Reprocessing the Middle Class — Act 2

The second act of reprocessing the middle class begins after college.  Our “middle class” young people, now shackled with over twenty grand in debt from college loans, feel “fortunate” to land a job paying thirty to fifty grand a year.  Others that aren’t so lucky have to take part-time jobs or jobs well below their potential.  It is at this point that the vultures begin to circle and prey on humanity’s greatest weakness — you can have it all now and pay for it later in small incremental payments known as interest.  There aren’t any animate creatures on earth with enough discipline to forgo a meal offered today rather than wait until tomorrow.  The human creation of debt and credit was a very costly invention to the majority and it preys upon a fundamental weakness in our genetic make up.

Those young people fresh out of college that want and are enticed to live the middle class American Dream immediately begin to load themselves up with things and more debt.  The first big purchase is a car with low-interest payments.  The second big purchase is a house or a condo where the government actually throws out carrots via mortgage payment tax breaks.  Along with the house and car comes additional expenses including insurance, maintenance, gas, furniture, big screen TV’s, fancy phones, cable and the internet.  The other costs of living like groceries, health insurance, heat, and entertainment further eat into the young person’s meagre annual salary.  Keep in mind prices for goods and services in the United States aren’t in decline — inflation especially on gas and groceries is on the rise.
The marketing and advertising blitz permeating from the television, mobile phone, radio, and the internet, combined with the easy access to credit cards and more debt, encourages and enables the young person to acquire even more things than he or she may or may not know they want or need.  Beautiful woman, handsome men, our Hollywood heroes and sports icons, all used as bait to round-up the school of fish.  The concept of saving or waiting to acquire things is a foreign concept.  The American youth isn’t brought up Asia style.  The culture defined by the capitalistic machinery is one that is based not only on consumption, but instant consumption.  Live for the day and pay the price tomorrow.  Some of the youth, either through good parenting or common sense, avoid these traps, but the vast majority go for the bait and get hooked.  What else could have driven the American economy in the last two decades — manufacturing? No, the only thing truly driving the United States economy in the last two decades is the easy access to credit and debt.

Reprocessing the Middle Class

Given I have firsthand experience of the reprocessing (term borrowed from my beloved brother known as Dragonstrand) of the middle class, I figured this post might carry some weight when taking into account the status quo for the vast majority of American citizens.  In a nutshell, I went from making at my peak $180,000 with bonus, to a three-year period of unemployment or no full-time job, to recently taking a night shift job making $11 dollars an hour with a huge corporation.  I still have two years of federal taxes to pay and over ten grand in credit card debt to pay off.  I have a few personal reasons for my predicament, but nothing that would realistically prevent me from landing a decent job at a decent wage relative to my experience and education.  I don’t really have any other options available.  I have tried to pull myself up and applied to over a thousand white-collar professional jobs during that three-year period, but I couldn’t secure a job offer despite over a decade of solid work experience and higher education from well-known undergraduate and graduate institutions.

The middle and upper middle class in America has been downsized and is being “reprocessed”.  To understand this phenomena one must agree to a fundamental principle.  Wealth, as measured by money, does not grow for the money supply in theory is constant.  Sure, those in charge of the money supply can print more money, but that simply waters down its assumed value and purchase power.  As such, wealth is merely lost by one and gained by another.  There is only one pie to cut up and serve.

 In the United States, the few have mastered the art of accumulating and taking more and more and more money away from the many.  No other developed nation has such an enormous gap between those few that have most and those many that have little.  The art the few have mastered to siphon money away from the majority centers on a multi-pronged strategy and a closely knit group in powerful positions in banking, Wall Street, venture capital, huge multinational corporations, media (advertising and marketing), and government (controlled by lobbyists and big campaign donors).

The only problem with their strategy is eventually the many have little left for the few to take and the well runs dry.  And when the well runs dry they have to figure out how to appease or deceive the mob to avoid a rebellion before they take their winnings and leave the country.  Currently, the power structure is employing delay tactics to avoid the inevitable – a revolution.  The game can best be described as kick the can.  Obama, a man of change, says the right things, but his actions are merely status quo.  And the republican presidential front-runner wants to return to the Reagan era where the wolves were set free.  The truth of the matter is that there is no way out given the current power structure.  Politics and your vote isn’t going to create any change to the fascist power complex.

My next several posts will summarize the multi-pronged strategy used by the few to siphon away money from the many.  Much of this has been discussed in this blog via previous posts, but I feel now is the time to re-iterate and summarize.  The upcoming election between a republican presidential candidate and Obama is all smoke and mirrors.  The game ahead of us is quite simply a game of kick the can.  We have reached the stage of no way out unless we are willing as a majority to make bold moves.  All that is really needed is an enlightened sense of what is and what will be if we do not act.  I am the farthest thing from a protestor or revolutionary and I have a son I dearly love, but if there is a movement with intelligent momentum, I would be willing to put all that matters in this one life on the line for the many that are yet to come.

