Archive

Reuters blog archive

from The Great Debate:

Despite stimulus, middle class still struggles

Photo

Five years ago Monday, President Barack Obama signed the signature economic proposal of his presidency, saying that the passage of the $787 billion economic stimulus package heralded the “the beginning of the end” of the Great Recession.

The president told a Denver audience that he was “keeping the American Dream alive in our time.” But for millions of Americans, he made things worse.

It is now clear that bold White House predictions about stimulus jobs “saved and created” were just a prelude to later pledges about keeping your doctors and falling premiums.

Equally maddening has been the president’s unwavering belief that an economic recovery could be engineered by Washington’s central planners. It’s as if he isn’t aware of the cynicism engendered by a stimulus bill that seemed to have been designed not so much on the basis of real need or an empirical study of what would actually help people get back on their feet, but on ideology and political connections.

from The Great Debate:

The middle class’s missing $1.6 trillion

Photo

The United States was the world’s first middle-class nation, which was a big factor in its rapid growth.  Mid-19th-century British travelers marveled at American workers’ “ductility of mind and the readiness…for a new thing” and admired how hard and willingly they labored. Abraham Lincoln attributed it the knowledge that “humblest man [had] an equal chance to get rich with everyone else.”

Most Americans still think of themselves as middle class.  But the marketing experts at the big consumer goods companies are giving their bosses the unsentimental advice that the middle class is an endangered species. Restaurants, appliance makers, grocery chains, hotels are learning that they either have to go completely up-scale, or focus on bargains for the struggling and budget-conscious.

from The Edgy Optimist:

The real future of U.S. manufacturing

Few topics have been more fraught than the fate of U.S. manufacturing. The sharp loss of manufacturing jobs since 2008 has triggered legitimate concern that America’s best days may have passed.

Even as recent leading indicators suggest more economic momentum, job growth remains at best sluggish and manufacturing has seen only marginal gains -- having shed more than two million jobs in 2008-2009, and millions more since the peak in the late 1970s. Manufacturing accounted for slightly less than 20 million jobs at the peak in 1979. Now it’s barely 11 million.

from The Great Debate:

IRS at 100: How income taxation built the middle class

Photo

Exactly a century ago, on October 3, 1913, President Woodrow Wilson signed the first modern federal income tax into law. The sky did not fall.

That may have surprised the eminences of the American plutocracy. For years they had predicted the most dire of consequences should the federal government begin taxing the incomes of America’s most comfortable.

from The Great Debate:

The real student loan crisis

A month has passed since Congress allowed interest rates on federal student loans to double for some borrowers, increasing the cost of their college educations by as much as $4,500. While the debate continues to focus on the interest rate for future borrowers, it is ignoring the larger problem with student debt: the more than $1 trillion that had already been borrowed before the interest rate debate. This existing debt will continue to drag down borrowers’ financial security, which in turn drags down the entire economy. By how much? Demos, the public policy group where I work, has just released a study that estimates the economic impact of the existing student debt burden, and finds that it may cost the country more than $4 trillion in lost economic activity.

This economic drag happens because student loan payments take a significant bite out of many borrowers’ incomes, causing them to delay or forego important purchases or investments. A recent study by the American Institute of CPAs found that 75 percent of student debtors had made personal or financial sacrifices because of their student loan payments. Forty-one percent have postponed contributions to retirement plans, 40 percent have delayed car purchases, and 29 percent have put off buying a house. The effects of delaying making these crucial investments early in borrowers’ lives, in turn, are magnified because of the amount that the lost home equity and investment returns would have compounded over their entire working lifetimes.

from The Great Debate:

Obama’s Plan: One Nation, Under Government

You’ve probably read that the series of speeches President Barack Obama started giving Wednesday are a “pivot” to the economy designed to rev things up. Well, they’re not. Obama’s speeches will be no less than the manifesto of a leftist president who plans to spend his remaining time in office installing as much of his big government “project” as possible by whatever means he can get away with.

If you got the wrong message, it’s because Washington reporters too often have a poor understanding of people who have a systematic philosophy and truly believe in what they are doing. Reporters,  focused on who is up this day and who’s down the next, have difficulty discerning the intent of someone like Obama -- who is thinking much more long term.

from Chrystia Freeland:

Mysteries of the middle class

If you are worried about the Western middle class - and we all should be - you may have started to have some doubts about the virtues of flexible labor markets. In theory, flexible labor markets should make our economies more productive, and all of us richer, by making it easier for people to do the work the economy needs and to stop doing the work it doesn't.

In practice, though, some economists who once championed flexible labor markets without reservation, like Daron Acemoglu of the Massachusetts Institute of Technology, have begun to have second thoughts. Acemoglu doesn't doubt the positive economic effects of flexible labor markets, but he has begun to be concerned about their political and distributional consequences. They might help the economy grow overall, but they may also be contributing to the hollowing out of the middle class by weakening its political bargaining power.

from Chrystia Freeland:

Matriarchy, patriarchy and the masters of the universe

The past week has underscored one more way in which the lives of the super-rich are diverging from the lives of everyone else: The middle class is becoming a matriarchy, while the plutocracy remains firmly patriarchal.

The sexist mores of the super-rich were exposed by one of that tribe's most prominent philanthropists, the hedge fund billionaire Paul Tudor Jones. At an April symposium at the University of Virginia, Jones said that women didn't trade as successfully as men because becoming a mother is a "killer" to professional focus. "You will never see as many great women investors or traders as men - period, end of story," he said.

from Chrystia Freeland:

Twilight of the middle class?

It's evening in America. That is the worrying news from the latest Heartland Monitor Poll, conducted quarterly and sponsored by the insurer Allstate and National Journal.

The researchers made a striking finding: The U.S. middle class, long the world's embodiment of optimism and upward mobility, today is telling a very different story. The chief preoccupation of middle-class Americans is not the dream of getting ahead, it is the fear of falling behind.

from Chrystia Freeland:

Technology, the economy and pool cleaning

One way to divide people is into foxes and hedgehogs. Another is into those who think this time is different and those who believe there is never anything new under the sun.

The latter split can be a matter of temperament, of politics or even of religion. But today it is relevant for another, more urgent reason: It describes how people think about the most critical economic problem in the industrialized world today — the dearth of well- paying middle-class jobs.

  •