The Middle Class Two Income Trap

[ThePythonicCow]

Re: The Middle Class Two Income Trap

Does everything that comes with unintended consequences have to be a conspiracy? Do TPTB (Whoever they are) spend all this time thinking of all these ways to beat the average person into the ground?

Isn't it just possible that life is unfair and is full of unintended consequences.

You are touching on one of the great challenges of our time (perhaps of anytime in civilization.) How is it that so much seemingly orchestrated crap comes from so many seemingly well intentioned people?

The dichotomy you present, between (1) consciously conspiring Powers That Be (whoever they be) and (2) life being simply unfair and full of unintended consequences is, by my intuition, overly confined. Neither half seems right to me, and you can't prove (2) by disproving (1) because you can't prove that these two choices cover all possibilities.

Now if only I could describe, to myself even, what the actual nature of this is, I'd be some famous freakin' genius, or else drawn and quartered by TPTB (or both.)

[Starving Steve]

Re: The Middle Class Two Income Trap

OK, I'm not arguing with more people moving in together. That's definite and a logical result of economic events.

I'm more interested in the claim that people are *deliberately* buying larger places in preparation for this. Are using the conversion of out-buildings as your basis for this?

If anything, I think we'd see the reverse. Going away from the McMansions to smaller, easier on the utilities houses but with more people. You may get the occasional McMansion turned into a modern group-house....

There are two trends emerging which might create an increase in average household size: a.) children returning home as adults to live with their parents; and b.) non-family people moving together to share costs of a large dwelling unit.

If the Joe/Jill Six-packs like me are rational--- and I believe they are rational--- then McMansions are being bought to be used for mortgage tax-deductions in the U.S, also to be used as a redemption sink for questionable (and risky) paper money, also to be used as a hedge against inflation, also to be used as rental property (to generate income).

[metalman]

Re: The Middle Class Two Income Trap

You are touching on one of the great challenges of our time (perhaps of anytime in civilization.) How is it that so much seemingly orchestrated crap comes from so many seemingly well intentioned people?

The dichotomy you present, between (1) consciously conspiring Powers That Be (whoever they be) and (2) life being simply unfair and full of unintended consequences is, by my intuition, overly confined. Neither half seems right to me, and you can't prove (2) by disproving (1) because you can't prove that these two choices cover all possibilities.

Now if only I could describe, to myself even, what the actual nature of this is, I'd be some famous freakin' genius, or else drawn and quartered by TPTB (or both.)

i've stumbled across your personal web site... or maybe not!

[ThePythonicCow]

Re: The Middle Class Two Income Trap

i've stumbled across your personal web site... or maybe not!

Damn - how did you know??

[Debt-freeTICer]

Re: The Middle Class Two Income Trap

I don't want specific gender roles for either gender. I have never been in favour of going back to the old ways.

However, I do not like women's lib types just dumping responsibility onto the man and not taking half of the responsibility of supporting the household themselves. The way it is now, if the woman wants to go to war, she goes to war. If she wants to work, she goes to work. If she doesn't want to work, she stays home. If she wants a new husband, she just goes to a divorce lawyer. The guillitine comes down, and she gets half of everything in a divorce settlement, automatically. Goof around and enjoy life, she still gets half. But a male doesn't quite get the same options; in theory yes, in practice no.

A cat in a marriage wouldn't cause problems. No divorce lawyers, nor settlement agreements, nor automatic 50:50 for a cat. No automatic support entitlements for a cat or for its kittens. No unknowns with a cat. No: "I'll stay as long as it works for me," with a cat.

Cat cost: 33cents per day for cat food. And that is it; you have a friend for life.

Do you know of a cat that ever got affirmative action as an entitlement in the job market?

A quote from the late Ann Landers, newspaper columnist which I have never forgotten: "Anyone who thinks marriage is a 50/50 proposition either hasn't been married or doesn't know fractions."

I like cats, but I can't eat a whole one.