Why the U.S. “Middle Class” is Poor

The Federal, state, and local government takes in over five trillion dollars in the form of tax revenue each year.  Guess where the majority of that tax revenue comes from?  No, it doesn’t come from huge corporations, or investment banks, or insurance companies, or Wall Street.  Close to 90% of that tax revenue comes from you and me and really small businesses.  Never mind that these government entities can’t break even with all this money as that is a topic for a much longer post, but just imagine for a moment that we the citizens of the United States provide the Federal, state, and local governments with approximately $4+ trillion in tax revenue.  Larger corporations only provide roughly 6% of government revenue through taxes.

Large U.S. based multinational corporations have been enjoying record profits during the last few years while main-street american citizens are struggling.  Large corporate profits are approaching $2 trillion a year.  As a result, the stock market is fairing pretty darn well considering the struggles many Americans are facing economically.  Huge American corporations are enjoying cheap international labor and a lean base of U.S. employees that are terrified of losing their jobs.  Labor productivity is very high for these large American companies.  Why hire U.S. citizens when profits are hitting historical record highs?  Those at the top of these large U.S. corporate entities are rolling in the money as are investment bankers, Wall Street, and the rich that are in the know and invest money to make more money without doing anything to make that money.  Is it any mystery why the income gap in our great country is wider than any other developed country in the entire world?  Is it no wonder that the gap is still increasing?

Now, in addition to the enormous tax burden individuals and small businesses absorb, there is another high-priced burden — prices of everything we buy.  How do corporations make a profit?  Because we, the ordinary citizen, pay more for those products than they cost to produce and distribute.  Because we believe all the advertising bullshit that makes us think a product is worth more than its cost.  The marketing gurus call this “perceived value”.  So, as a result, not only are we supporting all our governments with the majority of their tax revenue, but we are also giving excessive money to huge corporations so that they can enjoy profits.  We, the middle class, are getting fucked on both ends.  And guess who gets all our money?  The government and the 1% that runs corporate America (huge corporations, investments banks, Wall Street, banks, insurance companies).

Now, in addition to the above two burdens, most of us must resort to forms of credit and loans to enjoy life.  As a result, we end up forking out money in the form of interest payments to the altruistic banks.  If we a buy a car, a house, or simply enjoy a vacation or dinner out — along comes the extra expense in the form of monthly interest payments.  Or, if you are young without wealthy parents and want an education to get a job then you also need to take out a loan (a loan you will be paying for the majority of your youthful life).  And since the corporations we work for aren’t going to give us annual pay raises above the rate of inflation (or hire you young folks after taking out that big loan to get an education) we will never be in a position to pay off that debt.  Therefore, monthly interest payments simply become a life-long additional expense in addition to income taxes, sales taxes, and inflationary prices coined “perceived value”..

The final piece of the elimination of the “middle class” comes in the form of higher inflation above an beyond the already considerable price inflation forced on the individual through corporate prices that are far above production and distribution costs.  This additional inflation is caused by the incompetence and cronyism of the Federal Reserve combined with our governments that can’t contain spending to the some $4 trillion bucks we hand over to them.  The crook-like Federal Reserve just keeps printing more and more U.S. dollars which simply waters down what little dollars we have left in our wallets.  Why do they keep printing more and more dollars?  I am not the one to answer that question, but it has something to do with our mounting Federal debt, trade deficits, and currency wars.  But it really doesn’t matter why when you consider that in the end it is the “middle class” that ends up disappearing.  How much more are you spending to fill up your gas tank?  How much more are you spending at the grocery store?  How much more are you spending when you travel and have to check bags?  How much more are you paying to heat or cool your homes?  How much more are you paying for entertainment and dinner out?

I don’t have a fully developed solution outside of a Utopian creation, but I do have a broad fundamental concept.  It is time to tax the shit out of the rich.  It is time to tax the shit out of huge corporations that are taking our money by shipping jobs overseas, charging us too much money to buy their products, and working current employees like dogs without raises greater than inflation.  It is time to cut the shit out of government spending.  I don’t care if the stock market takes a major hit.  All I want is the middle class to have a chance to get back on its feet.  A country without a healthy and strong middle class isn’t going to be around long in its current form.  And I for one am reaching the point where I would be more than willing to ensure that current form no longer exists.  But, a new form must first be envisioned through logic and true leadership.  Tearing down a corrupt and broken form without envisioning a radical but workable new form simply leads to a bandwagon of buffoons beating their chest and demanding a free bushel of bananas in exchange for nothing.  My Utopian visions could solve our problems, but then again, people would have to understand and agree that money is a myth and that the true form of currency is human energy, motivation, cooperation, sacrifice, and acceptance of some inequality not in gender or race, but in ability..

