The GI bill wasn’t exactly an ‘entitlement’ program. Those young men and women served in war for years to get that benefit. It was payment for service.
But yes, people do love a good pull yourself up by the bootstraps story. American icons like Abraham Lincoln, Andrew Carnegie, Alexander Hamilton, Andrew Jackson, Ben Franklin, people who rose from nothing…
^an issue is that nothing as far-reaching as the GI Bill - which was a commitment to those who’d served the nation- exists nowadays.
In the 50s and 60s, a working class man could earn 3 times minimum wage, with 2 weeks paid vacation, full retirement at 55, and full health benefits.
Can these jobs be reinvented? Economic stability would go a long way toward reducing inequality.
Something I see that bothers me is that jobs are plentiful - but many offer no/few benefits, low-ish wages, and have no clear path for advancement.
Higher wages accross the board, from minimum to just-graduated-college, would be a good step. Not a one-time bonus for current employees, but an actual pay raise. Perhaps index the minimum wage on inflation so that it rises “naturally”?
Better financial aid so that public colleges, instate, are affordable regardless of income and offer extra support for those with extra health or socio-economic challenges (like HEOP/EOP in NYS or ASAP at CUNYs).
I guess I’d also provide condom machines to all high school bathrooms to ensure any teen who’s even thinking about sex is equiped and make that not shameful but normal. Early pregnancy is a disaster for teens whose life isn’t already stable.
A good policy I saw in France is the “more for those who have less” policy - ie., special funding to provide middle class/upper middle class opportunities at schools where students are predominantly lower income or immigrant backgrounds. This way, the libraries have extra books, there’s a better teacher: student ratio, kids can go on school trips including language trips abroad during middle school (those are extremely important and can make a big difference when accessing academic high schools or are taken into account for college applications - upper middle class kids start them when they’re 9 or 10, every summer for about 10 years, and middle class kids go on two or three. Most middle schools offer one at bargain prices. Keep in mind of course that “abroad” in Europe is the same as for an American going from NYS to Pittsburgh, or from California to Oregon; $300 for a week abroad is common). It doesn’t work perfectly (in part because there’s a mindset that ought to go with it and other problems plague these schools such as sexual harassment and discipline issues) but it’s a step in the right direction. In the US I guess it could mean philanthropy dedicated to adding books or offering field trips for all working class and lower income public schools in a State. Volunteering venues whereby people would pledge their time, not at their kid’s school, but at a disadvantaged school, weekly, for a year.
@OHMomof2 actually we do have the post 911 GI bill which is 4 year full ride (not tuition only) to most universities.
That’s a common misunderstanding of the governmental definition of entitlement programs. Somehow the word entitlement has morphed to only its derogatory meaning. But “entitlement programs” in the government means programs that you are entitled to–promised–and so must be funded for everyone who qualifies. So that’s why Social Security is an “entitlement”–it must be funded for everyone who qualifies. So the GI Bill was an entitlement to every qualifying vet–it couldn’t be underfunded.
It simply means that all who qualified --in this case through service–were entitled to it.
I am guessing globalization has a lot to do with it. Globalization made corporations rich while taking out middle class jobs out of middle class.
For a starter, lower the estate tax exemption. I thought that worked as equalizer. It used to be $650,000. Now it’s at $11M. 9.9%ers complained the only thing they are leaving to their heirs is a primary resisence and that should be exempt. If you live in a high price housing area, a $1M house is a norm. Life is tough to afford $1M for a house and they needed a break from estate tax. Nobody put a break on that argument. They may have had a self-pitying party. Curiously, many of them were Dems from NY or CA. I think it’s when Dems abandoned lower middle class and they no longer had anyone looking out for them. The ball started rolling and what is “norm” kept getting more expensive. 9.9%ers conveniently consider themselves “middle class”. Since they are middle class, what they want/need cannot be luxury. Just don’t mind the rest 90%.
Not likely under the current government, which raised it substantially (though the increase expires in several years).
