On July 24, 2012, the San Jose Mercury News ran an article by Josh Richman and Matthew Artz, “Obama’s campaign hits Oakland. “Obama campaign hits Oakland.”
The article covers the typical campaign rhetoric. It has its requisite Romney and republican bashing, has the required promises that he will give us all everything we want if we just give him one more chance, how everything would be better already if it was not for those other guys, and of course it was all wrapped up with a large dose of scare tactics to convince those present in Oakland that the bogymen conservatives were about to take away their babies, force them into slavery to corporations and do away with fair labor practices.
Nothing in the article therefore was a surprise, it was campaign 101. There was one exception. President Obama made one of those slips of honesty in a statement that was almost an aside. Like most such moments of clarity and honesty, it is likely none even gave it a second though. Yet, this statement like the others tells us volumes about how the President sees each class and what their role is for our society.
This specific statement regarded the middle class. The President said in a section of the speech on how he would recover the economy the following:
“I believe the free market is the greatest source of prosperity in our history,” but any business owner will also tell you success requires workers with the right skills and education, and a strong middle class that can buy products and services, Obama said.” (emphasis added)
So the role of the middle class in America is to buy products and services so others can get more. This is not the first time this has been said by the president or democrats running for office. It is a clear statement of what they believe the middle class’s role is. Of course this is truly ludicrous. And, I am sure that many will write and say this is taken out of context. But, is it? And, even if it is out of context, it still illustrates a fundamental disconnect. If the rich are stealing all the profits from the poor and the middle class, and the poor and the middle class are the workers who are creating the value that the rich are exploiting, and the poor are, well, poor then who is to buying the goods? Well it must be the middle class! Because, if it is the rich, then taxing the crap out of the rich will have them stop buying and that will hurt us all!
The overall problem with the logic that the middle-class are buying our economic prosperity is such that even a 5th grader has enough sense to know this is not how the economy works. And, while it may take a few more years of education after that, these now high-schoolers soon start to realize that there is a cause and effect between wages and costs. The more we pay workers, the more expensive the goods they produce become, and the more expensive the goods, the more money the workers need to buy those same goods. And since money doesn’t come out of thin air!!!
Wait ! ! ! That’s the problem ! ! ! Money has been coming out of thin air since 1972 when we got off the gold standard, and that has compounded the problem.
You see, the middle-class can’t afford to buy anything. They do not get the government subsidies that the poor get, and they do not have the excess assets that the rich use to invest and hedge against the loss of buying power; so the “prosperity” (printing more money to pay for all this stuff) disproportionality affect them. In other words, they will likely never have enough money to buy anything more than they do now. The more money in circulation, the more money going to the poor and the more money available to the rich to gain from investment hence they continually decline in value. And while the aggregate dollars in circulation will in fact increase they will be getting less for those increasing dollars than everyone else.
We are a nation that has a continually accumulating deficit spend and trade deficit. Each year our nation is spending more on goods and services from other countries than we generate in GDP therefore we lose value each and every year. And we have since the 1960s. It is the middle class who has paid the disproportionality higher burden during the period. While it is politically expedient to blame the rich it is fact the poor that are draining the middle-class. So how will the President create programs to get more money to the middle-class so they can buy more stuff so the poor can get their subsidies and the rich get their profits? Well the President, and the Fed think they can keep printing and/or borrowing more money (quantitative easing) and they can just create more incentives programs to get more of this cash to the middle-class. The problem is that systemically this doesn’t work. The more they give, the more they print — the poor get higher subsidies, the rich continue to invest the extra assets, and the middle class keep getting hosed!!
So when the President said, “a strong middle class that can buy products and services” did he really mean it, and if you are middle-class how do you feel about being the nations prosperity purchasing system while you continue to have declining value for each and every purchase?
16 Responses
There was a time when even rock-ribbed conservatives understood that a strong middle class was essential if our country is to realize economic prosperity. And, of course, the ability of the middle class to afford to buy products and services is a key component of the overall equation. Obama’s statement is unremarkable, widely accepted by economists, and just common sense. Even Henry Ford realized it, paying his workers more than was absolutely necessary so that they could afford to buy his cars. It is only thirty years’ worth of propaganda by the Cato Institute and the Heritage Foundation that makes this point “controversial” in any way.
