"A Bad Place"
Falling wages, forever wars and the
heavy hand of government...
by Bill Bonner
Baltimore, Maryland - "Michael Snyder: "Say Goodbye To The Middle Class: Half Of All American Workers Made Less Than $40,847.18 Last Year." If you are wondering why so many Americans are stressed about their finances these days, just look at the numbers. The Social Security Administration just released national wage statistics for 2022, and the figures that they have given us do not paint a pretty picture at all. In particular, we should all be deeply alarmed that the median wage earner brought home just $40,847.18 last year. That breaks down to about $3,400 a month, and that is before taxes. Needless to say, you cannot live a middle class lifestyle in America today on just $3,400 a month before taxes. So in most households more than one person must work, and in many cases more than one person is working multiple jobs.
More formerly middle class Americans are falling into poverty with each passing day, and this is causing an alarming surge in demand at food banks from coast to coast…Economic conditions have deteriorated substantially in 2023, and I am entirely convinced that 2024 will be even worse…"
And here’s Business Insider: "Americans are drowning in credit-card debt - and the economy will pay the price. Record credit-card debt threatens to spark a consumer-spending slowdown soon, Carl Weinberg said. "Consumers are just waking up to the fact that they're financing their spending by running up their credit cards, and that the interest on those credit cards is over the top, out of control, off the hook right now," Carl Weinberg told CNBC on Wednesday.
Musk painted a similar picture in October. "A large number of people are living paycheck to paycheck and with a lot of debt," he said, noting credit-card payments have hit "extremely punishing" levels. "If you cannot pay them off and you're still accruing interest at 20%, you're at best headed to a bad place."
Slip Slidin’ Away: A bad place is where we think we’re headed. So let’s continue trying to understand how we’ll get there. As you recall from last week, the period – 1950-1980 was fine. Then came a bewildering 40-year stretch, 1980-2020 should have been the most astonishingly rich period in our history. It turned out to be a big flop. Despite some of the most remarkable technological innovations ever, growth rates declined. Real wages stagnated. By almost all comparisons and indicators, the US slipped down.
‘What went wrong?’ is the most important question in modern economics. Didn’t the Fed stimulate enough? Nope, it couldn’t be that…the Fed never before stimulated as much as it did then, especially in the last half of that period.
Bad luck? Where? How? In the 13th century, the plague struck Europe and wiped out an estimated one-third of the population. That was bad luck. In comparison, Covid was a gentle nuisance. There were no major plagues in the last 40 years. No real climate disasters. No giant meteors crashed into the earth.
So, what went wrong? One hypothesis: most of the progress of the last 150 years came from fossil-fueled machines. And that breakthrough may have reached a natural point of declining marginal utility by 1980. You could add more and better machines; but you got only marginal, incremental gains.
But that wouldn’t seem to explain the entire slowdown…and it certainly doesn’t explain how the gains, such as they were, went overwhelmingly to the elites. And it is perhaps more than a coincidence that this period also saw a breathtaking surge in the number of elites themselves – PhDs, engineers and scientists, but also social engineers, policy makers and political hacks. All of them went to work to try to improve the material conditions of our lives. Did they all fail? Or did the weight of so many improvers drag down the whole economy?
A Heavy Hand: One of the most insidious features of government policies is that the improvers never seem to go away…even when they are disastrously wrongheaded. Wars go on for years – at staggering cost – even though there’s no plausible gain on the horizon. Whole careers are spent fighting the War on Drugs or the War on Poverty, for example, with no sign of victory. Agencies, projects, commissions, departments…the list grows; it never shrinks. The feds announce an outfit intended to deal with an emergency. The group gets titles, office space and a budget. It goes to work…and is never heard from again. It becomes as eternal as sin, comfortably camped in luxury on the bayous of Washington DC…while the limelight moves on to the next crusade.
This is not unique to the US government. It is a feature of government itself. Over time, the swamp of lame programs, freeloading clients, and jackass crusades gets deeper and deeper. And then, the going gets tough. Entrepreneurs, reformers, and the sweating multitudes, struggle through the muck of regulations…and drown in the slime of politics.
But wait. What does this mean? Is the middle class doomed? How about the US itself? The stock market? There’s more on the subject of ‘what went wrong,’ tomorrow…"
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