[Big Red]

http://finance.yahoo...ml?tickers=^DJI,^GSPC,SPY,MCD,WMT,XRT,DIA

[Holloweaver]

i don't think it's only the middle class in Amrica...

overhere we have something like an index of how much more expensive life is getting,
based on the rise of prices of basic needed things,
last year that index had the reverse effect, instead of a raise we got a 0,4% less on our paycheck.

it seems that the prices still go up though, even those of products that come from the east,
increases of 15% are verry common on those ones... but i doubt that the poor labor workers themselves see any dime of it.

[brian]

Yeah, the income disparity in America is appalling and it's not exactly getting better. It has just become too easy for the upper classes to entrench themselves in ever-improving positions of wealth and power. To me, it's largely a product of the unique American cultural fetish of "pulling yourself up by your bootstraps", which all kinds of economic studies have shown to be nearly impossible. The idea that "anyone can become anything they want in life!" may be counter productive because the only ones that are truly poised to take advantage of "free for all" opportunities are the ones that already have the means to buy a good education, have the free time to spend on school rather than work, etc. If the best college students, for example, get scholarships and don't have to pay for school, who is likely to get the scholarship? It is almost certainly going to be the rich kid who doesn't NEED the help, but happened to have enough free time to do well in high school (rather than having to spend time on a part-time-job). And the cycle continues.

Executive pay, for example, is outrageous. I won't pretend that there is an answer of what executive pay "should" be, e.g. 50 or 100 times more than the average workers'. Many executives add 50-500 times the value to the company as an assembly line worker (though of course most do not). What makes me mad is that in order to be an executive and make that money, you have to have the right degrees from the best schools; to have the right degree from the best schools, you have to have been a great student and/or had a rich family to pay tuition at Harvard and/or had legacy connections to a school; to be a great student you probably had a wealthy, supportive parents; etc. The best jobs, by and large, are only available to the people that grew up in a certain income level.

I don't know how things are in Europe entirely, but I have heard there is simply not this cultural fetishism with the self-made man and the naive belief that everyone succeeds on his own merits.

Now the question is whether we'll learn our lesson... not so sure we'll ever learn it in this country as long as the popular mythology continues to believe that all you need to succeed is a little hard work.

[shaftmaster]

I read this article when it came out and have to say I disagree with their statistics and the conclusion they draw from it. It looks like they say three things

'over the last 10 years the rich have gotten richer'
'over the last 2 years the poor have gotten poorer'
'over the past 6 months the rich have gotten richer'

Therefore the middle class is dieing...am I the only one that has trouble with that conlusion?

First off I'd like a definition of middle class. If the middle class is defined as the middle 50% of americans than its impossible to disappear. If the middle class is people making between 50k-150k then I'd also say that is not true. Just because the rich get richer does not mean that everyone is suffering.

I think the disparity is growing though, and while I don't think that's a sign of a bad economy or a troubled nation it is something I think we should address. I always hate the income comparisons because they are so flawed. If the top 10% makes 1000 times what the bottom 10% there are a number of ways to fix this, you can have every millionaire burn half of their money, you can export the richest people or the poorest people or you can give huge government handouts to the poor, etc. All of these would help the numbers but wouldn't solve the problem.

I think the problem is largely because society has become so technologically advanced that there is no use for people without specified skills. 100 years ago if you were a warm body you could get a good job in a factory or on a farm, etc. Now days we have machines that can do all of that so if you don't have an education or a specialized skill then you can't expect to make a lot of money. The other side of that is that if you have a very specialized skill that is in high demand people will pay anything for it. This gap in skills (more appropriately specialized skills) is largely responsible for the gap in income. I'll illustrate with a personal example.

I've been job searching this summer. I have a good job, its stable and I'm excelling. I'm in a very specialized field that is in high demand. I have a bachelors and masters from a top university and several notable credentials. With barely trying I have gotten more job offers this summer than I can count. I have a relative who is also searching for a job. He is a high school dropout, has a criminal record, can not use a computer and was fired from his last job for doing property damage. Is there any surprise that he's had a hard time finding a job this past year? Ultimately, he got a job washing dishes and I got a job doing complex tax calculations for huge investment management firms and helping them to understand all these crazy bills that congress keeps passing. At the end of the day I will make about 9 times as much as he does (probably only about 6 after taxes). Anyone can pull the top CEO or NBA player's contract and multiply that times minimum wage and get appauled, but those are the outliers and are rare. Few people make millions per year.

I'm not sure what the solution is. Education certainly is key because no one will pay more for an uneducated person to do a job that an educated person in India can do better. The problem with education is that as you pump money into schools, those that take school seriously get a benefit and those that cut school don't get any of the benefit. The real problem is how to motivate kids into getting helpful skills, particularly in the more down trodden areas where they feel as though they have no hope.