Lou Dobbs; War on the middle class

[Jim Richards]

Originally posted by Saab Pilot
pitching his book, to the Middle Class, about the Middle Class, Dobbs "gets" money from the middle class.

With abundant food, shelter and plasma TV's, the American "Middle class" seems to be doing well.

If not the US, which nation has the best-off middle class?

WTF? Who should he pitch his book to? Or perhaps he shouldn't have written a book?

[Bill Verburg]

Originally posted by Saab Pilot
pitching his book, to the Middle Class, about the Middle Class, Dobbs "gets" money from the middle class.

With abundant food, shelter and plasma TV's, the American "Middle class" seems to be doing well.

If not the US, which nation has the best-off middle class?

But are things getting better or worse? There are already large sections of this country that many wouldn't want to go into because of the hopelessness and rage that is felt there.

[Superman]

I wonder how income is distributed. I'd like to see a chart where the x-axis is income and the y-axis is number of people earning that income. All income. And then I'd like to see one where the x-axis is "earned income" and another where the x-axis is "unearned income." I'm guessing there is some bi-modality there.

[Bill Verburg]

Originally posted by Saab Pilot
pitching his book, to the Middle Class, about the Middle Class, Dobbs "gets" money from the middle class.

With abundant food, shelter and plasma TV's, the American "Middle class" seems to be doing well.

If not the US, which nation has the best-off middle class?

In addition by that logic, one should eschew investing at Vanguard and avoid any of the excellent investment books authored by John Bogle

[RallyJon]

Not really much to say in the service vs. manufacturing discussion other than this isn't the 1970s and that boat sailed a long time ago (and it was filled with empty shipping containers).

We have gone from being a country of union drones to a country of entrepreneurs. Manufacturing is dwindling and the service sector is booming. Does "service sector" mean McDonalds to you? Maybe it does to the poster-child autoworker who went from earning $80k a year he most certainly wasn't worth to $18k a year he arguably is worth. More importantly, service sector also includes millions of six figure jobs for the bright, industrious and well-educated.

Again, look at GDP, look at unemployment as a whole, look at productivity growth. America and American workers are doing great. The smarter and more motivated they are, the better they're doing. The lower their horizon and the more they want to keep the status quo, the worse they're doing.

It is a non-productive discussion to harken back to fifty years ago when America built lots of low tech cars and worse, Americans actually had no choice but to buy them and drive them.

For every nostalgic whiner, shut off that big screen TV you got at Wal-mart for less than a 13" b&w cost twenty years ago and throw it out the window.

[Bill Verburg]

Originally posted by Superman
I wonder how income is distributed. I'd like to see a chart where the x-axis is income and the y-axis is number of people earning that income. All income. And then I'd like to see one where the x-axis is "earned income" and another where the x-axis is "unearned income." I'm guessing there is some bi-modality there.

I'll give you a hint, I don't have the dat in front of me but I have seen it, whether it is based on wealth or income, the vast majority goes to a small minority, there are still lots in the middle that have "enough" or "enough to get by" but there are many that are one misfortune away form destitution.

[vbaron]

It's not about having just enough to "get by". My father-in-law was an engineer back in the '60s. He could afford to send his family of five to Europe for one month. I am also an engineer (in management!) and I could never comtemplate sending my family of four ANYWHERE for a month!

My dollar buys so much less than it did in 2000. Taxes and prices keep rising faster than my salary. When does my standard of living start to increase and not decrease?

Additionally, you are missing the point of the article: Corporate America controls Congress. The amount of money being dumped into Congress by lobbyists is incredible. Both parties are to blame. These corporations funnel vast sums into politicians' pockets. If you get a chance watch Bill Moyers' report on the Abramoff-DeLay-Reed scandal on PBS. Fortunately, these scum b*st*rds were not careful and got greedy, otherwise they'd still be in business. But for the ones that get caught, there are so many others who are still in the business of selling legislation to the highest bidder.

Dobbs' has a good idea - register as an Independent. I'm going to look into it. Thanks Bill for the post.

[RallyJon]

My dollar buys so much less than it did in 2000.

A common perception. But it depends on what you're talking about. Most consumer goods are cheaper now than in the past, relative to function. Many people don't take into account how much better today's products are than in the past, thereby delivering much better value as in what you get for your money.

Also, our expectations have changed. Many people live within very modest means, but the quickest way to feel poor is to apply upper class standards to a middle class budget.

