America is Regressing into a Developing Nation for Most People

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A new book by economist Peter Temin finds that the U.S. is no longer one country, but dividing into two separate economic and political worlds

You’ve probably heard the news that the celebrated post-WW II beating heart of America known as the middle class has gone from “burdened,” to “squeezed” to “dying.”  But you might have heard less about what exactly is emerging in its place.

In a new book, The Vanishing Middle Class: Prejudice and Power in a Dual Economy, Peter Temin, Professor Emeritus of Economics at MIT, draws a portrait of the new reality in a way that is frighteningly, indelibly clear:  America is not one country anymore. It is becoming two, each with vastly different resources, expectations, and fates.
[h2]Two roads diverged[/h2]
In one of these countries live members of what Temin calls the “FTE sector” (named for finance, technology, and electronics, the industries which largely support its growth). These are the 20 percent of Americans who enjoy college educations, have good jobs, and sleep soundly knowing that they have not only enough money to meet life’s challenges, but also social networks to bolster their success. They grow up with parents who read books to them, tutors to help with homework, and plenty of stimulating things to do and places to go. They travel in planes and drive new cars. The citizens of this country see economic growth all around them and exciting possibilities for the future. They make plans, influence policies, and count themselves as lucky to be Americans.

The FTE citizens rarely visit the country where the other 80 percent of Americans live: the low-wage sector. Here, the world of possibility is shrinking, often dramatically. People are burdened with debt and anxious about their insecure jobs if they have a job at all. Many of them are getting sicker and dying younger than they used to. They get around by crumbling public transport and cars they have trouble paying for. Family life is uncertain here; people often don’t partner for the long-term even when they have children. If they go to college, they finance it by going heavily into debt. They are not thinking about the future; they are focused on surviving the present. The world in which they reside is very different from the one they were taught to believe in. While members of the first country act, these people are acted upon.

The two sectors, notes Temin, have entirely distinct financial systems, residential situations, and educational opportunities. Quite different things happen when they get sick, or when they interact with the law. They move independently of each other. Only one path exists by which the citizens of the low-wage country can enter the affluent one, and that path is fraught with obstacles. Most have no way out.

The richest large economy in the world, says Temin, is coming to have an economic and political structure more like a developing nation. We have entered a phase of regression, and one of the easiest ways to see it is in our infrastructure: our roads and bridges look more like those in Thailand or Venezuela than the Netherlands or Japan. But it goes far deeper than that, which is why Temin uses a famous economic model created to understand developing nations to describe how far inequality has progressed in the United States. The model is the work of West Indian economist W. Arthur Lewis, the only person of African descent to win a Nobel Prize in economics. For the first time, this model is applied with systematic precision to the U.S.

The result is profoundly disturbing.

In the Lewis model of a dual economy, much of the low-wage sector has little influence over public policy. Check. The high-income sector will keep wages down in the other sector to provide cheap labor for its businesses. Check. Social control is used to keep the low-wage sector from challenging the policies favored by the high-income sector. Mass incarceration - check. The primary goal of the richest members of the high-income sector is to lower taxes. Check. Social and economic mobility is low. Check.

In the developing countries Lewis studied, people try to move from the low-wage sector to the affluent sector by transplanting from rural areas to the city to get a job. Occasionally it works; often it doesn’t. Temin says that today in the U.S., the ticket out is education, which is difficult for two reasons: you have to spend money over a long period of time, and the FTE sector is making those expenditures more and more costly by defunding public schools and making policies that increase student debt burdens.  

Getting a good education, Temin observes, isn’t just about a college degree. It has to begin in early childhood, and you need parents who can afford to spend time and resources all along the long journey. If you aspire to college and your family can’t make transfers of money to you on the way, well, good luck to you. Even with a diploma, you will likely find that high-paying jobs come from networks of peers and relatives. Social capital, as well as economic capital, is critical, but because of America’s long history of racism and the obstacles it has created for accumulating both kinds of capital, black graduates often can only find jobs in education, social work, and government instead of higher-paying professional jobs like technology or finance— something most white people are not really aware of. Women are also held back by a long history of sexism and the burdens — made increasingly heavy — of making greater contributions to the unpaid care economy and lack of access to crucial healthcare.
[h2]How did we get this way?[/h2]
What happened to America’s middle class, which rose triumphantly in the post-World War II years, buoyed by the GI bill, the victories of labor unions, and programs that gave the great mass of workers and their families health and pension benefits that provided security?

