Maybe it’s no surprise, then, that a recent poll found that even opportunity-loving Americans prefer, by a two-to-one margin, the security of having their current income protected to the chance to make more money.

The portion that do not, likely have never had to work hard to support themselves. That goes for a lot of Americans under age 25, including myself.

Once you work hard to support yourself, and build any kind of sweat-equity or nest-egg, and have people, a wife, children, who depend on that - then taking risks doesn't seem like a very smart thing to do.

I have a conservative buddy. (I mention him a lot here). (he's actually not conservative - he just thinks he is). He bought into all the Rush Limbaugh BS that America was built by enterpreneurs, and risk-takers. He took a risk and started a business. And it failed. He lost his home, and he and his family were recently evicted from their rented house too. He very stubbornly stuck to his business until his savings were bled dry, he had to sell just about everything he owned, that he could sell, and finally, his 10-year old used car started breaking down every other week.
He was lucky that he found someone who would rent to him after the eviction, so at least his kids aren't out on the street. And he finally gave up on his business, and got a job. He got lucky - but he's so far in the hole now, there's little hope that he'll ever be able to pay his way out. So now, his kids probably will not go to college. And they'll probably end up in the same dead-end life with no opportunities that he's in.

Risk Taking is NOT a Family Value.

"If you have trouble figuring out why risk makes people anxious and unhappy, consider this simple thought experiment: How much of your income would you be willing to put at risk to get a chance at twice your current income? If you’re like most Americans, the answer is “not much”—and for a simple reason: While you’d love to have more money, your life would be thrown into turmoil if your income dropped by, say, half."

I'm not 100% sure whether this is intended as satire, but for purposes of this comment I'm going to assume Jacob isn't putting us on.

Jacob, here's another thought experiment. If you're having trouble figuring out why "Americans [are] so unhappy about the economy, when the basic economic numbers (inflation, unemployment, economic growth) have been pretty good," pretend you're living paycheck to paycheck, even if you're middle class and doing reasonably well, and ask yourself what would happen to you and your family if you lost your job. Now pretend that you know some people who are in same paycheck to paycheck boat you're in and have lost actually lost their jobs, their ability to carry their mortgages and then maybe their health insurance too.

when I hear "sticking up for middle-class families", I hear screw the poor.

It seems to me that you misunderstand the risks being faced by people today. Losing half of what you have is not just losing vacations and nice cars. Losing half of what you have means losing your house, your car, undoubtedly your job. And since many of our wonderful Democrats voted for the bankruptcy bill, there's no safety net.

Tell me how marginalizing the middle class helps this country.

And, by the way, maybe there's a generation gap here, but I remember when the Democratic Party was not just for the middle class but for the working class as well.

However, that's semantics. Anyone who depends on salary or wages for their living is deluding themselves if they think they are middle class.

Watch the election in Ohio.

If the Dems cannot win here on economic issues, they might as well fold their tent.

The Dems have a better slate of candidates than usual, but other then Sherrod Brown don't seem to have a coherent message.

The GOP keeps serving up big fat easy pitches but the Dems cannot get a hit - come on guys.

self fulfilling prophecy? Republicans have preached that government is bad evil wasteful for 30 years and when given the chance they proved it to be so. They made it so. They had nothing but contempt for government( the people's business) and therefore disrespected the people themselves. The cynicism of their big ideas was they preached libertarian fear of government while becoming welfare queens- power and money of government acruing to them and their disciples only. Theocracy? Democrats need to reconnect to the idea that we all have a stake in and a duty to not create a government that is a dirty rag- very clear in the military( the concept of service) and bidding contracts. Ethics have been lost because they created a lack of respect for the institutions that built the country.

Well, if you are sticking up for the middle class you are sticking up for a large portion of Americans, which is better than sticking up for the rich, which is what our current administration has done.

If the middle class was less anxious, then taking care of the poor would be a lot easier, because the middle class seems to be a lot more generous, tax-wise and charity-wise, than our loverly rich folk, who only give if they get to party while doing it.

So, no, it isn't screw the poor, it is give the middle class a chance, get the hogs riding on our backs off our backs so we can create a better society for everyone.

I have what I only half-facetiously call the Unified Field Theory of Politics. You know how in physics they keep searching for the Grand Explanation of Everything. (Gravity=time, that sorta thing.)

In American politics, it's immigration.

Think about it -- it is almost impossible to name a major (or even many minor) issue that doesn't have an immigration component.

Abortion? Chinese refugees fleeing the one-child policy.

Taxes? Zillionaires who give up their American citizenship for the tax break (or rich "temporary" workers, particularly in high tech fields, who refuse to naturalize to avoid taxes on their offshore income.)

Family values? The most anti-marriage, anti-family provision of American law is the way we treat the spouses and kids of LEGAL immigrants: get a green card, then get married to your high school sweetheart, and your spouse is exiled for a minimum of 7 years.

And what is the progressive response? Republican lite, and lawyer fodder.

Democrats are for guest workers (has there ever been a guest worker program that worked? Nope); we call amnesty "earned legalization" so we seem to want illegal residents and "temporary" workers to be treated better than LEGAL immigrants.

(yawn)

The fact is, we have spent a generation making all profits private, and socializing as much risk as possible. There are huge costs associated with low-skill immigration (which includes most illegal immigration), mostly educating the kids of guys who don't make much money so they pay little in taxes -- and WE, the People, get stuck with the burden: an extra grand a year per household in California taxes, about $300 a year in NJ.

Illegal workers are simply a subsidy for inefficient businesses.

Likewise, no less than MILTON FRIEDMAN has called the abundant supply of "temporary" workers for the IT industries a subsidy.

What's the risk? This whole approach, severing the Ellis Island connection between getting here (immigration) and BELONGING here (citizenship), puts what makes us America at risk. It's doing the worst damage precisely to the folks we claim to want MOST -- literally alienating 'em.

And where are progressives?

At every point in the American economy where people are living paycheck to paycheck, the spooky music playing under the scene is the distinct possibility that the work can be offshored, or done cheaper by a "temporary" worker, or someone who is outright illegal.

