Thursday, December 11, 2008

That sucking sound wasn't just your job, it was your wage base, too.

Financial Sense
The Demise of the Middle Class
Early 1970's an historic turning point
BY TONY ALLISON

As the credit crisis deepens and morphs into uncharted waters, a little perspective is necessary on what it is costing, in both dollars and human terms. You may have seen the mind-numbing comparisons with other massive government expenditures of the past. These statistics were inflation-adjusted, courtesy of Jim Bianco of Bianco Research. The credit crisis, with $4.6 trillion committed (and perhaps just getting started) already has cost roughly one trillion dollars more than World War II ($3.6 trillion). The Marshall Plan to rebuild Europe after the war cost a mere $115 billion. The Louisiana Purchase was a ridiculous bargain at $217 billion ($15 billion originally). It appears that the piper has finally arrived to be paid for the unlimited debt creation since 1971 and the middle-class is already tapped out...

...The struggles of the American middle-class since 1970 become very clear when looking at the next two charts. Their buying power has plunged when you factor in the massive loss of buying power of the US dollar. Over this 35+ year period, both spouses were forced into the workplace to keep the family afloat. It also explains the massive growth in consumer debt and lack of personal savings. The middle-class was not necessarily acting irresponsibly. It was acting out of desperation and necessity.

Clearly many in the middle-class (and elsewhere) have added debt too recklessly. But prices have inexorably grown faster, year after year, than the growth of real middle-class income. In addition fixed costs for the American family (mortgage costs, insurance, child care, health care, etc.) are much higher as a percentage of income than they were 35 years ago.






...Divided by the CPI (which has been understated for decades) the “adjusted” Median Household Income has barely grown at all since 1973. When measured in terms of ounces of gold instead of dollars, median income has plunged. This chart shows median income peaked in 1970, when it would buy 240 ounces of gold. The devastating inflation of the 1970’s sent real median income down to its low in 1980, where it could only buy 29 ounces of gold. One can see the current direction of “real” median income since 2001, and we haven’t even felt the eventual inflationary effects of the credit crisis. As we stand today, the Median Household Income can buy approximately 65 ounces of gold, one of the lower levels since 1945...

...The availability of easy credit the last two decades was a key mechanism to keep the middle-class above water. Now the easy and available credit is going away, and with it much of the quality of life of the middle-class. The early 1970’s was clearly an historic turning point for millions of Americans. With the 1971 severing of the gold-backed dollar by the Nixon Administration, the fate of the middle class was sealed. Unlimited fiat money creation led to unlimited debt and a rapidly depreciating dollar. Middle-class “real” wage growth would never again keep up with “real” inflation, especially in key areas such as health care and college tuition, which have greatly exceeded the stated rate of inflation.




It will soon reach the point where many people will simply have to give up even making payments on their consumer loans and credit cards in order to keep a roof over their heads and food on the table if income doesn't rise - and it's not going to as long as the globalists are busy making sure they bottom-fish for the lowest wages instead of curbing excess output.

Believe it or not, overproduction is the biggest problem facing the consumer market. There are too many players in every category of goods - and no consideration whatsoever for living wages and old-fashioned "social contract" which never went away, but was simply externalized by greedy CEOs who didn't want to pay their share of it.

And let's get real here - nobody in any of those companies is doing any "labour" worth 10, 50, or 100 million dollars a year. A decent person couldn't even figure out what to spend that much money on besides charity. It's time for the greedfest to end. What money you do have to spend on your food and household goods must be carefully spent to support and sustain small local businesses, not giant transnational corporations. We'll buy less but it will do far, far more good for us and our community. It's time to elevate sustainability over quantity, living wages over slave labour.

We as a Judeo-Christian nation decided a long time ago that it is immoral and unethical to engage in business practices that exploit people, deny us sabbaths and holidays and vacations, trash our environment, burden the community, and treat workers with disdain and disconcern.

We should not buy from companies that treat workers in ways we would not want to be treated, deny people simple rights that we insist upon, force people to work in contaminated and unsafe conditions that we would not work in, and have no consideration for their family, community, or circumstances - because we insist upon that same consideration for ourselves. Your wages are inadequate because the transnational corporations and their globalization game made them that way. They decided to exploit uneducated third world workers whose governments are paid handsomely, on and off the table, to NOT enact the same laws we have here. Responsibility and Greed are not compatible. They have therefore chucked responsibility and the social contract out the window.

You are being exploited, too. They are taking your hard-earned money, smirking at your sensibilities, laughing all the way to the bank in fact, and giving you nothing of value in return. You must stop doing business with these companies. There is no other way to save our communities. The false and unsustainable consumerist paradigm that has kept their pockets full has to be destroyed completely - not tinkered with, not adjusted, not bailed out. Destroyed. No more overproduction, no more raping third world workers, no more snubbing the social contract in the name of greed. The destruction of their Feudal Fantasy starts with your budget - not theirs. How you spend your money is what gave them their power, how you spend your money will be what takes it away. So take it away from the the fat cat CEOs, and give it to a local small business and a local family farmer that deserves it.

Or, let them continue to "level" your wages with places that don't have electricity or running water - the choice is yours.

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