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The Crisis of the Middle Class and American Power

January 11, 2013

Thinking about the long term is all too rare a talent these days and one I really appreciate. When you take a longer view, it is easier to see how all the moving parts, the bits and pieces, fit together. And you can see other streams of action impacting your original line of thought.

In today’s Outside the Box, my (and our) old friend George Friedman thinks about the future of employment and how it impacts the expression of American social order and geopolitical power. Sitting here in Stockholm tonight, that was the very point we were making in our dinner conversation with the management team of the Skagen funds. It is not just a US problem, although George looks at the US. This is a global issue as the gulf between the middle class and the upper income classes is widening, and it is widening for structural reasons. There are no easy answers. Dennis Gartman quotes PJ O’Rourke, who basically launched a shot from the right. It speaks for itself:

 Mr. President, the worst thing that you’ve done is that you sent a message to America in your reelection campaign that we live in a zero-sum universe.

There is a fixed amount of good things. Life is a pizza. If some people have too many slices, other people have to eat the pizza box. You had no answer to Mitt Romney’s argument for more pizza parlors baking more pizzas. The solution to our problems, you said, is redistribution of the pizzas we’ve got—with low-cost, government-subsidized pepperoni somehow materializing as the result of higher taxes on pizza-parlor owners.

In this zero-sum universe there is only so much happiness. The idea is that if we wipe the smile off the faces of people with prosperous businesses and successful careers, that will make the rest of us grin.

There is only so much money. The people who have money are hogging it. The way for the rest of us to get money is to turn the hogs into bacon. The evil of zero-sum thinking and redistributive politics has nothing to do with which things are taken or to whom those things are given or what the sum of zero things is supposed to be. The evil lies in denying people the right, the means, and, indeed, the duty to make more things.

 But George notes the other side (bold emphasis mine):

 Last week I wrote about the crisis of unemployment in Europe. I received a great deal of feedback, with Europeans agreeing that this is the core problem and Americans arguing that the United States has the same problem, asserting that U.S. unemployment is twice as high as the government's official unemployment rate. My counterargument is that unemployment in the United States is not a problem in the same sense that it is in Europe because it does not pose a geopolitical threat. The United States does not face political disintegration from unemployment, whatever the number is. Europe might.

At the same time, I would agree that the United States faces a potentially significant but longer-term geopolitical problem deriving from economic trends. The threat to the United States is the persistent decline in the middle class' standard of living, a problem that is reshaping the social order that has been in place since World War II and that, if it continues, poses a threat to American power.

These issues and the threat they pose have to be resolved. The structural mechanisms are creating the inbalance. We need to nurture creativity and we need to reward it, but it creates a wide dispersion of income.

I think you will find George’s analysis quite thought-provoking, and you may find yourself wanting a Stratfor subscription. They are offering my readers a discount on their excellent products, and, you can get on board by clicking here: https://www.stratfor.com/subscribe/mauldin-jmf.

I am in Stockholm tonight (and did Copenhagen and Oslo) on my way to the south of Spain for a few days, for what is hoped will be a vacation, then a day in London for a Soc-Gen Conference and one of my famous “dinners with interesting people.” Dylan Grice (Soc Gen), Anatole Kaletsky (GaveKal, Simon Hunt (serious expert on copper and China), Dan Stetler (chief econ and Boston Consulting and wicked brilliant), Jonathan Tepper (of Variant Perception and my co-author). Just found out Richard Howard of Hayman Partners (Kyle’s Bass’s operation) and a few others will be there, too. I shall learn a lot. Then I’m off to Greece for five days with Christian Menegatti of Roubini Economics before ending up in Geneva and then returning to Dallas.

Have a great week. I am having a blast and will write your Thoughts from the Frontline letter tomorrow. Three computer crashes in five days! What are the chances? Ugh. But Life is fun and you take it all in stride. Just means I needed to think more about this next letter – maybe I will get it right.

