MIT economist Peter Temin is warning America that she is regressing into the economic and political structure of a developing nation. Citing our roads and bridges, our two-track economy, and continual racial problems and tensions, Temin says the “fracture of US society”1 is causing our middle class to disappear.
The economist describes our two-track economy in “The Vanishing Middle Class,” this way: 20 percent of the population has an education, a good job, and supportive social networks while the remaining 80 percent are part of the U.S.’ low-wage sector “where the world of possibility has shrunk and people are burdened with debts and anxious about job security.”2
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Using the “Lewis model,” created by Nobel Prize winner Arthur Lewis to understand developing nations, Temin describes just how far inequality has progressed in the US.
“…much of the low-wage sector had little influence over public policy, the high-income sector was keeping wages down to provide cheap labor, social control was used to prevent subsistence workers from challenging existing policies and social mobility was low.”3
Temin also claims that this dual-economy has a “racist” undertone saying, “The desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.”4
And let’s not forget about the turmoil between the classes. Lynn Parramore, a senior research analyst at the Institute for New Economic Thinking, said about Temin’s findings, “Without a robust middle class, America is not only reverting to developing-country status, it is increasingly ripe for serious social turmoil that has not been seen in generations(my emphasis).”
I’ve spoken to many people who agree with him, including some who are headed for Mexico and South America to live out their retirement years, citing money as the driving force.
As the rich get richer, and the middle class disappears, do you have a plan?
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