The dual economy didn’t happen overnight, says Temin. The story started just a couple of years after the ’67 Summer of Love. Around 1970, the productivity of workers began to get divided from their wages. Corporate attorney and later Supreme Court Justice Lewis Powell galvanized the business community to lobby vigorously for its interests. Johnson’s War on Poverty was replaced by Nixon’s War on Drugs, which sectioned off many members of the low-wage sector, disproportionately black, into prisons. Politicians increasingly influenced by the FTE sector turned from public-spirited universalism to free-market individualism. As money-driven politics accelerated (a phenomenon explained by the Investment Theory of Politics, as Temin explains), leaders of the FTE sector became increasingly emboldened to ignore the needs of members of the low-wage sector, or even to actively work against them.

America’s underlying racism has a continuing distorting impact. A majority of the low-wage sector is white, with blacks and Latinos making up the other part, but politicians learned to talk as if the low-wage sector is mostly black because it allowed them to appeal to racial prejudice, which is useful in maintaining support for the structure of the dual economy — and hurting everyone in the low-wage sector.  Temin notes that “the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.”

Temin points out that the presidential race of 2016 both revealed and amplified the anger of the low-wage sector at this increasing imbalance. Low-wage whites who had been largely invisible in public policy until recently came out of their quiet despair to be heard. Unfortunately, present trends are not only continuing, but also accelerating their problems, freezing the dual economy into place.
[h2]What can we do?[/h2]
We’ve been digging ourselves into a hole for over forty years, but Temin says that we know how to stop digging. If we spent more on domestic rather than military activities, then the middle class would not vanish as quickly. The effects of technological change and globalization could be altered by political actions. We could restore and expand education, shifting resources from policies like mass incarceration to improving the human and social capital of all Americans. We could upgrade infrastructure, forgive mortgage and educational debt in the low-wage sector, reject the notion that private entities should replace democratic government in directing society, and focus on embracing an integrated American population. We could tax not only the income of the rich, but also their capital.

The cost of not doing these things, Temin warns, is incalculably high, and even the rich will end up paying for it:

“Look at the movie, Hidden Figures: It recounts a very dramatic story about three African American women condemned to have a life of not being paid very well teaching in black colleges, and yet their fates changed when they were tapped by NASA to contribute to space exploration. Today we are losing the ability to find people like that. We have a structure that predetermines winners and losers. We are not getting the benefits of all the people who could contribute to the growth of the economy, to advances in medicine or science which could improve the quality of life for everyone — including some of the rich people.”

Along with Thomas Piketty, whose Capital in the Twenty-First Century examines historical and modern inequality, Temin’s book has provided a giant red flag, illustrating a trajectory that will continue to accelerate as long as the 20 percent in the FTE sector are permitted to operate a country within America’s borders solely for themselves at the expense of the majority. Without a robust middle class, America is not only reverting to developing-country status, it is increasingly ripe for serious social turmoil that has not been seen in generations.

A dual economy has separated America from the idea of what most of us thought the country was meant to be. 

https://www.ineteconomics.org/persp...sing-into-a-developing-nation-for-most-people
 
Great read and very informative and true imo.
This was predicted and been in play for a while now. Everyone been focused on race for so long that the big picture (economic & class division) went under the radar for most off middle class America. We live in a Capitalist Society it's either "You got money or you don't".
Racism is still a huge problem but money is the only race that controls everything. I'm seriously scared for the next generation let alone my own golden years. :smh:
 
forgive mortgage and educational debt in the low-wage sector, reject the notion that private entities should replace democratic government in directing society, and focus on embracing an integrated American population. We could tax not only the income of the rich, but also their capital.

good luck on that.
 
I really believe America is this too far gone to reverse course. The social, racial, economic factors that are "in play" today are the same factors that have been in place since this country's birth.

The rich ruling class play poor whites and certain other skin folk like a fiddle.
 
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I really believe America is this too far gone to reverse course. The social, racial, economic factors that are "in play" today are the same factors that have been in place since this country's birth.

The rich ruling class play poor whites and certain other skin folk like a fiddle.

I don't think so.

At least not yet.

I can say from personal experience that the US exhibits many of the signs that exist in developing nations; they are growing, but they can still be reversed. However, it will take a lot of effort to get there.

The most important thing that America still has, and the one thing that will be its saving grace IMO is the respect most people still have for the institutions. Once that respect is gone, so will the country.

The current administration doesn't help (that's an understatement BTW), but the willingness of the people to go out and express their displeasure, along with the growing realization that a particular segment of our political apparatus has been dragging us down show that the US can still be saved.

