Squeezed?

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Campitor
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Re: Squeezed?

Post by Campitor »

Clarice wrote:
Tue Aug 07, 2018 12:18 am
If you are talking about higher incomse I agree. However, to me high class includes way more than money, especially money that are not well spent. Most people end up squandering their high income on first mortgage, second mortgage, private mortgage insurance, car payments. They never leave the grind and don't get an opportunity to acquire, for example, social or political capital, without which you are not really high class.
You're moving the goal post. The topic is about the middle class being squeezed. What determines you're income class is your total household income pre-tax in combination with the size of your household.

Squandering money and lack of social/political capital isn't part of the equation and its inclusion would be in error when discussing income brackets. Social and political capital can be attained without any great personal wealth.

I believe several presidents in US history have come from meager backgrounds. And as your political and social capital rises, so does your net worth if you know how to take advantage of it.

Loner
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Re: Squeezed?

Post by Loner »

No control? I wouldn't say so.

The other day, I passed in front of a house. It had a shed made to look like a far-west building, with a table, lighting effects and all sorts of decoration in front. I wouldn't like it in my own backyard, but it was so well made that the guy could have made a living making movie sets. Anyhow, I asked him if I could take a picture. He agreed, and we started talking. Turns out, it's illegal to have a shed so he built it on a trailer that he backed into a hole in the ground. You couldn't tell it was a trailer even knowing it was a trailer. Not only that, but a lot of it was made out of scrap materials, and/or handmade by him or his wife. The table was an glass tabletop fitted on a an old wine barrel.

The discussion went on, and he proudly told me how he was one of those people who grap stuff out of the garbage. His driveway, for instance, was made out of cobblestone, that is, cobblestone that he was given by a guy redoing the facade of his house. He just passed in the street, asked "Hey, you garbaging that? Can I have it?", and took it home. The builder was happy to get rid of his old stone. So he brought the bricks home, scratched the old mortrar off, and remade his driveway. "I had been waiting for a while to find brick to re-do it."

His wife then saw us talking from afar and also came to talk. She showed us picture of the inside of the house. They had found old ceramic in the garbage, so she painted it, cooked it, and made a mosaic in the bathroom. They also remade their bedroom mostly with stuff found in the trash. I think their bed frame/base was made from apple crates. The room looked like one in a fancy, trendy expensive shabby-chic downtown hotel (which typical middle-class people would probably pay 150 $ to sleep in). They found a nice cabinet from the 1920's, and put it in the bathroom with a nice sink on it (w/ diy plumbing of course). The guy said he outfitted his daughter's 3 bedroom apartment entirely from trash (mind you, everything looked like it came right out of the store). As he lives in the suburbs, he also says he commutes in part by electric bike.

The conversation naturally turned to consumerism, and both of them couldn't believe how most people lived nowadays (they were maybee 50), buying so much crap and garbaging it right after, too. (Their house was small-ish by today's absurd standards of size for middle-class houses.) They felt that grabbing stuff out of the trash helped the environment and prevented useless money outflows. "I don't even buy anything anymore, I know that if I'm patient enough, I'll find it in the trash", she said. And this is where we get to your question about control. The guy said he didn't understand people who couldn't make ends meet. "Them people who say it's expensive to live nowadays, I just don't get them," he said. "I don't believe in that, not being able to live comfortably. If you really want something, there's always a way."

The middleclass might have it harder, I don't know, and I'm not that interested in the numbers, to be honest, because so much is in its control. Many people, of course, have a terrible life, and I'd agree that this is somewhat different. It's just that looking at every typical middle class person I know, it's hard to feel empathy. There's a lot a crap-buying and living-over-one's means going on. The point has already been made about lifestyle inflation. Everyone wants a huge castle, vacations to bora-bora and 100$/month phone plans to know whether or not Kim Kardashin took a crap today - in real time. It cannot wait until coming home to your PC. It seems to me that complaining about marginal changes in productivity, wage stagnation, and whatnot, is preposterous when you could be talking instead about what you could do (but won't) to stop feeling money-squeezed.

Clarice
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Re: Squeezed?

Post by Clarice »

@Campitor:
I am not arguing with you. I am genuinely curious: don't you think that one can be squeezed out of political power?

Campitor
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Re: Squeezed?

