Sanchez on Class and Other Subjects

Commentary: It's time for America to think straight about class

By Mary Sanchez | The Kansas City Star
So now, with people's 401(k) retirement accounts vanishing along with their puffed-up middle class pride, perhaps there is space for a little truth telling.

The average American never leaves the class level he or she is born into. Yes, it's true, despite all those Horatio Alger kitchen table talks about "you can be anything you want dear, this is America!" I don't want to let greedy financiers off the hook for current market turmoil, nor do I wish to deflate the ambitions of next great entrepreneur, Google founder or Warren Buffet in the making. But Americans just don't understand class and how it works within the version of capitalism that is the U.S. of A.

Just consider the heedless and lemming-like way most Americans stumbled into this recession.

For decades, people truly believed they were far better off financially than they actually were, even though the average American worker saw a 16 percent drop in his earnings (adjusted for inflation) between the 1970s and 2004, according to economist Benjamin Friedman of Harvard. Meanwhile, the top 1 percent of the income scale skyrocketed ahead? Yet somehow, every American proudly proclaims membership in "the middle class." Amazing what E-Z credit and the ability to buy a latte every morning can do to a worker bee's perspective.

It is time for the voting masses – and I'd include myself here – to understand economic facts better and begin pushing for real change. We need to shed our mythical beliefs about class and build a stable economic foundation that all Americans can depend on. I suspect more people will be open to this line of learning now that unemployment has hit 8 percent. For decades, people missed the fact that a white collar job, a college degree and a cubicle did not necessarily offer them a level of job or financial security above the blue-collar, manual labor workers they thought they'd moved ahead of.

Consider the findings of the 2009 MetLife Study of the American Dream, released in March: Half of all respondents admitted they were one or two paychecks from ruin. If they lost their jobs, within a month, 50 percent of the people polled admitted they would not be able to pay their bills.

Another 28 percent said losing their job would find them unable to pay their bills within two weeks. More than a quarter of people earning $100,000 said they'd be insolvent after a month of unemployment. That's not middle class stability as most people would define it. No doubt this situation owes much to the recent crash in home prices and the cratering of the stock markets. But that's another way of saying that many Americans were simply never as upwardly mobile as they had assumed, or deluded themselves into thinking they were.

You may own a sprawling home with the three-car garage, take an annual trip to Cancun, and be able to discuss basic investment strategies, but somehow at least a quarter of you are living one month away from financial oblivion. The trappings of middle class life are not the same as security.

Another sign of our cluelessness is that half of us are railing (a few decades late) at the excesses of the executive class, while the other half of us are railing at deadbeat subprime borrowers. What we should be doing is pouncing upon our elected officials, demanding that Congress lay a foundation for true prosperity and security, as previous generations did in the 1930s and 1950s. In this session, Congress will likely decide on major legislation that would make it easier for unions to organize workplaces; that would reform the American health care system; and possibly that would overhaul the way we regulate banks and other financial institutions. In each of these areas we need bold change from recent policy.

I hear the cry of "socialism" coming from the back of the room.

This isn't about class conflict; this is about building a stable foundation for the future, so hard work really will get people ahead.

My Commentary:

America does not have a “version of capitalism”, but a mixed economy of steadily eroding capitalistic freedom and ever expanding government control. There is nothing new or bold about Obama’s policies, which continue America on the century-long path toward total statism.

Ms. Sanchez points to the 1930s and 1950s as models we should follow to “lay a foundation for true prosperity and security”. Far from any such thing, the foundation for the current crisis in finance and healthcare were laid in the early to mid 20th century in a quest for the free lunch of government-guaranteed “security”. Instead of turning toward a free market, she calls boldly for government to be rewarded for its failures with still more power.

The two areas of concern mentioned by Ms. Sanchez, the financial crisis and the mess that is our healthcare system, are perfect examples of a mixed economy, not capitalism. The third-party-payer system, the thousands of insurance mandates, barriers to interstate competition for health insurance, and rights-violating programs such as Medicare, Medicaid, SCHIP, and EMTALA have virtually destroyed all but a few remnants of capitalism and free markets in healthcare. The current financial crisis is proof of the failure of government regulation and market interference, not capitalism. This crisis occurred within the context of a heavily regulated banking system under the control of a coercive government central bank money monopoly. On top of that is a whole network of market distorting government housing policies accumulated over a period of decades spawned by the intention to "encourage" homeownership. We are witnessing the climax of the failure of those policies and regulations today.

