Thursday, February 17, 2011

Once upon a time there was the American Dream...


Most Americans in the United States define themselves as being part of the middle class, but there are differing opinions of what that means. The American Heritage Dictionary defines the middle class as follows: "The socioeconomic class between the working class and the upper class, usually including professionals, highly skilled laborers, and lower and middle management." Most Americans, however, generally consider the United States to be a classless society and associate the group with factors ranging from income and occupation to hobbies and lifestyles. Doctors, teachers, lawyers and plumbers can all belong. Economists say there is no specific criteria for defining the middle class, though income level is the most common way of breaking it down.

INCOME
Economists generally align the group according to earnings, even if there is no standard established range. "Most people tend to think of themselves as middle class unless they're (billionaire investor) Warren Buffett or really poor," said J.D. Foster, an economist and senior fellow at the Heritage Foundation, a conservative think tank. Foster regards the upper 20 percent of earners as "upper income" and the lower 20 percent as "lower income." He regards the 60 percent in the middle as middle class, with household incomes roughly between $25,000 and $100,000. Median household income in the United States was $52,175 in 2008, according to the U.S. Census Bureau.

EDUCATION
Education can be another defining factor, as it is often correlated with income. Some academics divide the middle class into an upper bracket that includes professionals and middle managers who hold postgraduate degrees and often earn more than $100,000 and a less affluent lower middle class that typically has some college education with household incomes around the national median. These two groups account for roughly 45 percent of the population, depending on the model. Blue-collar and clerical workers in the working class typically have a high school education, and many may describe themselves as "middle class" even though their incomes may be a fraction of those earned by professionals. Profession and education level, however, does not always correlate with household income. A household with two blue-collar earners, for example, could take in more income than one headed by a single professional. The poorest 12 to 20 percent of Americans often have not finished high school.

Who, exactly, is middle class in America today?

Congress asked its research service to come up with a definition of middle class. The researchers started by looking at income levels. Based on 2005 Census Bureau reports, some 40 percent of the nearly 115 million households in the U.S. earned less than $36,000 a year. That represented just 12 percent of all income. The 40 percent on the next rung up the economic ladder took in between $36,000 and $91,705 — or about 37.6 percent of all income. The top 20 percent, who made $91,705 or more, collected half of all income. But those numbers don’t adequately reflect the state of mind of those who consider themselves middle class. Surveys have shown that, while people consider $40,000 a year to be the low end of what it takes to buy a middle-class life, some people who make as much as $200,000 a year still consider themselves middle class, the researchers said. In the end, they wrote, “There is no consensus definition of ‘middle class’; neither is there an official government definition. What constitutes the middle class is relative, subjective and not easily defined.

You may feel comfortably middle class — with two cars in the driveway and a big screen TV — until the guy across the street pulls up in his third car to install a second widescreen TV. The researchers call this the "relative income hypothesis" ( although long identified by Karl Marx in Wage Labour and Capital when he wrote "A house may be large or small; as long as the neighboring houses are likewise small, it satisfies all social requirement for a residence. But let there arise next to the little house a palace, and the little house shrinks to a hut.." ) Being well above the bottom is a source of satisfaction. But when those at the upper end of the distribution fare better than you do, it is a source of consternation.

Another reason for middle class "consternation" is that income tells only part of the story: the cost of maintaining a "middle-class" lifestyle. The cost of housing has played an important role in the financial squeeze reported by many families in the middle.

Another key aspirations of "middle-class" families is to provide their children with the good yet expensive education they’ll need to maintain — or exceed — their standard of living when they enter the work force. The financial security of "middle-class" Americans has also been strained by the rising cost of higher education, which has risen faster than overall inflation for much of the past decade. Since 1990, the proportion of Americans who are paying off more than $20,000 in student loans a ­decade after they graduated has almost doubled. Lawrence Summers, Obama’s chief economic adviser points out that of the major economies, the US has the highest share of graduates in the workforce. But if you take the 25-34-year-old age group, America is not even in the top 10. More and more young Americans are put off by the thought of long-term debt. But “It’s not only fear of the debt – it is the four years of lost earnings.”