George,
I always love your comments! The point is not that the middle class have not historically the bedrock of the consumer class. It is that over the past 75 years the various changes to the economic structure of this economy have undermined their ability to do so because they are no longer elevated to the middle by hard work but in essence get trapped there due to the other socially enacted managed fiscal pathways for our money, either to subsidize those either less able, less willing or purposely fraudulent or to re-inject money into the infrastructure or private sector to “stimulate” the economy through nothing more than valueless printing of currency.
There is plenty of blame on both sides this is not a partisan argument other than the fact that both parties are fear mongering and false promising as much as humanly possible to obscure the reality of our economic situation. We cannot continue to artificially manage our economy to prove false promises.
I am not kidding or being sarcastic. I do like your comments. They contribute to the discussions and often either change my own opinions in part or require me to think the issues further to support my beliefs.
i just want to say i like it and thanks.
i just want to say i like it and thanks.
i agree with you buddy..
i agree with you buddy..
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wow, what an excellent presentation! going to follow your site now. thanks so much.
Tom,
It’s all a far simpler story that the Republicans should oblige themselves to tell and to educate the public, shor and simple:
The CREATION OF WEALTH by an entity (person, corporation) starts with an ACURING OF AN INPUT(raw materials, a workplace, an piece of paper), ADDING VALUE to that input something of their own (labor, thought, repackaging), and SELLING OUTPUT of the result to a buyer who will give the entity something in return of value that is GREATER than the cost of the input. CREATION OF WEALTH — EASY TO UNDERSTAND, RIGHT?
Now, in something other than a Communist or a Dictatorial economic system, what ENTITY can do such CREATION OF WEALTH? If you answer “government”, then please explain how. That our government CAN CREATE WEALTH is, incidentally, an answer that not Harry Reid, Nancy Pelosi, Barak Obama, or even Mitt Romney can give you.
Tom,
It’s all a far simpler story that the Republicans should oblige themselves to tell and to educate the public, shor and simple:
The CREATION OF WEALTH by an entity (person, corporation) starts with an ACURING OF AN INPUT(raw materials, a workplace, an piece of paper), ADDING VALUE to that input something of their own (labor, thought, repackaging), and SELLING OUTPUT of the result to a buyer who will give the entity something in return of value that is GREATER than the cost of the input. CREATION OF WEALTH — EASY TO UNDERSTAND, RIGHT?
Now, in something other than a Communist or a Dictatorial economic system, what ENTITY can do such CREATION OF WEALTH? If you answer “government”, then please explain how. That our government CAN CREATE WEALTH is, incidentally, an answer that not Harry Reid, Nancy Pelosi, Barak Obama, or even Mitt Romney can give you.
tI certainly does not take a rocket scientist to understand when there is NO cash coming in, there will be no spending with real cash.the idea that Obama has created in his mind about business owners not building that by themselves is so stupid ( best word for that) it is bizarre. When he talks about the roads, railways,etc. being a providing force to enable the business person, where the HELL does he think that money comes from to build and maintain a cities infrastructure? Does he pull it out of his orifices? BUZZZZZZZZZZ NO! The answer is it comes from taxpayers….job holding, business owning entrepreneurs that pay taxes to the government! Can this man, Obama, be that ignorant or did his teleprompter break and his speech writers go into comas? The middle class is supporting this nation as well as the wealthy, and possibly more. The middle class always have been and always will be the backbone of this nation. But, lets face it,,Obama is seeking to eradicate the middle class, control the wealthy and dominate the poor with handouts and freebees. It is called communism folks!
tI certainly does not take a rocket scientist to understand when there is NO cash coming in, there will be no spending with real cash.the idea that Obama has created in his mind about business owners not building that by themselves is so stupid ( best word for that) it is bizarre. When he talks about the roads, railways,etc. being a providing force to enable the business person, where the HELL does he think that money comes from to build and maintain a cities infrastructure? Does he pull it out of his orifices? BUZZZZZZZZZZ NO! The answer is it comes from taxpayers….job holding, business owning entrepreneurs that pay taxes to the government! Can this man, Obama, be that ignorant or did his teleprompter break and his speech writers go into comas? The middle class is supporting this nation as well as the wealthy, and possibly more. The middle class always have been and always will be the backbone of this nation. But, lets face it,,Obama is seeking to eradicate the middle class, control the wealthy and dominate the poor with handouts and freebees. It is called communism folks!