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Hot Topic (More than 10 Replies) Bernie Sanders's Middle Class Myth (Read 1,229 times)
TowardLiberty
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Bernie Sanders's Middle Class Myth
Jul 13th, 2015 at 6:48pm
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Sen. Bernie Sanders is a democratic socialist running for President of the United States, and his passionate populist message has won him many admirers on the left. His willingness to push for radical progressive policies (such as top income tax rates of 90 percent), which mainstream Democrats are too moderate to embrace, is steadily eroding Hillary Clinton's dominance of the Democratic primary field.

There are several “facts” upon which Sanders has built his campaign. Probably the most important is the claim that the American middle class has been declining for quite some time. According to Sanders’s website:

The long-term deterioration of the middle class, accelerated by the Wall Street crash of 2008, has not been pretty…

Since 1999, the median middle-class family has seen its income go down by almost $5,000 after adjusting for inflation, now earning less than it did 25 years ago.

The situation is clearly dire, and the right man for the momentous job of saving the middle class is Sen. Sanders. Well, at least that’s message his campaign seeks to convey.

But what if the middle class isn’t becoming worse off over time? What if the American middle class is actually doing as well as ever? Would Sanders’s supporters be as likely to endorse his more radical ideas if they weren’t convinced that the middle was becoming poorer over time — and that only progressive policies could reverse this trend?

It’s worth taking the time to examine Sanders’s claim that the middle class is worse off now than in the past. He doesn’t cite a source for his statistic, but it seems to rely on looking at the median household income over time and adjusting for inflation using the Consumer Price Index (CPI).

This is a problematic methodology because it does not control for the well-known fact that the median household has itself grown smaller over time. Even if median income stayed the same over time, a decline in the number of people in the median household over time would lead to an increase in income per household member.

Additionally, Sanders’s statistic looks at income before taxes and transfers. Transfer payments and tax credits (like the Earned Income Tax Credit) make up a significant portion of income for many lower-income families. Not controlling for these factors understates their true economic well-being.

The figures cited by Sanders also fail to take into account the fact that a larger proportion of worker compensation comes in the form of non-cash benefits (such as health insurance) now than in the past.

The incomes of households in the three middle income quintiles grew 40 percent between 1979 and 2011. Somewhat surprisingly, given the histrionics about the state of America’s poor, income in households in the lowest quintile was 48 percent higher in 2011 than it was in 1979.

Indexing median household income (post taxes and transfers) to inflation using the PCE, rather than the CPI, and adjusting for the long-run decline in household size shows that median incomes have “increased by roughly 44 percent to 62 percent from 1976 to 2006.”


http://fee.org/anythingpeaceful/detail/bernie-sanders-thinks-the-middle-class-is...

Don't get me wrong the economy is not perfect. It is suffering from too much debt and credit and not enough savings and investment. Financialization is a problem. And there are labor force and labor market issues.

But let's not pretend that the market process is failing to lift people up. Markets and capitalism work even when distorted by regulations, corporatism and monetary policy.

They just don't work as well.
  

Open Trade, Open Borders, Taco Trucks on Every Corner

"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.ā€¯ F A Hayek
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Rabbit_Reborn
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Re: Bernie Sanders's Middle Class Myth
Reply #1 - Jul 13th, 2015 at 6:57pm
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It’s worth taking the time to examine Sanders’s claim that the middle class is worse off now than in the past. He doesn’t cite a source for his statistic, but it seems to rely on looking at the median household income over time and adjusting for inflation using the Consumer Price Index (CPI).

This is a problematic methodology because it does not control for the well-known fact that the median household has itself grown smaller over time. Even if median income stayed the same over time, a decline in the number of people in the median household over time would lead to an increase in income per household member.

This part doesn't sit well with me.

Many people are choosing to have fewer children because they might be struggling financially.

To split household income amongst individual family members feels a bit too convenient.

There are generally one or two salaries for a family, whether that family has 3 people total or 8 people.

The household income is still measuring, generally, the income of either one or both of the parents.
  

Buddy_Love wrote on Jul 16th, 2019 at 5:17pm:
I'm fine where I am. I love America. However, you don't like America, so it's you that should leave.


Ulysses wrote on Aug 12th, 2019 at 10:00pm:
I dare you to say that to Cuomo's face.
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TowardLiberty
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Re: Bernie Sanders's Middle Class Myth
Reply #2 - Jul 13th, 2015 at 7:00pm
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Rabbit_Reborn wrote on Jul 13th, 2015 at 6:57pm:
This part doesn't sit well with me.

Many people are choosing to have fewer children because they might be struggling financially.

To split household income amongst individual family members feels a bit too convenient.

There are generally one or two salaries for a family, whether that family has 3 people total or 8 people.

The household income is still measuring, generally, the income of either one or both of the parents.

That's a good point. I guess it turns on whether people are having fewer children because they cannot afford to or if it is a change in values/ preferences regarding the size of families people want.

My guess is that it's a bit of both.
  

Open Trade, Open Borders, Taco Trucks on Every Corner

"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.ā€¯ F A Hayek
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Rabbit_Reborn
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Re: Bernie Sanders's Middle Class Myth
Reply #3 - Jul 13th, 2015 at 7:05pm
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TowardLiberty wrote on Jul 13th, 2015 at 7:00pm:
That's a good point. I guess it turns on whether people are having fewer children because they cannot afford to or if it is a change in values/ preferences regarding the size of families people want.

