Equal Opportunity Ire

3 Responses to “Equal Opportunity Ire”

1. Don Quijote says:

   December 17, 2008 at 10:22 am

   Every American who insisted on living beyond his/her means.

   HORSESHIT!!!

   The Middle Class on the Precipice
   

   Blaming the family supposes that we believe that families spend their money on things they don’t really need. Over-consumption is not about medical care or basic housing; it is, in the words of Juliet Schor, about “designer clothes, a microwave, restaurant meals, home and automobile air conditioning, and, of course, Michael Jordan’s ubiquitous athletic shoes, about which children and adults both display near-obsession.” And it isn’t about buying a few goodies with extra income; it is about going deep into debt to finance consumer purchases that sensible people could do without.

   But is this argument true? If families really are blowing their paychecks on designer clothes and restaurant meals, then the household expenditure data should show them spending more on these frivolous items than ever before. But the numbers don’t back up the claim.

   A quick summary of the data from the Bureau of Labor Statistics’ Consumer Expenditure Survey paints a very different picture of family spending. Consider what a family of four spends on clothing. Designer toddler outfits and $200 sneakers are favorite media targets, but when it is all added up, including the Tommy Hilfiger sweatshirts and Ray-Ban sunglasses, the average family of four today spends 33 percent less on clothing than a similar family did in the early 1970s. Overseas manufacturing and discount shopping mean that today’s family is spending almost $1,200 a year less than their parents spent to dress themselves.

   What about food? Surely, families are eating out more and buying shopping carts full of designer water and exotic fruit? In fact, today’s family of four actually spends 23 percent less on food (at-home and restaurant eating combined) than its counterpart of a generation ago. The slimmed-down profit margins in discount supermarkets have combined with new efficiencies in farming to cut more costs for the American family.

   Appliances tell the same picture. There is a lot of complaining about microwave ovens and espresso machines: Affluenza rails against appliances “that were deemed luxuries as recently as 1970, but are now found in well over half of U.S. homes, and thought of by a majority of Americans as necessities: dishwashers, clothes dryers, central heating and air conditioning, color and cable TV.” But manufacturing costs are down, and durability is up. Today’s families are spending 51 percent less on major appliances than their predecessors a generation ago.

   This is not to say that middle-class families never fritter away money. A generation ago, big-screen televisions were a novelty reserved for the very rich, no one had cable, and DVD and TiVo were meaningless strings of letters. So how much more do families spend on “home entertainment,” premium channels included? They spend 23 percent more—a whopping extra $180 annually. Computers add another $300 to the annual family budget. But even that increase looks a little different in the context of other spending. The extra money spent on cable, electronics, and computers is more than offset by families’ savings on major appliances and household furnishings alone.

   The same offsetting phenomena appear in other areas as well. The average family spends more on airline travel than it did a generation ago, but less on dry cleaning; more on telephone services, but less on tobacco; more on pets, but less on carpets. When we add it all up, increases in one category are offset by decreases in another.

   So where did their money go? It went to the basics. The real increases in family spending are for the items that make a family middle class and keep them safe (housing, health insurance), that educate their children (pre-school and college), and that let them earn a living (transportation, childcare, and taxes).

   The data can be summarized in a financial snapshot of two families, a typical one-earner family from the early 1970s compared with a typical two-earner family from the early 2000s. With an income of $42,450, the average family from the early 1970s covered their basic mortgage expenses of $5,820, health-insurance costs of $1,130 and car payments, maintenance, gas, and repairs of $5,640. Taxes claimed about 24 percent of their income, leaving them with $19,560 in discretionary funds. That means they had about $1,500 a month to cover food, clothing, utilities, and anything else they might need—just about half of their income.

