The crisis of middle-class America  

Gav,
I first thought you were a classic when you made Buckminster references and now Carlin.

Awesome.

The classic tragic comic, he will be missed.

I am sorry but I don't understand the contradictions. A house bought for $50K in 1989 should have been paid off years ago. The first family probably made around $1.5 million in today's dollars and certainly had the opportunity to get better jobs when the job markets were booming and skill sets were in demand.

The way I see it, most people create their own misfortunes by living beyond their means and by doing so do not save enough to keep them safe during periods of turmoil. In my case, I purchased a C$250K condominium in 1987 and had it fully paid off by 1997 even though I never had a large salary. I borrowed money for my down-payment and wound up working more than 100 days straight to get enough cash to pay off that loan. By the time I took possession of the unit in 1992 (it took five years of fighting city hall to build the units) about 35% of the purchase price had already been taken care of and a combination of rent and savings took care of the rest over the next five years.

Of course, I did not have much money to spend on beer, had to find very cheap entertainment, spent a lot of time in libraries and free public events, and had to live for a decade in my parent's basement but the sacrifice allowed me the freedom that only savings can give you. By the time my plant closed down in 2001 I was making about the same in base salary as the first family but had to use it to support a wife that did not work and two young children. After a year of living off my severance I realized that after 15 years of working my modest income and savings habits allowed me to accumulate enough to retire and to spend more time with my children and my parents, who have some serious health issues and require care. Ten years later, with very little in the way of employment income my family is very more comfortable and our wealth is still higher than it was when I retired even though I have to pay out of pocket for many of the medical expenses that we have had over that time.

Keep in mind that my tax rate was much higher than the people being featured so my take home pay was probably lower. And during the period in question, the currency that I was paid in was much weaker than the USD. During the same period I also saw my parents' neighbours change three times. All of the neighbours were Sikh families that had just moved to Canada. The usual arrangement was simple. There would be two old people in the house. They would live with their children, who were usually married and had kids. All the adults would work with the exception of the oldest, who looked after the kids, cooking, cleaning, etc. The house would be bursting with bodies but because of that the costs were low on a per person basis. Most would work more than one job and get as many hours as possible. After a year or two they would pool their savings and purchase a house that would be rented out to a few families. The combination of the rent and the salaries would lead to new savings that would go towards the purchase of another house that would be rented. After six or seven years each of the families would own a house that would be fully paid for. The original house would be sold and the sons or daughters would move to a their own house where they would rent the basement to another family so that they could pay the taxes, food, and utilities from the proceeds. At that time the clothes would start to improve, the cars would become better (but still bought used), the grandchildren would be given music lessons or supplementary English, Science, or Math tutoring and savings would be put aside for their education.

If those people can work their butts off and succeed there is no reason why a native born American who is willing to work hard and save can't make it.

America is in relative decline compared to the rest of the world and this means declining living standards for much of the American working and middle class. It doesn't mean everyone is destined for absolute poverty (but many are).

Read my "Tea Party" post linked to in this post.