Ms. Sanchez doesn’t like hearing the term “socialism”. But words have meanings, and ignoring the nature of where America is heading will not wish it away. The fact is that socialism is coming to America via the back door of welfare state fascism, a system whereby most property remains in private hands, but is totally controlled by the state. It is just this mixed economy trending toward total fascism that tends to freeze people into economic “classes”. The graduated income tax, massive government business regulation, dependency-fostering welfare-state programs, and tax and monetary policy are among the reasons upward mobility is shackled in America. Capitalism, the system of individual rights, eliminates all of those barriers under a system not of classes or tribes or special interest groups but of individuals associating with each other through voluntary trade and contract to mutual advantage.

“Hard work” is not the primary ingredient to “get ahead”. People worked a lot harder in pre-capitalist times just to stay ahead of the next famine. Slaves can be made to “work hard”. The irreplaceable virtue that lies at the foundation of economic prosperity and progress is the individual human mind. But reason and thinking require both political and economic freedom…i.e., to be free from interference by force from one’s neighbors and the government. Only one social system establishes the proper social conditions man’s rational faculty (and thus wealth production) requires…capitalism.

The fundamental battle today is between capitalism and socialism, or individual rights and the total collectivist state. Mostly what we hear today in varying degrees from both major parties is more of the second. The truly bold change would be to discover and embrace individual rights and capitalism as the foundation for a truly free and prosperous laissez-faire society.

Other's Commentary:

borisjimski wrote on March 17, 0:29 AM:
"Local projects should be paid out of local funds, not by federal moneys taken from people who are nowhere near . . . in a quest for the free lunch of government-guaranteed “security.”" Right you are! So all those southern states that live off the largess the Yankee states give them each year as the excess over what they pay into the federal system, time to cough it up. As to healthcare being a market-based business, do you really believe people price out how much it will cost them at each hospital with each doctor when they have a heart attack or discover a lump? "This crisis occurred within the context of a heavily regulated banking system under the control of a coercive government central bank money monopoly," notwithstanding the fact all those regulations were ignored the last eight years. Geez Mike, sounds like you're getting your talking points directly from the AEI. Capitalism isn't a social system, it's an economic system. And socialism isnt the total collectivist state.

MikeZemack wrote on March 17, 9:06 PM:
Capitalism in the philosophical sense is a social system based upon the recognition of individual rights to life, liberty and property, and a government limited to protecting those rights. A free market is an economic system, which is integral to capitalism. But capitalism encompasses both political and economic freedom, Political freedom is only possible under economic freedom. Freedom of speech, religion, association, etc. are not practicable when government controls one’s property and livelihood. Only capitalism provides both freedoms.

Government economic regulation is the means by which politics corrupts the private economy. Political pressure on the banks applied through the conduit of the regulators and the GSEs, compounded by the Fed’s easy money, low interest rate policies, led to this crisis. The quick-buck artists on Wall Street, while not to be excused, were merely riders on a political train. At no time did the government relinquish any of its regulatory powers.

Other's Commentary:

mongrel wrote on March 17, 3:10 PM:
Mike Zemack said it all:

"The fact is that socialism is coming to America via the back door of welfare state fascism, a system whereby most property remains in private hands, but is totally controlled by the state."

This is not new, it has happened elsewhere in the past. "Limousine liberals" and misguided leftist do-gooders were instrumental in making "welfare state fascism" become reality.

What "our" limousine liberals forget that all those previous limousine liberals also thought they will be allowed to keep their limousines while the misguided "masses" will be ruled by the socialist government. Instead of limousines, they were labelled "enemies of all classes" & ended up in prison, in concentration camps, and execution chambers. The "masses" lost freedom of speech, freedom of assembly, freedom of religion, the right to private property, and became poorer, hungrier, completely oppressed by government.

MikeZemack wrote on March 17, 9:22 PM:
Mongrel, you are scarily right.

The growing dependency on government, the breakdown of society into a civil war of special interest pressure groups at the expense of the individual and his rights, government controls breeding more government controls, calls for more and more sacrifice to the state (or the nation or the race or society), exploding government debt, a flood of printing press money…it’s all happened before.

The closest historical parallel to the America of recent decades is pre-Hitler Germany…from Bismarck’s 1880s welfare state to the 1930s.