No offense to Yalies (is it possible to offend a Yale man in the Bush era?, but if you want to know about the impact of risk-taking in the U.S. economy, compare entrepreneurship among African-Americans BORN IN AFRICA, and those born here for more than two generations.

Or in other words, the great experiment with supply-side economics has failed. The GOP said if we take the tax burden off the rich, we would all benefit. The need for the entreprenur and businessman to expand business would mean more jobs, lower prices, and an extension of the 90's boom. We would all benefit; poor, middle-class and rich alike.

But it never played that way. The rich got richer, the middle-class is getting squeezed, and the poor grow in number.

If you follow the GOP rhetoic, the rich have not done their patriotic duty to try to get richer. If you follow common sense, it was never going to work as advertised.

Don't get me wrong, I hate taxes. But I understand the value of paying my fair share. No more than that, but my fair share.

Let me say, at the outset, a broadly agree with Hacker's general thesis that the Democratic Party's long-term strategy needs to be "[speak] forthrightly about the rapidly increasing insecurity of American workers and their families, and [put] forth innovative ideas that build on the Democrats’ proud tradition of broad-based insurance while updating that tradition for the new world of work and family."

But that’s not what I’m advocating. Instead, I want the Democrats to return their roots, so to speak—reclaiming their voice as the defender of middle-class Americans on pocketbook issues.

What roots? The focus of, say, the New Deal Coalition, which is what I would call the roots of the modern Democratic Party, wasn't the protection of middle-class Americans on pocketbook issues, it was the protection of all Americans on pocketbook issues, particularly those who relied on wage labor rather than capital for their ability to put food on the table.

Why are Americans so unhappy about the economy, when the basic economic numbers (inflation, unemployment, economic growth) have been pretty good? Because the basic economic numbers don’t capture the pervasive insecurity that Americans increasingly feel.

I think that's part of the problem (almost a tautology), but I think it misses the fact that the basic numbers don't capture lots of important distributional effects: headline unemployment numbers don't capture the quality of jobs, GDP/capita doesn't tell how the wealth generated by the economy is distributed, inflation numbers reflect a hypergeneralized experience that doesn't necessarily translate well to the prices relevant to the lives of particular people in particular situations: hedonic adjustments for the quality of, say, computers available may be a big deal for the upper middle class, less so for people who are living on the edge with paying for food, housing, and essentials. One consistent market basket doesn't capture the experience of all people in all walks of life (heck, the usually-cited overall measure of inflation, the CPI-U, doesn't even pretend to: its the Consumer Price Index for Urban Consumers—even for them, of course, its hypergeneralized: Donald Trump and a single-mother on welfare are both "urban consumers", but there spending patterns, and which prices affect them most, are very different.)

Basically, what that statistic is showing is that the attention paid by the first Bush Presidency to changing the way unemployment and many other economic indicators reflect the economy are...lying about the actual economy when it comes to the effect on the average American worker. Yeah, it makes the GDP look great but it doesn't accurately reflect the basic economic power of the average American in any meaningful way. GDP is a ghost of what the society as a whole can muster economically but neglects socioeconomic class in the health of the nation.

Or in other words, the great experiment with supply-side economics has failed. The GOP said if we take the tax burden off the rich, we would all benefit.

b-b-but, look at the GDP! The CPI! The DJIA!

Kevin: "Is there an alternative? Yes, and Democrats should seize it."

Yes, they should seize it but they probably won't. Even if they do, it won't because the professional Democratic class feels any great identification with the sinking middle class - it'll just be because they think it's a strategy to get them back into power again.

Let's face it: the Democrats have not identified with the American middle class for many years. The long-time Democratic pols (and the parasitic consultants attached to them) are in their own little DC world and haven't a clue as to what the life of the average middle-class American is like.

The Democrats are like a lighter version of the fat-cat Republicans and maybe that's why they can't get much separation from the GOP on any policy issues that affect the economic health of the middle class, except Social Security. No wonder that most middle-class Americans no longer feel that the Democrats speak for them.

Yes, there is an opportunity just waiting to be seized but I see no inkling that the professional class of Democrats have a clue about how to do it.

The thing standing in the way of Hacker's vision is the dependence of Democratic politicians on organized interests who do not have the "roots" of the party at the top of their list of priorities.

Trial lawyers, feminists, the civil rights establishment, Jewish supporters of Israel, and labor unions -- among these groups, that dominate the Democratic Party, only unions have as part (and, at that, only part) of their core agenda addressing the problem of risk and the middle class that Hacker identifies. Democratic politicians know that to get the support of the other groups -- all of which are more influential than the unions within the Democratic Party in some parts of the country, and two of which (the lawyers and the feminists) are more influential than the unions almost everywhere. To get the support of "the groups'" leaders, Democratic politicians have to endorse their agendas. This leads them to spend a lot of time demonstrating their devotion to the right to choose abortion, the dream of aging civil rights leaders that their grandchildren can get admitted to all the swanky schools, and lawsuits. Lots and lots of lawsuits.

Fundamentally, "the groups" exercise such a dominant influence for the same reason the NRA and evangelicals are so influential within the Republican Party. The importance of organized interests who can supply candidates with money and get their followers to the polls is magnified during low-turnout elections -- and in this country today, that means nearly all elections.

Their are many, many Americans to whom the problem of risk and insecurity matters greatly (what, exactly, needs to be done about this problem is another question). Most of them, though, don't vote. Democrats will never get them to vote as long as their spending all their time doing obeisance to NARAL, the NAACP and the trial lawyers.

Democrats will never get them to vote as long as their spending all their time doing obeisance to NARAL, the NAACP and the trial lawyers.

Most Democratic politicians' loyalty belongs to Boeing, General Dynamics, Lockheed, General Electric, Chase, Citi, AIG, etc., not to NGO's and civil rights groups. That is why Democrats are unable to address the economic problems of real people.

Ideologues on the left and right always think centrism is somehow mealy-mouthed or cowardly. Does it ever occur to you geniuses that some people actually BELIEVE FIRMLY in centrist principles, in the balance between competing ideologies? It might enhance your worldview if you grasp the concept that those who disagree with you are not merely afraid to voice their agreement. It might also enhance your electoral prospects, because I suspect the majority of Americans are centrist to one degree or another.

