San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Wednesday, May 18, 2016

"Middle Class" Mythology

Last Friday's Denver Post featured a front page headline story entitled, "The Shrinking Middle."  The story was designed to inculcate fear in the minds of those who read it about an alleged sociological problem known as the "shrinking middle class."  This problem, which is certain to destroy life as we know it, can only be fixed if wise career politicians spend billions of taxpayer dollars on new programs designed to curb income inequality and revitalize the middle class.
There are lots of reasons given for why this horrible thing is happening to us.  Some groups say that profit seeking businesses have destroyed the middle class by shipping their jobs (how they came to own those jobs is never described) overseas.  In a similar vein some argue that manufacturing jobs, the backbone of the middle class I am told, have been destroyed by greedy corporations who move their manufacturing plants to countries where the labor is cheaper, thus increasing their immoral profits.  Others say that the tech boom has destroyed the middle class by creating an upper class populated with tech nerds and eggheads while leaving the common man behind.  The only way to solve this alleged problem is to raises taxes on the income of techies.  Still others, usually strident feminists, claim that the middle class is disappearing because women do not earn equal pay for equal work.  I like to dismiss them offhand since it gives me the opportunity to hear them shrieking in their shrill little voices about what a misogynist I am.  Boo Hoo.
All of the hand-wringing about the death of the middle class is an utter waste of time.  What the propaganda really boils down to is nothing more than various groups using the erroneous concept of a shrinking middle class to petition government for protected and privileged positions, all at taxpayer expense of course.  Let's consider the mythology of the shrinking middle class for a moment today.
The graph below illustrates income distribution in the Socialist Democracy of Amerika as of 2010.  Please note that the two bars at the extreme right of the graph represent a much larger slice of income than the remaining bars.  I suspect the graph was prepared in this fashion simply to keep it from running off the page to the right, although some suspicious folks believe it was crafted to make it appear as if the super-rich dominate the rest of us. 

https://upload.wikimedia.org/wikipedia/commons/0/0d/Distribution_of_Annual_Household_Income_in_the_United_States_2010.png

Notice that the median household income was $50,00.  Even a cursory glance at the above graph shows that income distribution in this immoral country is hardly along the lines of the classic bell curve.  That being the case, how is a person expected to define what the income parameters for the middle class should be?  Even slight adjustments to the right or the left derive vastly different numbers for who makes up the mystical middle class.  From a purely statistical perspective it would make sense to define the middle class as that 50% of the population that sits in the middle of the income population, regardless of the amount of income earned.  That would guarantee that the middle class always makes up 50% of the population while the upper and lower classes, where I generally find myself, would each have 25% of the income population assigned to them.  Then it would be a simple matter to determine the total income in each class by adding together the percentages for each group.
Applying that principle to the above chart shows me that the lower class goes from $0 to $25,000 in income, the middle class goes from $25,000 to $95,000 and the upper class goes up from $95,000.  But this simple statistical interpretation of income figures does not make for good propaganda.  For example, the newspaper story I mentioned above said, "Middle income households in metro Denver shrank from 58 percent of the population in 2000 to 53 percent in 2014....That shrinkage did not come primarily from households moving into higher income brackets but rather from more households moving into lower income ones."  How does the article define the middle class?  Household income between $42,000 and $125,000 is how the middle class is defined in Denver.  In a typically alarmist fashion the author of the article interpreted the statistics and concluded that, "one of the most disturbing findings in the study is even though the bar needed to enter the middle class dropped from 1999 to 2014, a smaller share of the population was able to cross it."  That observation can only be made if the interpreter first makes the decision to not use the middle 50% of the income population as the middle class.  In other words, the conclusion is already derived from the presupposition made at the start.
A elitist government economist is quoted responding to the new data about the shrinking middle class.  He said, "The middle class is shrinking, suicides and drug abuse are up, fertility has dropped precipitously, millions of college graduates are stuck at places like Starbucks, and home ownership is at a 48 year low."   Well there you have it.  The death of the middle class has brought about the death of us all.  The only way to solve the problem is to petition our rulers to create programs that will stop suicide and drug abuse, cause people to have more babies, give college graduates high paying jobs (and forgive their student debts) and force people to buy homes rather than rent.  Hummmm.....isn't that what Bill Clinton tried to do with his sub-prime mortgage scam?  How did that turn out?  Anyone recall the Great Recession?
Those who bemoan the death of the middle class love to tell us that the income earned by the remaining members of the middle class is shrinking as well.  That lost income is always described as moving upwards, to the evil and greedy members of the upper class who use their wealth and political power, as Bernie likes to describe it, to keep their boots on the throats of the workers beneath them.  One of the more popular graphs used to indicate this alleged reality is from the Federal Reserve.  Here it is:



This graph clearly illustrates that the median household income, in real dollars, has declined since it peaked in 1999, over sixteen years ago.  Surely the middle class is in serious decline.  What is not shown in the above graph is the fact that the reason for the decline in real median income per household is entirely due to the decline in the number of people that make up a household.  With more people choosing to live alone and more people choosing to live in sin (and file tax returns as singles) the number of people per household has declined.  The less people there are in a household the less income that the household will report.  A more accurate way to gauge the real income of the citizens of the SDA is to see it as a "per capita" figure.  Here is that graph:



Real income per capita has risen significantly since 1999 according to this graph.  I guess that is why nobody uses it.  Yes, it is true, the upper class earns a disproportionate share of that increase but, as they say, a rising tide lifts all boats.  Everyone is better off when real income rises.  It is only the sinful act of envy that takes good news about rising incomes and turns it into bad news about disproportionate shares of increase.
Another factor never considered by those who believe the middle class is dying is the fact that the population is aging.  As more and more people enter the retirement years the share of income earned by those formerly middle class folks often goes down, sometimes dramatically.  A family or person that previously was a member of the middle class is now listed as a member of the lower class and socialists clamor for politicians to do something about that fact even though the net worth of those retirees is often greater than those who remain in the middle class.  If a truly accurate picture of the middle class were to be created it would combine both income and net worth statistics, thus giving us a full picture of the financial status of each group.
Ultimately the middle class is a nonsense concept.   There is no reason why the middle class should be sacred.  There is no reason why the members of that class should see their incomes go in any particular way.  It is all just number crunching of one sort of another.  The only thing consistent in all of the smoke and mirrors about the shrinking middle class is the call for anointed government rulers to take money from the members of the upper income cohorts and give it, less 10% for handling, to the members of the lower income cohorts.  That, of course, has been going on for years.  There is a reason why the top 49% of the income population in this sinful country pays 98.5% of all federal income taxes.  Praise Bernie!

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