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Shifting our course to build up the middle class

By Mary Barker

For the Deseret News

Published: Friday, May 2 2014 12:00 a.m. MDT

If we weren’t so blinded by the mythology (and perhaps the fact that many of us are still doing well), we’d react to the tremendous changes that have taken place in the economy.

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In "The 7 Habits of Highly Successful People," Stephen Covey shares the story of a seaman training in foggy weather. Suddenly, a light is seen in the distance and the crew realizes that they are going to collide with another ship, so the captain sends it a message telling it to change course. The answer advises the captain to do so instead. Irritated, the captain sends a stronger message, pulling rank and ordering the ship to turn. A lowly seaman second class replies, and again advises the captain to turn. Livid, the captain sends a final message “I’m a battleship. Change course,” to which the reply comes, “I’m a lighthouse.” The captain turns his ship.

We, the American public, are that captain. We are wedded to an idea about how the economy works that is leading us on a collision course with reality. Of course, our vision isn’t completely wrong, which is why the landscape is foggy. But we wouldn’t be courting disaster if we weren’t so entrenched within a simplistic view of capitalism that tells us its pristine form is rational, rewards the industrious and punishes the lazy, and has been the key to American greatness and our leadership of the world.

The answer, of course, isn’t communism (the capitalism-communism dichotomy, itself, comes out of the simplistic view), but rather a more sophisticated appreciation of the conditions under which capitalism serves us.

Like all simplistic views, ours contains much that is true. Capitalism has created modern wealth both here and abroad. But unregulated free-market capitalism creates not the American greatness to which all others once aspired, but rather the world of Charles Dickens, with hardworking, exploited and impoverished Oliver Twists and a tiny middle class, many of whom are shivering Bob Cratchits.

The large and prosperous American middle class of the 20th century was born of the mixed economy, combining market competition with strong unions, genuinely progressive taxation, and a robust welfare state that captured the dynamism of capitalism while curbing its irrational and exploitative tendencies. Moreover, today’s capitalist successes are as much the product of crony capitalism (government intervention in the form of subsidies, bailouts and political favors to powerful corporations and finance) as they are hard work and innovation. Of course, that is likely not true of anyone reading this paper; Utah is fairly far removed from the halls of power, and our small businesses are as squeezed as anyone.

If we weren’t so blinded by the mythology (and perhaps the fact that many of us are still doing well), we’d react to the tremendous changes that have taken place in the economy that not only affect our present employment and standards of living but also the possibility of future growth and even the survival of democracy.

How close are we to Charles Dickens’ world? Well, the top 20 percent of us owns 89 percent of the wealth while the bottom 80 percent of us get by on just 11 percent. There hasn’t been a gap this big since the Gilded Age, and it’s getting bigger. Are we really going to say that it’s all due to laziness, single mothers and illegal immigrants?

Of course, I can’t begin to do justice to the extent of wealth inequality in one column, especially concerning the much discussed 1 percent and those at the very bottom, so I’ll refer you to a must-see, six-minute presentation on YouTube by a Harvard economist. The video is titled, “Wealth inequality in America,” and it begins, “There’s a chart I saw recently that I can’t get out of my head.”

What have been the effects of such staggering inequality? Slashed wages and benefits; a sinking middle class; rising insecurity; and hunger in the world’s wealthiest country. Moreover, we no longer lead the world in the things that count. Our peers have a healthier and better-educated citizenry and offer them greater economic mobility, all while working fewer hours. The so-called socialist states of Europe (that are really capitalist) beat us across the board on all markers of the once vaunted “American dream,” and it was recently revealed that Canada now has a wealthier middle class (after taxes). Moreover, we are losing our democracy to money. Princeton and Northwestern say we’re an oligarchy.

Who would’ve predicted that 30 years after the Cold War the victors would be in such a state? We aren’t in this state because we were wrong, however, but rather because we have lost who we once were. Time to change course.

Mary Barker teaches political science in Salt Lake City and Madrid, Spain.

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