I don;t think that the Dems have been the party of working people since Carter at least. They will have to make some tough decisions and be willing to give up lobbyist money if they want to be perceived as being honest again. I am not holding my breath. Most agitation for reform comes from outside the system anyway.

Osama,

If we could only buy food with the DJIA, we'd all be better off. Or buy diapers with the GDP! :-)

The expectation of a broad-based increase in wealth as a result of supply-side economics is fully proven to be a fallacy for an overwhelming majority of the American people. We all knew it would basically work, and the rich would get more. But we believed the GOP when they said the rest of us would do much better with supply-side than with any other plan.

We paid our money, saw the show, and now understand we've been ripped off.

An excellent post. Kevin, I'm glad you've invited this guy here for the week.

If anything, Jacob Hacker's case is conservative. There's plenty of evidence that it's not *just* economic insecurity - that in the short term, the past 6 years, incomes for the bottom half have fallen or remained stagnant while prices have risen drastically. We're not *just* facing greater insecurity but actual diminished purchasing power - i.e. increasing poorness.

But nobody talks about it, because the media is shallow, and focuses on key indicators that have been maniuplated by the government to almost the point of uselessness.

Quoting cmdicely: think it misses the fact that the basic numbers don't capture lots of important distributional effects: headline unemployment numbers don't capture the quality of jobs, GDP/capita doesn't tell how the wealth generated by the economy is distributed, inflation numbers reflect a hypergeneralized experience that doesn't necessarily translate well to the prices relevant to the lives of particular people in particular situations: hedonic adjustments for the quality of, say, computers available may be a big deal for the upper middle class, less so for people who are living on the edge with paying for food, housing, and essentials

Again, cmdicely is *understating*. It's not just that low inflation represents computers and stereos that may not be core to the poor/financially struggling. It's that inflation completely leaves out the cost of education, the cost of insurance, the cost of housing, the costs of debt servicing - etc. An inflation statistic that focuses solely on material goods is nearly useless. A lot of things beyond material goods can cripple your finances (and cause insecurity!)

The unemployment statistic is also almost completely pointless at this point - the simple fact that both unemployment and labor force participation can **both** fall at the same time should clue us in that something is massively wrong with either the stat or the way it's interpreted.

Does it ever occur to you geniuses that some people actually BELIEVE FIRMLY in centrist principles, in the balance between competing ideologies?...
Posted by: Shag on October 10, 2006 at 1:15 PM | PERMALINK

Excellent point. I was always taught that FDR's policies, the New Deal, and all that - was a masterstroke that worked to PRESERVE capitalism in this country. Had we not pursued those policies, there was a very real fear of Communist takeover in this country. The New Deal was a Centrist approach to an uneasy truce between Anarcho-Capitalism and Hard-core Communism. The Centrist approach is the proof that this choice was a False Dichotomy.

Then I'm reminded of this famous quote:

"Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes that you can do these things. Among them are a few Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible and they are stupid."

-- President Dwight D. Eisenhower, 1952

Ever since the New Deal, these "negligible and stupid Texas oil millionaires" that we have allowed to take over our Nation, have worked to undermine it. Maybe they feel that now, things are different. Now, there is a strong middle class that will not march in the streets and overthrow their plutocratic rule. Or now, military technology, and America's military might (one is reminded of the Military Industrial Complex warning speech that came later) - would prevent any such takeover from within from happening. In either case - nobody seems worried that the downward slide into fascism will trigger a violent revolution in this country.

I think that Eisenhower grossly underestimated the problem.

Most Democratic politicians' loyalty belongs to Boeing, General Dynamics, Lockheed, General Electric, Chase, Citi, AIG, etc., not to NGO's and civil rights groups. That is why Democrats are unable to address the economic problems of real people.
Posted by: Hostile on October 10, 2006 at 1:13 PM | PERMALINK

Yes - we've heard from the "pox on both their houses" crowd.

This idea was popular in the 1990's: "I don't like either party being in power, we're better off with gridlock, when neither party can do anything." -

I tend to agree with that assessment.

Look - the Democratic party needs change. The electoral system and campaign finance systems need change. But there's two possible outcomes to the upcoming election:

1. Dems win big - and at least we can do something about the damage the Republicans have done. Short term goal. Long term, we have to hope that the Dems aren't just as bad when they're in control.

2. Dems screw it up again, and lose - Maybe this party SHOULD disintegrate, and a third party could arise. But we'll never know for another two, maybe four, maybe six, maybe eight years of de facto one-party rule. And the incumbent party is not going to feel inclined to work on the problems of campaign finance reform, or fair elections, or lobbyist and big-money influence.

I feel that short-term, America's only hope for maintaining progressive values (if there's any left after the 2004 debacle) - is to restore some balance of power by getting the Dems in.

Long term - we can work the issues that have brought the Democratic Party into such a state of irrelevance and decay. Or they'll just lose the next election to bitter, and well-financed Republicans who will have their Mighty Wurlitzer, and a new generation of Karl Roves to convince people to forget about the 2000-2006 Republican corruption-fest.

Their are many, many Americans to whom the problem of risk and insecurity matters greatly ... Democrats will never get them to vote as long as their spending all their time doing obeisance to NARAL, the NAACP and the trial lawyers.
Posted by: Zathras on October 10, 2006 at 1:08 PM | PERMALINK

Short-term - get rid of Republican Dominance.
Long-term - rid the Democratic Party of these corrupting influences. (ie. focus on the REAL problems with our American System of government - Corporate Personhood, Media Ownership Consolidation, and Money=Speech rulings).

when I hear "sticking up for middle-class families", I hear screw the poor.