I went into a Wal-Mart the other day and bought a $40 child car seat. It'll go nicely alongside my fancy $200 car seat which is still not even close to the most you can spend. I walked by racks of pants and shirts for <$10. Amazing.

I can fly to Boston to visit my m.i.l. and pay less than friggin' bus fare! Not much more than gas and tolls if I were to drive!

Never in history have lower income Americans been able to afford so much STUFF.

[Moneyguy1]

Jon

Are you forgetting the increasing role of personal debt in order to maintain that "standard of living"? Personal finance and counseling was my stock and trade for years. Until you have sat down with hundreds of "middle class" families on the verge, you do not understand the depth of the problem.

There have been improvements in product quality, and reductions in actual cost, due to improvements in technology and differentials in manufacturing costs, particularly between America and Europe on one side, and The far and middle east on the other. Historically, as time goes by and labor in other countries improve their earnings, this differential will begin to disappear as it did between America and Europe. It is just a matter of time.

We could debate the goodness or badness of Wal-Mart until the cows come home, but the effect on the economy is not all good. There is a long range negative cost to low priced imports. The question is whether people really need all that STUFF.

[Nathans_Dad]

Ah, the victim mentality rears its ugly head again.

I strongly disagree with the idea that people have to use credit card debt to maintain their standard of living and thus are victims of the economy.

Case in point. My sister in law is a teacher. She certainly qualifies as middle class. She was living in an apartment and driving a 6 year old Isuzu Rodeo. She was living within her means. Since then, she traded in the Rodeo (which she had not yet paid off) for a new Jeep Wrangler. She also bought a house which was out of her budget. She goes on trips to Vegas and the Carribbean. When she talks to my wife, she always talks about how little money she has and how unfair it is that she doesn't make more money.

If you aren't making enough to pay your bills, as it is, the answer is NOT to say "well, I'm a victim. The economy sucks. I'm going to use my credit card to keep living the way I want to". The answer is to tighten your belt and live within your means. If you are so poor that you cannot afford food, water, and shelter then you should be on welfare and food stamps.

I call BS on this idea of poor middle class who has to use their credit cards because they aren't making enough.

[RallyJon]

I think it's important not to confuse people who are "in trouble" for whatever reason. Sure, if you make $50k a year and have $100k in credit card debt you won't likely be able to maintain a show-offish standard of living. But how about if you make $50k a year and live within your means? I contend that you can experience a better standard of living today than 30 years ago (inflation adjusted of course).

[Bill Verburg]

I agree that we have become an extremely materialistic society, especially many members of the younger generations, they take it for granted that they will have a car, cell phone, high end TV, high end stereo,high end computer and thrice annually vacations to Hawaii or Cancun and be CEO by the time they are 30 retired by 40.

Nevertheless that is only part of the issue, I am thinking about all the people that do have a job, go to work every day and work hard, but still can't get ahead, manage to build a nestegg etc.

Mean while the good folks in Washington and many state capitols enact legislation at the for and at the behest of their corporate masters all the while feathering their own nests and living by their own imperial rules.

[vbaron]

So I'm reduced to shopping at Wal-Mart? Can't shop at Macy's any longer for better made goods? My standards are being lowered, not raised. Products are cheaper - not better. Things are designed to last and/or be functional for only a short finite period. Yes, maybe they have more function, but they are purposely outdated as soon as they hit the streets.

And I'm talking about the price of basic goods - not luxury items. Prices are out pacing salaries. That's reality - not perception.

[Moneyguy1]

Rick

You are arguing from the specific to the general..A poor method at best and generally leads to flawed conclusions. As I said, you are in the higher income group and really have a difficult time identifying with those "less fortunate". Your sister in law is only one case but to some extent reflects the problem. Why should she not have a few of the luxuries she sees you and your family having?

Others say that is irrelevant. But, in the 60s and 70s, a single wage earner could afford a home, a car or two, a color TV and other luxuries of the time. For most people today, this is difficult to impossible.

Really never mind...it is simply that I have counselled HUNDREDS of individuals who have overextended themselves. I think that gives me a bit more insight into the severity of the problem.

[RallyJon]

See, we live in a world where consumers are so influenced by media that they feel inadequate if they don't have a polo pony on their shirt. If you could buy clothes at Macy's before, you still can. But if you can't afford to buy clothes at Macy's you can still buy perfectly good clothes elsewhere, so don't run up your credit card trying to fit some media-imposed fashion stereotype.

