A new book by economist Peter Temin finds that the U.S. is no longer
one country, but dividing into two separate economic and political
worlds
You’ve probably heard the news that the celebrated post-WW II
beating heart of America known as the middle class has gone from
“burdened,” to “squeezed” to “dying.” But you might have heard less
about what exactly is emerging in its place.
In a new book,
The Vanishing Middle Class: Prejudice and Power in a Dual Economy,
Peter Temin, Professor Emeritus of Economics at MIT, draws a portrait
of the new reality in a way that is frighteningly, indelibly clear:
America is not one country anymore. It is becoming two, each with vastly
different resources, expectations, and fates.
Two roads diverged
In one of these countries live members of what Temin calls the “FTE
sector” (named for finance, technology, and electronics, the industries
which largely support its growth). These are the 20 percent of Americans
who enjoy college educations, have good jobs, and sleep soundly knowing
that they have not only enough money to meet life’s challenges, but
also social networks to bolster their success. They grow up with parents
who read books to them, tutors to help with homework, and plenty of
stimulating things to do and places to go. They travel in planes and
drive new cars. The citizens of this country see economic growth all
around them and exciting possibilities for the future. They make plans,
influence policies, and count themselves as lucky to be Americans.
The FTE citizens rarely visit the country where the other 80 percent
of Americans live: the low-wage sector. Here, the world of possibility
is shrinking, often dramatically. People are burdened with debt and
anxious about their insecure jobs if they have a job at all. Many of
them are getting sicker and dying younger than they used to. They get
around by crumbling public transport and cars they have trouble paying
for. Family life is uncertain here; people often don’t partner for the
long-term even when they have children. If they go to college, they
finance it by going heavily into debt. They are not thinking about the
future; they are focused on surviving the present. The world in which
they reside is very different from the one they were taught to believe
in. While members of the first country act, these people are acted upon.
The two sectors, notes Temin, have entirely distinct financial
systems, residential situations, and educational opportunities. Quite
different things happen when they get sick, or when they interact with
the law. They move independently of each other. Only one path exists by
which the citizens of the low-wage country can enter the affluent one,
and that path is fraught with obstacles. Most have no way out.
The richest large economy in the world, says Temin, is coming to have
an economic and political structure more like a developing nation. We
have entered a phase of regression
, and one of the
easiest ways to see it is in our infrastructure: our roads and bridges
look more like those in Thailand or Venezuela than
the Netherlands
or Japan. But it goes far deeper than that, which is why Temin uses a
famous economic model created to understand developing nations to
describe how far inequality has progressed in the United States. The
model is the work of West Indian economist W. Arthur Lewis, the only
person of African descent to win a Nobel Prize in economics. For the
first time, this model is applied with systematic precision to the U.S.
The result is profoundly disturbing.
In the Lewis model of a dual economy, much of the low-wage sector has little influence over public policy.
Check. The high-income sector will keep wages down in the other sector to provide cheap labor for its businesses.
Check. Social control is used to keep the low-wage sector from challenging the policies favored by the high-income sector.
Mass incarceration - check. The primary goal of the richest members of the high-income sector is to lower taxes.
Check. Social and economic mobility is low.
Check.
In the developing countries Lewis studied, people try to move from
the low-wage sector to the affluent sector by transplanting from rural
areas to the city to get a job. Occasionally it works; often it doesn’t.
Temin says that today in the U.S., the ticket out is education, which
is difficult for two reasons: you have to spend money over a long period
of time, and the FTE sector is making those expenditures more and more
costly by defunding public schools and making policies that increase
student debt burdens.
Getting a good education, Temin observes, isn’t just about a college
degree. It has to begin in early childhood, and you need parents who can
afford to spend time and resources all along the long journey. If you
aspire to college and your family can’t make transfers of money to you
on the way, well, good luck to you. Even with a diploma, you will likely
find that high-paying jobs come from networks of peers and relatives.
Social capital, as well as economic capital, is critical, but because of
America’s long history of racism and the obstacles it has created for
accumulating both kinds of capital, black graduates often can only find
jobs in education, social work, and government instead of higher-paying
professional jobs like technology or finance— something most white
people are not really aware of. Women are also held back by a long
history of sexism and the burdens — made increasingly heavy — of making
greater contributions to the unpaid care economy and lack of access to
crucial healthcare.
https://www.ineteconomics.org/perspectives/blog/america-is-regressing-into-a-developing-nation-for-most-people