The middle-class aspires to be rich. The middle-class envies the rich. The middle-class swallows whole the neo-con/conservative Republican ideology that becoming rich is the goal of life in America, so they support policies that are not in their best interest but the in the interests of return on capital investments. Republican apparatchiks have manipulated the middle-class into thinking progressive economics is a lose for them and a win for the poor, which it is not. Perhaps losing the occupation of Iraq and the coming economic hardship will change their political views and allow them to reject Reaganomics.

theAmericanist says: Think about it -- it is almost impossible to name a major (or even many minor) issue that doesn't have an immigration component.

Illegal immigration also leads to political corruption, and IIRC the Dems were trying to make a big deal out of "culture of corruption" a while back. Of course, it's a bit hard to get traction with such a meme when your party is just as crooked as the GOP.

As for where are the "progressives" on this, almost all of them are acting like shills for cheap labor employers or worse. However, some have more sense.

As for where are the Democrats, they're leading the parade: two Georgia Democrats led the illegal immigration march organized by a former Mexican consul general in Atlanta. Until such time as they and similar Democratic Party leaders are censured or expelled from the party, should we consider the Democratic Party an American party at all?

Never seems to be a shortage of buyers of rental property or openers of a small business. Rentals are probably around 75% successful, other small businesses around 20%, depending how you measure success. People who would never take a flyer on the market will bet everything on their ability to make a better sandwich. Thank God.

The last time I checked, Tom Daschle lost.

Measured, thoughtful words about snuggling up to the middle class on economic values are simply pointless right now. The country has been whipped up into an hysterical frenzy over such "nationally critical" issues banning marriage between two people who love each other; the imminent return of coathangers to women's medicine; and the subordination of science to a bleak and utterly superficial theology.

Perhaps Hacker is right, but apparently he thinks an opposition party can wrest this country away from Bushism by being sober-minded and sensible.

Like I said, Tom Daschle lost. Before any kind of serious discussion of economic issues and the middle class can take place, the hysteria must be treated. And it cannot be treated by pretending to ignore it.

Furthermore, by the time the national hysteria whipped up by the rightwing is quelled, the truly important issues will have likely changed somewhat and Hacker's analysis will be long out of date.

I want substantive discussions as much as the next liberal. But today, October 2006, the truly substantive discussions are taking place over finding ways to confront and thereby defeat Bushism, not ignore it.

The only issues right now are Bush and the systematic destruction of this country's law by the rightwing. There is not a chance in hell for anyone to be effective on economic issues until Bush is reined in and defeated.

And believe me, every middle class voter in this country knows that.

Zathras: "Democrats will never get them to vote as long as their spending all their time doing obeisance to NARAL, the NAACP and the trial lawyers."

Hostile: "Most Democratic politicians' loyalty belongs to Boeing, General Dynamics, Lockheed, General Electric, Chase, Citi, AIG, etc., not to NGO's and civil rights groups."

I think there's an element of truth in both of these comments in that the Democrats have lost contact with what used to be their base. I've heard it said that the Democrats abandoned their base and that is probably not too harsh of a criticism. Whether intentional or not, the "professionals" who run the party seem to have made this choice.

In the last two presidential elections, cultural values have been touted as "the" swing issue for middle-class Americans. That may have had some validity then but the heavier burden of economic risk for them has the potential to be "the" issue next month and again in 2008. But the Democratic party in no position to capitalize on it because it has little credibility left among those who used to make up its base. I sense that in both elections middle-class voters are going to be torn in choosing between two equally unappealing alternatives.

The middle-class has absolutely nothing to fear from Latin American immigration and nothing to fear from Iraninan nuclear armament, yet both of these issues are used to appeal emotionally to the middle-class in order to keep big capital in political power. These emotional issues keep the insecure middle-class off balance, prompting many to become supporters of nationalism, racism and classism in the belief that it will prevent them from being economically displaced, rather than focused on the issues that affect their daily lives.

"I want the Democrats to return their roots, so to speak—reclaiming their voice as the defender of middle-class Americans on pocketbook issues."

Apparently Hacker misses the point in his new book much like he did in the last one.

The problem? Its not Democrats being seen a defending the middle class on pocketbook issues. Everyone knows that the Democrats are for Social Security and Medicare and national health insurance and student loans and are against tax cuts for the rich.

The core problem is UNMITIGATED REPUBLICAN LYING.
As long as they can lie with complete impunity about the effects of their budget policy, it doesn't matter how we are seen.

Illegal immigration also leads to political corruption, and IIRC the Dems were trying to make a big deal out of "culture of corruption" a while back. Of course, it's a bit hard to get traction with such a meme when your party is just as crooked as the GOP.

Wow - EVERYBODY is crooked? Sounds like you're about ready to start fomenting armed insurrection against the government.

I'd watch it, TLB--the government monitors people like you, the Stormfront folks, the Michigan Militia, the militant wing of the Salvation Army, the dissenting members of Blondie, the wastoids, the Other Ones, the KKK AND the CCC, the Dobson crowd--even Barbra Streisand is monitored.

Keep up with that talk and you'll have a front yard full of armed Federal Marshalls who will throw your toilet out of your bedroom window and kick in every inch of the sheetrock in your rumpus room...

The country has been whipped up into an hysterical frenzy over such "nationally critical" issues banning marriage between two people who love each other; the imminent return of coathangers to women's medicine; and the subordination of science to a bleak and utterly superficial theology.

Daschle was too busy helping Boeing, GE, Citi, and AIG obtain government business or avoid paying taxes to bother making a bold message about Bush's bleak and utterly superficial theology. Daschle and those like him are living Bushism, and that is why those types of Democrats fail to win elections as an opposition to it.

The American Dream is that anyone can make it big.

But there is no potential reward without a corresponding risk.

The increased risks that Americans are facing are simply a reflection that their potential rewards are increasing as well.

Who are liberals to deny Americans their dream?

"But there is no potential reward without a corresponding risk."

The problem is that the ratio of reward to risk right now is completely out of wack. Yesterday's announcement was the highest inflation seen in eleven years. What makes this even scary was that 7 years ago we had a completely different CPI. In 1995 Greenspan changed the CPI to make inflation seemed lower. The current CPI contains all sort of distortions like imputed rents (housing has gone up, but rents have not, so that is not included in the CPI) and substitutions (when steak gets too expensive we compare its price with hamburger, because they are basically the same thing). If we were to use the pre-1995 CPI, then we would discover that inflation has really been running at 7% during this administration.