[BuckarooBanzai]

Re: The Middle Class Two Income Trap

Does everything that comes with unintended consequences have to be a conspiracy? Do TPTB (Whoever they are) spend all this time thinking of all these ways to beat the average person into the ground?

Isn't it just possible that life is unfair and is full of unintended consequences.

"In politics, nothing happens by accident. If it happens, you can bet it was planned that way. " --Franklin Delano Roosevelt

You need to come to grips with the fact that these people are simply much smarter than you, or me. Does your dog understand anything about what you do? Of course not, it all looks like a series of random coincidences to him. As long as he gets fed and gets taken for a walk 3 times a day, that's all that matters to him.

Do some research on the Ford Foundation, Tavistock Institute, or the Rockefeller Foundation. These organizations are in the business of social engineering. Go to the Ford Foundation home page and this is what you'll see right at the top: "Working with Visionaries on the Frontlines of Social Change Worldwide". Could it be any more obvious??

Time to wake up.

[ThePythonicCow]

Re: The Middle Class Two Income Trap

Time to wake up.

I'm currently reading Andrzej M. Lobaczewski's Political Ponerology (A Science on the Nature of Evil Adjusted for Political Purposes).

His readability index is a tad high from my modest Bovine brain and I'm still chewing my cud on this. But my initial impression is that his discipline of "ponerology" does a better job than I've seen before of explaining this paradox: is it some grand conspiracy or is it just "unintended consequences?"

My current tentative elevator summary of his work is that (1) some people are just plain evil psychopaths without a moral compass, (2) societies go through cycles in which such psychopaths gain excessive dominance, and (3) we're in such a time now.

[BuckarooBanzai]

Re: The Middle Class Two Income Trap

I'm currently reading Andrzej M. Lobaczewski's Political Ponerology (A Science on the Nature of Evil Adjusted for Political Purposes).

His readability index is a tad high from my modest Bovine brain and I'm still chewing my cud on this. But my initial impression is that his discipline of "ponerology" does a better job than I've seen before of explaining this paradox: is it some grand conspiracy or is it just "unintended consequences?"

My current tentative elevator summary of his work is that (1) some people are just plain evil psychopaths without a moral compass, (2) societies go through cycles in which such psychopaths gain excessive dominance, and (3) we're in such a time now.

Lobaczewski is right on the mark, IMO. Sociopaths with 180 IQs are well equipped to gravitate to the top of hierarchical and compartmentalized organizations, like government or corporate bureaucracies. The more power that these types of organizations have, the more power these sociopaths have.

Since we will always have high-IQ sociopaths with us, the only solution, then, is to severely curtail the power of any and all hierarchical, compartmentalized organizations across all fields of human endeavor (politics, business, religion, etc.)

[ThePythonicCow]

Re: The Middle Class Two Income Trap

... the only solution, then, is to severely curtail the power of any and all hierarchical, compartmentalized organizations ...

Pray tell, how do we severely curtail said power?

Do we empower some organization sufficiently to accomplish this?

If so, how do we curtail that organization's power without rendering it impotent, or if we don't curtail it keep it from becoming another agent of oppression?

There is no central answer in my view. A free society can only exist so long as its citizens remain alert and morally responsible. However once immediate threats to freedom subside and prosperity becomes widespread, citizens become less alert and more irresponsible. The cycle continues.

Perhaps Lobaczewski has a better suggestion in the last half of this book. I'm only half way through it so far.

[Rajiv]

Re: The Middle Class Two Income Trap

I have found some of Sapiens' posts really helpful in this regard.

[ThePythonicCow]

Re: The Middle Class Two Income Trap

I have found some of Sapiens' posts really helpful in this regard.

Can you provide a brief summary of your thoughts here?

[Chris Coles]

Re: The Middle Class Two Income Trap

Great debate, but wrong conclusions.

Trying to define the problem as either women working or political intervention is incorrect. The problem of declining middle class family incomes stems from a classic unintended consequence that in turn led to government executives, (not the politicos), discovering that their income increased if they supported that unintended consequence; the draining of the "hidden" prosperity of the nation.