Post by Campitor »

@Clarice

Yes. Political, social, and financial capital in the US isn't stagnant. People move in and out of their brackets frequently. 90%+ of those in the upper income brackets are new arrivals. Discussing income brackets, without focusing on individuals, skews the interpretations of the stats. Tracking individuals is obviously a lot harder but the numbers indicate that people fall in and out of all income brackets with a regular frequency. The brackets in the US are not static. The same can be said of politics. The Clintons were political giants in their heyday - not so much now. Sure they still have political power but not in the outsized manner that they enjoyed while Bill was president or Hillary was a Senator and then Secretary of State.

jacob
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Re: Squeezed?

Post by jacob »

The median wage in real terms has been stagnant in the US for 40 (FORTY!) years. Meanwhile, the top wages have 3x-10x'ed depending on how big a percentile we talk about. That's the group of lawyers, bankers, and software engineers (creative knowledge workers).

In the 1960s manufacturing was 30% of the US economy and FIRE (finance, insurance, RE) was 10%. Today, it's the other way around. So there are four ways the middle class (and here I'm talking people in manufacturing or backoffice accounting ... not your engineer+RNurse household) is getting squeezed.

1) The "good jobs" are going away. When the middle class and politicians speak of "good jobs", they're talking about a kind of social contract that once existed in which if you graduated highschool and then showed up every day from 9-5 and pressed a button at the factory (semi-skilled labor) for 30 years, you would earn a house, a car, some children, and eventually a pension. These good jobs are now competing with China et al. for 50cents/hr.

2) Things are increasingly becoming financialized. Instead of buying something outright, you buy it with debt and then pay monthly instead of a lump sum. There's a high-finance(?) joke about how investing when it comes down it is about turning consumers into dependable cash flows. However, such a financial structure means that people start competing on monthly payment ability instead of savings. The lower the interest rates, the more expensive things get. Interest rates have been dropping for 30 years! So while 40 years ago, you might have have a 30 year fixed on your house as your only debt, now you finance cars, health care, education, appliances, and even everyday food on credit cards. The interest people pay is like the gravity holding them down. Here the squeeze is the fact that you never really own anything as much as your budget is comprised of multiple different bills. Your long term security of ownership is unobtainable.

3) College+ education is now necessary if you don't want a couple of part-time w/o benefits. This combines the two above. Education uses to be either unnecessary or cheap. Now, it's six-figures+. So you either have to be very rich to afford the ballet class, violin summer school, admission counseling, .... or very poor to get free scholarships. If you're in the middle, it'll still be five-figs per child. Now, it doesn't have to be that way, but seeing what student loans are, people stupidly pay for it. That's another bill to pay.

4) Everybody now has stuff because stuff is cheap. Houses, etc. and the general amount stuff has increased. It's true that if you live a 1950s lifestyle, it'll cost you less and you won't be struggling. But people can't help themselves. First they found meaning in competing with who could have the most or the nicest stuff. This is still ongoing. Some people realize the lack of meaning here and so they become minimalists, etc. and start competing elsewhere. Now, it's no longer about have the most stuff but the correct stuff. Your laptop must be a powerbook, your tshirt must all be made out of merino wool, ... your exercise must be yoga and you have to talk incessantly about your practices in mindfulness and how eating baby kale from whole foods makes you a healthier and better person. If you don't, you might have the education, but you're not a good fit for the startup culture, etc.

Yes, sure there are ways around all this, but those require a quantity and quality of diverse capital that did not use to be necessary 1-2 generations ago.

Riggerjack
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Re: Squeezed?

Post by Riggerjack »

Nationally, the share of adults in the upper-income tier increased from 17% in 2000 to 20% in 2014, a gain of 2 percentage points. 13 Meanwhile, the share of adults in the lower-income tier increased from 28% to 29%, an increase of 1 percentage point.
From campitor's link. That pretty much sums it up. The middle class is getting squeezed, and for every 1 that drops into the lower class income, nearly 3 go into the upper class income. If you think of this as a crisis, well, I am sure the book will reinforce that.

I didn't come from the middle class, and this deteriorating social contract we seem to collectively wring our hands about seems... Fictional? Mythical? I'm not sure of the right word, but somewhere in between urban legend and nursery rhymes.

I'm sorry the fiction that let's some people sleep well at night is fraying at the edges, but maybe clinging harder to the safety blanket isn't the best solution for adults.

