On America's Middle-Class Divide

Tyler Durden's picture

With both political parties having concluded their respective rah-rah-fests and each vehemntly proclaiming "The Other Side" as failing miserably; it appears, as Raghuram Rajan points out in his latest article that while America’s presidential election campaign is superficially a debate about health care and taxes; it is much more fundamentally about democracy and/or free enterprise. As he notes, democracy implies regarding individuals as equal and treating them as such, with every adult getting an equal vote, whereas free enterprise empowers individuals based on how much economic value they create and how much property they own.

What prevents the median voter in a democracy from voting to dispossess the rich and successful? And why do the latter not erode the political power of the former?

The answer relies upon the 'dream' (American or otherwise) of a level playing field and hard-work paying off; once that middle-class hope begins to fade then the self-reinforcing benefits of democracy and free-enterprise will become self-destructive (not helped by the current parties' actions to enrage the middle-class 'working rich' against those losing faith).

The United States needs to restore the possibility of achieving the American Dream for its middle class, even while it reaffirms the historically light regulation and relatively low tax burden that have allowed enterprise to flourish.

The Heart of the US Election (originally posted by Raghuram Rajun at Project Syndicate)


What prevents the median voter in a democracy from voting to dispossess the rich and successful? And why do the latter not erode the political power of the former?

Echoes of such a tension are playing out as President Barack Obama tries to tap into middle-class anger, while former Massachusetts governor Mitt Romney appeals to disgruntled businesspeople.


One reason that the median voter rationally agrees to protect the property of the rich may be that she sees the rich as more efficient managers of that property. So, to the extent that the rich are self-made, and have come out winners in a fair, competitive, and transparent market, society may be better off allowing them to own and manage their wealth, while getting a reasonable share as taxes.


The more, however, that the rich are seen as idle or crooked – as having simply inherited or, worse, gained their wealth nefariously – the more the median voter should be willing to vote for tough regulations and punitive taxes on them.

Back, then, to America’s presidential election.

The recent crisis, followed by huge bailouts of financial institutions, has raised questions about how at least one segment of business – the bankers – make their money. As the misdeeds of “banksters” come to light, the system no longer seems fair.


Moreover, the American Dream seems to be slipping out of reach, in part because a good education, which seems to be the passport to prosperity, is increasingly unaffordable for many in the middle class.

So playing the 'disgruntled' middle-class against the 'working rich' seems like a win, but:

The middle class, however, is divided: some want to protect whatever entitlements and property they already have, while others want the government to give them a fairer chance.

As Rajun sums up so succinctly, this situation is untenable:

A free-enterprise system that is sustained only by the moneyed power of the successful is not stable, and unlikely to remain vibrant for long.

The United States needs to restore the possibility of achieving the American Dream for its middle class, even while it reaffirms the historically light regulation and relatively low tax burden that have allowed enterprise to flourish.


Source: Project-Syndicate

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GMan_'s picture

BULLISH. Can't wait to buy SPX at 1436 tomorrow!

Michael's picture

Correct answer;

The divide and conker strategy is always advertised on Jewtube MSM TV.

See Jon Stewart and Stephen Cobert back to back for proof.

Pool Shark's picture



I've said it before, and I'll say it again:

Democracy: Three wolves and two sheep voting on what's for dinner.

This is why our founding fathers were wise enough to give us a "Representative Republic."

Of course, we have voluntarily given back that which the Revolutionaries fought and died for...

nmewn's picture

We may have to do it again to get the point across.

nmewn's picture

At least the government and us see eye to eye...I don't give a shit about government either...up to the point it gets in my face.

Michael's picture

We have to get our government and FCC to break up the monopoly of the MSM.

We all know the truth, Who owns Reuters and AP, the Rothschild's.

We all know who owns the 6 big news networks if you've seen this, especially the last 10 minutes of it;

PROPAGANDA | FULL ENGLISH VERSION (2012) Notice their censoring it now?


And further who owns them;

Media Military Complex- Same 6 owners for Media & Defense Ron Paul coverage investigative journ pt 2


And I just got done skewering the previous ZH thread from the WSJ after ten minutes of research with Google, that should tell you something is wrong.

Maybe this will help;

Matchbox Twenty - Back 2 Good (Video) 




rhinoblitzing's picture

>>> "We all know the truth, Who owns Reuters and AP, the Rothschild's."

<<< That is a Propaganda tool: I call BS whenever I hear -  "We all know..."  "Everyone Knows...."  thats a red flag for me,

as it's clearly not true that everyone knows... as you immediately put the weight of the conversation on your side...


Looks like Michael can only spew his own brand propaganda, as - It's the Oil Cartel, arabs, -

History repeats itself - the Jews are the easy scape goat - again... - beware.


Agreed that the MSM monopolies are doing great mind control - With the sheeple being educated by propagandists

camouflaged as comedians, late night hosts, and broadcasters. for them It's just show business.