Having more than a passing familiarity with the rag trade, I can tell you that there is a huge amount of supply chain markup on any brand name apparel you buy at Macy's. So congrats, you've been fooled into transferring your limited spending money right into the bottom line profit of those big businesses that are destroying America.

[RallyJon]

I'm going to follow this media idea a bit further: as MTV et al gets into every corner of the country, people have lost perspective as to what's appropriate in terms of spending.

A poor country kid sees coastal rap stars and their fans that dress just like them, and wants to emulate that. Well, you dumb hick, put on your jeans and go milk the cows, that's not for you.

A middle class family in an affluent area wants to buy a house, but they all cost $500k+. If you want to live in urban CA, or northern NJ, or suburban DC, sorry--you don't get a 4 bedroom house on an acre with a picket fence.

It's like if you lived in a town with all Mercedes dealerships--you'd think you couldn't own a car because you can't spend $70k.

Just because people have increasingly unrealistic expectations foisted upon them from external influences, doesn't change their financial reality. So even when they can afford to live quite well, they feel poorer because they can't afford to live as well as their expanded perception tells them they should.

[Moneyguy1]

On the role of media and advertising we agree. We live in a generation of instant gratification, and I see no end to it. Can you even buy a car today without what was a luxury package twenty years ago? Also blame the credit industry, touting easy money. Blame the financial institutions for the creative financing schemes so prevalent today.

Blame the public for being so gullible.

[vbaron]

You still have it wrong RallyJon. My family and I are not "gotta have" types. No big screen TVs, no useless gadgets of the hour, consequentially no huge debt. We make informed, thought out purchases. And still can only tread water. Forget about saving for retirement, we can barely afford today! Why can't I afford to buy better made goods at Macy's? Instead I have to go shop at the stores that have historically been associated with lower incomes! Yep, things are getting better!

[Nathans_Dad]

Originally posted by Moneyguy1
Rick

You are arguing from the specific to the general..A poor method at best and generally leads to flawed conclusions. As I said, you are in the higher income group and really have a difficult time identifying with those "less fortunate". Your sister in law is only one case but to some extent reflects the problem. Why should she not have a few of the luxuries she sees you and your family having?

Ummm, because she can't afford them? I have a friend who inherited a trust fund and has millions of dollars to her name. She gets to buy stuff and do things that I cannot. Is that somehow unfair to you?

Originally posted by Moneyguy1
Others say that is irrelevant. But, in the 60s and 70s, a single wage earner could afford a home, a car or two, a color TV and other luxuries of the time. For most people today, this is difficult to impossible.

Maybe where you live, not here. A single wage earner here in Texas can afford a car, a house or apartment, etc. Can they afford a house in California? Nope. Solution? Don't live in California. Home ownership is at an all time high, how do you get that it is "difficult to impossible" for "most" people?

Originally posted by Moneyguy1
Really never mind...it is simply that I have counselled HUNDREDS of individuals who have overextended themselves. I think that gives me a bit more insight into the severity of the problem.

Maybe you do have more insight into the specifics of how people get into debt. My position is simply that it is the individual's responsibility to manage their own finances. If you can't afford cable, put up the rabbit ears. If you can't afford a new car, buy a used one. If you can't afford to eat out, mac and cheese or TV dinners. This mentality that "oh poor me, I can't buy that big screen TV...I'll just put it on my mastercard" is exactly why people get into debt problems. You should know that more than most.

[Moneyguy1]

Rick
Yes, I also know people with huge resources. I do not envy them; they have different problems than I do. But on the other end of the spectrum, there are those who see folks with newer cars, this gadget or that gadget and wonder why they themselves cannot have the same? They are not thinking logically, on that we can agree. Read my post above about where at least some of the responsibility lay for the current situation. OTOH, I see retirees who saved, planned, went without and are, through no fault of their own, one step away from Alpo instead of Dinty Moore. They aren't looking for "niceities", they are simply wanting to survive.

Education for the younger consumerss is a partial answer. Schools should mandate courses in what used to be called "home economics" and teach some degree of responsibility. How many college students graduate with the double whammy of student loans and a huge credit debt because no one educated them in the dangers of poor credit choices?

Yes, I understand the reasons. The reasons are not as important as the solutions necessary to change people's expectations. What you say makes sense in a perfect world, populated with informed consumers, but that world is not what is presented by financial institutions and retailers. Until that educational element is added to the mix, the problem will continue to grow, tossing more people into bankruptcy, thereby increasing the cost of goods and services to all of us.

I not only point out that there are problems, I also try to suggest solutions, or at least something that can be discussed.