Saturday, May 10, 2014

May 10 2014: As distracted and deluded—as most of us are—we seemed to have failed to notice (or have chosen not to notice) that our earning power is in decline. It needn’t be and it shouldn’t be. But it is.

“Experience has shown, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.”

Thomas Jefferson

DECLINING EARNING POWER. When I write about the U.S. economy—which is arguably more often than a thriller writer should—but it’s such fun (well, the writing part it—experiencing it is more of a moveable feast) I regularly point out that the earning power of most Americans is in decline (a solvable problem—but one we don’t seem to be fully aware of—let alone trying to resolve). We don’t notice it as much as we might because:

  • LET’S NOT THINK ABOUT IT. It’s not something most of us want to think about—or even accept.
  • FATALISM. Even if we accept it, we have no idea what to do about it.
  • DISTRACTED BY PROPAGANDA. The American Way of Life is heavily influenced by a constant barrage of political/corporate propaganda dominated by myth, consumerism, and distraction—which acts as something of a reality distortion field.
  • CORPORATE MEDIA CONTROLLED. The mostly corporately owned media—subject to some notable exceptions—don’t cover the economy well. They are not allowed to. There is token criticism, but the scale of our problems is not communicated.
  • WE DON’T KNOW WHAT IS GOING ON ABROAD. The media do a particularly bad job covering foreign news so we don’t realize that we are steadily losing ground compared to many other countries—where in many cases incomes are going up in real terms.
  • POLITICIANS AVOID THE SUBJECT. Politicians don’t like talking about it—and are mostly personally wealthy so are unaffected.
  • UNIONS CRUSHED. The one group, who might have been strong enough to arouse a popular outcry—the unions—have had their credibility undermined and have been largely crushed.
  • ADD A SECOND WORKER AND HOUSEHOLD INCOME MAY GO UP. Many households have compensated by a previously having a non-working homemaker get a job—so the actual household income may have increased.
  • RELIANCE ON DEBT. There has been an increasing reliance on debt.
  • MINIMAL SAVINGS. Saving has become minimal.  People in other countries are saving 10% plus.
  • SOME PRICES DOWN—MANY UP. The prices of many items have come down so although we are poorer, we don’t feel poorer. Unfortunately, the prices of key items like college education have gone up.
  • INFLATION IS MINIMAL—OR IS IT? Official inflation figures—for some time now—have indicated minimal inflation.

MISLEADING GOVERNMENT STATISTICS. The inflation figures are extremely misleading for various technical reasons. However, the most important thing to note is that the Middle Class are being absolutely hammered by:

  • Educational Costs
  • Healthcare Costs
  • Housing  Costs
  • Car Costs
  • Food Costs

In that context, although it is pleasant to be able to buy electronic gadgetry for much less than in the past, it doesn’t remotely compensate for the above.

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