Your ready for some Costa del Sol analyst,

John Mauldin, Editor
Outside the Box

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The Crisis of the Middle Class and American Power

By George Friedman

Founder and Chief Executive Officer

Last week I wrote about the crisis of unemployment in Europe. I received a great deal of feedback, with Europeans agreeing that this is the core problem and Americans arguing that the United States has the same problem, asserting that U.S. unemployment is twice as high as the government's official unemployment rate. My counterargument is that unemployment in the United States is not a problem in the same sense that it is in Europe because it does not pose a geopolitical threat. The United States does not face political disintegration from unemployment, whatever the number is. Europe might.

At the same time, I would agree that the United States faces a potentially significant but longer-term geopolitical problem deriving from economic trends. The threat to the United States is the persistent decline in the middle class' standard of living, a problem that is reshaping the social order that has been in place since World War II and that, if it continues, poses a threat to American power.

The Crisis of the American Middle Class

The median household income of Americans in 2011 was $49,103. Adjusted for inflation, the median income is just below what it was in 1989 and is $4,000 less than it was in 2000. Take-home income is a bit less than $40,000 when Social Security and state and federal taxes are included. That means a monthly income, per household, of about $3,300. It is urgent to bear in mind that half of all American households earn less than this. It is also vital to consider not the difference between 1990 and 2011, but the difference between the 1950s and 1960s and the 21st century. This is where the difference in the meaning of middle class becomes most apparent.

In the 1950s and 1960s, the median income allowed you to live with a single earner -- normally the husband, with the wife typically working as homemaker -- and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well. I know this because my family was lower-middle class, and this is how we lived, and I know many others in my generation who had the same background. It was not an easy life and many luxuries were denied us, but it wasn't a bad life at all.

Someone earning the median income today might just pull this off, but it wouldn't be easy. Assuming that he did not have college loans to pay off but did have two car loans to pay totaling $700 a month, and that he could buy food, clothing and cover his utilities for $1,200 a month, he would have $1,400 a month for mortgage, real estate taxes and insurance, plus some funds for fixing the air conditioner and dishwasher. At a 5 percent mortgage rate, that would allow him to buy a house in the $200,000 range. He would get a refund back on his taxes from deductions but that would go to pay credit card bills he had from Christmas presents and emergencies. It could be done, but not easily and with great difficulty in major metropolitan areas. And if his employer didn't cover health insurance, that $4,000-5,000 for three or four people would severely limit his expenses. And of course, he would have to have $20,000-40,000 for a down payment and closing costs on his home. There would be little else left over for a week at the seashore with the kids.

And this is for the median. Those below him -- half of all households -- would be shut out of what is considered middle-class life, with the house, the car and the other associated amenities. Those amenities shift upward on the scale for people with at least $70,000 in income. The basics might be available at the median level, given favorable individual circumstance, but below that life becomes surprisingly meager, even in the range of the middle class and certainly what used to be called the lower-middle class.

The Expectation of Upward Mobility

I should pause and mention that this was one of the fundamental causes of the 2007-2008 subprime lending crisis. People below the median took out loans with deferred interest with the expectation that their incomes would continue the rise that was traditional since World War II. The caricature of the borrower as irresponsible misses the point. The expectation of rising real incomes was built into the American culture, and many assumed based on that that the rise would resume in five years. When it didn't they were trapped, but given history, they were not making an irresponsible assumption.

American history was always filled with the assumption that upward mobility was possible. The Midwest and West opened land that could be exploited, and the massive industrialization in the late 19th and early 20th centuries opened opportunities. There was a systemic expectation of upward mobility built into American culture and reality.

The Great Depression was a shock to the system, and it wasn't solved by the New Deal, nor even by World War II alone. The next drive for upward mobility came from post-war programs for veterans, of whom there were more than 10 million. These programs were instrumental in creating post-industrial America, by creating a class of suburban professionals. There were three programs that were critical:

1.    The GI Bill, which allowed veterans to go to college after the war, becoming professionals frequently several notches above their parents.