My guess is that it's a bit of both.

You're right in that it's probably both.

I just hated the thought of the following comparison:

Family A:
4 people. Mother, Father, 2 children
Household income: $40,000

Family B:
5 people, Mother Father, 3 children
Household income: $48,000

Family A is better off, according to the previous argument, but maybe they're putting off a third child that they both want because the money is just stretched too thin. But hey, higher per-family-member income stream, so...
  

Buddy_Love wrote on Jul 16th, 2019 at 5:17pm:
I'm fine where I am. I love America. However, you don't like America, so it's you that should leave.


Ulysses wrote on Aug 12th, 2019 at 10:00pm:
I dare you to say that to Cuomo's face.
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TowardLiberty
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Re: Bernie Sanders's Middle Class Myth
Reply #4 - Jul 13th, 2015 at 9:26pm
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Rabbit_Reborn wrote on Jul 13th, 2015 at 7:05pm:
You're right in that it's probably both.

I just hated the thought of the following comparison:

Family A:
4 people. Mother, Father, 2 children
Household income: $40,000

Family B:
5 people, Mother Father, 3 children
Household income: $48,000

Family A is better off, according to the previous argument, but maybe they're putting off a third child that they both want because the money is just stretched too thin. But hey, higher per-family-member income stream, so...


Yeah that would definitely be misleading in terms of signaling any sort of gains.

Its complex though because there are financial incentives for those at certain income levels to have more kids in terms of welfare benefits and such.

But at higher income levels those incentives diminish but there are still tax incentives.
  

Open Trade, Open Borders, Taco Trucks on Every Corner

"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.ā€¯ F A Hayek
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Rabbit_Reborn
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Re: Bernie Sanders's Middle Class Myth
Reply #5 - Jul 13th, 2015 at 9:39pm
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TowardLiberty wrote on Jul 13th, 2015 at 9:26pm:
Yeah that would definitely be misleading in terms of signaling any sort of gains.

Its complex though because there are financial incentives for those at certain income levels to have more kids in terms of welfare benefits and such.

But at higher income levels those incentives diminish but there are still tax incentives.

That's a good point that I hadn't thought of... That's a good point of which I had not thought? Stupid prepositions.
  

Buddy_Love wrote on Jul 16th, 2019 at 5:17pm:
I'm fine where I am. I love America. However, you don't like America, so it's you that should leave.


Ulysses wrote on Aug 12th, 2019 at 10:00pm:
I dare you to say that to Cuomo's face.
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crepe05
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Re: Bernie Sanders's Middle Class Myth
Reply #6 - Jul 14th, 2015 at 6:17am
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Rabbit_Reborn wrote on Jul 13th, 2015 at 9:39pm:
That's a good point that I hadn't thought of... That's a good point of which I had not thought? Stupid prepositions.


LOL!  Was the following drilled into your head, too?  "Never use a preposition to end a sentence with?  Sometimes it's a bit clumsy to follow.  Anyway, back to your finance discussion.
  
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Re: Bernie Sanders's Middle Class Myth
Reply #7 - Jul 14th, 2015 at 10:52am
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TowardLiberty wrote on Jul 13th, 2015 at 6:48pm:
http://fee.org/anythingpeaceful/detail/bernie-sanders-thinks-the-middle-class-is...

Don't get me wrong the economy is not perfect. It is suffering from too much debt and credit and not enough savings and investment. Financialization is a problem. And there are labor force and labor market issues.

But let's not pretend that the market process is failing to lift people up. Markets and capitalism work even when distorted by regulations, corporatism and monetary policy.

They just don't work as well.



Give an example of how you think market forces are working to the benefit of the middle class. Cost of living certainly is not going down due to globalization.

In any event, the idea that the middle class is disappearing is a proven fact, not just some hypothesis.

http://billmoyers.com/2015/01/26/middle-class/

Then there is the internet causing the loss of other jobs:

http://www.usatoday.com/story/money/personalfinance/2015/03/08/247-wall-st-disap...

And then you might read what Sanders said in more detail:

http://www.budget.senate.gov/democratic/public/_cache/files/e90ada48-fe78-4e06-b...
  
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TowardLiberty
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Re: Bernie Sanders's Middle Class Myth
Reply #8 - Jul 14th, 2015 at 11:04am
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Give an example of how you think market forces are working to the benefit of the middle class.


You mean other than the evidence in this article?

  

Open Trade, Open Borders, Taco Trucks on Every Corner

"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.ā€¯ F A Hayek
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Rabbit_Reborn
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Re: Bernie Sanders's Middle Class Myth
Reply #9 - Jul 14th, 2015 at 11:17am
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Give an example of how you think market forces are working to the benefit of the middle class.

Computing power?

Improved automobiles?

Accessibility to air travel?

Communication devices?

Taxi services?

Music availability?

Entertainment options? (e.g., Netflix)

Meal preparation equipment? (Nutribullet, Vitamix)

Nutrition? (e.g., Grass fed beef availability)

Options in fitness pursuits?

Gaming?

Vacation planning? (Trivago, Expedia, instead of Travel Agents)

How are all of these things, and millions more, not preferable to the consumers within the middle class?
  

Buddy_Love wrote on Jul 16th, 2019 at 5:17pm:
I'm fine where I am. I love America. However, you don't like America, so it's you that should leave.


Ulysses wrote on Aug 12th, 2019 at 10:00pm:
I dare you to say that to Cuomo's face.
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