At the same time, the return on investments has been horrible. Interests rates were so low that just to cover inflation the middle class have been forced to go into riskier investments. This is not how the Fed should be working; if all you want to do is cover inflation, then the risks should not be that high. But instead you have MBSs and other very risky securities taking over the market just so people can stay above inflation.

A lot of people believe we are looking at systemic risk in the financial sector right now (see the latest Economist on "The Dark Side of Debt"). And this has not been for high payoff. This is simply for people to stay above water using HELOCs and other creative financing while the purchasing power of their wages drops.

If you all thought the S&Ls in the the 80s were bad, you are not ready for what is coming.

More than it being good issue for Dems, it's a SOLID issue. Dems (and liberals) ran out of steam in the '70's when their issues became increasingly space-kaydet visionary and un-concrete...which led to money, belief and mandate being pissed away. What are liberals for? Response: mumble, mumble.
This is a dead-on concrete, armor/teflon-piercing projectile to blow a hole in the GOP.

Of course, the GOP is now doing the same thing as the Dems in the '70's

Okay, so let me get this straight: The chance of a person's income NOT dropping 50 percent has gone from 93 percent down to 83 percent? On a steady curve from 1970?

Leaving that aside, if you look at the chart shown here, Democrats and Republicans really make no damn difference at all in the steady rise of the curve. Unless you want to make silly assumptions about the drop starting in 1995. Who gets credit for that? Congress or the President?

Maybe this is something inherent in modern life and industrial development, and not something you can fix by passing a law. But then, what would Democrats have to sell?

Can't wait to finally see the "alternative."

Osama Been Forgotten:

Interesting story about your conservative entrepreneur friend. A lot of startup businesses fail. It's risky. That's why the rewards are higher than for those who play it safe. If he'd gotten rich, you'd want to tear his throat out.

What do you do for a living?

The Democrats need to get on the right side of the immigration issue if they want to win back the working class. Indentured servitude (i.e. H2B visas) are unamerican. A recent study by Borjas attributes one third of the rise in African-American unemployment to immigration.

The folks who are distinguishing between "middle class" and "working class" are missing the point. Among stratification scholars, there are various disagreements about how precisely to define middle class. But 80% of Americans define themselves as middle class.

As Democrats, we do ourselves a disservice by trying to make a fine distinction between working and middle class that most Americans don't make. Even most of those who presently would fall below a standard definition of "middle class" are likely to identify themselves as such.

The real distinction we want to make is between the wealthy, particularly those who rely predominantly on investment income, and the rest of us.

Capitalism is the extraordinary belief that the nastiest of men, for the nastiest of reasons, will somehow work for the benefit of us all.

What do you do for a living?

Hey, bart.

Since you're asking rude questions, lemme ask you one.

The e-mail you're using to post with ends in 'carousel.net'

Does that have anything to do with the network of people who make commercial carousels?

Just curious...

Two things are causing the insecurity problem, first Chinese economic expansion and Republican government expansion. Making taxes progressive stops the expansion of Rebuplican government.

As far as China, why not consider an import tax?

If he'd gotten rich, you'd want to tear his throat out.
Posted by: bart on October 10, 2006 at 3:18 PM | PERMALINK

Um, yeah, that's me. I'm a regular psycho-killer.

What do you do for a living?

Oh you know, the usual. Tear throats out. Drink blood. Eat babies. Sometimes I burn down churches too.

Nice post as far as it goes, but when Hacker says: 'Our economy has—until recently at least—produced strong overall growth and productivity (though not strong growth in middle-class incomes)," and doesn't break out further how much the rich-middle class, not just rich-poor, income gap has widened, he fails to give the empirical data for WHY risk insecurity fears have increased.

Oh you know, the usual. Tear throats out. Drink blood. Eat babies. Sometimes I burn down churches too.

Sometimes? Man, that's the best part...

Osama_Been_Forgotten: Sometimes I burn down churches too.

See, the Left really is anti-Christian. Sure, I burn down churches too (everybody's gotta make a living), but I also burn down synagogues, mosques, Hindu temples, you name it.

I would say this is the critical issue of the day. In cobbling together its electoral bare-majority, the Republican party has thrown in with some really dodgy interest groups. After all, you can only pay lip service to trying every women who has an abortion, and her doctor, for murder for a certain number of years, and then either or both interest groups on this issue are going to call bullshit on you.

While they were at it, the Republican party achieved sort of a trifecta of unwise economic positions, all of which cut against the interests of the majority of Americans: (i) cut taxes in general and increase spending, (ii) cut taxes on non-wage income when the vast, vast majority of taxpayers earn wages, and (iii) come out against the basic reforms needed to be made to SS and Medicare (in the case of SS,proper accounting of the dedicated taxes, and in the case of Medicare, failure to save money by slowly expanding the coverage of the program).

These are three things the Federal government actually has power to affect, and the Republicans caved on all of them.

John Edwards had a great message heading in this direction in the primaries.

At this point, a direct assault is needed. The old saw "less government, more individual freedom, Halleluja!" is, in the case of many economic policy decisions, simply wrong.

Many of the comments in this thread have been well written and right on point.

The "middle" class is only doing well compared to unskilled labor. Gains in productivity growth is less and less being reflected in wages so workers are competeing for a smaller piece of the economic pie.The ratio of the total income(from IRS data) for the bottom 90% of returns (as a proxy for wages) divided by the GDP is ploted at

http://www.visualizingeconomics.com/

It shows the bottom 90% share of gdp which was at 42% from the end of WWII to the mid 70’s, falling to a little over 30% today. This represents about 25% less in wages for everyone.
Democrats do not have to choose between the poor and the middle class but can support policies that help both. Increasing programs like earned income tax credit, only serve as a stop gap. The aim should be that people who work don't need help. If you look at the timing, one canidate for the cause is the tight fed policy, needed to control inflation when there are large budget deficits. puts a downward pressure on wage growth.

hostile says: The middle-class has absolutely nothing to fear from Latin American immigration

Most such "immigrants"/immigrants are low-skilled and obviously the middle-class pays through the nose in order to subsidize their employers. They save (literally) a few pennies on the cost of lettuce, and then they pay more out in all the social welfare costs that the employers don't pay. And, such subsidies do not go unnoticed by those who pay for them, leading to some refusing to support further "liberal" attempts to increase social welfare programs.