2.     The part of the GI Bill that provided federally guaranteed mortgages to veterans, allowing low and no down payment mortgages and low interest rates to graduates of publicly funded universities.

3.    The federally funded Interstate Highway System, which made access to land close to but outside of cities easier, enabling both the dispersal of populations on inexpensive land (which made single-family houses possible) and, later, the dispersal of business to the suburbs.

There were undoubtedly many other things that contributed to this, but these three not only reshaped America but also created a new dimension to the upward mobility that was built into American life from the beginning. Moreover, these programs were all directed toward veterans, to whom it was acknowledged a debt was due, or were created for military reasons (the Interstate Highway System was funded to enable the rapid movement of troops from coast to coast, which during World War II was found to be impossible). As a result, there was consensus around the moral propriety of the programs.

The subprime fiasco was rooted in the failure to understand that the foundations of middle class life were not under temporary pressure but something more fundamental. Where a single earner could support a middle class family in the generation after World War II, it now took at least two earners. That meant that the rise of the double-income family corresponded with the decline of the middle class. The lower you go on the income scale, the more likely you are to be a single mother. That shift away from social pressure for two parent homes was certainly part of the problem.

Re-engineering the Corporation

But there was, I think, the crisis of the modern corporation. Corporations provided long-term employment to the middle class. It was not unusual to spend your entire life working for one. Working for a corporation, you received yearly pay increases, either as a union or non-union worker. The middle class had both job security and rising income, along with retirement and other benefits. Over the course of time, the culture of the corporation diverged from the realities, as corporate productivity lagged behind costs and the corporations became more and more dysfunctional and ultimately unsupportable. In addition, the corporations ceased focusing on doing one thing well and instead became conglomerates, with a management frequently unable to keep up with the complexity of multiple lines of business.

For these and many other reasons, the corporation became increasingly inefficient, and in the terms of the 1980s, they had to be re-engineered -- which meant taken apart, pared down, refined and refocused. And the re-engineering of the corporation, designed to make them agile, meant that there was a permanent revolution in business. Everything was being reinvented. Huge amounts of money, managed by people whose specialty was re-engineering companies, were deployed. The choice was between total failure and radical change. From the point of view of the individual worker, this frequently meant the same thing: unemployment. From the view of the economy, it meant the creation of value whether through breaking up companies, closing some of them or sending jobs overseas. It was designed to increase the total efficiency, and it worked for the most part.

This is where the disjuncture occurred. From the point of view of the investor, they had saved the corporation from total meltdown by redesigning it. From the point of view of the workers, some retained the jobs that they would have lost, while others lost the jobs they would have lost anyway. But the important thing is not the subjective bitterness of those who lost their jobs, but something more complex.

As the permanent corporate jobs declined, more people were starting over. Some of them were starting over every few years as the agile corporation grew more efficient and needed fewer employees. That meant that if they got new jobs it would not be at the munificent corporate pay rate but at near entry-level rates in the small companies that were now the growth engine. As these companies failed, were bought or shifted direction, they would lose their jobs and start over again. Wages didn't rise for them and for long periods they might be unemployed, never to get a job again in their now obsolete fields, and certainly not working at a company for the next 20 years.

The restructuring of inefficient companies did create substantial value, but that value did not flow to the now laid-off workers. Some might flow to the remaining workers, but much of it went to the engineers who restructured the companies and the investors they represented. Statistics reveal that, since 1947 (when the data was first compiled), corporate profits as a percentage of gross domestic product are now at their highest level, while wages as a percentage of GDP are now at their lowest level. It was not a question of making the economy more efficient -- it did do that -- it was a question of where the value accumulated. The upper segment of the wage curve and the investors continued to make money. The middle class divided into a segment that entered the upper-middle class, while another faction sank into the lower-middle class.

