Earth to Middle Class: Deal's Off

Father Frank had a good piece this Sunday wondering whether Obama has jumped the shark. Actually he jumped the shark in the first episode, economically speaking. The economic problems of the US and the world are so serious, so structural, that it's hard to see how our really very dumb political system can even start to deal with it.

I do mean dumb. David Runciman called his great article on US politics "The Cattle Prod Election." Lots of political blogs and general discourse are really astute, he writes. But they are trying to create a dramatic collision of ideas and forces by covering up the crucial fact: "demography trumps everything: people have been voting in fixed patterns set by age, race, gender, income and educational level, and the winner in the different contests has been determined by the way these different groups are divided up within and between state boundaries." Polls are bad, he continues, because their samples are so small. And they are small because "if you keep the polling sample sizes small enough, you can create the impression of a public willing to be moved by what other people are saying. . . . The hard truth this time round is that most people are voting with the predictability of prodded animals."

Our political system is completely unable to cope with our economic decline But there's more good daily newspaper coverage of the majority's long-term tailspin. Ben Stein got to the heart of it a week ago Sunday:

Get this, friends: from 1947 to about 1973 — from the days from the great Harry S. Truman to the great Richard M. Nixon — real hourly pay for nongovernment workers rose by about 40 percent. The peak year was the one before R.N. left for San Clemente in 1974. Since then, real wages both hourly and weekly for all nongovernment workers, on average, have fallen by about 5 percent, very roughly.

I get it. So does everyone I know. But none of us make economic policy.

Peter Gosselin does an overview in the LAT of the loss of basic support structures - pensions (only 10% of the workforce has a traditional defined-benefit pension, down from almost 2/3rds a generation ago); low-cost health care; higher education (1/3 of the cost is now covered by loans, up from 15% a while back).

These are epochal shifts that change hundreds of millions of lives for the worse and yet everyone acts like they're inevitable. And none of the commentators have any idea what to do. Stein says that big policy changes are a good idea, but they won't happen. "So the only thing for workers to do is to drive less, buy fuel-efficient cars and trucks and, above all, whip their children into a frenzy to get more education." What do you think we've been doing for 30 years, Mr. Stein?

The big middle-class safety-net become inflation in investment assets - dot-com era stocks, then housing, now commodities or something else. The gospel was buy and hold. John Authers announces in the Financial Times that "It’s official: US stocks have had a wasted decade. The real return on the S&P 500 since 1998, after subtracting consumer price inflation, is just below zero. The last time this was true, according to Merrill Lynch, was in 1983."

All those systems of mutual support- pensions, health care, insurance - need to be rebuilt. But first people need to figure out how much they've lost.