Health care costs also have outstripped inflation; the cost of a catastrophic illness can quickly knock a middle-class household into another, better-defined economic category - poverty. A 2009 study by researchers at Harvard and Ohio University showed that health-care problems were the root cause of 62 percent of all personal bankruptcies in America in 2007. Put another way: Every thirty seconds, someone in this country files for bankruptcy in the wake of a serious illness.

While many "middle-class" Americans a generation ago relied on their employers to fund their retirement, that burden has now shifted heavily to the wage-earners themselves.

The decline of unionized labor ( Fewer than a tenth of American private sector workers now belong to a union. ) in the past several decades has given employers more flexibility to increase productivity and adapt to rapid technological change and increased competition.But it has also devastated those workers who have been displaced from high-wage jobs and don’t have the skills they need to find a new one with comparable pay and benefits.Labor movements have been disabled by the capitalists’ increased ability to move capital and workers round the world.

Though "middle class" status may be largely a state of mind for many, they have clearly lost ground due to specific, harsh economic circumstances that have sent them falling abruptly down the ladder. For years, the problem was cushioned and partially hidden by the availability of cheap debt. Middle-class Americans were actively encouraged to withdraw equity from their homes, or leach from their retirement funds, in the confidence that ­property prices and stock markets would permanently defy gravity (a view, among others, promoted by half the world’s Nobel economics prize winners ). That cushion is now gone. Easy money has turned into heavy debt. Baby boomers have postponed retirements. College graduates are moving back in with their parents.We are afraid for their jobs. More and more, workers are working an extra half-hour or an hour or more, before they leave work for the day, or they take work home. They are producing extra profit for the capitalists, but no extra pay for themselves.

The anger is human and increasingly political. When people lose the sense of optimism, things tend to get more volatile.“To be pessimistic about the future is so new for Americans and so strikingly un-American,” says Michael Spence, a Nobel Prize-winning economist, whom the World Bank commissioned to lead a four-year study into the future of global growth. “But most people grasp their own situations way better than any economist.”

For so many for so long our wage slavery bought us a comfortable, prosperous lifestyle and personally rewarding work, now it means being discarded. There is no middle class. We’re all working class in the economic sense that we have to sell our labour in order to live. The exception being the small number of capitalists who can live entirely on the labour of others. The rest of us are all, economically speaking, working class by virtue of the fact that we have to let ourselves be used, to sell our labour power, to live. How readily we embraced the illusion of being middle class. Now in China and India, we reach out again and again in individual aspiration, setting aside the hope of banding together and ending our exploitation. We try to win in the rat race instead of trying to abolish it, thereby ensuring that the parasite class goes on leeching off us for their own profit. No matter how seductive the American Dream was, we were still wage slaves and still are , and that fact is growing more and more apparent to more and more people. However, rage and desperation rarely clarify the facts. To solve the problems we need to understand why society does not work for us. We need to understand the structure of society, and the real enemy. The ruling class, of capitalists and their executive, the governments of the world, have no monopoly on our skills and abilities. These belong to us. It is we who fish the oceans and tend the forests and till the land and plantations. It is we who build the cities and railroads, the bridges and roads, the docks and airports. It is we who staff the hospitals and schools, who empty the garbage cans and go down the sewers. It is we, the working class, who produce everything society needs from a needle to a sky-scraper, who provide all of its services. Moreover, it is we who are responsible for the inventions that have benefited humanity and the improvements in productive techniques. If we can do all of this, then surely we can continue to do so without a profit-greedy minority watching over us and, more importantly , we do it in our own interests. That much is assured. We certainly have the science, the technology and the know-how. All that is missing is the will and a belief in ourselves as masters of our own destiny – the desire for change that can make that next great historical advance possible

Sources:-
http://www.reuters.com/article/2010/09/14/us-usa-taxes-middleclass-idUSTRE68D3QD20100914
http://www.msnbc.msn.com/id/21272238/ns/us_news-gut_check/
http://www.ft.com/cms/s/2/1a8a5cb2-9ab2-11df-87e6-00144feab49a.html

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