American society on the whole was never egalitarian. It always accepted that there would be substantial differences in wages and wealth. Indeed, progress was in some ways driven by a desire to emulate the wealthy. There was also the expectation that while others received far more, the entire wealth structure would rise in tandem. It was also understood that, because of skill or luck, others would lose.

What we are facing now is a structural shift, in which the middle class' center, not because of laziness or stupidity, is shifting downward in terms of standard of living. It is a structural shift that is rooted in social change (the breakdown of the conventional family) and economic change (the decline of traditional corporations and the creation of corporate agility that places individual workers at a massive disadvantage).

The inherent crisis rests in an increasingly efficient economy and a population that can't consume what is produced because it can't afford the products. This has happened numerous times in history, but the United States, excepting the Great Depression, was the counterexample.

Obviously, this is a massive political debate, save that political debates identify problems without clarifying them. In political debates, someone must be blamed. In reality, these processes are beyond even the government's ability to control. On one hand, the traditional corporation was beneficial to the workers until it collapsed under the burden of its costs. On the other hand, the efficiencies created threaten to undermine consumption by weakening the effective demand among half of society.

The Long-Term Threat

The greatest danger is one that will not be faced for decades but that is lurking out there. The United States was built on the assumption that a rising tide lifts all ships. That has not been the case for the past generation, and there is no indication that this socio-economic reality will change any time soon. That means that a core assumption is at risk. The problem is that social stability has been built around this assumption -- not on the assumption that everyone is owed a living, but the assumption that on the whole, all benefit from growing productivity and efficiency.

If we move to a system where half of the country is either stagnant or losing ground while the other half is surging, the social fabric of the United States is at risk, and with it the massive global power the United States has accumulated. Other superpowers such as Britain or Rome did not have the idea of a perpetually improving condition of the middle class as a core value. The United States does. If it loses that, it loses one of the pillars of its geopolitical power.

The left would argue that the solution is for laws to transfer wealth from the rich to the middle class. That would increase consumption but, depending on the scope, would threaten the amount of capital available to investment by the transfer itself and by eliminating incentives to invest. You can't invest what you don't have, and you won't accept the risk of investment if the payoff is transferred away from you.

The agility of the American corporation is critical. The right will argue that allowing the free market to function will fix the problem. The free market doesn't guarantee social outcomes, merely economic ones. In other words, it may give more efficiency on the whole and grow the economy as a whole, but by itself it doesn't guarantee how wealth is distributed. The left cannot be indifferent to the historical consequences of extreme redistribution of wealth. The right cannot be indifferent to the political consequences of a middle-class life undermined, nor can it be indifferent to half the population's inability to buy the products and services that businesses sell.

The most significant actions made by governments tend to be unintentional. The GI Bill was designed to limit unemployment among returning serviceman; it inadvertently created a professional class of college graduates. The VA loan was designed to stimulate the construction industry; it created the basis for suburban home ownership. The Interstate Highway System was meant to move troops rapidly in the event of war; it created a new pattern of land use that was suburbia.

It is unclear how the private sector can deal with the problem of pressure on the middle class. Government programs frequently fail to fulfill even minimal intentions while squandering scarce resources. The United States has been a fortunate country, with solutions frequently emerging in unexpected ways.

It would seem to me that unless the United States gets lucky again, its global dominance is in jeopardy. Considering its history, the United States can expect to get lucky again, but it usually gets lucky when it is frightened. And at this point it isn't frightened but angry, believing that if only its own solutions were employed, this problem and all others would go away. I am arguing that the conventional solutions offered by all sides do not yet grasp the magnitude of the problem -- that the foundation of American society is at risk -- and therefore all sides are content to repeat what has been said before.

People who are smarter and luckier than I am will have to craft the solution. I am simply pointing out the potential consequences of the problem and the inadequacy of all the ideas I have seen so far.

Discuss This


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Jan. 19, 2013, 7:49 a.m.

