturing.
But, that number started to shrink in the late 1960's and, by 2008, it has dropped to 11.5% of our economy.
Taking its place as the leading portion of the value-added of our economy was the sector lead by financial services. That sector went from 10.4% of our economic value added in 1947 to 20% in 2008. In other words, moving money and ownership around became a bigger part of the size of our economy than actually making things.
In addition to outright disproving any notion that the newer, high-tech manufacturing produces the same value to our economy as the "old" manufacturing did, the change from a real economy to a paper one shows us why it is that the recession we are now in is the recession that changes everything. It is the recession that finally exposed the fraud Wall Street has been perpetrating on the American people.
That is why it is troubling that we have not heard much talk about this truth. Instead, what we mainly hear is that the recession is mostly the fault of everyday Americans - everyday Americans who dreamed the American dream of homeownership, everyday Americans who worked hard for paychecks that could lift their families into the middle class, everyday Americans who wanted health care for their families and college for their children, everyday Americans who wanted security in retirement and to pass on to their adult children and grandchildren a better life than they had. It is everyday Americans who seem to be taking the bulk of the blame - and are therefore told it is fair that they be asked to tighten their belts.
And, while you, everyday Americans, tighten your own family budgets, you are told that you should also expect to receive fewer public services, with cutbacks such as in education, higher tuition at college, fewer services for seniors and less help while unemployed during the recession. You also are asked to blame your neighbors whose jobs are to provide these services because they, too, strive to lift their families into the middle class.
All of this conveniently diverts attention from the real cause of our economic woes - a system in which wealthy elites have been profiting by undercutting the middle class incomes of everyday Americans. It is a system that has been going on for four decades and finally came to its ugly fruition in 2008. Now you, everyday Americans, who did what you were told was the way to a respectable middle-class life, are being asked to accept the blame - and bear the burden - in place of the elites who are actually at fault.
There is a lot of work that has to be done to rebuild a strong and prosperous economy for ourselves and younger generations. But getting there requires that we confront the real causes of our present troubles and extricate ourselves from the bad systems that got us into this situation in the first place.
I am an optimist enough to believe that we can.
Everyday Americans were told to aspire to the American dream of homeownership - that this was the hallmark of responsible citizenship and within reach for just about everyone. Average Americans were told that they, in the "ownership economy" could expect to "own" a stake in corporate wealth through their 401(k)'s and other investments - and that these were not just a better substitute for a regular pension, but could make for a well-to-do retirement for anyone. And, in general, everyday Americans were told that there was no reason whosoever to question the proposition that every generation in our nation would continue to live better than their parents.
Then, the 2008 meltdown and recession happened. Almost immediately, we started to hear the message change. Now, average, everyday Americans are being told that the reason for our nation's economic problems are that average, everyday Americans have been living beyond their means.
The message about the American dream of homeownership turned into the new mantra: "Homeownership is not right for everyone," we now hear from Wall Street and media pundits. And those speakers for Wall Street elites have replaced their talk of unending prosperity and lavish retirements with discussions of how American consumers got themselves into trouble by borrowing too much, resulting in the present day of reckoning. Replacing the former exuberance about the limitless growth of our Wall Street-run economy is a now a sober lecture about how we all must learn to make due with less.
But is everyone truly making due with less? The middle class and poor sure are:
The recession has hit middle-income and poor families hardest, widening the economic gap between the richest and poorest Americans as rippling job layoffs ravaged household budgets. (source: MSNBC)But to the richest, the recession was just a different opportunity to make money:
...last year's wealth wasteland has become a billionaire bonanza. Most of the richest people on the planet have seen their fortunes soar in the past year.
This year the World's Billionaires have an average net worth of $3.5 billion, up $500 million in 12 months. (source: MSNBC)So while the already hurting middle class and poor are asked to make sacrifices in their own lives, little attention is being paid to the growing wealth of the richest and the growing inequality between them and everyone else.
It is not bad luck that that there is such growing inequality between the wealthy Wall Street elite class, whose wealth has been growing, and most everyone else, whose incomes are hurting and who are now being asked to make all of the sacrifices in a shrinking U.S. economy. This is the result of policies that were intentionally designed to result in this outcome.
You do not have to be an economist to figure out what has been happening. Almost everyone I have spoken to in the city and town I represent about this has wondered how it is that we can have a successful economy in the long term when we are exporting so very much of our manufacturing base. How long, we have asked, can we have decent jobs for everyone when so much of what we buy at the store is manufactured in low-wage places?
That is why so many of us have been questioning the economic policies of our country - Wall Street behavior and government "free trade" laws that have combined to send jobs to the nations (and states) willing to subject their workers, consumers and environment to worse conditions. We questioned why it would be a good idea to have policies that undercut human living standards for no reason other than corporate profit.