   By 2004, the family budget looks very different. As noted earlier, although a man is making nearly $800 less than his counterpart a generation ago, his wife’s paycheck brings the family to a combined income that is $73,770—a 75 percent increase. But higher expenses have more than eroded that apparent financial advantage. Their annual mortgage payments are more than $10,500. If they have a child in elementary school who goes to daycare after school and in the summers, the family will spend $5,660. If their second child is a pre-schooler, the cost is even higher—$6,920 a year. With both people in the workforce, the family spends more than $8,000 a year on its two vehicles. Health insurance costs the family $1,970, and taxes now take 30 percent of its money. The bottom line: today’s median-earning, median-spending middle-class family sends two people into the workforce, but at the end of the day they have about $1,500 less for discretionary spending than their one-income counterparts of a generation ago.

   If you want to blame somebody, blame people who voted for small government & cheap labor conservatism, in other words REPUBLICANS.
2. Michael Merritt says:

   December 17, 2008 at 11:44 pm

   I'm not sure why you're back down on your argument Liberal partisans are always going to blame Republicans, no matter what. People who've lived beyond their means are not the only party to this mess, but they are a party. And they're at least in the top 3.
3. Don Quijote says:

   December 18, 2008 at 9:45 am

   UPDATE: Perhaps ranking profligate borrowers and buyers in the number-one spot was a bit harsh/unfair. So, let’s move them down a notch … or nine. But they still deserve a place on the list, despite the hysterical objections of a certain commenter to this post.

   No, it's more of a case of blaming the victim i.e. Woman gets raped, it's her fault, if she had not been wearing a skirt and walking down the street in broad daylight it would not have happened.

   The reason the Middle Class is in trouble can be boiled down to four factors, all of which are dependent on Public Policy:

   Housing: The price of housing has been going up much faster than the rate of inflation for the last thirty years, and the education policies that we have pursued has made housing even more expensive (People will pay through the nose to get their kids in a good school district), low interest rates and the removal of the 20% down payment requirement.

   Health Insurance: The cost of health insurance has substantially grown faster than the rate of inflation for the last 30 years, the deductibles have gone up every year and the proportion of the insurance premium paid by the employer has gone down every year.

   Education: The cost of College has also gone up every year faster than the rate of inflation. (Tuition at Utica College in Utica, New York, cost $4,014 for the 1980-1981 school year. The cost for the 1999-2000 year was $16,150. This kind of increase is not unusual on a national basis.) And you ain't getting a job that pays a living wage without a Bachelor's degree.

   Cheap Labor Conservatism: driving down wages any which way you can, outsourcing, importing trained labor trough H1B, not enforcing immigration laws so that undocumented aliens can increase the size of the workforce, killing welfare to increase the size of the workforce, busting Unions left and right to keep wages low. The results are in, who do you think American Consumers are if not American Workers?

   All of these cost have been going up while wages have been stagnant for the last thirty years, all of the benefits of economic growth have gone to the top 5% of the population. If there is someone to be blamed for this state of affairs it's the American voter, and even there, it's not entirely his fault.

   Garbage in, Garbage out:
   The mass media is the guilty party, they have spent the last thirty years misinforming the American Public about the world at large, they spend more time discussing Madonna, Britney & Paris Hilton lifestyle and affairs than they do discussing Pubic Issues or Business, and when they do discuss public issues, they lie though their teeth or just discuss irrelevant issues, case in point 2000 Election, they spent 2000 making fun of Gore, discussing whether or not he should wear earth-tones, whether or not he sighed to much at the debates, repeating debunked lies (Invented the Internet, love canal or love story). So how has that worked out? Having trashed Gore, Bush got close enough to steel the Presidency with a little help from the Supreme Court, eight years later the national debt has doubled, the poverty rate has gone up, every social indicator of well-being is down, the Stock Market has been flat for the last eight years, we are in the process of losing two wars simultaneously, but the wealthy are wealthier than ever.

   Now it's no surprise, that the media did a crappy job of reporting the facts and discussing the issues, they are owned and controlled by the top 5% of American society and the last thirty years have been great for them.