You gloss over the forty year history of affirmative action in America where education and employment slots are taken from general competition and given to African Americans regardless of income- a pernicious zero sum game.  Our President and First Lady, solidly Middle Class Americans in their youth, benefited from Affirmative Action to the Ivy League and have never looked back, and their academic records have been sealed.  Legacy programs for African Americans are just as wrong as Legacies for the politically powerful Chicago bosses’ children (University of Illinois Law School) or rich alumni (Notre Dame and Princeton).  However, Affirmative Action is worse than a zero sum game when lazy, dumb rich kids (Black and White elites) are taking education and employment slots from our smartest and most enterprising youth—Jews, Chinese and Japanese Americans, etc.
This Zero sum American Heritage goes on steroids when at the bottom, impoverished, rural Latin Americans are sold the American Dream by coyote criminals, drug transporters and our President and Congress.  For their vote, they receive free health care, education, food stamps, housing and whatever else their Precinct Captain can give out during election day.  Whole communities from Central American have been uprooted to this “illegal” American Dream while millions of educated Middle Class Hispanics are denied immigration.

Jim Summers

Jan. 17, 2013, 5:04 p.m.

PJ O’Rourke is wrong.  Conservatives are claiming it is a zero-sum economy, not the president.

Over the last few decades, the economy has grown; we are producing more pizza.  But, all of the extra pizza is being taken by the pizza parlor owners; the workers aren’t getting any of the extra pizza we are now producing.

Conservatives are claiming that if we try to tax away any of the extra pizza that is going to the parlor owners, the extra pizza will disappear; the only reason there is any extra pizza is because we let the owners keep all of it.

That sounds like a zero-sum argument to me: there is no way to make the pizza workers better off.  We have to let the owners keep all the extra pizza or there will be no extra pizza, and workers are getting all the pizza they are ever going to get.

Maybe that’s right; but for most of history before Reagan, it was possible to give workers a share of the extra pizza.  What changed?


Jan. 17, 2013, 7:04 a.m.

Where does unemployment count on the efficiency scale? Why isn’t efficiency measured across all of society, as opposed to measuring it for some particular company?. Wal-Mart may be considered and efficient company, but how do you count the fact that many of its US employees have to depend on government for medical care? Why is that not counted as a detriment to the company efficiency rating?

Seems to me that a re-structured company claiming to be more efficient now that is has fewer workers leaves out the fact that society at large inherits responsibility for those unfortunate souls who no longer have work. Unless we shoot them, or kill them off in some other way. But, as George says, once this unemployed cohort gets large, they will definitely shoot back. Wouldn’t you?

Daniel Plager

Jan. 15, 2013, 7:11 a.m.

I think George Friedman is way off base here, and he seems to have built quite a franchise by bloviating about subjects and issues that really have no verifiable manner in which to conclude he is right or wrong.

To wax nostalgic about the wonderful American middle class of the post war era, and to wring one’s hands about the ‘broken promise’ that has been made at the core of our struggles, misses the entire point.

Globalization and the flattening of the world are the reasons why our middle class feels more strained.  There is competition from people and places that weren’t in the game as recently as 30 years ago.  The US middle class needs to step up its game in order to meet this competition.  The theory, of course, is that the global pie will grow such that, even while American dominance necessarily diminishes, the standard of living for all can continue to rise, even for the US middle class.  But it takes work and effort, and both of these virtues are in less evidence in America 2012.  We’re a soft entitlement driven society, so what do we expect??


Jan. 15, 2013, 5:38 a.m.

Might flag and add emphasis to a few issues

1) Illegal immigration has driven down the income of lower income Americans
2) Increased international trade has increased the competition with low wage workers in foreign countries
3)The increased use of computers has reduced the need for large sectors of employees
4)  With respect to women entering the workforce - running the household used to be a full time job - lots of work.  Moderb conveniences reduced that workload so that it os now only natural for women to enetr the workforce.  In the good ole days they didn’t have that freedom because there was too much work to do at home.

