What is Happening to our Middle Class?

In the New York Times opinion peace, “Is This the End of Market Democracy?” author Thomas B. Edsall presents an incredibly interesting point about our current and future state of economy based on the market, technology, globalization, and the dwindling of our middle class.  Quite refreshing in this piece is the fact that it is not hiding a left or right wing agenda but presenting the case to both parties and to all of us as a whole. Both Democratic and Republican positions are stated (Democratic: Investing in things like education that gives everybody a chance to succeed. A tax code that makes sure everybody pays their fair share. And laws that make sure everybody follows the rules. That’s what will transform our economy. That’s what will grow our middle class again. Republican: Denouncing the expansion of a Democratic “entitlement society” and what they see as a trend toward European social democracy. They are calling for sharply reduced taxes, regulation and government spending to free market forces and revive private sector economic growth.)

The major point Edsall is focused on is that our classes are continuing to divide and how this affects our economy.  As Edsall also points out, there is not a resolution in place and we are at a crossroads and I firmly believe he is correct. Emerging economies are producing goods at lower a cost which positively affects the cost of our consumer goods but negatively affects the US working middle class that used to have these manufacturing jobs. Technological innovation and globalization leads to a polarization of labor demand in rich countries increasing the need for upper level jobs and eliminating middle skill jobs. This globalization at first opened the doors to trade and growth for our economy and workforce but now is negatively impacting us because the global market and automation has resulted in lower cost labor and goods outside of our country.

As each end of the spectrum grows the rich become richer and their political influence continues to expand. With this happening can our Democratic Free Market Capitalism provide what is needed for the broad spectrum of classes in our country? Edsall presents the argument that with the affluent class growing and expanding its political reach and power their political influence is too strong and inequality is then out of balance. Most interesting is the statement that employment problems in America do not result from market failure but just the opposite. Our problems arise from the exceptionally efficient global marketplace that has evolved and those holding mid-skill jobs are paying the price.

Edsall does present some possible solutions in his piece that we can moderate the trend of inequality. With increased job training, more employee leverage in wage bargaining, infrastructure spending, progressive taxation, and expansion of the Earned Income Tax Credit for the working poor which could potentially produce a vibrant Market Economy with a strong role for government generated shared prosperity. I neither agree nor disagree that this will provide a solution. That is for the economic experts to figure out. What I do agree with is the fact that this is a huge issue that needs to be addressed. I have not heard our Presidential candidates address this thus far and it is of mention that Edsall believes that this has been avoided because as important as it is, the political costs of engagement are likely to far outweigh any potential gains. Despite this observation this will have to be addressed so be ready for it because it is going to be fun to see how our Politicians try to handle this one.