Economic Collapse Permanently Destroys Middle Class Jobs
Oct 29th, 2009 | By David Calderwood | Category: Featured, Macro Economics
Many people write of the imminent destruction of the U.S. middle class (of which I consider myself a member) but few have explained specifically how this occurs. Understanding the mechanism seems important if I hope to avoid the fate of most of my peers.
An insight on this question came from an unexpected quarter.
A gentleman by the name of Fernando Aguirre, who posts on Internet forums and his blog as FerFAL, has written voluminously about his experiences as an Argentine citizen during and after the economic cataclysm that wracked his country in 2001. I first found a long forum post, and then a Google search of “FerFAL” revealed a larger web presence, including a recently published book.
Mr. Aguierre shares his thoughts on all sorts of related subjects, from food storage to guns to politics (he appears to really like Rep. Ron Paul). I personally found a great deal of value among what I’ve seen so far.
One brief passage struck me, however, because it related to the mechanism by which middle-class people become poor during an economic meltdown. The mechanism may be obvious, but it is important to see how theory actually worked in the real world.
Mr. Aguierre shares (in “Part IV”) how, while studying architecture following the 2001 crisis, a social studies teacher illustrated Argentina’s middle class’ slide into poverty. Quoting the teacher from memory, Mr. Aguierre writes,
“[Those in the] middle class suddenly discover that they are overqualified for the jobs they can find and have to settle for anything they can obtain, therefore unemployment sky rockets: too much to offer, too little demand. You see they prepare, study for a job they are not going to get. You kids, you are studying Architecture because you simply wish to do so. Only 3 or 4 percent of you will actually find a job related to architecture.”
We all sat there, letting it all sink in. After a few months, it all proved to be true. Even the amount of students that dropped out of college increased to at least 50%. They either [saw] no point in studying something that would not make much of a difference in their future salaries, had no money to keep themselves in college, or simply had to drop college to work and support their families.
This reads like a premonition.
The USA’s middle-class includes lots of people whose careers rest on higher education and specialized certification. While plumbers, electricians, factory employees and truck drivers typically are among the middle-class, most of those populating suburbia are accountants, middle managers, sales people, financial consultants, teachers, nurses, writers, etc. In other words, as manufacturing and now building activity contract, more of the middle class is made up of the college-educated in white-collar careers.
Factor in our current economic pickle and it’s easy to see the most likely path ahead.
With the economic expansion built on mass optimism and debt rolling over, conditions are now fertile for questioning the college degree system as jobs for the college-educated evaporate en masse. The ability of technology to replace white-collar jobs is widespread, and an increasing need to cut costs is finally driving its use, just as changing economic (and regulatory) conditions also drive the replacement of manpower with robotics in the factory.
Across the economy, the need to cut employment costs (not just payroll, but payroll taxes and benefits) is resulting in mass layoffs of sales people and white-collar office staff. When one considers how much work can be replaced now by accounting software, electronic sales presentations, flatter organizational structures, and “news persons” filing reports for free on the Internet via blogs, it is obvious that vast numbers of middle-class Americans teeter on the precipice of unemployability, not just unemployment.
When the “unique” skill sets that commanded $50,000 to $100,000 (or more) annual salaries turn out to be in vast oversupply, the only course left is to compete with those with neither a college degree nor technical education for jobs that can’t support a middle-class lifestyle.
Hands-on service occupations like nursing and medicine are also far from safe. At the end of the day, it is productivity that pays for such work to be done, and when vast numbers of people cannot find economically productive work, economic reality will land on these occupations, too.
When the economic tide goes out, all boats sink into the mud.
Too many people were goaded into illusory occupations by tax subsidies for higher education, government (rather than market) demand, and other distortions like the credit-without-prior-production of the central bank. Political pandering and central planning replaced the natural balance of an economy growing organically through the honest signals of the price system.
As long as there was enough optimism and ignorance to sustain the illusion, the distortions only grew larger.
Though the ignorance largely remains, there’s no more blind denial left to sustain the burden of all that wasted effort. If your job disappears, it may not come back.
This time it really is different. The final stages of that blind denial included fiscal imprudence that bordered on insanity. The mirage economy can’t return until after the pendulum has swung its full travel to the other side of the arc. That path leads through the valley of a crushing economic depression, one that will radically and permanently alter the lives of middle-class Americans who are almost universally unaccustomed to hardship.