In the developing countries Lewis studied, people try to move from the low-wage sector to the affluent sector by transplanting from rural areas to the city to get a job. Occasionally it works; often it doesn’t. Temin says that today in the U.S., the ticket out is education, which is difficult for two reasons: you have to spend money over a long period of time, and the FTE sector is making those expenditures more and more costly by defunding public schools and making policies that increase student debt burdens.
Getting a good education, Temin observes, isn’t just about a college degree. It has to begin in early childhood, and you need parents who can afford to spend time and resources all along the long journey. If you aspire to college and your family can’t make transfers of money to you on the way, well, good luck to you. Even with a diploma, you will likely find that high-paying jobs come from networks of peers and relatives. Social capital, as well as economic capital, is critical, but because of America’s long history of racism and the obstacles it has created for accumulating both kinds of capital, black graduates often can only find jobs in education, social work, and government instead of higher-paying professional jobs like technology or finance— something most white people are not really aware of. Women are also held back by a long history of sexism and the burdens — made increasingly heavy — of making greater contributions to the unpaid care economy and lack of access to crucial healthcare.

The whole paragraph is a pretty accurate explanation of why it is difficult to move up the economic ladder in developing countries.

One thing the article didn't mention is that once the enforcement of laws and rules becomes selective and dependent on how wealthy the suspect is, corruption sets in and becomes the only way to function over time. Where I grew up, it isn't uncommon for college applicants to seek out professors and slip them envelopes full of cash to guarantee a spot for the next academic year. Some government officials (especially the high ranking ones in the education sector) even have lists of applicant names that they send to the admission committees.

When you look at how unbalanced the US justice system is, where affluenza gets you probation after recklessly killing four people, it's not hard to see how far down the hole this country can go, especially if you've been there before. The thing Americans need to do is to stop being complacent about their government if they want to bring back some sort of balance to the system.
 
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The system seems set up to hinder some to have a difficult time progressing which in turn helps a chosen few.

War on drugs...
Obtaining proper public education
Adequate housing
Public assistance
Achieving goals then being dismissed (aa)
 
The system seems set up to hinder some to have a difficult time progressing which in turn helps a chosen few.

War on drugs...
Obtaining proper public education
Adequate housing
Public assistance
Achieving goals then being dismissed (aa)

This is how it's designed. The sooner people catch on the better.
 
Classism is a function of racism. Show me the black elite in the US. I'll wait.

“the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.”

The system is collapsing because its evil ways have made it a cannibal, consuming its own (whites) to sustain itself as black people are no longer enough to nourish it.
 
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good luck on that.

I just watched the Michael Moore documentary which was decent, but I'm definitely leaving America. Once I get my A&P license. This is a giant trap of a business. It ain't the dream it once was. Everything is for sale, health care and education. I'm going to where the country takes care of its people. I'm thinking of Italy, Africa, or Slovenia, I love America but **** this government. And every great empire shall fall, Persia, roman, ect.. get out now. I'll only come back to have my kids born here. That's it.
 
 
good luck on that.
I just watched the Michael Moore documentary which was decent, but I'm definitely leaving America. Once I get my A&P license. This is a giant trap of a business. It ain't the dream it once was. Everything is for sale, health care and education. I'm going to where the country takes care of its people. I'm thinking of Italy, Africa, or Slovenia, I love America but **** this government. And every great empire shall fall, Persia, roman, ect.. get out now. I'll only come back to have my kids born here. That's it.
Why Italy?
 
Why Italy?

From what I hear everyone gets a minimum 8 weeks paid vacation, 2 hr lunch breaks, and it's a different standard of living. Not tryna get rich, just a better quality of living is what they are on. Free health care and education to better its people.

Also saw a little thing on there where France serves its children fine dinning in school, compared to the trash we feed our youth here. I think america literally poisons our minds to make us think we are so much better here and free.. but that's the most dangerous prison, the kind without bars. I'm fed up with this level of degradation/segregation. Not to thread jack
 
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Why Italy?

From what I hear everyone gets a minimum 8 weeks paid vacation, 2 hr lunch breaks, and it's a different standard of living. Not tryna get rich, just a better quality of living is what they are on. Free health care and education to better its people.

Also saw a little thing on there where France serves its children fine dinning in school, compared to the trash we feed our youth here. I think america literally poisons our minds to make us think we are so much better here and free.. but that's the most dangerous prison, the kind without bars. I'm fed up with this level of degradation/segregation. Not to thread jack

Their youth unemployment rate is also exponentially higher than most of Europe outside of Spain and Greece. Their economy and more so their local government is in complete disarray. If I were to go to a European country it'd be eithe Germany, England, or one of the Scandinavian countries.
 