We compete. We have always competed. We will always compete. Any "solution" that applies to those who don't compete well, under the current rules, but doesn't leave room for that competition, isn't a solution. It's a sad, soon to fail, safety blanket, thrown over the heads of people about to get clobbered. Maybe, if one considers the clobbering to be mandatory, this is supposed to be a kindness...

Alternatively, one could look at this as it is. The world is changing, as the world always has. In a changing world, the strategies a few generations old are not likely to be optimal.

My grand parents were raised as farm kids. They all got off the farm, got jobs or started businesses. This worked for all of them. My parents got jobs, never developed in demand skills, or learned to market the skills they had. This caused a lot of failure in my youth. But this strategy worked for many of their peers. It has worked for me.

But I wouldn't recommend it to anyone else. The OP posted a link to a book written to make people emote at the problem. Cool. Feel however you like about it, but if you want to do something, rather than feel something, then looking at the world the way it is, (rather than as it fails to conform to our wishes) seems a good start, and a rare approach.

BRUTE
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Re: Squeezed?

Post by BRUTE »

@DLj:

they haven't made Powerbooks for a while now :)

Riggerjack
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Re: Squeezed?

Post by Riggerjack »

If I make 10 dollars a year but live a nicer lifestyle than someone making 10,000 per year in the 1950s, then things are better. If I'm making more than the guy in the 1950's, but my standard of living is worse, and I don't have heating and plumbing, then things are worse.
Yeah, but if you write a book explaining that, I and a few others will read it.

Write a book talking about how "real people are struggling", and it will get pushed to the top of the NYT Best Seller list.

Fiction, with a bit of sympathy, and some justifiable outrage, just sells better.

prognastat
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Re: Squeezed?

Post by prognastat »

Unfortunately, people compare themselves to those very around them. They don't compare themselves to people in other times nor to people far removed geographically.

If they are doing as well or better than those around them things are good, if they aren't then they are doing bad.

IlliniDave
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Re: Squeezed?

Post by IlliniDave »

I didn't study this at length, but maybe the squeezed-outs might be drawn back in. I'm sure we could assert gray linings to any ray of sunshine, but at the moment the pool of opportunities seems to be expanding.

https://www.nytimes.com/2018/08/03/busi ... -2018.html

7Wannabe5
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Re: Squeezed?

Post by 7Wannabe5 »

@IlliniDave:

I think it has something to do with the high level of corporate debt in China.

classical_Liberal
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Re: Squeezed?

Post by classical_Liberal »

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Last edited by classical_Liberal on Fri Feb 05, 2021 12:36 am, edited 1 time in total.

jacob
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Re: Squeezed?

Post by jacob »

It's not that obvious. It depends on how you calculate CPI. For example, housing prices have nearly doubled (twice the consumption) in real terms even if we're talking the same house built in 1948. (House prices are a part of CPI ... but this does affect whether you rent or buy.)

See http://www.multpl.com/case-shiller-home ... -adjusted/

Campitor
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Re: Squeezed?

Post by Campitor »

This economist has some numbers on housing prices and house sizes throughout the years - pretty interesting: http://www.aei.org/publication/new-us-h ... y-doubled/.

7Wannabe5
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Re: Squeezed?

Post by 7Wannabe5 »

AC wasn't standard even in the 70s. IMO, there are some ways in which standard of living/quality of life have gone down since the 70s, and I remember my father thought the 40s were better than the 70s. For instance, everybody had more leisure time on average in the 70s, because most women didn't work.

Clarice
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Re: Squeezed?

Post by Clarice »

jacob wrote:
Sun Aug 05, 2018 2:27 pm
@Clarice - Here's your next book then https://www.amazon.com/dp/0691162735/
I've finished the book. Thanks for the recommendation. It's an interesting read. However, I wouldn't call "small things" described there as trends. Those are mostly temptations. I'd say middle class is being squeezed by the pincer grasp of bad economic trends (the ones that you summed up pretty well - financialization of many things and disappearing of good jobs) and the temptations from the upper class - violin lessons, Intelligentsia coffee, etc). You yourself got squeezed. ;) 1 jacob is not what it used to be. :shock: If ERE headquarters (why, WHY did you name it ERE, not FIRM - Financially Independent Renaissance Man, (and the hell with the PC police :twisted:)?) get squeezed what does it say about the rest of us?

IlliniDave
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Re: Squeezed?

