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If one watches CNBC or most financial channels, the impression is given that the free market as the best allocator of resources if left unfettered is the solution to all that ails the country’s economy. This god, the free market, will ensure that productivity and efficiency are rewarded. Additionally ones wage is somehow proportional to their worth within the economy.

The reality is that all those pretty words and theories amount to hogwash. As productivity increased in this country, and employees provided more value, only those at the top that do little got the spoils. These are theories intent to keep a class system in which a very select few control most of the capital and the government. A selected buffer class just large enough to be very obvious, that has the semblance of prosperity guards the gates. And then, there is the rest, the struggling middle class and the poor class.

Firstly, there is no free market. Corporations are grabbing patents or acquiring patents left and right however dubious the claims. Farmers are losing their ability to grow their crops free with their own seeds, because of cross pollination with genetically modified seeds of major corporations who own the patent on those seeds. New innovations are stifled when corporations stop them based on some dubious claim of patent infringement.

Secondly, while politicians are elected democratically, they are generally elected on false premises. The fact the mainstream news media is controlled by a few companies, means that the messaging heard by Americans are corporate centric. As such, only politicians that toe the line tend to get the ability to get a message out that can get them elected.

Most Americans are broke. There is a semblance of having but they are broke. Even assets that use to be considered sacred, an asset to be passed to the next generation, one’s home, is being taken away by using advertising that induce bad decisions. The reverse mortgage while in very few instances can be a good thing, is sapping the last piece of wealth the average middle class American could count on.

Thirdly, the current tax structure mathematically ensures the demise of the middle class. This is a mathematical fact. The working person’s income comes mostly from wages. The wealthy person’s income comes mostly from municipal bonds and capital gains. Wages are taxed at up to 39% and municipal bonds interest is not taxed at all while capital gains are taxed at 15%. It is a mathematical impossibility that the wealthy will not continue to get a very disproportionate take of the pie. Worst, if the growth rate of the pie is stagnant or near stagnant it means income and wealth inequality and poverty accelerates. All of this is borne out by today’s American reality.

Right Wing and centrist “economist” would like to make one believe that the reason for most of these problems are caused by job polarization, high skill and low skill employment growth, while the middle stagnates mostly because of technological changes. The article, “Job Polarization in the 2000s?” dispels this fallacy.

The reality is that there needs to be systemic change in which there is the correct balance between “good government”, “good corporations”, and the individual with a bias towards the individual. In the book “As I See It: Class Warfare The Only Resort To Right Wing Doom” an attempt is made not only to describe the problem but talk solutions in layman form. Others have attempted to express solutions in more stark terms.

The elite talking class on the major networks, whether from the center or the right have misled Americans. The wealth of most Americans has been in a state of stagnation since the institution of Ronald Reagan’s supply side economics (termed voodoo economics by George HW Bush) that America is still living under. Until this form of economics is disbanded and corrective action taken via the tax system, the middle class will continue to falter and the Plutocracy will continue its unfettered reign.

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Originally posted to ProgressiveLiberal on Thu Jan 17, 2013 at 09:38 AM PST.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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Comment Preferences

  •  Sign of the times (6+ / 0-)

    back in the 50's and 60's, life insurance was touted as an instrument which would pay off the house, cover funeral expenses, pay for the kids' college, and provide the surviving spouse with a sufficient income so there would be no need for remarriage or seeking outside employment.  Much of this was puffery but there was a kernel of truth.

    How much insurance would be required to do cover this today?  Funerals run around $10K and I guess many mortgages are in the $100K range, maybe less.  College is around $20K a year per kid and average income for a family is around $48K (numbers are off the top of my head)

    For the actuaries out there, how much insurance would there have to be to pay off the house, pay for the funeral, put 2.4 kids through college and leave the surviving partner with sufficient income from an annuity (include SS survivor benefits in annual income figure) to live a middle middle class lifestyle. (Assume 3% return on annuity)?

    I remember back in the 60's an insurance agent trying to sell a $100K policy to achieve all of this.  Would $25M policy achieve this today?  The change in the amount of estate required to complete these tasks could be a rough measure of the erosion of the middle class economically

    •  According to the average (1+ / 0-)
      Recommended by:

      mortgage balance in the US is $172,000.