But, when everyday Americans have brought this up over the past few decades, our concerns have been brushed-off. We were told that it does not matter that so much of our manufacturing jobs were being exported to low-wage countries (or, often, low-wage places in our country) because every good-paying manufacturing job lost would inherently be replaced with a better paying job doing something else. The U.S., we were told, was to become the brain center of a new "information age" economy in which everyday people would be able to shed their dirty factory jobs in favor of clean office jobs. It was a vision in which the U.S., and American workers, would "mature" to become the governing elite of the world economy, leaving the hard, grunt work to the developing world.
Another thing we were told is that we were not, in fact, giving up our manufacturing base. It was just that our industry was becoming more efficient - more productive. We had turned a corner, technologically, in which we could genuinely produce more for less. And so, we were told, the lost factory jobs in places like New Britain were not so much attributable to exporting jobs to low-wage places, but rather to their replacement with more efficient forms of production that require fewer workers.
And, we were told, those who questioned the exporting of jobs were just chicken-little Luddites - the evidence being that things were going just fine. The office jobs that we were promised seemed to be appearing, and it looked like we really were at the head of a new economy in which all Americans could be both the brains of the world economy and - through our 401(k)'s, etc. - its owners. Many people were - and many still are - persuaded that the Wall Street elites had us on the right track.
Of course, the assurances we received came undone when the mess of derivatives and the debt of our economy all came crashing down in 2008.
The real truth is that, in fact, you cannot have an economy when too little of your manufacturing is done by middle class workers in your own state and country. The real truth is also that the only reasons it looked, for a while, like what the Wall Street elites were telling us was working was, first, because they created a fictional economy floated on exotic investment instruments that made it appear that what people's 401(k)'s, etc., were invested in were real, even though they were not and, second, by creating a massive system of debt in which our country imported a middle class lifestyle by borrowing from other countries. All of this covered-up the weakness of the economy that existed because so much of our manufacturing employment had been exported.
But this is not something we hear so much, perhaps because saying it betrays an inconvenient truth about our economy. The truth is that, for the past four decades, the elites on Wall Street - and the politicians in Washington D.C. who have done their bidding - have been trading away our economic strength for their own profit.
Back in the post World War II era, the moment when our nation was at its zenith of economic strength among the world's nations, according to data from the U.S. Bureau of Economic Analysis, around a full quarter of the value added by our economy was in manufacturing. This statistic, "value added," is important because it shows how much of what is produced by our economy (the Gross Domestic Product) is accounted for by value created by the different sectors of our economy. And so it is important that to know that, when we were truly strong economically, a full quarter of the value added of our economy - and the largest share of it - was in manufacturing. In 1953, 28.3% of our nation's value-added was in manufacturing.
But, that number started to shrink in the late 1960's and, by 2008, it has dropped to 11.5% of our economy.
In addition to outright disproving any notion that the newer, high-tech manufacturing produces the same value to our economy as the "old" manufacturing did, the change from a real economy to a paper one shows us why it is that the recession we are now in is the recession that changes everything. It is the recession that finally exposed the fraud Wall Street has been perpetrating on the American people.
That is why it is troubling that we have not heard much talk about this truth. Instead, what we mainly hear is that the recession is mostly the fault of everyday Americans - everyday Americans who dreamed the American dream of homeownership, everyday Americans who worked hard for paychecks that could lift their families into the middle class, everyday Americans who wanted health care for their families and college for their children, everyday Americans who wanted security in retirement and to pass on to their adult children and grandchildren a better life than they had. It is everyday Americans who seem to be taking the bulk of the blame - and are therefore told it is fair that they be asked to tighten their belts.
And, while you, everyday Americans, tighten your own family budgets, you are told that you should also expect to receive fewer public services, with cutbacks such as in education, higher tuition at college, fewer services for seniors and less help while unemployed during the recession. You also are asked to blame your neighbors whose jobs are to provide these services because they, too, strive to lift their families into the middle class.
All of this conveniently diverts attention from the real cause of our economic woes - a system in which wealthy elites have been profiting by undercutting the middle class incomes of everyday Americans. It is a system that has been going on for four decades and finally came to its ugly fruition in 2008. Now you, everyday Americans, who did what you were told was the way to a respectable middle-class life, are being asked to accept the blame - and bear the burden - in place of the elites who are actually at fault.
There is a lot of work that has to be done to rebuild a strong and prosperous economy for ourselves and younger generations. But getting there requires that we confront the real causes of our present troubles and extricate ourselves from the bad systems that got us into this situation in the first place.
I am an optimist enough to believe that we can.