I would say that if the people commenting on this thread had the reigns of power, our society would look much better than the picture in the article. @Iglooo, I don’t think the Democrats abandoned the lower middle class. Rather, the Democratic party (as epitomized by FDR-era New-Deal Democrats) became more inclusive and took on issues beyond economics, such as women’s rights, minority rights, the environment, anti-war, etc. Moneyed interests, through a persistent, decades-long campaign, managed to insert wedges between these diverse interests. Historically, labor movements in the US tended to be anti-immigrant. As the power of unions was weakened by globalization and persistent smear campaigns (and a backlash to corruption), it became easier to persuade working class whites that immigrants and minorities were the problem. Abortion, religion, guns–all of these issues have been used to fragment the various interests that were under the Democrat umbrella. But I think you’re right in thinking that it’s hard for socially liberal but wealthy coastal Democrats to identify with the lower middle class now, and vice versa.
On another note, many observers (I think including Warren Buffett) have noted that we shouldn’t have an income tax; we should have a wealth tax. But then, even if we have an income tax, why do we allow a lower tax rate for people who don’t work (i.e. investors who pay taxes at the capital gains rate) than for people who work (i.e. wage earners who pay taxes at the earned income rate)?
Mainly due to political lobbying power – those with the highest non-labor income are the wealthiest who can lobby for reduced taxation on their non-labor income.
Also, capital assets are more mobile than labor in terms of finding places to reduce or avoid taxation. The claimed reason behind the recent tax law change to reduce business income tax “to compete with other lower tax countries” is basically an admission of that. But that means that labor income is the easiest to find/document and tax with income taxes.
I am surprised that people keep asking this, when the answers are staring at them in the face.
One reason that invested money should be taxed at a lower rate is to encourage investment, because invested money is at risk, whereas earned wages are generally not. Once a wage earner has put in their two weeks of work, they are 99.9% likely to get fully paid for that work.
The second reason that invested money should be taxed at a lower rate is because the tax is based upon the total gain, not the real gain after adjusting for inflation. If someone made an investment in 20 years ago and sold it today for 2x the original cost, they get taxed on the full amount of gains, even though the vast majority of that gain has been eaten away by inflation.
Well it would be more equal, mainly because most people would be poorer.
The US has about 325M people, and the median worker makes more here than any other collection of 325M people you could cobble together by putting together various countries (or states of large countries like India or China). There are potentially millions of combinations you could create, and I doubt you could find one of them that will result in a higher median wage.
This is not an accident of nature, but a result of conscious decisions that the USA will reward risk taking by allowing people to keep more of their money than say, the more socialist states of Europe. Europe really has no excuse for having a lower median standard of living than the United States, particularly given they spend so little on defense, instead relying upon the US defense umbrella. They are poorer because of their policies.
My support of the US capitalist model doesn’t mean I think that the recent policy changes to taxation were good ones (deficits do eventually matter), or that the US is doing enough to help the least fortunate people in our society. I want to raise the issue that the social programs that many people admire come with very real costs, and that those costs are larger than the apparent sticker price of the programs themselves.
Their incomes may be lower, but then so are their expenses. When you’re paying little to nothing for medical insurance or medical costs, when childcare is heavily subsidized, when public college tuition is much lower or zero, when public transportation is more convenient, when new-parent paid leave for a year is the norm (just a few of many examples), that “lower” median goes a lot farther.
I would happily take that trade-off.
Incomes in Europe are lower, and taxes are higher. Therefore, take home pay is quite a bit lower. Generally food and housing also costs more. Access to college is also often rationed, in effect requiring the families without college children to subsidize the ones going to college.
To put it another way, the median US worker has much more take-home pay that they can decide what to do with. They could use it to spend it on childcare, or save for college. Or as most do, they could instead fund a higher quality of living now. But these are choices people make.
I will concede that one thing that Europe does much better is universal health care, generating much better health outcomes, for far lower cost. The US should adopt that model.
First, that was a great article. I am very surprised there are no voices from folks who own businesses or who have inherited via their parents. Having come from a very poor background and working like crazy to make the right choices, I believe in the pull yourself up by the bootstraps story. Always will. I also believe in the power of saving which includes making sacrifices for your family. This means that money I have saved for my children which was already taxed at 50%+ in our case, should not be taxed at death.
