economy, stupid
Beneath the triumphalism and euphoria, a deep unease pervades Middle America, argues Robert Kuttner
Yes, in many respects life in the United States has never been better. But there are four notable soft spots in the American utopia: insecurity, holes in the welfare state, inequality and stress.
First, insecurity: social critic Richard Sennett observes that there has never been a greater gap between fixed obligations and variable earnings. Americans have onerous mortgages, credit card debts and tuition obligations – but no assurance that next week’s payslip will be there. No wonder personal bankruptcies are at record levels.
No profession is secure – not doctors, bankers, even postal clerks. The US leads the world in casualisation; some entrepreneurial types find this exhilarating, but the average American still wants to know that a job done well will be there next week.
However, the vaunted new economy does not allow this. So-called “contingent work” – temporary, part time, and contract work – is becoming the norm. Even elite professions such as college teaching are dividing into a small priesthood of tenured professors and a larger class of itinerant lecturers with multiple, insecure, low-paid jobs.
Secondly, there are holes in the safety net. In 1955, the British socio-logist Richard Titmuss astutely distinguished between a tax-supported welfare state for the poor and one for the middle class based on company benefits. The latter has been even more essential in the US, where the public welfare state was underdeveloped. Since World War II, Americans have come to depend on their employers for pensions, health insurance, and other benefits – but all are dwindling.
The proportion of Americans with health insurance through their jobs has been steadily declining for a decade, from more than 70% to about 61% today.
The public welfare state is unravelling even faster. Medicare for the elderly will lose $115-billion over the next five years in budget cuts, and Republicans want to turn it into a voucher programme with a capped government payment that would leave less affluent citizens without adequate coverage. Social security pensions may soon be partly privatised. Social aid – what Americans call “welfare” – has just been subjected to a five-year lifetime limit.
The third problem is inequality. Journalists and other commentators insist this is a great time to be alive. It surely is – for elites. The value of the stock market has nearly quintupled in a decade, but half of all shares are owned by the top 1% of the population. The net worth of Bill Gates alone is equal to that of the bottom 40%.
Nearly all the income gains of the past decade were captured by the top fifth, and it is only since 1996, with the return of near-full employment, that ordinary wage earners have made any real gains at all. The real value of the minimum wage is still below the level of the Kennedy years. Income distribution is as unequal as in the 1920s.
Fourth is stress. It now takes two incomes to achieve a living standard that is even lower middle class. Yet no advanced nation has a less developed system of childcare, and the work- family tension has become unbearable for the average family.
Elites solve the problem with nannies. Others struggle with inadequate daycare centres, staffed by undertrained workers. The poor settle for “family daycare” – taking in each other’s children. A sick child means a career crisis.
So yes, many indicators suggest we are enjoying unusually good times. It is wonderful that rates of crime, teen pregnancy, unemployment and air pollution are all down. But then so is job security and income support, not to mention voting. Beneath the euphoria of the private market is deep private unease.
And for all the talk of a new economy of permanent prosperity, capitalism has not repealed the trade cycle. In the next recession, the latent weaknesses will become manifest.
Despite the triumphalism, the reality of private affluence and public squalor is as stark as when JK Galbraith skewered our affluent society nearly half-a- century ago.
Robert Kuttner is co-editor of the American Prospect. His latest book is Everything for Sale