I really believe America is this too far gone to reverse course. The social, racial, economic factors that are "in play" today are the same factors that have been in place since this country's birth.

The rich ruling class play poor whites and certain other skin folk like a fiddle.
saved me about 1000 words.
 
College professor?

Not hearing it. All those libbies in higher ed are just Obama drones.

Wake me when Larry the Cable Guy opines.



But on the real, this sucks, mayne... I can definitely see a different life between me and my homies from back home. I was fortunate enough get a hoop scholly, or I would've been at the crib right along side them.

:smh: :smh:
 
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We are knee deep in it. Look at our country right now. If I told you back before Barack got elected that this would be the future you wouldn't believe me.

I hop in a time machine and go back to August 2011 and say we're gonna get attacked by "terrorists" which leads to us losing many of the liberties and freedoms we have right now. No... the terrorists didn't take over. We just gave up because we were afraid. Oh yeah, we get a black president too, but that makes the country very racist again. Cops are on video shooting black people monthly. Yeah, like Rodney King and Diallo combined, monthly. Oh and Trump is our president and the middle class is disappearing.
 
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We are knee deep in it. Look at our country right now. If I told you back before Barack got elected that this would be the future you wouldn't believe me.

I hop in a time machine and go back to August 2011 and say we're gonna get attacked by "terrorists" which leads to us losing many of the liberties and freedoms we have right now. No... the terrorists didn't take over. We just gave up because we were afraid. Oh yeah, we get a black president too, but that makes the country very racist again. Cops are on video shooting black people monthly. Yeah, like Rodney King and Diallo combined, monthly. Oh and Trump is our president and the middle class is disappearing.

As some that works as an economist, yes I would, yes I would believe you. The economics trends were happening before Obama too office. J.Cole was right when he rapped "They let a brother steer the ship but never told him the ship was sinking"

The hope with Obama is that he was a liberal (after over 30 years of not having a liberal president) with many progressive policies so that if he could get his entire agenda passed (economic and social), that it could start to reverse the trends that started since the late 1970s. Well maybe not reverse them completely but make some major improvements, and build a bridge to a socially democratic United States

But dude was never offered bipartisanship and the GOP were able to jam him up about a year into office. Liberals did not show up to vote in midterms making things even more hopeless because he then lost nearly all this political power. Then the right wing, and much of white America got inflamed at the sight of a black man being president that a new wave of white supremacy swept over the nation.

And no, we are not deep in it yet, things can still get much worst. Much, much worst.
 
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I didn't mean to imply Obama was responsible.

I didn't not take it as you were, nor was my post really meant as a defense of the man. There are some policies, especially economic, that I disagreed with. Even though I could understand his reasoning

I'm saying as a country, America squandered the past 8 years. If he got his way on everything, the country would be in a much better condition, not perfect, but better. Especially for the bigots that hated him he most. It kinda highlights how self destructive and addictive white supremacy is too many lower class white people.
 
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Of all the empires in human history, the US is probably the only one that chose to decline. That is the most ridiculous thing about it.
 
Classism is a function of racism. Show me the black elite in the US. I'll wait.

“the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.”

The system is collapsing because its evil ways have made it a cannibal, consuming its own (whites) to sustain itself as black people are no longer enough to nourish it.

This is really all that needs to be said. A country founded on blood, moral ineptitude, deceit, fraud, aka anything you could ever fathom as evil but far worse than that was great? It's supposed to continue those ways and not get here? It's actually pretty damn good if you put into account what the justifiable karma/fate SHOULD be. Black people need not participate much anymore please.
 
Great read and awesome article. Man my girlfriend of almost a year and half is caucasian and I'm african american. She was raised in the highest income county in all of Indiana in a two parent household and went to good schools her whole life and graduated from college. I'm from a single parent, low income household but I went to a private HS and college.. 

What's wild is how oblivious most of the upper class is to what's going on in the bottom sector. Like I tell my girlfriend my theories about society and she's like "No way why would they do that?"

For example, I really believe the real reason why schools in the inner city are so terrible is to keep minorities uneducated and therefore increasing their chance of going to jail/prison. Why? Privatization of jails/CCA and government. It's a multi billion dollar industry. 

It's wild you really just gotta educate yourselves and not listen to mainstream media to stay informed on topics like this because they just shoot out BS to us daily.
 
Part of the reason those schools are bad is also the biases teachers have. They go into those schools expecting students to be terribly behaved and incapable of rigorous learning so they operate in a way that forces compliance rather than learning. They give them pointless worksheets to keep them busy cause hey don't think they can handle rigor. Lisa Delpit wrote an excellent book on this, Multiplication is for White People.
 
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