Welcome to the Vitus Capital Blog!
Notes to myself, possibly of interest to others.
-- Bill Northlich

Monday, November 8, 2010

Does the Middle Class matter?

So, I've been ranting a lot in private and sometimes in this blog about the destruction of the Middle Class over the last few years and now we have destruction with a vengeance in the so-called recovery.  Why rant?  First, to see one's fellow citizens being ground down is terrible to this bleeding-heart liberal nee Republican.  But mainly, a healthy middle class has been thought to be central to a healthy democracy since Aristotle.  Practically, economic growth is found again and again to depend on a vibrant Middle Class.  So, these are things I believe.

Then, I read this post (via ckm at sar).  The article proposes that the middle class does not matter.  This recovery, though not strong, is nevertheless alive, and it is alive mainly among the richest 5% of the population which are 25% of the economy.

One only needs to look around.  Restaurants are, if not full, doing a lot of business.  On the weekends my up-scale shopping area, in downtown Walnut Creek, Ca., is full (but maybe not so much during the week).   Tiffany moved in a couple of years ago and seems to be doing fine.  There's an Apple store.  The usual suspects - Banana, Gap, Pottery Barn, etc are here, and Nieman Marcus is building a building.  In my relatively affluent, insular area, things seem sort-of normal.

So, the idea that the hoi-polloi don't matter may have some heft.  As shameful as the proposal may be, what if it works?  Forget stopping tax breaks for the rich, and pray that trickle-down economics works.  We'll go invest in the things that the rich want - Hmmm.  I think they want banks.  That is, the banks are doing and will continue to do very well.  Forget that most of them, if their assets were marked to market, are insolvent.  I digress...

Of course, the future is being mortgaged - not the way the Austerians posit, that we are taking on more debt than we can ever repay.  Rather, while we, as rich guys, go to restaurants and buy our toys, and, refuse to pay taxes, we are indeed mortgaging the future.  No education, healthcare, retirement, or infrastructure for those distasteful, unpleasant, old, out of work wastrels.  The heck with 'em.  Party on. Gaudiamus Igitur.  Carpe diem, quam minimum credula postero.

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