I live in a town where all meet the standard in the article and most homes are very expensive. I don’t lie to myself and call myself middle class as the article states because I can check a stat and see exactly where our income puts us. Then again when I look around my town most people came from another country. Most are first generation Americans or married to one. Most are married. Most have high levels of education and many own businesses. Most people also work long hours or travel for their work. This is important as they want a good life for their kids ( like anyone else).
Capitalism works because it is based on self interests. Communism and socialism do not. I have been to 5 communists nations ( some of which no longer exist-Thank heavens. Ask someone who was raised in East Germany, Czech, the former Yugoslavia etc what they think about socialism/communism.
Someone cited France, I lived in France and taught English. People would often ask, are you de bonne famille? From a good family? They were not talking about ethics or morals. They were talking about money and nobility. As an American I had to laugh. I laughed even more when they insisted on knowing what my father did for work (to determine “the good family” ) There IS mobility in America. It isn’t as accessible as it used to be but it is still better than other nations. If you want to trade that for an economy in which the government runs all healthcare, schools, businesses-that’s your choice. But I will tell you, in France the wealthy still get into the best schools and they still lock others out. And they pass on their wealth. You would too if you have the money. You would want your family to continue it’s trajectory. This is human nature.
And 1.2 million ( or 48K per year) is not a lot of money at all to retire on in many states. Or do some suggest that people should move out of state when they retire because they saved more than others?
According to the article, the 9.9% will be the target of resentment when the 90% finally get too fed up to take it any more. The 90% will not be convinced to be satisfied with their circumstances by economic theory. We can do whatever it takes to fix this problem, or just wait for the inevitable.
I am part of a third generation family business partnership. In the scenario imagined by the author of the article, that inheritance is lost to my kids and grandkids anyway. I’d rather give it up now to leave them a stable society.
In a stable society, they have the skills they need to do okay financially, without an inheritance.
@alh Well you could always leave the money to charity or donate it. IF you have the option. Possibly having the option or having a couple of million in your hands is different. Also, if it’s third get, isn’t someone in the family using it to generate income. In that case you would be on the wrong side of the equation. Plus think of all the money you owe in terms of the monies received in the form of tax benefits through three generations. You will be paying a lot to make it even to others.
IMHO, the US is a pretty stable society. More stable up than down but basically nothing like parts of the world where famine and disease make day to day living very very difficult. Do you mean stable or do you really mean more for those who have less and less for those who have more? Do you want to “stabilize” society by taking from the rich to give to the poor? Or do you just want good jobs and education for all with a wide range of incomes as we have today?
Did you read section 9 of the article? How Aristocracies Fail?
Since you ask, If it were up to me, we would immediately institute a guaranteed minimum living wage for every citizen without one, then address health care, education, etc. That just seems like enlightened self-interest to me.
And yet though this group claims to be for eliminating income inequality, there are usually voices that are against banning legacy admissions. Giving preference to legacies is blatantly perpetuating income inequality. As is giving preference to children of the famous and the elites.
Make admissions name-blind using only grades and SAT/ACT scores. Create a floor for such scores. Then admit by lottery, from various different boxes to account for filling up different majors and schools.
We with higher than average incomes would scream bloody murder that our children ‘deserve’ to be admitted based on factors that we were able to provide because we had the means. So let’s not kid ourselves.
In the scenario the author imagines, college admissions will be the least of our worries. He uses his own 16 year old daughter’s college search to frame the article.
I studied no economics, but a whole lot of history. I think I understand his point.
We can hope he’s wrong.
It is always easier to imagine how you will fix things than actually doing it. Most experiments in fixing societies end up in death, destruction and war. For those were meant to benefit usually end up starving for a few things, the wealth get wealthier and nothing really changes.
There is no way that people are going to allow you to take their money/house/ and property without a fight. Money especially lots of money can move in the blink of an eye.
@TatinG I’d agree with the idea of blind admissions using only scores. I think it’s a good way to get back to a meritocracy. In our family, we try very hard to tell kiddos to take their own path. The idea of legacy is so strange to me. Why would my kiddos want to do the same things we did? And attend the same schools? Plus things have changed a lot. They’ll likely go into fields that didn’t even exist when I was in college.