Identifying the issues is easym the hard part is quantifying them.

Christopher Gable

Jan. 14, 2013, 9:31 a.m.

I think this piece ignores a number of large factors and singles out a straw man often used by the Left.  The joint stock enterprise form has been around since 16th century England.  If it caused a systemic problem, there would be a pattern of it by now.  I have not seeen any that survied scrutiny.

There are alternative explanations to the depressed wage growth of the middle class. The introduction of the Japan/India/China populations into the global work force greatly increased the supply of labor.  That alone would have depressed wage growth in the U.S.  You could check if the other Developed countries has a similar experience.  If so, and the emerging markets did not, yuo can’t blame it on the corporate form.

The U.S. Dollar,  as the world’s reserve currenty, exascerbated the effect.  An overvalued dollar makes imports cheaper and exports more expensive.  The artificial lack of competitiveness would place pressure on wage growth.  Although Manufacturing may be singled out, the effect would impact Services as well.  Witness the migration of call centers overseas. 

Christopher Gable


Jan. 13, 2013, 11:48 p.m.

I agree with Mr. Friedman’s excellent analysis of the problem and the need to focus on solutions.

First, *everyone* needs to read <a >The Fourth Turning</a>. This book explains the role of generational theory over modern history - nothing I’ve read in 20 years comes close to the explanatory power of this book to understand the current social and economic situation. I vote the authors deserve a nobel prize.

Second, we need to get back to the healthy tension between fostering competition (distributed power) vs. acquisition rights (concentrating power).  We are currently way out of equilibrium here. I’m going to talk about banking, but the same applies in most industries. Over the last 30 years, in banking, we have seen a reduction in competition from 18,000 institutions in the 1980s to under 8,000 today. 

Let’s do some basic math on that - that’s 10,000 fewer CFOs (150K salary positions), 10,000 fewer CMO’s, CIO’s, etc. There’s a multiplier effect there as well, as each one of those C-level exec’s had teams. While we focus on the loss of manufacturing jobs, the reality is that knowledge workers are and will be our middle class base going forward.

Couple this with how much we all hate our banks (both commercial and personal), and the total lack of innovation in banking (see this <a >article</a>) and it’s pretty obvious to me a simple 2 step policy response is 1 - enabling more competition by enforcing existing laws that prohibit further concentration of the industry and 2 - making it easier for entrepreneurs to create new banks. The same applies in other industries. A policy focus on competition and wealth accumulated from organic growth is good for jobs and good for customers.

The problem is that there is nobody in Washington owning pro-competition policy. It’s either pro-redistribution, or pro-accumulation. We need one of the two parties to shift.

Third, the shifts to the “agile corporation” that Mr. Friedman describes will be ultimately liberating for the middle class if we have truly competitive markets. In such markets, your people matter equally with your shareholders, your customers and your environment. Our current imbalances are evidence we don’t have efficient markets in most industries.

Matt Wilson

Jan. 13, 2013, 5:52 p.m.

Looking at complexity theory suggests that we may never pull out of this mess short of a large crash. And that crash might come in the form of war.

Do a little thought experiment on your own life. Is tomorrow going to be heavily influenced by the past? Sure it is. Everything we do in the future is heavily by the past if you think about it. While there is a randomness component to the future, the past makes a huge mark.

If your future is like this, then which other systems work this way? What about a growing forest, growing sandpile, earth movement, financial markets and wars? All of these systems have a positive feedback causing the past to heavily influence the future, plus a randomness component.

All of these systems automatically crash with no help needed. Suppress small crashes and you get bigger crashes. Suppress bigger crashes and you will get the mother of all crashes. Suppressing that crash means you will be stuck in an unstable state forever, or until a crash is forced. Welcome to Japan.

If you thought our problems were related to the economy, then you would be wrong. They are about the spread of bad ideas, bad decisions and corruption. These have gradually spread to all corners of society. The nation cannot move forward without clearing these away. And that means crash. No crash equals no solution. I didn’t say this was going to be painless.

