Wednesday, October 05, 2005

The fate of the vanishing American middle-class

The American middle class is vanishing:
The Big Picture: Top of the Top

To review: The Middle class is getting squeezed by outsourcing, decreasing industrial sector, increasing energy prices, weak personal income gains, non-commodity inflation, the worst savings rate ever, all the while accumulating massive debt, both personal and governmental. The good news is their tax burden has fallen, albeit at 1/10 the rate of the wealthiest Americans....

..."Other data show that among major world economies, the United States in recent years has had the third-greatest disparity in incomes between the very top and everyone else. Only Mexico and Russia, among major economies, have greater disparity."
I've seen other economists refer to the American middle-class as a post-war phenomenon, meaning it was an artifact of WW II rather than a stable feature of the US economy. I don't think, however, that's true in all weathy nations.

So why does anyone but the wealthy vote for George Bush? As near as I can tell about 70% of his base vote for religious reasons, 5% vote because they expect to gain economically, and 25% made a big mistake. That's oddly reassuring, it means that 75% of Bush's base voted rationally (if someone believes Bush is God's messenger, it would be intensely irrational not to vote for him).

How will this all turn out? I think we're too aged a nation to for 1960s style upheaval, but I do think it will be interesting to see how a socialist/green party does in the next election.

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