The economic theory that explains why the middle-class is so upset

Hawkwin called this a “Red Herring” when I cited it as the reason that Pew Study showing that the middle class was doing OK was wrong.

free link:

{{ In February of 2020, there’s this big piece on what they call “the great affordability crisis.” And the point the piece makes is that a lot is looking good in the economy — unemployment is down, wages are rising, people are feeling good. But if you look at the things people really need, housing, health care, education, child care, costs have just exploded. Quote, “The spiraling cost of living has become a central facet of American economic life.” }}

And those costs have exploded due to “rent seeking” behavior by Private Equity, Corporate Executives, Real Estate Brokers, Health Insurers, etc. Excess gains accruing to the Top 5% by strip mining the middle class with price gouging, and other anti-competitive behaviors.

Tax policy that punishes wage & salary earners while favoring investment income and inherited wealth, plus a lack of anti-trust enforcement to address the price gouging, is the source of the problem



From a macro perspective, THE economic problem of the current generation (e.g. all of us over the last 20-30 years) is the failure of governments to adequately enforce antitrust restrictions on megacorporations. So many new business models grew out of technology that politicians and the public gave them a pass as they grew exponentially past the (say) $300 billion mark. The pass was provided because:

  1. politicians and the public didn’t understand HOW these new models could rapidly grow to abuse new types of economic power

  2. politicians and the public forgot 100 years of industrial and political history and tried to give these megacorps the benefit of the doubt that “this time would be different” regarding size, corruption and abuse of market power - a fiction that was easier to convince one’s self to believe if one had a stock portfolio in Microsoft, Apple, Google, Facebook, Netflix, Nvidia, etc.

  3. politicians in a position to push for regulatory enforcement and establish appropriate new laws protecting the overall economy are captive to contributions from those requiring regulation

In reality, there is nothing “unique” about these current technologies that alter the actual macro impacts to a single country’s economy or the world economy of extreme monopolistic competition. In every case:

  • monopolies will abuse market power to collect undue “economic rents” from the economy
  • monopolies will abuse market power to leverage “externalities” that allow private costs that should DISCOURAGE lower production to be hidden or pushed onto the public, encouraging MORE production of goods or services that aren’t covering their true hidden costs in pollution, health consequences, human rights, etc.
  • monopolies will stifle innovation in ways that more than counteracts any “network effects” their underlying scale might otherwise claim
  • monopolies will corrupt governments to protect their market power
  • monopolies are the exact corporate analog to the concentration of wealth among individuals and they are the primary CAUSE of extreme wealth inequity, by abusing market power to shrink margins of supplier businesses and distorting labor markets and driving down wages by dumbing down jobs that is only practical at massive volumes

In short, the world economy’s health SEEMS precarious because the foundation upon which everyone says it should be based – that of fair competition – has been obliterated by probably 30-40 top firms worldwide.

As Steppenwolf so aptly put it,

And though the past had its share of injustice
Kind was the spirit in many a way
But it’s protectors and friends have been sleeping
Now it’s a monster and will not obey



Bring back the Trust Busters!

The Captain


There is a much bigger macro question.

The pandemic proved paper can simply be printed and handed out.

I am NOT in anyway saying people should get free money or more free money.

The problem is all inclusive pay for 80% of the population is not delivering a reasonable return for the labor. That is not being directly addressed in the decision making or rhetoric.

We can not address all inclusive pay or wealth until we have more factories. We have to leverage production in North America.

It is not like any of us do not want more wealth for the US, Mexico, and Canada. This applies to the UK and Japan as well.

There is a history in the US of supply-side economics and a deep dissatisfaction.


Must not “burden” the “job creators”. :slight_smile:



It has been tried multiple times since at least the 1890s (really !!) and it never worked.