.... While you were not watching, Russia gets admitted to the WTO and Putin shows his leadership skills by getting his geese in a row behind him


Michael's picture

It's just a character flaw.

Get over it.

Boris Alatovkrap's picture

Boris is know how owns Reuters - is Rothschilds.

Boris Alatovkrap's picture

No, is 2 wolf and 1 sheep, vote to choosing meal selection. Must have 2/3 super-majority.

goldfish1's picture

it is much more fundamentally about democracy and/or free enterprise

No it's not about either one of those things.

vast-dom's picture

no need for much violence when you take the average Amerikan and reduce them to sheeple brainwaves. Pwned through and through. Braying donkeeple sheeple biyatchez!

Tsukato's picture

I think we all need to face facts: that the middle class was only a temporary abberation. Throughout history there have been few very rich, many more lower rich- merchant class folks, and then a massive peasant class. Robotics has rung in the death knell of the overpaid manufacturing worker, and I think its about time. I'm sooooo sick on the "Hard working man" working on the assembly lines of companies like GM, tellin it like it is, saying he never gets a fair shake, and that management is ALWAYS a pack of idiots. These people don't work too hard, and if they actually just told the truth, the only thing they could say about their work and lives, is that they are boring and suck dick. Boo-hoo! Fuck off losers. You deserve to live peasant lives.

The vast majority of people are very dim lights; uninspired, lazy, narrow minded, and stupid. Whats so wrong with them being poor? The world's a tough place, and with globalization, not only are corporations and nations competing, but so too are individuals. Why should Sanjeep in India, or Cheng Liang in China, make massively less money than Hard-Working Jim in Detroit? They shouldnt. If Jim can't cut the mustard, then fuck him.

What we need is a smarter welfare program to take care of the unambitious, stupid and lazy, in a manner that's humane, but also sensible. Why not cheap public housing, community kitchens, community internet centers, free marijuana, and computer games for all, pocket money for everyone,... a sort of "Peasant Resort". Of course all the folks on the dole have responsibilities like cleaning, cooking, trash collection, etc. But once a person checks into this "Peasant Resort System", they must be sterilized, so we can lower their numbers over time. Oh yeah, put these peasant resorts in shitholes like arizona, west texas, etc..

People are bitching about a new world order, and/or a one world government, but to be honest, it just makes sense. Folks need to start accepting reality, and just deal with it.

vast-dom's picture

fucking asshole Michael stop with the racial hate shit.


on topic: great article. with QE and other bs the rich will not be immune (not the 1% more at 2-6%) and they will slide into middle class and the downward pressure will only get worse. The 1% are well hedged against inflation of all kinds. The system is clearly failing and the conventions are shitshows for mostly morons, oratory skills not paying any real bills notwithstanding. 

economics9698's picture

I was not “racial” at all in 2007 but then I realized how political correctness stifled free speech and honest political discussions in America.  When I realized what the political correctness police were after I said “fuck it” and I have not been political correct ever since then.  Every time I get a chance to insult a minority group I take it. 

The political correctness needs to end or assholes like Nidal Malik Hasan and Ben Shalom Bernanke continue to fuck up this world. 

Good for Michael for calling like it is.

vast-dom's picture

don't forget the prez is a nigger. and you and michael can start your very own branch of the KKK. Fucktard. Hope you don't use computers and google and most anything else cause it was all in no small part developed by yids... There's my free speech bitch!

veyron's picture

woah woah what is this language?  The president has demonstrated on many occasions that he's an oreo ...

economics9698's picture

Turn vasdoom in the the pc police for using the "N" word.  He deserves it.

economics9698's picture

Good for you, thanks for letting me know your opinion.

Michael's picture


Here's all I fucking want. No fucking shit.

I want the US Constitution strictly carried out.

I want a Gold like Standard.

I want people thrown in jail who caused this shit we're in.

That's fucking all!

I swear to the Creator, that's all.

If you think that is anything else other than it is, then you need to move to fucking China.

AldousHuxley's picture

"I want this"

"I want that"


If you want to see things done you have to do it yourself.

Run for elected office, spread information, educate sheeps, etc.


Creator doesn't exist. that's transferring political power from politicians to priests.

sadmamapatriot's picture

No man, God exists. But only you can give His power to priests. So don't conflate the two.

Boris Alatovkrap's picture

"I have not been political correct ever since then."

And you have not been correct at all since then.

economics9698's picture

If you had my intellect you would not write such stupid shit.

Boris Alatovkrap's picture

You are challenge Boris, no?! Boris have more hair on chestnuts than are on your head!

Michael's picture

v-d, see my post at 22:41.

Michael's picture

Which ones Divide and which ones Conker?

Cathartes Aura's picture


haven't played that in years. . . and damn, here's me thinking it was Brits that strategised the game. . .


philipat's picture

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship".

