posted on 04 March 2015
Written by Frank Li
Talking about America's middle class is both essential and fashionable today. So let me add my two cents worth with three clear messages:
First of all, what is America's middle class?
1. What is America's middle class?
Here is an excerpt from Wikipedia - American middle class:
Below is a chart from What Is Your U.S. Income Percentile Ranking?
Here is my simple and quantifiable definition of an average American middle class family: It has
2. Where did America's middle class come from?
After WWII, America became the economic monopoly in the world. America's chief competitors were either destroyed through the war (e.g. Germany and Japan) or self-destructed by adopting/continuing a fundamentally flawed system called "communism" (e.g. China 1949-1976 and the former Soviet Union) after the war. In other words, America was left as the only viable producer, making and inventing virtually everything and therefore dictating prices. This not only got America out of the Great Depression finally, but also created unprecedented prosperity in America throughout the second half of the 20th century, dramatically growing the middle class in America!
3. Where did America's middle class go?
The middle class has been significantly diminishing in size since the turn of the 21st century for two main reasons:
4. Will America's middle class be back to the 1990 level?
Highly unlikely! As a matter of fact, America's middle class, as we knew it in the 1990s, was actually the upper class by global standards. Even the poor in America were often better off than the middle class in most other countries. As our economy becomes more and more globalized and wealth is further spread worldwide, America's middle class will inevitably have to realize that government overspending/borrowing will drive their standard of living further down with respect to the rest of the world.
Unfortunately for America, rather than fixing the communistic policies, most American politicians keep doubling down as most Americans keep demanding more, and electing whoever promises more. Three informative readings:
Now, let's discuss income inequality ...
5. Income inequality in America
Is income inequality in America today worse than it was in the gilded age some 100 years ago? No! As a matter of fact, John D. Rockefeller and Andrew Carnegie remain among the two richest Americans, ever!
Income inequality today is indeed worse than it was throughout the good old days (i.e. from 1946 to 2000). But those good old days were the exception, not the rule, as I argued earlier in this post!
Is income inequality a big problem today? Maybe! But taxing the rich is not the solution and will likely hasten our decline! Note: The Top 1 Percent Pays More in Taxes than the Bottom 90 Percent! In other words, by pulling down the top 1%, all Americans will be poorer! It is communistic - been there, seen that, escaped from it once!
American middle class, as we knew it in the 1990s, is gone for good for two main reasons:
While reason 1) above is inevitable, reason 2) is not. How to truly right the wrongs in America? Read my book: "The GOP Bible for 2016"!
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