Those members of the middle class who want college discounts are also affected when "liberals" take their discounts away and give them to foreign citizens who are here illegally.

And, as stated above, such "immigration" is undermining our entire political system. And, attempts to in some cases give illegal aliens a better deal than U.S. citizens reduces the value of a U.S. citizenship. One would imagine that those are middle class issues as well.

Don't expect the Democrats to come to their senses, they're too busy leading parades organized by former Mexican_consul_generals.

hayek: Maybe this is something inherent in modern life and industrial development

And apparently a constant of the human condition is the presence of useful (if not very creative) idiots.

Surely a defender of the Conservative Nanny State can come up with something more original than the "part of the natural order" argument. Heck, that was used to defend the privileges of the nobility.

Never forget that for the American Middle Class, economic issues are really family value issues. Members of the middle class really want 1)to make enough money to pay for raising their kids, 2) to pay for college educations for their kids, 3) to be free of financial worry when they become sick, 4) to make sure that the government isn't deficit spending--which is that it isn't stealing from their kids and 5) to make enough money to be secure in retirement. Those are real family values for most Americans.

The Democrats would do well to remember that family economic issues are real family value issues. Notice I included balancing the budget. Most people know there is no free lunch. If we don't pay for it now, our kids will pay for it later. They are willing to pay a little in taxes to balance the budget but Democrats better damn well produce on the other 4 family values I named above.

Excuse me while i geek out for a minute:

Jacob, I agree with your overall message & many of your policy suggestions. But I've got a couple of nagging questions about the key statistic you're using, the likelihood that a working-age person will experience an income drop of greater than 50% in a given year.

1. The paper you link to says the data for this comes from the Panel Study on Income Dynamics, and notes that the PSID doesn't include the value of in-kind public assistance. Doesn't that mean that the value of Food Stamps and Medicaid aren't factored in to the equation? When we're talking about a period in which the value of Medicaid has grown dramatically (due to health care cost inflation), that seems like a major shortcoming. (Of course it's probably offset to some extent by the fact that out-of-pocket medical costs aren't factored in here either, since the PSID & the chart only talk about income, not expenses.)

Do you have any way of at least estimating how big of an effect it would have on your findings if medical costs & the value of in-kind public assistance were included? (e.g. I know there are experimental poverty definitions out there that attempt to adjust for these things ...)

2. The report says the following about how the line on that chart was calculated:

Probabilities are based on the time trend from a logistic regression, with all other variables set at their annual means. Variables include age, education, race, gender, income (mean of five prior years), and a series of events (such as unemployment and illness) that affect income.

So for each year, you're taking the average of each independent variable for that year and multiplying it by the coefficient for that variable that came out of your regression analysis (and in the case of the time variable, multiplying the coefficient by the year). Doesn't that amount to showing us only the time and population effects? It seems like those effects are probably the least telling in terms of the real nature of the economy, and the least amenable by the kinds of policy changes you're talking about.

What I'm trying to get at is this: isn't it the change in the coefficients over time that would really tell us whether the fundamental character of the economy is changing - rather than an overall increase in risk based on changes in the annual means of each variable?

3. Did you include family structure (i.e. living in a single-parent household with children) among the independent variables? Or does that show up in the form of events, like "getting a divorce" or "having a child out of wedlock"?

4. I've got a whole bunch of other questions that really boil down to one: can you make the regression analysis itself available someplace? This class of questions includes things like the following:
What's the standard error for the regression? What would a 10% confidence interval around that trendline look like?
How much of the total variation in the likelihood of a 50% drop in income over the period is explained by the factors you included in your analysis (i.e. what's the r-square)?
Which population factors have had the greatest independent influence in increasing the odds of a 50% income drop?

Thanks for posting here, Jacob. This is really informative & thought-provoking.

"The real distinction we want to make is between the wealthy, particularly those who rely predominantly on investment income, and the rest of us."

Posted by: rle on October 10, 2006 at 3:31 PM | PERMALINK

Yep, but use the word "rich" not "wealthy".

Republican policies favor the rich, who make thier money from investments and inheritances, over regular people, who make thier money by working.

Sure, everybody wants to get rich, but what republicans don't want you to notice is that it is the getting rich rather than the being rich that is hard. If you did notice that you might decide that shifting taxation from the investments and inheritances of the rich onto the wages of the rest of us will only make it harder to get rich by working and easier to stay rich by being rich.

This is what I call the Myth of the Lone Frontiersman. This is the central myth of the Repukeliscum Party.

In the Myth of the Lone Frontiersman, we are slaying our own bears, shootin' our own injuns, rapin' our own women, and otherwise havin' a good time, out there on the frontier.

WHat is missing, of course, is that this is totally moronic. Nothing in modern life can be done by an individual, or very little. Large, powerful corporations do much more to run the world, and to fight a huge corporation, you need to part of a large group.

As long as people believe that they can take on a big corporation and win, Dems will have problems.

Is there an alternative? Yes, and Democrats should seize it. But that’s a subject for another post.

alex:

Surely a defender of the Conservative Nanny State can come up with something more original than the "part of the natural order" argument. Heck, that was used to defend the privileges of the nobility.

What you see in that curve, assuming it's an accurate representation, is a steady rise over three decades. Through Nixon, Ford, Carter, Reagan, Bush I, Clinton, and Bush II. Through Democratic Congresses and Republican ones. There was an upward bump for a short time, but the curve eventually settled down to exactly where it would have been if no bump had happened at all.

It's an article of faith among liberals that there is no economic problem that can't be solved by putting the right people in power and passing the right laws. No doubt Hacker is going to come up with his own suggestions.

But what I'm seeing is something that transcends simple politics, and unless you can figure out what's really driving this, don't be a smartass.