-Attributed to Alexander Tytler

PS. Yes I know that The US is not a democracy but a Constitutional Republic but now it is neither of those things so it is of equal relevance. I note also that The Dims have now achieved about 48% of the working population, and counting, paying NO Federal Income taxes. Now it might be just a coincidence but.......................

Flakmeister's picture

Empty platitudes....

Rah, rah, bullshit....

Timmay's picture

Everyone, please, wake up. It's ALL fake....

fonzannoon's picture

I am sorrounded by high school administrators and health care teachers retired at 53 with 120k pensions. 83% of all local firefighters retire on full disability. Etc. etc etc. This ain't just about the bankers. The system is a 900lb fat woman sitting on a chair made of sticks.

Dr. Engali's picture

I agree. It's way off kilter on both sides. You have unapologetic corruption from the bankers and the entitlement mentality of the government slouch, both of them preying in the guy in the middle trying to scratch out a living.

economics9698's picture

The shit falls apart when the Chinese peasant realizes that the washing machine he just built for America would look better in his house.  And when his wise Chinese leaders agree with him.

Cathartes Aura's picture

rumour has it that the Chinese only build cheap shit for amrkns because that's what is on the order books of the amrkn corporations who import it.

Gully Foyle's picture


Surrounded by all those retirees, what nursing home or gated community you live in?

you are surrounded by high income retirees, therefore you yourself must be well off to hobnob with that class.

So why come here for your minute of hate with the gutter folk?

fonzannoon's picture

Gully, pull yourself together.

For whatever it's worth to you, I am self employed. My wife works in the private sector. We have no "entitlement" coming our way. My compensation and hers are based on our ability. We own a Hyundai and an Accord. So we are neither killing it and we are not gutter folk.

I would bet there are a lot of people on here that do a lot better than I do. I can sit here and throw stones on this one because my fuckin taxes go to these bailouts and unsustainable pensions and I don't delude myself into thinking either one would bail me out. You usually make a pretty compelling point whether I agree with you or not. Your dumb comment here is surprising....


Gully Foyle's picture


You claimed to be surrounded by all those high income retirees.

Therefore you socialize and live with them. They surround you on all sides, simple logic bitch.

If you share a neighborhood with them, surrounded by them like Custer by pissed off Indians, you are part of their community.

I'm not seeing you claim you are surrounded by mall workers, or working class folks.

So why the fuck try to lie your way out of it?

You enjoy their company otherwise you would have gotten the fuck out of dodge. Maybe Idaho with the Preppers and Gold hoarders.

People vote with their feet, and your trip lead you to associate with high income retirees.

When you move to that survivalist enclave in Idaho please post back and share just how much happier you are.

Until then you are just another whiner seeking a shoulder to cry on. Poor, poor pitiful me...

nmewn's picture

Your EBT at the strip club is about to be cut off.

Hulk's picture

EBT's work at the strip club? Sign me up !!!

nmewn's picture

Get with Gully...he's got it all figgered out ;-)

Dr Benway's picture

This was an excellent article. The greatest cost of the bailouts is not the immediate dollar cost, but the loss of belief in the overall system. If it's not a fair game anymore, I won't play fairly either, I'll just steal as much as I can too. Unfortunately these things easily become vicious circles.

Gully Foyle's picture

Dr Benway

"I'll just steal as much as I can too"

I guess you are not familiar with your fellow posters, they all want to steal from someone they vaguely claim as "government".

But when the shit hits the fan they will still demand their fair share of government protection.

None of them are Randian or even Stamperish.

They are just greedy fucks who think more shit, more gold, more guns, more mre's, more dried beans and rice will make them happier.

Reality is they are ONLY happy bitching about how bad they have it.


mess nonster's picture

All I want is just a little bit more...

fonzannoon's picture

Gully all you steal are other people's comments and try to pry them apart. How about you post an original thought?

Gully Foyle's picture


Boy, you must be an example of the modern education system.

Clearly you can't understand what the big folk, those with full grown man balls, are saying.

Now run along and tweet your hipster buds, they can cry with you. Maybe even participate in a circle jerk as your generation is so gender flexible.

fonzannoon's picture

Thats deep gully. You are a big boy. Funny, not much insight here from you as to what your vocation is. Tell us your contribution to society gully. Tell us how society is any better off from you....or....are you a leech gully? Maybe you have tiny leech balls. Girls don't like tiny leech balls gully....My guess is you are either a teacher or a postal worker. That's why you are so tweeked by my comment. Well it's supposed to rain tomorrow Gully, but your mandate is to deliver my mail, rain sleet etc..right bitch? Try to get it to me early. I have a lot going on. Thaaaanks.


Dr. Engali's picture

Hey Fonz .. don't even bother with him. He just likes to start trouble where he can. He's kind of like a flee on a dog. He keeps bothering you and won't go away.

fonzannoon's picture

Yeah fair enough. I took the troll bait. My bad.