U.S. Federal Government Created the American Middle Class – In spite of What You May Have Been Told by Free Market Advocates

The American Federal Government Invented the Middle Class: TeaPublicans now in power in DC are determined to shoot it down.

For the American Dream - directly related to the rise of the Middle Class - to work, people have to believe that it is "possible" for them to reach a higher standard of living. If they don't believe the possibility or opportunity is there to rise in society, then the Dream is dead.

Occupy Wall Street is making all of us face serious questions about the future of the Middle Class and survival of "full faith and confidence" so necessary to the value of our monetary script and a thriving marketplace.

A full chance for individuals to work toward a higher level of wealth and successful achievement has been a perennial draw for immigrants striving to come to America.

"America has been peopled by Europeans primarily because they expected in that country to make more money more easily," Herbert Croly wrote.

American Economic Paradise

"It's no accident that the United States has always been an economic paradise for the middle class -- that class was invented and reinvented by the government. Now the government needs to reinvent it again -- before it's too late."

This a part of a commentary by Michael Lind, Whitehead Senior Fellow, in the Atlantic Monthly in "Are We Still a Middle-Class Nation?"

The Economy of America Has Taken Distinct Changes in its Unfolding Stages: Agricultural, Industrial, and Service

Back to Michael Lind:

"To most of us, the transition from farmer to industrial worker to service worker -- sometimes within three generations of one family -- appears in retrospect to have been inevitable, like some geological process. Indeed, MANY CONSERVATIVES AND LIBERTARIANS SEEM TO BELIEVE THAT A MASS MIDDLE CLASS IS AN INEVITABLE BY-PRODUCT OF CAPITALISM. The truth is that each of AMERICA'S SUCCESSIVE MIDDLE CLASSES HAS BEEN ARTIFICIALLY CREATED BY GOVERNMENT-SPONSORED SOCIAL ENGINEERING -- a fact that is profoundly important for us to admit as we think about the future of middle-class America."

 The favorite mantra of so many advocates of individual freedom, the myth of the stand alone individual, and the anti-government and anti-tax rebels is based on a false premise: The Middle Class is the distinctive work of individuals who work hard, take risks, and are rugged entrepreneurs; best divorced from government intervention or help.

Lind lines it out historically:

"From 1800 to 1848 the U.S. government acquired more than two million square miles of territory, much of it arable, by purchase or negotiation (the Louisiana Territory from France in 1803; Florida from Spain in 1819; Oregon from Britain in 1846), by annexation (Texas, 1845), or by conquest (the Mexican Cession in 1848). Populists sought to ensure that this land went to small farmers rather than large landowners or speculators. THE DANGER OF EUROPEAN-STYLE FEUDALISM IN THE UNITED STATES WAS NEUTRALIZED BY THE LAND ORDINANCE OF 1785, WHICH GUARANTEED THAT THE FEDERAL DOMAIN WOULD BE BROKEN UP INTO "FEE SIMPLE" PROPERTIES, with no complex web of multiple ownership. And the Homestead Act of 1862 provided 160 acres of free public land to settlers who would live on it and improve it for at least five years. Meanwhile, the federal government subsidized continent-crossing railroads, and the Army Corps of Engineers built much of the country's rural infrastructure. This was social engineering on a colossal scale."

"The story was similar for the second American middle class, made up of prosperous urban industrial workers. FROM ABRAHAM LINCOLN TO HERBERT HOOVER, AMERICAN POLITICS WAS DOMINATED BY A BARGAIN BETWEEN CAPITALISTS AND WORKERS; HIGH TARIFFS ON IMPORTS SERVED THE INTERESTS OF BOTH, BY PROTECTING GOODS FROM FOREIGN COMPETITION."

"In addition, the dominant industrial labor force successfully lobbied the government to protect it from competition with other groups. In the late nineteenth century Congress cut off "Oriental" immigration, and after World War I -- with the support of organized labor -- it cut large-scale European immigration. Before World War I informal discrimination prevented southern black Americans from moving to the Northeast and the Midwest to compete for industrial jobs. Finally, child-labor laws removed children from the work force, and "family wage" or "breadwinner" systems -- which paid married fathers more than unmarried, childless men -- encouraged married women to become homemakers. TODAY NOSTALGIC CONSERVATIVES ATTRIBUTE THE PROSPERITY OF THE 1920S TO FREE ENTERPRISE. IN REALITY THE MARKET WAS RIGGED."

To take a deeper look at the basis of the American middle class the writer Lind adds this explanation of the service sector's Middle Class's underlying mechanisms:

"Whereas the second American middle class was founded on high wages for workers in the industrial sector, the third American middle class was founded on the supplementation of wage income by government benefits that collectively constituted a "social wage."

"The social wage included not only private-sector benefits encouraged by the tax code, such as employer-provided health insurance, but also subsidies such as the home-mortgage-interest deduction and government entitlements such as Social Security and Medicare (which freed many middle-class families from the bankrupting burden of caring for elderly parents), the GI Bill for higher education, and student loans.

"As the Yale political scientist Jacob Hacker has pointed out, when the hidden welfare state is counted along with the visible welfare state, the United States has a system of social provision as generous as those in Western Europe -- though in this country much of that system extends only to the middle class and the professional elite.

"The social-wage system had many flaws -- for example, it failed to provide health insurance for tens of millions of Americans. Nevertheless, the third American middle class, the product of Franklin Roosevelt's New Deal, Harry Truman's Fair Deal, and Lyndon Johnson's Great Society, was larger and more inclusive than the earlier two. From the 1930s to the 1970s income inequality in America shrank dramatically, producing what the economic historians Claudia Goldin and Robert Margo have called the Great Compression."
(emphasis added)

Since the 1980's the Service Era Middle Class has been undergoing drastic cuts and a ballooning gap between the now famous 1%'ers and the 99%'ers (who control a vastly unequal portion of the nation's wealth) highlights the 1%'ers who have seen their financial status go from static to negative, from employment to unemployment, from solid home equity to undermined "under water" equity-based on a tsunami of foreclosures.

The vast part of this condition rests squarely on the failed policies of Republicans under George W. Bush and a runaway economic epic including fraud, deception, and theft by Wall Streeters who saw themselves as the "SMARTEST PEOPLE IN THE ROOM." The 2008 market value plunge tallies at a staggering multi-trillion dollar loss, nearly equal to the accumulative income of the nation for one entire year!

The fact that many corporations, national and multinational, have billions in assets which are set outside the economy and banks have used only a small fraction of their government provided billions legislated to help homeowners sits idle, and big banks are severely restricting consumer credit, tells us that Occupy Wall Street is directly on target with its protesting.

We want our money back. We want felony convictions. We want a clear path to recovery.

Americans want the "do nothing," "NO" to everything, TeaPublicans out of the way of the American Dream's recovery and reinvention. Let the government continue to sponsor and provide for our Middle Class-the key to the American experience.

Original.