Post by IlliniDave »

I think we'll have to be more precise in our language and clarify whether we are talking about nominal jacobs or real jacobs.

One thing that occurred to me as having changed in the ~35 years I've been paying attention is that at the start of that time the established middle class where I grew up was probably dominated by high seniority, skilled, blue collar workers, a good fraction if not a majority of whom were union workers. Through much of that time the the fraction of people who have earned college degrees has increased, meaning what now is the middle cohort defined by income percentile or per capita household income is probably composed more of the lower half of the white collar workforce. That could be connected with the substantial lifestyle creep of the middle class.

One thing that we need to deal with is that there is a significant fraction of the population that just isn't cut out to sit behind a computer all day. Humans by nature are builders/makers/maintainers of things and for people whose aptitude for adding value lies largely in that realm entrance into the US middle class is increasingly difficult. Mike Rowe has been talking about this for many years, specifically from the perspective of the stigmas that surround blue collar work and a system that defaults to steering young people away from it, often into chronic "underempolyment" accompanied by large debt. It's easy to see the visceral appeal of policies that seek to preserve and expand that corner of the landscape. Whether or not that fits with optimal macroeconomics I'm not smart enough to say, but at a lower level we can either displace that faction of the population wrt the workforce and relegate them to being a net drain on the system, or maintain enough breadth of opportunity to maximize the portion of the population that can contribute on the plus side of the ledger, even if it results in the perpetuation of enterprises that are seen as anachronistic (e.g., "manufacturing jobs"). It often gets framed as the middle class getting squeezed out, but saying a significant cohort of the iconic middle class have been discarded might be more accurate.

7Wannabe5
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Re: Squeezed?

Post by 7Wannabe5 »

IlliniDave wrote:One thing that we need to deal with is that there is a significant fraction of the population that just isn't cut out to sit behind a computer all day. Humans by nature are builders/makers/maintainers of things and for people whose aptitude for adding value lies largely in that realm entrance into the US middle class is increasingly difficult.
I agree, because I see all the kids who don't want to sit at their desks all day. However, I would note that in addition to the kids who would rather be helping the janitor haul boxes or boxing in the aisles, there are also kids who would rather be doing arts and crafts while gossiping, and the kid who already did a sloppy job getting mostly the right answers on her math paper and is hiding under her table reading a book. So, if not truly economically self-supporting, why should anachronistic blue collar work be subsidized in preference to pink collar work or liberal arts degree-based jobs? Is the core American values system more in alignment with paying people to dig holes and then fill them up, rather than paying people to make stuff with glitter glue and then give/throw it away, or paying a person to read from her latest book of poetry to a crowd of 5?

Like it or not,in the 21st century just about everybody sits or stands in front of a computer during their workday. Even a member of the glitter glue gang might need to learn how to program a sewing machine. The problem is that the lifestyle that the American middle or upper middle class enjoyed in 1958, which seems pretty basic to us now, because we are forgetting how a brand new black and white TV was the equivalent of the latest smart phone, can't easily be obtained by all of the 10 billion people projected to be sharing the planet by 2050.

I don't quite understand it yet, but based on what I have read, it comes down to the poor results obtained by printing money to cover decline in rate of innovation. One thing I really didn't like or agree with in the very long IDW discussion between Peterson and Weinstein posted elsewhere, was the statement that only the extreme outliers on the curve are capable of innovation. It makes sense that both of these gentlemen believe this because they both come from an academic background, where an artificial meritocratic structure defines innovation*. In the real world, if all 10 billion of us are going to achieve anything resembling 1958 American upper middle class lifestyle, we all need to take personal responsibility for being true innovators and not just dull, shuffling workers in search of a boss man with a wallet.

*nod to Taleb on the topic of "tinkering."

Also http://accelerating.org/articles/Innova ... SC2005.pdf

IlliniDave
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Re: Squeezed?

Post by IlliniDave »

I only highlighted the "blue collar" aspect because it is something I've thought about for many decades as a function of where I grew up. I'm sure it can be extended. You are correct that computers have become nearly ubiquitous, but if we decline to jettison all the opportunities where a computer is one of the tools in a pursuit that an individual might aspire too, we might find ourselves with a more productive overall society than if we try to herd all the glitter-and-glue or grease-under-the-fingernails leaning people into call centers to field customer complaints about their $200/mo cable TV service, or typing data into spreadsheets.

