All for one and one for all

I met a man a few weeks back and he told me his story.  It’s a real story, but I changed his name to protect his identity.  Milt, a college graduate lost his well-paying job of eight years in September of 09.  He filed for unemployment and began the process of filling out three to six applications per day for 14 months. 

Contrary to popular opinion, unemployment income is not a princely sum – in his case it was $580 per month.  Being that Milt had child support payments of $150 per month, he was very motivated to find employment.  But that wasn’t going to be easy.

After filling out between 800 and 1000 applications, he won two interviews for minimum wage jobs. One of the hidden obstacles he discovered was that many hiring managers were instructed to “not hire the unemployed.”

After months of struggle, Milt decided to start his own business.  It lasted a few months and went under.  And so did his life’s savings.  No job.  No savings.  No insurance or benefits of any kind and 46 years of age; it was his  mother’s house or the streets. 

As usual, there’s some good news and bad news.  First the good news: he finally found a fulltime job.  Then the bad news: it pays $20,000 per year and he can’t live on that amount. By the way, his previous income was $45,000.  In fact, Milt’s story is not so unusual.  It’s becoming very familiar.  But don’t despair.  Some people continue to do very well.  The top 1 percent received 93 percent of the increase in wealth last year.

So why is this happening?  From William Lazonick, on Alternet.org, “There was a time when high corporate profits meant bright employment prospects for most members of the US labor force. That relation between profits and prosperity was strongest in the immediate post-World War II decades when US corporations led the world in manufacturing, provided workers with career-long employment security, and reinvested profits in productive capabilities in the United States. For the past three decades, however, the pursuit of corporate profits has been at the expense of prosperity for an ever-growing proportion of the American population.”

Here’s the part that everyone, including those corporations, should be concerned about:  When enough people suffer the fate that Milt did, the economy will get even worse.  You see, the simple economic truth is that the middle class is a consumer class.  And like it or not, America has a consumer economy.  Even with all their wealth, the 1 percent can’t consume enough to keep our economy afloat.  So the sum of this game equals zero.

Now this is where the debate usually breaks into two positions: Government does or does not have a legitimate role to play in the lives of people who are hit hard by the economic situation.  And no, I’m not debating that question. But I will remind you folks, that if we want a the government to play a role, we the taxpayers, not the government, have to pay for it.

My point is that without consumers, consumer economies fail.  There are those who will fuss about exactly what percent of our GDP is consumer spending but it’s upwards of 50 percent.  And on the current trajectory, fewer and fewer people will have more and more of the wealth leading us into a vicious downward cycle.

So I think we need to take our morality hats off and quit discussing who and who does not deserve to be helped and begin to see the fate that awaits us if we stay on this trajectory where a few people have all the money. 

All the moral arguments and economic theories be darned.  If the middle class continues to disappear so will our economy.  You can take that to the bank.  You might not have anything else to take there.      

Robert DeFilippis
ps. I encourage your comments!