Since bad ideas, bad decisions and corruption affect every corner of society, they also affect national security and your thinking about national security. You have been led down the wrong path in the thinking about your safety. You know you are safe, and anybody who thinks otherwise is crazy. Except it ain’t true. For those actually paying attention, they know there are ominous storm clouds forming ahead concerning China and Russia.

We should not be surprised if a large economic shock is followed by a large war. They are simply two forms of a crash.

Jennifer Watson

Jan. 13, 2013, 11:22 a.m.

World War II fostered the idea that we are all in this together and a pride in the country and our culture that enabled us to solve many problems. Today, some groups being favored over others (affirmative action for anyone not white), some illegals tolerated, and other non-achievement rewards destroys the morale necessary to work together to create solutions. It is like a workplace where favoritism reigns, morphing into nihilism. You wouldn’t run a football team this way!


Jan. 13, 2013, 7:50 a.m.

Dear Mr. Mauldin,
I truly enjoy your work and look forward to your articles.  Your meanderings are intelligent, enlightening,  readable,  and quite entertaining.  I also value the opportunity to read the offerings of your learned colleagues, such as the recent message from Mr. Friedman.
Like you, I profess to be apolitical, however, in truth I must confess to being a financial conservative, and that influences how I vote.  I am retired.  My family background is lower middle class.  I grew up in suburban Pittsburgh, PA, steel country.  My 3 brothers and I went to college, (the first in our extended family to do so), and by most measures are considered to be successful upper income Americans.
I’m not a letter writer or emailer,  but Mr. Friedman’s article bothered me to the extent that I felt compelled to respond.  I think he has it all wrong, or chooses not to write what’s really going on in America.  I’m sure he’s a brilliant guy and has vast resources to draw on for his analyses.  I, on the other hand, am not brilliant and am without the resources.  But, I have lived what he wrote about, and he has it wrong.  I could write forever on this subject, but few care and I don’t have the time or inclination.  So allow me to tell you what’s wrong in as few bullet points as possible.
 It’s over.  Get over it.  the post-war American dream was just that, a dream.  Who really believed that our prosperity could continue at the expense of the rest of the planet?  Could we have continued to produce the majority of the world’s steel?  Of course not.  Apply this example to the rest of the US economy.
 We must redefine the middle class.  It ain’t what it used to be.  We live in a middle class world of 2 or 3 car families, $100 dollar a month Wi-Fi plans and going away to college as a birthright.  Try walking or riding a bus, putting a dime in a pay phone and not putting your family in debt with outrageously expensive college tuitions.  We are entitled today, and that must change. 
 Politicians lie.  With a few exceptions, they know what has to be done, but the will to address the reality isn’t there.  A fire has started; will they put down the fiddles and get to work?
 Statistics and statisticians lie.  Mr. Friedman refers to the widening gap between the middle class and the rich.  Does he do an apples to apples approach when he makes middle class comparisons?  Does he acknowledge the influence of 10’s of millions of uneducated immigrants on an economy that is in trouble?  Mine is a family of immigrants and I am pro-immigration.  But, one has to address this complicated issue when comparisons are made.  If a true comparison is made, is the wealth gap greater in the US than other civilized nations?  I’m skeptical.  Demonizing those who have accumulated wealth is a slippery slope.
 Government, in all its forms.  We have allowed the creation of a monstrosity.  Forget the intrusion into our daily lives.  Look at the enormous overhead burden.  We see intrusion because legions of bureaucrats feel compelled to justify their existence.  Talk about re-arranging deck chairs on the Titanic!  No wonder we don’t have a budget.
I believe we have been and exceptional Nation and can continue to be a beacon.  We are caught in a very tricky maze today and we must find a way out.  If we are to remain exceptional we will do just that.  It will require another exceptional effort.  I pray that we have it within us.

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