Regards,
David Calderwood
October 29, 2009
This pretty much nails it, but I can speak from experience and fill in some of the details. I came from a blue collar lower middle class family. I was the first of my extended family to make it through a 4 year college degree and it took me 8 years with lots of low credit semesters and time away- both to accomodate paying work. Then just as I was making it through, I got stuck with the bill for a welfare case’s bastard. I don’t know and don’t care if anybody doesn’t like the way I said that- my rights were violated- I never got my day in court much less a jury trial. The government wrecked my credit rating, stole my income, and tracked me like the modern day runaway slave that I was.
I count that now as a blessing- because I know government for what it is- I hate cops and bureaucrats. I question everything. I lived for 18 years scraping by with nothing, and learned to make do, hide wealth, avoid taxable income. I got mad and I got mean. I am the future- and the meddlers had better beware the wrath of whole armies of the dispossessed like me.
Meanwhile, I’m out here, hiding in plain sight. I am a family man and a pillar of the community.
Dear Mr. Calderwood:
Superb.
I think you are clearly “one of us,” and if you will go to http://www.thetexasring.com and leave me a message we can discuss that interesting proposition. An alternative is to consent to having Gary give me your e-mail address.
Gary, I hope we hear from Mr. Calderwood again.
MDC is (atypically) badgering me to get up from the computer and leave our beloved home in the Hill Country to go back to our paradise ranch in the “lakes and prairies” section of the seven geographical districts in Texas, but I shall return later to comment on this splendid article as it deserves.
Regards,
Linda Brady Traynham
I watch my 50 year old brother just sit around all day. He asked me in 2002,”When is the crash coming,Bob? ” “I don’t see it!” He was unemployed just after the Tech WRECK when he asked me this. A friend said to me,” My brother is like a man drowning in the sea wondering when the flood is coming.” I’m with a political group loosely affiliated Lyndon LaRouche since 1993. I always passionately wanted to know the truth about what was going on in the world and why. Knowing what may come,sometimes I wish I could forget. I have a hard time getting to sleep at night.
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Ernie…my commiseration, and tell it like it is. The time is long past for us to sit quietly while we are robbed and insulted by the Statists.
Linda Traynham: Pardon me if I misread your case. With a “beloved home in the Hill Country” and a “paradise ranch” to go to, it doesn’t sound like you are anything like “middle class”. Nice to know you may deign to comment on David’s “splendid article”. Excuse me, but are you setting yourself as an arbiter of what is deserving? Your language betrays you.
In the interest of disclosure, I’ll have to visit the Texas Ring and, perhaps, I can make beter sense of what you’re saying.
[...] Collapse Permanently Destroys Middle Class Jobs Oct 29th, 2009 By David Calderwood Whiskey and Gunpowder Many people write of the imminent destruction of the U.S. middle class (of which I consider myself [...]
Beware of the will to conserve wealth and power from those who now have it. The elite’s and their puppet government will not hesitate to turn the MILITARY against the people. Ready to Civil War mk2 anyone?
[...] By David Calderwood WhiskeyandGunpowder.com [...]
[...] By David CalderwoodWhiskeyandGunpowder.com [...]
The destruction of the middle class has taken 30 years to accomplish. I’m old enough to remember exposes about tax breaks given to companies who claimed they had headquarters in the Caribbean islands. What they actually had was a mail drop, maybe a desk and a chair in a cubicle, and certainly no headquarters. Congress did nothing. Manufacturers didn’t want to pay decent wages and benefits so they moved factories to Mexico and then Asia, and got tax breaks. My own cousin moved a clothing factory from Atlanta to Borneo! Meanwhile, Republicans bad-mouthed unions and convinced people that they didn’t need them. At the same time, millions of illegals flooded the country. Congress did nothing, because big business loves cheap labor. Companies didn’t want to pay American tech workers when they could import Indians, who would work for half price and around the clock (by sleeping on cots in their offices). Congress has outsourced our military to contractors for billions with no oversight, and given the okay for two undeclared wars while 45,000 Americans die each year for lack of medical care. Republicans talk about family values, but have pursued policies that make it impossible for one breadwinner to support a family; and now even two incomes is not enough. And we are just as much to blame for what Congress does and doesn’t do. Most Americans can name sports scores or Idol winners but they can’t tell you who their congressperson is. They can’t even find Iraq on a map, but they’ll go fight there. We are stupid and ignorant and we deserve these corporate whores. And lest you think I prefer the Democrats, they have turned out to be cowards and just as much on the take as Republicans.