"Before we can define what must be altered to bring about the changes needed, we have to look back to where the FIRE economy began and learn a classic lesson from history. I believe that we can define that beginning precisely, both in time and location. It was at a meeting in London in 1964 between two individuals, Jim Slater and Peter Walker and a London based savings institution. The conversation went something like this:

Slater Walker; we have identified a company that we believe has hidden value and we have come to you because we need funding to enable us to purchase a block of their shares sufficient to be able to take control of that company and break it up to “unlock” that hidden value. (Up to that point in time, a public company was considered to be sound and well run if it had, over time, built up internal prosperity, some in the form of a cash surplus, some in fully depreciated property with an understated “book value” are two examples sufficient to give you an idea of the picture Slater Walker presented).

They got the funding and they proceeded to do precisely what they had set out to do, they broke up the company and released substantial hidden value to the shareholders, the original savings institutions. Once this single event became visible, an unstoppable new paradigm slowly emerged which we now describe as the FIRE economy. Looking back, at the time, it was so easy to see the short, even medium term benefits.

But no one saw that they had also changed the fundamental direction of the responsibilities of the savings institution; from external, arms length investment, to internal investment with the primary aim of generating additional prosperity for the savings institution at the expense of the overall prosperity of the external community.

That the underlying philosophy of the savings institution changed direction and where in the past they had invested the savings of the nation – at arms length and thus without an expectation of control over the external community of savers; they now invested to bring increased prosperity to the savings institution.

The balance between the prosperity of the external community and the internal savings institutions changed. From that moment onwards, all investment became centred upon the need to maximise the prosperity of the savings institutions, what we now describe as the FIRE economy.

From that momentous meeting onwards, Savings institutions lost sight of their underlying responsibility to invest equity capital to create long term prosperity at arms length and instead concentrated upon investment into “privateers” 16 who would bring that prosperity back into the savings institutions.

What should have happened was the savings institution should have told Slater Walker that they could have all the funding they needed to compete with the existing company and through competition, force the existing company into using its hidden value to in turn compete against them. What happened instead is that from that moment, the savings were not invested as equity capital into new industry, but were instead, invested back into the institutions themselves.

At first sight, that simple statement seems innocuous but in fact, it underpins the complete destruction of the industrial society. Instead of investment of savings into industry created by the industrious of the savers community, all future investment had to compete with the returns available internally to the FIRE economy. Savings were from then onwards used internally, within the institutional economy to change the value of the paper assets held by the institutions.

Investment between the institutions from that moment became the dominant producer of the income of the institutions.

Let me give you an example, a parallel if you like. If a savings institution buys 10 million new issued shares, say of a base issue value of say, $0.10, ten cents, then the issued capital of the company will be $1 million. So the value of the investment into job creation for the savers of the local community is $1 million.
But the stock market value might now be, say, $60 and the savings institution now buys those same 10 million shares for $600 million from another similar savings institution, that money, the $600 million, is not invested as new job creation equity capital back into the savers local community; but instead, the money stays within the savings institutions internal economy. The savings are not invested into the local community, but instead drained off and used by the institutions for their own benefit.

Once you change the emphasis from investment of equity capital into the industrious of the community of savers; to investment BETWEEN the savings institutions, you automatically lock out the savers who now cannot benefit directly from local investment. And that is exactly what has happened. The prosperity of the community has been surrendered and instead used as the base investment between institutions.

By far the majority of that prosperity has now been transferred from the local communities into the holdings of the savings institutions as investment between the institutions."

Taken from Chapter 10 The Fulcrum for Change: The Road Ahead from a Grass Roots perspective.www.chriscoles.com/page3.html

If you lend someone $10,000 you drain back say, $12,500. But if you instead invest, say. $10,000 of new equity capital into new job creation; the money stays in circulation within the local economy.

What has happened is that you are all a part of the overall problem, but without realising it. You trade. But your trades are outside of the local economy and into exactly the same economic system that has already drained out the hidden prosperity of the entire nation. It took some five decades and was so slow, you simply did not notice it.

