Saturday, April 24, 2010

Government and the Middle Class

Almost every government program benefits the Middle Class at the expense of the very rich and the very poor.

We live in a democratic republic. Authority and legislative agendas is inevitably derived from popular will and support.

The focus of our political system is on the wishes of the Middle Class. For instance, the email that sparked this post was from Michelle Malkin and Eric Son of Eric: "Stop New Tax on the Middle Class!"

Depending on which politically expedient source you use, the Middle Class makes up between 25-66% of the American public.

In my limited opinion, our politics and their governmental outcomes suggest 55-70%.

Being that this is such a huge voting block, politicians are inevitably going to respond to large movements within it.

Typically our government structure seeks to "serve" the Middle Class while, at the same time, keep it struggling.

Why? Because this serves the political elite's interests best: it keeps them elected.

Why the MC struggles:

MC families usually invest solely in a home and give us the phrase 'house poor' to signify the many MC couples live a lower standard of living with the faith that their sacrifice to pay for a too-expensive house will pay off.

Since 2005, this hasnt happened, thus MC families struggle.

Cash for Clunkers is, perhaps, the best example of helping the MC at the expense of the very rich and very poor.

The program was designed to get old cars out of the market and make new cars cheaper to people who'd been owning older cars.

Putting aside that each car taken in the program cost taxpayers $24,000, the effects were simple: the top 1% of income earners primarily paid for it while fewer old cars raised the price of used cars for the rest of the year.

Who did that hurt? While the hurt to the rich and upper MC is very direct, the reduced supply and corresponding jump in prices of low-end cars catastrophically damaged the social mobility (ability to rise into the MC) of the poor.

If you cant afford a car at all, you cant get to a job. If you cant get to your job, you cant make money and you dont get on-the-job training. If you dont get those, you fall behind in the market and join the perpetual underclass, dependent on others and the state.

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