I don't think I can comment regarding your objection to Peterson and Weinstein because I don't know if I'm familiar with the conversation you are talking about, or even which Weinstein. But knowing those two (three) I'd suspect maybe you are extracting absolutes from within the context of a nuanced discussion and suggesting they were originally stated universally and axiomatically, which perhaps they weren't?

You close with the type of statement I alluded when I mentioned the stigma our culture likes to attach to degree-not-requited pursuits. Though it is not restricted to elites, quite a few of us (I include myself here) are not innovators by temperament or ability. Someone must fill in behind the innovators and actually turn the ideas into something tangible. Both/and is often better than either/or.

7Wannabe5
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Re: Squeezed?

Post by 7Wannabe5 »

IlliniDave wrote:You close with the type of statement I alluded when I mentioned the stigma our culture likes to attach to degree-not-requited pursuits. Though it is not restricted to elites, quite a few of us (I include myself here) are not innovators by temperament or ability. Someone must fill in behind the innovators and actually turn the ideas into something tangible. Both/and is often better than either/or.
Oh, I agree. I meant "do both" or more like "do all 3" since the "boss man" is also a needed component. I think the e-myth used entrepreneur, technician, and manager to describe the three basic roles needed for innovation to occur. These could all exist within one individual or self-aware partnership could produce the same results. However, I am suggesting that a flatter hierarchy might better serve. I would further note that there also social stigmas attached to entrepreneurial-type, such as "kooky" or "impulsive."
IlliniDave wrote:I don't think I can comment regarding your objection to Peterson and Weinstein because I don't know if I'm familiar with the conversation you are talking about, or even which Weinstein. But knowing those two (three) I'd suspect maybe you are extracting absolutes from within the context of a nuanced discussion and suggesting they were originally stated universally and axiomatically, which perhaps they weren't?
I am too lazy to search through the transcript, but at some point in the discussion with Eric Weinstein, Peterson says something about innovation occurring at the outer reaches of the curve of human competence, seemingly in support of "natural" , as opposed to overly regulated, formation of hierarchy. I did not get the impression that he was claiming to make an original point. More like he was tossing it out as a give, perhaps based on prior knowledge (and assumption that Weinstein shared this knowledge) of conclusion of paper by Jonathan Huebner linked above. IOW, Peterson was assuming a MORE elitist perspective than I am suggesting.
In conclusion, the evidence presented indicates that the rate of innovation reached a peak over a
hundred years ago and is now in decline. This decline is most likely due to an economic limit of
technology or a limit of the human brain that we are approaching. We are now approximately 85% of the
way to this limit, and the pace of technological development will diminish with each passing year. These
conclusions are controversial, but there are profound implications if they are true, and the following
questions are included for the interested reader to ponder:
! What are the implications for the economy, government and society of declining rates of innovation?
! What standard of living corresponds to the economic limit of technology?
! Will the level of technology reach a maximum and then decline as in the Dark Ages?
! Did the failure of ancient people to invent the printing press cause the Dark Ages?
! Are there any key inventions that could reverse the current decline in the rate of innovation?
! Are improvements in the flow and processing of information the primary sources for increases in the
rate of innovation?
! Are there any other reasons for the decline in the rate of innovation during the 20th century besides
the approach of an economic limit of technology or a limit of the human brain?

! What is the relationship between innovation and democracy?
! Does democracy depend upon innovation?
IOW, I am hopefully answering "Yes!" to Huebner's question I put in bold.
IlliniDave wrote:I only highlighted the "blue collar" aspect because it is something I've thought about for many decades as a function of where I grew up. I'm sure it can be extended. You are correct that computers have become nearly ubiquitous, but if we decline to jettison all the opportunities where a computer is one of the tools in a pursuit that an individual might aspire too, we might find ourselves with a more productive overall society than if we try to herd all the glitter-and-glue or grease-under-the-fingernails leaning people into call centers to field customer complaints about their $200/mo cable TV service, or typing data into spreadsheets.
I don't disagree, and I think Wendell Berry offered some good suggestions towards this in his essays on regional subsistence. However, I think somebody will have to take on the risk of directly investing in such enterprise, rather than simply investing in building walls to impede competition from elsewhere. IOW, keep it simple solution is to start a local business and hire some workers. First step to starting a business is coming up with an idea AKA innovation. Otherwise, you are just engaged in wishful thinking that "they" will do it for you.

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