The Essential Premise

The starting point for understanding the state of things is that the the American middle classes are not in danger, but have already been destroyed.

The exception is the upper middle-class, the doctors, lawyers, and bankers who are in professions that have been both protected from competition and grossly overpaid by comparison with the nation's overall pay scale. It is becoming clearer, as the Madoff and other Wall Street scandals unravel, that much of this amazingly inflated income (millions to tens of millions for an individual in a year) and swollen wealth accumulation depended on personal connections, family ties - the stuff of "natural aristocracy" gone mad.

For the rest, wages have declined, as I've noted many a time before. NYT columnist Bob Herbert has a good piece today on the auto industry example.

Last year, before the economy went into free fall and before any talk of a government rescue, the autoworkers agreed to a 50 percent cut in wages for new workers at the Big Three, reducing starting pay to a little more than $14 an hour.

That is a development that the society should mourn. The U.A.W. had traditionally been a union through which workers could march into the middle class. Now the march is in the other direction.

Mr. Gettelfinger noted that his members “have not received any base wage increase since 2005 at G.M. and Ford, and since 2006 at Chrysler.

Some 150,000 jobs at General Motors, Ford and Chrysler have vanished outright through downsizing over the past five years.

Auto workers gave and gave and gave at the office, and their executives and then the Senate just kept coming back for more. Why did they bother? Look at the Michigan economy: its cornerstone - not the "auto industry" but "auto workers" and their earning and spending - has already been semi-destroyed.

The old "Fordist" contract between workers and employers was the cornerstone of the American economy. The deal was attributed to Henry Ford Sr., who was mean as hell but capable of a medium-term self-interest well beyond that most economic leaders today. The deal was that his workers should make enough, consistently enough, to eventually buy one of the cars they made. By paying workers $5 a day, he could expand the market for his own product.

American economic leaders have for decades only wanted to expand foreign markets, and have taken the domestic one for granted, and don't really care what happens to local purchasing power. More accurate, perhaps, is the first phrase - they just take it for granted, in the lazy, thoughtless way that Reaganites took highways, bridges, airports, roads, schools, hospitals, and sewer service for granted as they were trying to destroy the governments that had and were continuing to build them. They haven't stopped yet, and a new, much smaller generation of auto employees making $14 hour has no chance of supporting an economy that helps them or anybody else.

None of the bailouts are going to get us off the low road that for decades has been quietly stripping the US of its status as a broadly middle class society. Anyone who thinks we can have one without the middle class status of blue-collar manufacturing workers - well, I've got some Phil Gramm 1999 legislation I'd like to sell you.