Bill:
Let’s start with the easy charge, that I “deigned” to comment on Mr. Calderwood’s article . It really wasn’t difficult. I thought he wrote an excellent piece, and, having nice manners, myself, I said so.
Do you advocate litmus tests before one may comment here? If so, what are you standards and what qualifies YOU to insult ME? (I would prefer to underline or italicize those words, but those options are not available.)
What qualifies ME to express an opinion is that I am a professional editor AND I am a frequent guest writer on this site. From the second qualification you may infer, correctly, that I am acquainted thoroughly with the issues involved; the first should indicate to the meanest intelligence that others pay me for my opinion and to fix what is wrong. My clients include Fortune 500 companies. In my professional opinion, Mr. Calderwood’s article was well-written, well-organized, factual, useful, and interesting.
Speaking in my capacity is a Counselor, I suggest you try saying something nice. It might change your whole attitude, which could use it.
Linda Brady Traynham
Bill:
The Texas Ring is a casual organization of friends–most of whom have been published on Whiskey and Gunpowder–as well as a site where similar articles are published. One is not invited to become a member because one has appeared on Morning Whiskey. Other than Richard Marmo, a longtime friend and widely-published writer, and Gary’s find of the fabulous Tex Norton, each member attracted my attention by commenting on something which appeared in W&G or on another site. I responded, they replied, and all our lives are richer for the friendships which developed. (Being a member of the Ring is NOT a guarantee that a writer’s work will make W&G. There is no nepotism, to use the word loosely.)
I do commend http://www.thetexasring.com to you. We think it interesting, insightful, frequently amusing, and full of principles and logic. It contains articles of the same caliber you find here.
NO one else has a better right than I to invite someone to join the Ring other than Gary Gibson because the Ring was our brain-child. All it takes is the ability to write well, sound principles, and a desire for the camaraderie of like-minded others. Far from condescending to Mr. Calderwood, I proffered friendship if he has time and an interest in corresponding. I hope he does. I stand by my original statement: he wrote a splendid article.
LInda Brady Traynham
Bill:
I qualify for the description of “middle class” because I am still managing to keep from slipping into the under class, although if Mr. Obama has his way a great many of us won’t, particularly widows on Social Security.
We DO love our hundred-year-old house over in the hill country, where Charles lived before we joined our lives, but we can’t ranch on 20 acres and we cannot become as self-sufficient as possible without raising animals and crops. It is not safe to live there in the current economic situation and we rely on ourselves, not the government, for what we need.
Paradise is in our MINDS. We love each other, the animals, what we are building exclusively by our own efforts, not living in the city, and even the shabby old house I inherited which we are enlarging all by ourselves. We’re working to protect ourselves and those we love from the coming Greater Depression. We do without things that most Americans think indispensible. Not having cable TV will buy three cows a year, and we can eat them if Detroit comes to our area. Foregoing dinner and the movies twice buys a good French Alpine Dairy goat. We do splendidly with one cell ‘phone and a magic box that gets us Internet anywhere cell ‘phones work. We don’t eat fast food or drink Cokes all day long. In short, we make choices. We defer gratification. We EARNED what we have over long lifetimes of following the rules. We do not apologize for having two residences. We defrauded no one to get them. The “homeless” have no claim on the fruits of our labor and sacrifices, and I explain this only because most of the electorate has forgotten what being responsible for their own lives and choices means.
The real question is why you supposed instantly that we live on the Ponderosa and have a mansion on a hill, as well. Not that it would matter so long as we hadn’t gotten them through unethical or illegal behavior. Happiness is where you find it and security is the result of character and choices. The politics of envy are always great vote getters, but they do not lead to safety, security, or happiness for anyone other than politicians.
Linda Brady Traynham
agree that the U.S. economy is in big trouble and many of the lost jobs are not coming back.
some of us may end up working in government run labor camps before long.