Forum Post: Discuss Elizabeth Warren's "The Coming Collapse of the Middle Class"
Posted 12 years ago on Jan. 14, 2012, 3:21 p.m. EST by Rico
(3027)
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The video at http://youtu.be/akVL7QY0S8A captures Ms. Warren's arguments that today's middle class is exposed to excessive risk. Her talk actually starts at the 6:20 mark and runs for about an hour past that mark.
I would like to hear other people's opinions and insights, so I will not post mine here. Instead, I will post mine as a comment below just as I ask others. Please do comment, however, if you haven't yet had the time to view the video.
Before reviewing my remarks, I think it's important people understand my leanings. Per the test at http://www.politicalcompass.org/index , my Economic Left/Right score is -1.5 and my Social Authoritarian/Libertarian score is -1.59. These scores identify me as one of those "in the middle."
I found the unspoken premise of Ms Warren's talk to be slightly offense. In my opinion, she is presenting the differences between the median family of the 1970's and that of the 2000's to illustrate a problem then assigning the differences purely to factors beyond the modern family's control, and this premise is what underlies the idea that government should step in.
I feel Ms Warren assigns too little weight to the decisions made by the family. In discussing the generation of the 70's she is discussing one that still retains contact with the values of the WW II (parents) and Depression (grandparents) generation. Key among these values is thrift. The children of the boomers who occupy homes in the 2000's have not had much exposure to this value. In fact, their boomer parents are well known to have attained the pinnacle of consumerism. At the same time, the bloomers created the modern "Cult of Self" esteem which praises all, shames none, and thus promotes a sense of entitlement that was alien to the prior generations. I believe these shifting values have a very significant role in the changes she describes.
I also beleive that Ms Warren, by not digging too deeply into the fact that two income families do not earn twice that of the prior generation's single income family, she is tacitly acknowledging that there is a reason that has nothing to do with unfairness; when a society decides to double it's workforce virtually overnight without a corresponding doubling of GDP, wages naturally fall. Ms Warren introduces another factor; that two income families incurr a significant cost in childcare that offsets the income gains of the two income family.
All my criticisms aside, however, Ms Warren makes a very effective argument that modern families suffer from much higher economic risk than families of the prior generations. The economy adapted to all the excess labor with lower wages which in turn means both parents must work. This is not a zero sum game. Assuming an equal probability of illness or job loss, the two income family is twice as vulnerable to bankruptcy due to these factors as before. In regards illness, Ms Warren rightfully argues that the factor is likely greater than two as serious illness of a child can force loss of income by a caregiving parent. I think he makes some very good points here that I had never thought of before.
Ms Warren also delves down into the other pressures now placed on the modern family. We now "require" 2 years of pre-school, 12 years of K-12, and 4 years of college to enter the middle class workforce, and the extra 6 years are paid by the family at great expense. She also point out that the cost of insurance has gone up while the coverage has gone down which also introduces stress. Finally, she points out that the defined benefit pension has gone, and families are now required to provide for their later years. These pressures, combined with those inherent to her core argument, put the modern family at great risk. Good points all.
Ms Warren says the middle class is rapidly splitting into an Upper and Lower class based purely on 'luck.' Those two income families who do not suffer job loss or significant illness generally graduate to the upper class while those who do suffer these events tend to fall to the lower class. In essence, she is simply saying that modern families suffer from higher risk, and it's hard to argue with her logic.
Ms Warren never delves into the solutions, but it's pretty clear to me that she's advocating government expand the safety net. I agree the safety net needs to be expanded to counter the increased risk she identifies, I'm just not too sure the government is the right agent.
While Ms Warren's implicit solution revolves around expansion of government, I believe family and community provide a more effective safety net.
I believe charity is best when it is managed locally. When we attempt charity at the federal level, we create a system that cannot be monitored, is ripe with abuse, and fosters an entitlement mentality. Under the government approach a neighbor who goes on welfare, unemployment, medical disability, etc. can do so without the knowledge of the community. Thus, policing of abuse falls to the government, and that's very hard to do. When a community provides charity, they do so with knowledge and insight into the character of the applicant, and this prevents abuse. Furthermore, when we are helped by community, our ties to the community are strengthened, and we are more likely to return the charitable feeling to others in need. This strengthening of connections and "pay it forward" attitude do not emerge under federal programs.
I also believe we dismantled the extended family prematurely. The idea that parents and grandparents should be 'discarded' and cared for by others is a relatively new perspective in the history of man. Many of the very problems identified by Ms Warren can be addressed, for example, by bring a grandparent into the home. Fortunately, it appears the problems Ms Warren identifies may be pushing America back to the extended family. In a recent new broadcast, a builder in Florida identified homes with a 'granny apartment' as being the most popular design. These apartments are incorporated directly into the home design but have a private entrance an exit. The broadcast discussed these arrangements with a few families who had adopted it, and it's clear that they found the presence of a grandparent to be a form of economic and social contract; we will provide housing and a sense of family in exchange for the stabilizing income, childcare, etc. you provide. To me, it's astonishing that we are having to 'relearn' the value of the extended family, but I'm happy to see they are returning.
In summary, I think Ms Warren gives too little weight to the value shift away from thrift toward consumerism, conveniently sidesteps the discussion of how a doubling of the workforce affects wages, and I think community and family based solutions are more effective than federal solutions. Nevertheless, I think Ms Warren makes some very important points, and found her talk educational and enlightening.
I'm so glad you wrote about this. Sorry I didn't respond earlier. I get easily distracted. : )
I took the test too. I know I've taken it before but couldn't remember my score. I'm Economic -3.88, Social -3.08.
To your first point, I didn't have the feeling she was saying the government should step in necessarily. I took it that governments policies are a factor in the difference between the two time periods. The idea of government stepping in is to make things right again.
I agree with you about consumerism, some personal choices are at fault. There was certainly too high a personal debt level even before the housing bubble. If individuals don't learn their lesson about consumerism and excessive debt we can't very well expect Wall Street, which I consider the epicenter of greed, to learn their lessons either.
2 income households are not earning twice as much, I agree. That is part of the problem. But they are working twice as hard.
Rather than a government safety net, why not a change in tax policies? "Taxes are what we pay for civilized society", reportedly said by Oliver Wendell Holmes in a speech in 1904. Also the book by Jeffrey Sachs "The Price of Civilization", whose title was inspired by the Holmes quote, speaks to these problems and the effects on society more so. Or even further subsidies for college education?
I think the extended family has suffered from geograph location. People make job changes, get transferred, sometimes multiple times within their careers.
I have to disagree with you about community, charity and family based solutions. I'm all for that, but I don't think it could possibly be enough to correct for the income/wealth disparity.