Posted by: Middleclass Search | August 21, 2014

Why the American Dream has gone away (Part 1)

For several years I have been looking at the American middle-class from the point of a system engineer trying to understand why middle-class wages have stagnated while corporate profits have increased.

Like any system capitalism can be looked at in various ways. We can divide a capitalist venture into three parts: the business part, which is the idea for a product or service and how it is developed and manufactured; the financial part, which is how the product or service will be financed and the consumer part, the user of the product or service. After World War II America created a unique capitalistic system that balanced the business/financial/consumer parts. In the middle-class Golden Age the American Capitalistic System was somewhat of a closed system. Businesses hired employees which they paid adequate wages so the employees had money to consume the products the businesses manufactured (creating demand) and also to purchase stock in the businesses. The system provided a strong middle-class. All three parts working in their own interest supported one another.

As the stability of foreign countries increased businesses that were having concerns because the scarcely of labor in America that was driving cost looked to moving jobs out of the country. Corporations soon realized that with globalization businesses could get labor, financial support and consumers from anywhere in the world. The need to court American workers was no longer needed they became just another resource. (See System model below.) The unique capitalistic system that created a strong middle-class and made the American Dream possible was destroyed.

Capitalistic System Model (The Golden age)

—–Business ———-Product or Service ————–Resources —————————————————————————————-Material . mostly from USA
—————————————————————————————-Machines
—————————————————————————————-Labor . USA Employees
—–Financial———-Sell Stock . USA Employees

——Consumer———-USA Employees

Figure 1

The model shown in figure 1, while very simplistic, helps explain several things. One thing it explains is the reason why many in the world dislike a capitalist system. In many parts of the world businesses go to a country remove natural resources using the countries citizens to supply the labor then take and use their profits elsewhere in the world leaving the country with nothing but depleted resources. The Important thing it explains is what happened to the American middle-class once businesses were no longer dependent on American employees to create the consumer demand there was no need to provide the strong middle-class.

Doing the Middle-classes Golden Age the political system established an environment that favored the Corporation with the concept that what was good for a corporations was good for the middle-class. In a global economy this is no longer true but many politicians still advocate and support the Corporation over that of the middle-class. Not needing the middle-class businesses began moving many of their cost to the employees and sometimes to the taxpayer. The two most obvious cost moved to the employee were retirement and healthcare. Dozens of other costs that are not so obvious were also moved; an example is keeping the cap on minimum wage which allows the corporations to pay employees below what it is required “to stay alive” which then forces the taxpayer to contribute to the employee welfare and indirectly to the corporations profit. Companies moved their corporate headquarters out of the US so they can lower their taxes but they still use Americans trade missions at foreign embassies to promote their businesses and still use America’s military might for “protection” in the foreign market area. The taxpayer now rewards these companies by allowing them the same privileges as corporations that remain in America and who pay their fair tax. There are many more open and hidden support that politicians have allowed corporations to pass on to the taxpayer. It is time for the politicians to change their priorities.

The above is a distillation of several larger essays. With the new political cycle beginning we need to look for candidates that believe in the American Dream for the Middle-class that want a country “of the people and for the people” and not a country of the Corporation. A country with a strong Middle-class will be able to adapt to the multitude of changes that will be required for our nation to survive. It starts with the belief that we can have a political system that works for the average individual and not just the wealthy, where political decisions are made for both the middle-class and corporations. It is easy in our busy lives to believe that we cannot influence an entrenched political system but in today’s world of instant communication, with a little effort from each of us we can breathe life back into the American Dream.

If you are interested in maintaining the American Dream and the American middle-class here are questions you may want to ask your candidate in the upcoming election.

1. Do you know what the middle-class wage should be in our district?
2. What are you doing to encourage businesses to pay employees a middle-class wage?
3. What are you doing to assure the tax rates paid by each citizen in your district are fair and equal?
4. Do you support increasing taxes on the upper ½ %? If no, why?
5. Do you support increasing the minimum wage so taxpayers do not support corporations that pay the minimal wage? If no, why?
6. Have you signed a pledge not to raise taxes? If yes why?

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