Vail Daily column: Flex middle class’s financial muscle
January 25, 2014
Want to increase the U.S.’s economic muscle? Expand the middle class.
Their paychecks have drifted in stagnate economic waters while the wealthiest 1 percent float on a tidal wave of increases in net worth. Middle class households have been jolted by financial declines for decades, with median family income sliding to approximately $5,000 less than it was in 1999, adjusted for inflation.
Census figures report the average income for the richest 5 percent of U.S. households, adjusted for inflation, soared 17 percent in the past two decades. Contrast this sizeable increase with the average income for the middle 20 percent of residences which rose no more than 5 percent.
Robert Reich, professor of public policy at the University of California, Berkley, has helped produce a documentary film, “Inequality for All.” Speaking at Colorado History Museum in early January, this former Department of Labor head in the Clinton administration, warned that 95 percent of economic gains since the 2009 recovery have lined the pockets of the top 1 percent by net worth.
Making the rich richer in hopes their investments trickle down to the masses doesn’t expand the middle class.
These mind-numbing stats provide stark results. Those who “want not” get more; the middle class who “need more” get less.
Why does the middle class play a pivotal role in an economic rebound? This large block pumps huge amounts of money into the economy. The bigger the base which benefits from upward mobility, the larger the economy grows.
“What you want is a broader spending base,” declares Scott Brown, chief economist at the financial advisory firm Raymond James. “You want more people spending money.”
Why? It cuts a wider swath for economic advance. Leaving this path to the 1 percent who buy at Neiman Marcus cuts out shoppers who spend their cash at Wal-Mart or Sears.
Moreover, economic resurgence rises when middle class consumers aren’t hesitant spenders. They need to be convinced that they can consume a larger piece of the economic pie. Without this hope, shoppers stay home, sit on their cash and wait for the wealthiest 1 percent’s investments to trickle-down to them.
Aristotle and Thomas Jefferson pushed for an expanding middle class to fuel the engines of prosperity. Making the “want-nots” wealthier didn’t appeal to Aristotle. He lacked confidence in altruistic rich folk sewing a safety net to keep the helpless from a financial free-fall.
Aristotle believed a strong middle class provided social stability with citizens working to improve their communities. He dismissed the rich as arrogant and insulated from poor people’s concerns. Aristotle taught that poverty robbed the poor of seizing initiative to rise above dire circumstance. Then, it’s enticing to gripe or turn destructive warned this philosopher.
In contrast, Aristotle believed the middle class moderated desires, not hording them. The middle class worked together and spread the wealth, which made for stronger communities.
Jefferson regarded an emerging middle class as tonic for what ailed colonies where prominent families controlled most of the wealth and passed it on to the oldest male heirs. From 1776-1779, he almost single-handedly reformed a Virginia legal code that favored the well-to-do. Jefferson supported a middle class populated by risk-takers who championed individual initiative. He aimed to create government which welcomed leaders who formed an “aristocracy of virtue and talent.”
Such civic-mindedness increased in proportion to an expanding pool of educated citizens. In retirement, Jefferson envisioned a master educational plan for Virginia. He laid educational grids across the state. His “scheme was pure Jefferson: magisterial in conception, admirable in intention, unworkable in practice,” admits historian Joseph J. Ellis in “American Sphinx: the Character of Thomas Jefferson.” Virginia’s Legislature declined to fund this financially ambitious plan.
In 1818, however, a commission recommended the capstone of Jefferson’s vision. It “was a state university where the best graduates of the county academies would receive the best education available in America, again the poorest of the best on tax-supported scholarships,” reports Ellis.
Aristotle and Jefferson would be chagrined at current proposals to lift us from economic doldrums. Some equate income redistribution as creeping socialism. Many adopt an antidote that works like aspirin. It provides some immediate relief but doesn’t cure underlying fiscal problems. Making the rich richer in hopes their investments trickle down to the masses doesn’t expand the middle class. It isolates an elite class, frustrates middle class Americans because their wages stagnate and blocks economic opportunity from the poor.
In Jefferson’s namesake county in Colorado, the Library Foundation reports: “More than half of the kindergartners in some Jefferson schools start without the skills they need to be ready to read. More than a third of the children in Jefferson County live in poverty, and many of these children don’t have books and are not read to at home.”
Where are virtues of decency, honor, colonial educational advocacy and sharing economic opportunity? With them, the U.S. economy prospers. Without their implementation, the U.S. devolves into a two-tiered society of “haves” and “have-nots,” with a declining middle class.
The Rev. Dr. Jack R. Van Ens is a Presbyterian minister who heads the nonprofit, tax exempt Creative Growth Ministries (www.thelivinghistory.com), which enhances Christian worship through dynamic storytelling and dramatic presentations aimed to make God’s history come alive.
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