Middle class

The Agenda – Kill the Middle Class

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middle classBrooks Agnew – The Made-4-TV virus has dominated all of our lives in recent months. Although tens of millions of Americans contracted the disease, less than 25 thousand people without comorbidities died of it.  The Trump Economy was roaring and showed signs of ushering in an age of prosperity that the Middle Class had not seen in 100 years.

This was their chance to buy a house, start a business, pay off debts, and secure the American dream, no matter what country they lived in.  The Global Syndicate has one enemy, throughout time.  That is us.  Within days of the most sweeping trade agreements with China ever were signed, the M4TVV was unleashed on the world.

Someone made a phone call.  Within hours, 187 countries began locking down healthy citizens and shutting down their economies.  It was like a Great Depression was ordered up and delivered whether people wanted it or not.  No one could resist.

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The New Nobility Uses Political Correctness to Fragment the Precariats

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classCharles Hugh Smith – I have long held that our economy is, stripped of propaganda, nothing but an updated version of feudalism, i.e. neofeudal: a vast class of precarious laborers (i.e. precariats–precarious proletariats) who own little to no wealth-producing capital ruled by a New Nobility/Oligarchy that owns the vast majority of wealth-producing capital and control of the political system.

I explained this structure in America’s Nine Classes: The New Class Hierarchy (April 29, 2014 – link), Neofeudalism 101: Strip-Mining the Upper Middle Class (April 8, 2015 – link) and The Class War Has Already Started (November 14, 2015 – link).

In the Marxist analysis, there are only three classes: those who must sell their labor to earn a livelihood, those who earn their livelihood from owning wealth-generating capital, and the dispossessed/ marginalized who are dependent on the state (bread and circuses) or who scrape out a living on the margins of the lawful economy.

In this view, there is no meaningful class difference between the well-paid liberal technocrat with the $1 million (mortgaged) house on the Left/Right Coast and the rural conservative “deplorable” wage earner. Both must sell their labor and neither earns a livelihood from wealth-generating capital.

If we extend this analysis, we find that the entire self-described “middle class” is in fact nothing but the better paid slice of the working class, i.e. the class who must sell their labor to pay their rent/mortgage, buy food, etc.

Both are precarious, but not equally so. The well-paid technocrat believes his skills will protect him from unemployment, and he is equally confident that the “wealth” in his mortgaged house and stocks/bonds 401K retirement account is secure and permanent.

He feels superior to the “deplorable” wage earner, but this superiority is contingent on 1) asset bubbles never popping (ahem, which they always do, eventually; 2) software that’s eating the world will not eat his job or the premium he is currently being paid, and 3) the skills he currently has won’t become over-supplied as the global work force expands into the sectors that require high levels of education.

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America’s Entitled (and Doomed) Upper Middle Class

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middle classCharles Hugh Smith – Two recent articles describe America’s entitled (and doomed) upper middle class: the top 5% of households with incomes above $206,500 annually and individuals with incomes of $160,000 or higher annually. (source: Historical Income Tables: Households Census.gov)

The first describes how businesses are responding to the new Gilded Age in which spending by the top 5% has pulled away from the stagnating bottom 95%:

In an Age of Privilege, Not Everyone Is in the Same Boat Companies are becoming adept at identifying wealthy customers and marketing to them, creating a money-based caste system.

With disparities in wealth greater than at any time since the Gilded Age, the gap is widening between the highly affluent — who find themselves behind the velvet ropes of today’s economy — and everyone else.

The Haven’s 95 staterooms were located so high up in the forward part of the ship that even guests in comparatively expensive staterooms might remain unaware of its existence. Depending on the season, a room in the Haven might cost a couple $10,000 for a weeklong cruise vs. $3,000 for an ordinary stateroom elsewhere on the ship.

Since the late 1990s, however, “there has been a huge evolution, maybe a revolution in attitudes,” Mr. Goldstein said. In addition to larger rooms or softer sheets, big spenders want to be coddled nowadays. “They are looking for constant validation that they are a higher-value customer,” he said. For example, room service requests from Royal Suite occupants are automatically routed to a number different from the one used by regular passengers, who get slower, less personalized service.

With a week in a top Royal Suite costing upward of $30,000, compared with $4,000 for an ordinary cabin, the focus is on “very affluent travelers, and we have no trouble filling these rooms,” Mr. Bayley said. Continue reading →

The Cultural Contradictions That Have Crippled the Great American Middle Class

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capitalCharles Hugh Smith – The decline of middle class capital is partly self-inflicted.

Conventional explorations of why the middle class is shrinking focus on economic issues such as the decline of unions and manufacturing, the increasing premiums paid to the highest-paid workers and the rising costs of higher education and healthcare.

All of these factors have a role, but few comment on the non-economic factors, specifically the values that underpin the accumulation of capital that is the one essential project of middle class households.

Daniel Bell’s landmark 1976 book The Cultural Contradictions of Capitalism held that”capitalism–and the culture it creates–harbors the seeds of its own downfall by creating a need among successful people for personal gratification–a need that corrodes the work ethic that led to their success in the first place.”

I would phrase this in the language of values and capital:

The primary cultural contradiction of the Great American Middle Class is the disconnect between the values needed to build capital and those of gratification via debt-based consumption.

Accumulating capital–not just financial capital but human and social capital– requires a distinct set of values and soft skills: Continue reading →

Is the Housing Bubble 2.0 About to Encounter a Pin?

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housingCharles Hugh Smith – Markets discover price via supply and demand: Big demand + limited supply = rising prices. Abundant supply + sagging demand = declining prices.

Eventually, prices rise to a level that is unaffordable to the majority of potential buyers, with demand coming only from the wealthy. That’s the story of housing in New York City, the San Francisco Bay Area and other desirable locales that are currently magnets for global capital.

In the normal cycle of supply and demand, new more affordable housing would be built, and prices would decline.

But that isn’t happening in hot real estate markets in the U.S.  What’s happening is rental housing is being built to profit from rising rents and luxury housing is being built to meet the demand from wealthy overseas buyers.

With limited land in desirable urban zones and high development fees, it’s not possible to build affordable housing unless the government subsidizes the costs.

Meanwhile, the supply of existing homes for sale is limited by the owners’ recognition that they won’t be able to replace their own home as prices soar; it makes financial sense to stay put rather than sell and try to move up. Continue reading →