There is only one mechanism to replace that missing prosperity, equity capital investment back into each local community. But how long will it take for the message to really sink in?

[cjppjc]

Re: The Middle Class Two Income Trap

"In politics, nothing happens by accident. If it happens, you can bet it was planned that way. " --Franklin Delano Roosevelt

You need to come to grips with the fact that these people are simply much smarter than you, or me. Does your dog understand anything about what you do? Of course not, it all looks like a series of random coincidences to him. As long as he gets fed and gets taken for a walk 3 times a day, that's all that matters to him.

Do some research on the Ford Foundation, Tavistock Institute, or the Rockefeller Foundation. These organizations are in the business of social engineering. Go to the Ford Foundation home page and this is what you'll see right at the top: "Working with Visionaries on the Frontlines of Social Change Worldwide". Could it be any more obvious??

Time to wake up.

Well if Roosevelt said it, it must be true. I'll wake up when you put the paranoid pills down. That goes for you too Cow.

Woody Allen once said "Just because you're not paranoid, doesn't mean they're not out to get you." You could also say just because bad things happen, it doesn't mean people want it that way. Sure some people are bad, but most people who are rich and have power are not spending their time plotting how to keep their foot on everyone elses throat. Or how to blow up buildings and go to war.

[c1ue]

Re: The Middle Class Two Income Trap

The majority of couples could live on one income if they wanted to. I think most of the problem is people spend money on more things than their grandparents did. People are buying 4 bedroom houses in their early 20's. People don't drive used cars anymore and instead feel the need to lease a brand new SUV. It costs me less than 50 cents to make a loaf of bread but very few people my age make their food from scratch even if they do stay home. How many middle class women are carrying $300 designer purses, middle class men are driving ATV's and teenagers are playing on $500 game systems?

K,

Look up Elizabeth Warren's speech at Berkeley; there she talks specifically about how spending changed for the 4 person family from the 1970s to the early 2000s.

What she found from the Census data was that spending on things like food (including eating out), entertainment, etc etc actually declined. The only categories that went up were: child care (100%), health care, taxes, housing, and car (per car lower, 2 cars more than previous 1 car).

This result is what EJ has mentioned, as has Dr. Michael Hudson: the financialization of American life via mortgages has decreased quality of living in every way.

[ThePythonicCow]

Re: The Middle Class Two Income Trap

Great debate, but wrong conclusions.

Trying to define the problem as either women working or political intervention is incorrect. ...

Huh??

You're responding, it would seem, to a request I made of Rajiv to elaborate his mention of Sapien's posts.

What debate do you label great?

What conclusions do you label wrong?

What problem is neither due to women working or political intervention?

Your good response struck me, at first read, to be a non sequitur.

===

Let me suppose that the answer to my just expressed confusion is that you're responding to the overall discussion of this thread, not to my immediately preceding post, and that you're suggesting that the problems we face are due to replacing local equity with remote debt.

First, is that what you're suggesting?

Second, if I'm supposing correctly here, then I beg to differ good sir.

The problems we face were already sufficiently evident for the American President Eisenhower to warn of them in his farewell address in 1960, when he warned of the encroaching powers of the military-industrial complex. This was four years before the London meeting you reference.

The grand scale of the lies, fraud, theft, and falsely justified wars is no more explained by a shift in investment vehicles than would be the Great War, the Great Depression, the Second World War, or the Gulags, Famines, Cultural Revolutions and Killing Fields of Russia, China, and Cambodia. Nor will the creation of some modest mechanisms for encouraging more local equity investment remedy the problems that face us.

A typhoon is not caused by a drop in barometric pressure, nor cured by the manufacture of some air pumps.

Sometimes I wonder if Mr. Coles is not like the inventor of an improved hammer, advising all the customers of the local hardware store (even those looking to obtain a screwdriver or wrench) of the advantages of his hammer (all this during the London blitz :eek:.)