It's an article of faith among liberals that there is no economic problem that can't be solved by putting the right people in power and passing the right laws.

*cough* bullshit *cough*

I want the Democrats to return their roots, so to speak—reclaiming their voice as the defender of middle-class Americans on pocketbook issues.

John Edwards is not alone in leading the way on this issue. Senator Dorgan is way out front with his book "Take This Job and Ship It". It seems fundamental that one of the main reasons middle class life has become riskier is because huge numbers of middle class jobs have been outsourced and replaced by low level service/Wal-Mart jobs. Many American corporations have now become international corporations with no allegience to anyone other than their stock owners. This has been enabled and encouraged by NAFTA. Loopholes make it possible for corporations to avoid paying taxes, paying pensions, healthcare or a living wage. This isn't capitalism. It's a perversion of capitalism.

The 'company is run for the benefit of the stockholders' economic ideology came about during the Reagan years, and was used to explain layoffs and macro-economic policies that favored corporations over employees. The stockholder as the lynchpin of economics completely ignored the other stake holders in a company's success: workers, customers, and suppliers. This new economic ideology made gods of men like Kenneth Lay and GE's Welch, yet these people never added any value to any good or service their company sold. That the average citizen bought into this new ideology and voted for Reagan, Bush I and Bush II, proved its effectivenes. But what the average citizen did not understand was that capital organizes itself to maximize returns, not greater incomes for all, and so became a victim to the needs of capital rather than a benefactor, sacrificing their stake in the economy, employment and economic security, for macro-economic financial growth.

The increased wealth of the wealthy has only increased their appetite for ever greater returns of capital. They have used their superior wealth to consolidate media in order to consolidate the message the electorate hears and to compromise all politicians and make them beholden to the money men. It is not by chance that opposition politicians like Daschle are indistinguishable from their counterparts on the other side of the aisle or that words like liberal and socialist have become political epithets.

Clearly the benefits of our capitalist economy are not reaching the maximum amount of people possible, but there is practically no political party or movement that is able to make that case to the electorate. TLB, above, seems to think the reason the economy is not providing for the people is because of immigration, which I think is either an obfuscation or a belief derived from watching too much MSM, which is dominated by the Lou Dobbs/Tancredo illegal immigrant hysteria in order to obfusate the political economy. Until the average American really feels the material pain of a loss of buying power, like in the Great Depression, it will be very difficult to break the platitude that the rich deserve their wealth because of hard work and ingenuity. Many people do work hard and are geniuses, but they still cannot accumulate wealth without the other stakeholders in the economy, who paid for the infrastructure that created the opportunity for the entrepreneur to take risks and benefit from the rewards. Making progressive economics politically viable will be a very difficust task without mass suffering, because of the average person's beliefs, derived from corporate television, in the decency of wealth and the fear of the other.

hayek: What you see in that curve ... is a steady rise over three decades.

Really? The nice think about such curves is that they double as Rorschach tests. I see a curve that was rising in the era when we went from a trade surplus to a deficit, followed by the oil price shocks of the 1970's. Then it levels off after the price of oil dropped after 1982. Takes a steep climb during the Bush I recession, and stays high during the jobless recovery. Takes a steep dive during the later Clinton years, but starts climbing coincident with our strong dollar policy and increasing trade surplus.

No, never mind, what I really see is a Greek god having sex with a swan. Probably the result of a twisted childhood.

Through Nixon, Ford, Carter, Reagan, Bush I, Clinton, and Bush II. Through Democratic Congresses and Republican ones.

Gee, if it happens with D and R policies over 32 years, I guess that covers all possibilities. And lets not make thinks complicated by admitting that both exogenous factors and political policy can have an effect.

the curve eventually settled down to exactly where it would have been if no bump had happened at all

And so the Natural Order prevails. While we're at it, can we continue the linear extrapolation to where the probability is greater than 100%?

It's an article of faith among liberals that there is no economic problem that can't be solved by putting the right people in power and passing the right laws.

And it's an article of faith among conservatives that anything which benefits the rich is part of the Natural Order, even if it's the result of laws passed in response to intense lobbying and political contributions (i.e. bribes).

unless you can figure out what's really driving this

Hmmm. Changing tax structures. Decreasing unionization (driven in large part by changing labor laws). Continually increasing trade deficits, driven by our unchecked oil consumption, strong dollar policies, tolerance of first Japanese and now Chinese gov't manipulation of our currency. Toleration or even encouragment of foreign "guest" workers and illegal aliens. Tax laws that encourage outsourcing.

No, I can't think of a thing.

don't be a smartass

And deny the very essence of my being? I think not.

restore a measure of public faith in government.

That is absolutely essential. Without an honorable government, the masses are often at the mercy of plutocrats and corporations, as consumers and as employees.

mhr:

The "Democrat party" is a figment of your malicious right-wing imagination.

Bob

It's an article of faith among liberals that there is no economic problem that can't be solved by putting the right people in power and passing the right laws.

Well, no, though its certainly the definition of a political activist that they are proponents of solving some problem by putting the right people in political office and/or passing the right laws. Certainly conservatives are no less prone to this than liberals.

rmck1: The "Democrat party" is a figment of your malicious right-wing imagination.

Bob,

Is it really worth your time to debate with someone who doesn't understand the difference between a noun and an adjective?

Does it ever occur to you geniuses that some people actually BELIEVE FIRMLY in centrist principles, in the balance between competing ideologies

Define "centrism." Here's a hint-- "centrism" is not "the midpoint between the beliefs of the two parties."

It comes down to three very simple facts:

1) Because of wage stagnation, most Americans purchasing power is decreasing over time.

2) Because of many factors (outsourcing, decline of union power, etc.), people are now much more likely to lose their job at some point in time.

3) More people are just barely keeping above water financially, thus making them all the more vulnerable to an unanticipated external event (weather damage to their home, a car accident, someone getting seriously sick, etc.) which blows their finances to hell.

The safety net has been significantly eroded, thus making people even more nervous and stressed out.

