RSS Feed MenuMike Konczal returned from vacation and promptly put up a post criticizing my take-down of Edward Luce’s horrible Financial Times piece on “the crisis of the middle class”. It’s become apparent to me over the past few years that I’ve been in D.C. that you can’t refute a specific empirical question about the situation of the poor or middle class (e.g., is it in crisis? as in much worse off than in the past?) without being attacked on much broader grounds than you staked out and being called an opponent of these groups or an insensitive jerk. I actually don’t disagree with much that Mike writes “against” my “views”.
What I do disagree with is the contention that the middle class is in crisis. And I think that it’s bad to believe (and assert for mass audiences) that that’s true because it hurts consumer sentiment, prolonging high unemployment, and diverts attention from the truly disadvantaged who really are in crisis. Mike can say that that pits me against the middle class (his post was titled, “Scott Winship versus the Middle Class”), but then let me ask Mike and others who would disagree with me a simple question: Why do you think Americans are deluded about their economic conditions, since in June, 7 in 10 American adults said their “current household financial situation” is better than “most” Americans’ (Q.25, disclosure: the poll was commissioned by my old employer)? Why are you against the middle class?
Mike says that when I say some problem affects a tiny fraction of the population, that’s like a hit man saying that he doesn’t kill that many people as a fraction of the population–the “Marty Blank gambit” as he calls it. But look, that’s not an apt analogy. If I were saying that we shouldn’t give a rat’s ass about the tiny share of the population that experiences a bankruptcy, that would be using the Marty Blank gambit. I never said that, and I wouldn’t. But if you convince everyone in the middle class that they are just one bad break away from bankruptcy, then you shouldn’t be surprised when they don’t spend their money and the recovery continues to stall. It’s important to convey the facts correctly. Mike is stalling the recovery! Why are you against the middle class, Mike??
Finally, I think the best chart I’ve seen that puts all of this into perspective (which I made myself) is the following showing health insurance trends:
Anyone who wants the data can email me at scott@scottwinship.com.
And contrary to Mike’s assertion, the fraction of under-insured has not increased. You can read the conclusion of my dissertation if you want to see what the facts show.
I’ll keep being concerned about the people who are in crisis, but I’m not going to buy in to the conventional wisdom among progressives that the middle class is in crisis.
*added note: Mike informs me that I missed the joke in his title, a Scott-Pilgrim-Versus-The-World nod. I like to think I’m clever and witty, but clearly my lack of sleep from parenting a newborn has left me not so quick on the uptake…)
Originally published at The Empiricist Strikes Back
jg bennet // Aug 20, 2010 at 8:49 am
the “corporations are scared” propaganda is BS and by 2012 obama & the middle class will be doing much much better.
evidence of the statement…..
NEW YORK/BOSTON | Thu Aug 19, 2010 7:01pm EDT
(Reuters) – Caterpillar Inc (CAT.N)’s new chief executive, Doug Oberhelman, confirmed the company’s goal of more than doubling profit by 2012 and said he sees opportunities for more takeovers.
The world’s largest maker of earth-moving equipment expects its revenue to reach $55 billion to $60 billion by 2012, and its profits to hit $8 to $10
We don’t think the world has ended,” said Oberhelman, who has spent 35 years with the company. “We think there is going to be fantastic growth in our industries in the future.
“We’ve never been in this position coming out of a recession,” he said of the cash reserves. “So we’ve got strength we can use…We generate a lot of cash and as we improve our internal efficiencies, we’re going to generate a lot more cash in the future.
“So we think that we have plenty of balance-sheet power and cash-flow power to do anything we want,” Oberhelman said……….
something from the past as an indicator of quick turnaround….
Indeed, although 1983 began for Reagan with a 35% job approval rating — the worst of his administration — things started to look better.
His ratings moved back above 50% by November 1983 because the economy was picking up
Oldskool // Aug 20, 2010 at 8:59 am
Before the financial meltdown everyone was one bad break away from bankruptcy and things haven’t gotten better, they’ve gotten worse. If the middle class isn’t in a crisis during the worst mess since the Depression, then the meaning of the word “crisis” has been lost.
Check out the number of foreclosures and the number of households close to it and the “7 in 10″ poll looks like an anomaly. And the actual unemployment rate as it used to be calculated is probably 15%-20%.
sinz54 // Aug 20, 2010 at 11:39 am
jg bennet: Indeed, although 1983 began for Reagan with a 35% job approval rating — the worst of his administration — things started to look better.
Things were already looking better before that.
You forgot that the late 1970s were a period of stagflation–high unemployment combined with double-digit inflation. In the first two years of the Reagan presidency, double-digit inflation ended, being reduced by two-thirds, from 15% down to 5%. So all at once, the interest and profits people were making were no longer being eroded by inflation.
Secondly, in mid 1982, the stock market suddenly began to soar upward, as investors began betting on economic recovery. Everyone with an IRA or 401(k) account invested in mutual funds suddenly became richer.
Unemployment is indeed a lagging indicator of the economy. Under Reagan, unemployment didn’t start to decline till the second half of his first term.
The problem is that today, unlike the first two Reagan years, even the leading indicators are looking poor. The stock market has stalled and seems to be declining again. Investors are no longer betting on an economic recovery.
And that’s ominous. The stock market follows earnings. If the market isn’t rising, it means earnings are continuing to be disappointing.
easton // Aug 20, 2010 at 2:30 pm
Secondly, in mid 1982, the stock market suddenly began to soar upward, as investors began betting on economic recovery. Everyone with an IRA or 401(k) account invested in mutual funds suddenly became richer
Sinz, why do you keep lying? The Dow was at 1,004.32 on April 28, 1981The Dow was at a meager 777 on August 12, 1982. Under Obama, similar timeframes, the Dow went from 6500 up to over 10,000. What you call soaring was simply recovering lost ground, and there was not a new high until Feb. of 83. How does making up for lost ground make you suddenly become much richer? You sure as hell have not been making that argument with regards to Obama.
Unemployment rose to 10.8% in November 1982
And as to the market, it is not 1983 anymore. You are aware, I hope, that we have a global market. Direct US investment in China is at an all time high. Foreign direct investment into China rose 19.6 percent to US$51.43 billion in the first six months of 2010. In 1983, this market simply did not exist. The United States is India’s largest investment partner, with a 13% share
Again, a market that simply did not exist in 1983. And lets add US direct investment in the formerly closed markets of Eastern Europe, etc.
It is crazy to imagine it is 1982 anymore. Reagan is dead, the cold war is over. India and China have market economies.
Maths Games For Children // Aug 26, 2010 at 2:08 am
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