Below the Line

I think I will make a few follow-up posts from the previous topic “Rich Man Poor Man”.  I think these posts will contrast nicely with my little utopian project.  I can also cover several of my larger thoughts by sharing personal experiences which may provide some entertainment for fellow bloggers.  

Today, Christmas Eve, was almost a horrible day.  After spending several weeks working hard in a manual labor type role I got the first pay check that amounted to $273.83.  This check amount was for 38.16 hours of relatively hard physical work.  My old paychecks used to amount to $2,500 per week excluding a nice healthy annual bonus and other perks like stock options and unlimited paid vacation (although you really couldn’t realize that “beni” to its fullest potential).  Unfortunately for me more than half of that would go to my ex-wife and expensive trips to visit my son (I was at one point living and working three thousand miles away from him).  The difference between these two paychecks, excluding the amounts, is that I actually felt like I earned $273.83.  In a very odd way I almost enjoyed the hard manual work as opposed to the business casual office environment where I sat in a nice cozy office and played with numbers and spreadsheets on a computer.  More about this later.

So, I went to cash this paycheck at my bank this morning.  Finally, I would have some cash to buy some decent food and drink.  I handed the paycheck over to the clerk and said I want to cash it out.  She punched a bunch of stuff into her computer and then paused long enough for me to realize there was going to be a problem.  She said something like, “it won’t let me cash your check because you have a negative amount in your account greater than the check amount.”  My account had a negative balance from auto payouts linked to my credit card (interest payments of course) and my son’s health care charges.  The bank had also charged my account over $100 bucks in over-draft fees further increasing the deficit.  I asked the clerk (I was quite embarrassed at this point) if she knew where I might be able to cash the check.  She said perhaps Money Tree would cash it but they would charge a large fee.  She then suggested Fred Meyer (kind of like a Wal-Mart for those of you that have never heard of it).  She said she used to work there and they would cash paychecks for a slight fee.   

I crawled out of the bank and jumped into the car (the low fuel red indicator light was of course beaming) and drove to Freddies.  I was doubtful I would have any success but I had to try.  No cash and little supplies would make for a crappy holiday week to say the least.  I waited in the customer service line and once I got to the clerk I quietly whispered, “do you cash out paychecks?”  To my surprise she confirmed they did indeed cash paychecks assuming the company had a reputable name.  Fortunately, the company I perform manual labor for has a very strong brand name.  She asked for my I.D., made a phone call, talked to her manager, and boom, she gave me the nod.  She let me know that they charge a $3 dollar service fee per $100 cashed.  I said no problem.  But here is the kicker and hot tip for folks that may be in a similar situation.  If you purchase more than $28 bucks of products at Freddies they would give me back the $6 bucks.  

Once I got my hands on the $267 bucks and change my spirits suddenly lifted.  I could actually buy some decent food, wine, and beer to enjoy the holidays.  I felt like a kid in a candy store.  But I resisted my old habits to just blow through the store picking this and that without any consideration of the price.  You see, I never respected money nor thought much about it for most of my life.  That has all changed now.  Not that I respect money, but I realize it is the only currency society understands and accepts.  You can be a wise, nice, generous, caring person, but if you don’t have a buck it really doesn’t matter what type of character you are or were in the past.  There is another side to that coin.  You could be a dirty rotten scoundrel, but if you have money, that carries much more weight.  I am not claiming that I have or do exist exclusively on one side of this coin, but I wanted to make and communicate this observation.     

As I carefully picked my items I observed many folks around me that were also purchasing strange things for the holidays.  Their carts weren’t filled with a big turkey, a huge hunk of ham, or expensive wine and other elegant trimmings.  They seemed to also be selecting very minimal and unexciting items.  I could tell by the items in their carts that they weren’t making last-minute purchases.  These people were stocking up for the week.  At that point, I realized I had joined those that have recently been demoted below the middle class threshold and that we would most likely never get back above that old line.  Here was the new reality — just getting by with the basics yet still owing money to the bank, the mortgage company, the credit card entities, or the government.  I have figured out today how to eliminate one of those blood sucking entities.  Once I get enough cash to kill my negative bank balance, I will close my account with the bank.  I don’t think I will need their services and overdraft fees any longer.  Shit, I can just go to Freddie Fucking Meyer’s and get my cash and groceries in one swoop with no hidden fees — excluding of course the inflated prices we pay due to the profit motive.