Does it ever occur to you geniuses that some people actually BELIEVE FIRMLY in centrist principles, in the balance between competing ideologies

"Some people", perhaps, but not all that many. Every study I've seen (including one cited by Kevin recently on the front page here) has shown that "moderates" or "centrists" tend to be no less extreme in their views than "partisans", they just happen to mix views that are conventionally seen as "liberal" with ones that are seen as "conservative" rather than being consistently to the left or right, so "mixed extremists" is really a better label than "moderates" or "centrists" for them.

And it's especially amusing that people who go on about how most voters believe firmly in CENTRIST PRINCIPLES consider things like preserving Social Security and not invading a country that didn't attack you to be figments of the frothing, wild-eyed Left :)

Bob

Is this blog really so lame that it can't even post anything after 11:54 am????

Making progressive economics politically viable will be a very difficust task without mass suffering, because of the average person's beliefs, derived from corporate television, in the decency of wealth and the fear of the other.
Posted by: Hostile on October 10, 2006 at 5:53 PM | PERMALINK

Agreed, Hostile. You're on fire today, that's for sure.

If the case can't be made without mass suffering, well, the good news is, another 2 years of Republican rule, and they'll take care of that FOR us.

Of course, by then, we'll be under martial law, so a convinced public won't be able to change anything.

One of the best threads I've read through in a very long time. [hat tip]

UT --

If that is your sole visit, it doesn't make a sample. If you are that quick to judge without even looking at past threads, you probably can't contribute much.

Goodbye!

In dealing with this stat, you will have to deal with two things:
1. The increase in people working for themselves. I now work for myself, after years of working for a large corporation, and experience much more income volatility, with several years that fall into your category of income that fell more than 50% from the previous year. I promise that I am not among those who progressives would consider victims. I am much more in the category of milch cow paying for whatever programs you are selling.
2. The mix shift in income sources. More people rely on passive income, including retirees with private investments. The 1040's for these folks can vary wildly.
3. If you want to make the point that income volatility is hurting real people, you need to show this chart for people in say the bottom 50% of income. My guess, but I don't know, is that much of the increase has actually come in the top 50% or is from entrepeneurs.

I do not want people to suffer. I want everyone to prosper, but I think the accumulation of extreme wealth leads to an even greater accumulation of ever more wealth, which tends to reduce the distribution of the aggregate wealth of the nation. This creates an impoverished nation. The US electorate embraced the socialism of the New Deal because of the privation of the Great Depression. I see lots of privation ahead for a debt-laden society and wonder if this will trigger another failure of capitalism and then a return to progressive economic politics. America has always been a lucky country and I hope we can find a way with good leadership and hard work and ingenuity to provide all of the things a modern society offers to most within that society without too much suffering, but, like OBF says, two more years of Bush will make things very difficult for most of us.

Yeah, you and Byron Dorgan.

How can dollars be created out of thin air?

I have read nearly every post, some very interesting ones. it seems, to me, that what started out to be about centrism soon turned into wealth, wealth then turned into class, class then became disparate.

Maybe I'm a throwback to the slope headed cro-magnons, Since when do we put wealth, class, and ideologies before humanity? How have so many become so reversed in their thinking?

I am poor, I admit, but not in anyway unhappy, nor do I desire Bill Gates wealth. I have given away more than I have kept, I find myself constantly repairing cars, computers, plumbing among other things often saving people hundreds of dollars.

I don't understand what has happened to mankind, how did we get to see wars as profitable? Why does one man see another as nothing more than a battery to be drained and discarded?

We have recently made a giant leap backward in progress by legalizing torture..does that not show people that the problem our society faces is not one of wealth or polity but in our virtue.

Our virtue as a whole is severely lacking. Perhaps it is time for the end of mankind..and that makes me angry and sad, it's like watching your children drown in front of your eyes, and your angry because you cannot reach them... It breaks my heart that we have come so far only to realize that as a whole we are still barbaric and its that callous greed and empowerment that has destroyed many an empire, and its that what will destroy America.
It is not complex, it is amazingly simple.

We can debate high and lofty principles and ideas, and we can tally the real faults of the Democrats. Keep lamenting about it, and be a victim just like all the other good Republicans and Allies and the press and the media and the Liberals and Democrats who have been playing the victim, as in Poor me!, for much too long. First, they let the Republicans do something "dirty", mount an attack on them and their positions or do something unjust like holding up intelligence or a report. Then they act surprised at the bad Republicans for doing this. Then they protest, calling what the Republicans do despicable or dirty tricks or untrue or, worse yet, unfair. All of which only makes all parties, the press and the involved organizations look even more like victims. And so you dig your own fate. I also sense that, when you do this and ring your hands, you are hoping the bad Republicans will receive their comeuppance from some mysterious force, and that they will self-destruct of their own accord. The Democrats have been out of power for so long they’re afraid to lose any handhold they have, and the press and media have become so used to truckling to the Administration, it is almost a lost battle. It is important to recognize that the Republicans who have lived up to Lord Actons maxim: Power corrupts; absolute power corrupts absolutely. Hope and work for the Democrats to come into power again; if they remain uncorrupted for a short period of time, it will balance the veniality of the existing Republican Administration.

For those who still want to vote Republican, think, really think, about the alternative. Sure the Democrats are spineless and whimpy. But what you're proposing, not voting for them is playing the victim, and that seems to be the role they’ve assigned for yourselves. When you get over it, and strike back to reclaim the electorate by asking the hard questions and not dumbing down statements like “Bush lied today”, or “Bush made wildly conflicting statements today” or “Bush didn’t answer the question he was asked.” When this begins to happen, when influential people say, Stop the madness, they won’t be victims any more. So if you help Republicans in any way, by not voting or by not persuading your friends and family to vote, by not contributing to the Democrats, you'll be helping to promote a draft, long term war, destruction of this country as we know it, among other things too stupid to mention. So make sure the Democrats win this time around, and don't jawbone about it or prevaricate or think about how inept or stupid they are, just vote for them. Right now the Democrats are the only force that will balance off the Republican's march to a totalitarian state; they may become corrupt but it'll take some time for that to happen.

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