      "let's talk about that"

      by VClib on Thu Jan 17, 2013 at 10:13:08 AM PST

      [ Parent ]

      •  thank you; would that move the amount of (3+ / 0-)
        Recommended by:
        susakinovember, VClib, Calamity Jean

        insurance needed to do the functions usually attributed to life insurance to maybe $30M-$50M?
        Cheapest term I can find is $900-$1500 per month for $10M coverage for a 35 year old male in excellent health for 30 year level term.  I think that we can agree that $10M is a minimum amount of insurance to accomplish the tasks enumerated; this means either life insurance is no longer truly insurance against the future or that some traditional tasks are beyond the average American to afford.  After all $12K annually for life insurance is out of the reach of most families.

        For the critics of the social safety net, I would point out it is impossible for an average Joe to reproduce said social net from his ordinary income

        •  $10million coverage is high (1+ / 0-)
          Recommended by:

          unless it is to replace income of $500,000 to $1,000,000 a year - which is about 10x or more median household income.

          The most important way to protect the environment is not to have more than one child.

          by nextstep on Thu Jan 17, 2013 at 11:11:23 AM PST

          [ Parent ]

          •  I am figuring an annual ROI of 3% (0+ / 0-)

            for the amount which survives probate and the deed of distribution.  $10M to replace $500K assumes a return of 5% and that the entire $10M survives probate while I am assuming that the individual's estate, while the insurance would be outside the estate, would have to pay off any debts.  I am also allocating a portion of the income from investments to saving for 2.4 children's colleges and saving for retirement,  

            •  Several items (0+ / 0-)

              1 why a probate issue (probate is how assets are divided amount heirs when a will does not cover the asset or when no beneficiaries are named - people sometimes confuse this with estate taxes which is very different), just name beneficiaries.
              2 purchase insurance through an insurance trust to avoid any estate taxes

              The most important way to protect the environment is not to have more than one child.

              by nextstep on Thu Jan 17, 2013 at 10:03:33 PM PST

              [ Parent ]

              •  RE: probate: in addition to estate taxes (0+ / 0-)

                on any assets in excess of $5M, all of the decedent's debts have to be paid in full, i.e. the creditors have to be satisfied, even if the estate has to be liquidated.  This is the reason life insurance is structured to be outside the estate.  Probate involves naming the executors, inventorying the assets, satisfying the creditors and then distributing any remaining assets.  If you die owing $5K on an auto that you leave to your son, he cannot take possession until he or the estate pays off the $5K. If he does not, the creditor takes possession, no matter what you said in your will

        •  Are you sure you're calculating the (0+ / 0-)

          annuity correctly? You need 30 mln of insurance to pay 200k worth of mortgage?

  •  It's perplexing that a diary like this, which adds (10+ / 0-)

    a lot of value to the discussion here gets very little attention, while a lot of useless sensational stuff which basically focuses on what the deranged right wing lunatics are doing dominates the rec list.

    Either way, you gained another follower here, and twitter.  I'll be paying attention to your work.  Thank you very much.

  •  In addition to the tax issue... (1+ / 0-)
    Recommended by:

    I agree that a balanced tax system will bring money back to the middle class.  The money has slowly been re-distributed up.  So, a re-re-distribution is what we need.

    Another solution that I believe will get to the heart of the matter is to reduce the influence of the plutocrats.  Campaign finance reform or even better, public financing for elections is a fantastic way to take away power from the elites.  This can only work with the elimination of all private financing in elections.  It will restore power to the middle class.

    I know I could be living in fantasy land here, but if the ability to buy elections is ended, we'll likely see progress we can only dream of.  

    "If the misery of the poor be caused not by the laws of nature, but by our institutions, great is our sin." Charles Darwin

    by Rockydog on Thu Jan 17, 2013 at 10:44:56 AM PST

  •  T & R'd (1+ / 0-)
    Recommended by:

    Well stated.

    The Aggressively Ignorant Caucus is getting aggressively ignorant again.

    by Anthony Page aka SecondComing on Thu Jan 17, 2013 at 11:47:51 AM PST

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