Thursday, August 12, 2010

Third World America: Chronicling the Assault on America's Middle Class...and the Solutions

Third World America: Chronicling the Assault on America's Middle Class...and the Solutions

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"The latest job numbers are out -- and they're not good."

That's a phrase we've heard a lot lately -- and will likely continue to hear for the foreseeable future. According to the Bureau of Labor Statistics, while the unemployment rate remained unchanged at 9.5 percent, the economy actually lost another 131,000 jobs in July. The only reason the unemployment rate didn't go up was because so many people had quit looking and dropped out of the workforce. Tens of thousands of people throwing in the towel is definitely not good news. More "not good news": the number of Americans unemployed for 26 weeks or more is now over 6.5 million.

Clearly, we're not in the middle of a normal recovery. Wall Street may have its casino up and running again, but Main Street shows no signs of bouncing back anytime soon. From foreclosures to unemployment to household debt to bankruptcies, the American middle class is under assault -- and America is in danger of becoming a Third World nation.

I detail all the ways this is happening -- and the reasons why -- in my upcoming book, Third World America. Just as important, I also talk about the steps we can all take to help stop the slide. As soon as I finished writing the book, I knew I wanted to keep telling the stories of the middle class families whose lives have been turned upside down by the economic crisis -- and to provide interactive tools that would allow people to get involved.

That's why HuffPost is launching a "Third World America" section to bear witness to what is happening to the American middle class in small towns and big cities all across the country. And we will, every day, focus on the solutions that are making a difference in the lives of ordinary Americans.

And we want you to be a big part of this section. If you or someone you know has been struggling with unemployment, foreclosure, bankruptcy, or credit card debt, we want to hear about it. Visit our interactive map, share your story, and leave your mark.

Though it is far from what dominates the debate in Washington, every day brings fresh evidence of the new reality that America is entering. And it's not just about dismal unemployment figures and gloomy foreclosure numbers. As the New York Times reported last week, Hawaii has gone beyond laying off teachers and has begun laying off students -- closing its public schools on 17 Fridays during the last school year. In the Atlanta suburb of Clayton County, the entire bus system was shut down. Colorado Springs turned off over 24,000 of its streetlights. The Philadelphia Inquirer reports that Camden, New Jersey is soon to permanently shutter its entire library system. And last month the Wall Street Journal reported on the trend of cash-strapped states and counties giving up on the idea of maintaining paved roads, allowing them instead to turn back into gravel. And those localities that can't even afford to put gravel down are just letting the roads, as the Journal put it, "return to nature." A seminar at Purdue University on this trend was entitled "Back to the Stone Age."

Though the particulars of our country's transformation are painfully real to the rest of the country, Washington and Wall Street remain blind to our trajectory toward Third World status.

Witness the joint appearance on Fareed Zakaria's CNN show by former Treasury Secretaries Paul O'Neill and Robert Rubin. According to both of them, we don't need a second stimulus. "We are moving forward at a pretty gradual pace," said O'Neill, "but I don't think things are terrible." Is "not terrible" the new definition of success? And I don't doubt that things are not terrible for O'Neill -- in fact, I bet the roads leading to most of his houses are still paved.

As for Rubin, he "wouldn't do a major second stimulus, because I think...we run a risk that it could be counterproductive in creating a lot of additional uncertainty and undermining confidence."

Uncertainty? I guess that's true in the sense that the nearly 15 million people without a job are currently quite certain they don't have one; if a new stimulus bill were passed, there will at least be some welcome uncertainty as to whether they would be one of the lucky ones getting hired.

In Rubin's mind, what would create more "certainty" is -- drumroll, please -- deficit reduction. "I would try over the next six months to put in place a very serious beginning of deficit reduction that would take effect at some specified time in the future," he said. "I think that could do a lot for confidence."

As Duncan Black writes:

"Can someone get me some of the Very Serious Person crack rock so I can understand the very sophisticated economic model such that all that matters is 'confidence' and that confidence could be undermined by fiscal stimulus?"

But Rubin's reasoning begins to make sense when you remember that he is only concerned with the confidence of a few hundred of his friends on Wall Street. And though he wasn't officially speaking for the Obama administration, he doesn't have to, since so much of the economic team at Treasury and the White House is composed of Rubin's acolytes. Here, for example, was Treasury Secretary Tim Geithner in his recent New York Times Op-Ed celebrating our wonderful recovery: "we are on a path to growth," but "uncertainty is still inhibiting investment."

It's not uncertainty that is stopping business from expanding capacity -- it's a lack of customers. Because the potential customers don't have jobs!

With this kind of muddled thinking by our "very serious" establishment, we're in for a long, bumpy ride. But you have to at least give Rubin credit for gall -- after all, he's one of the people responsible for the continued misery that millions of Americans wake up to every morning. And now he's back arguing against a practical solution to the mess he helped create. Talk about chutzpah.

The O'Neill and Rubin Continue-The-Misery Show certainly proves that this is not a left-right issue - the willful lack of awareness of the reality being experienced by so many Americans is truly bipartisan.

But it's going to take more than a new stimulus to stop our slide into Third World status. While pushing those in charge to do the right thing, we're also going to have to push ourselves.

In Waiting for Superman, his new documentary on America's failing public school system, Davis Guggenheim (the Oscar-winning director of An Inconvenient Truth) tells how the project began. Every day, while taking his children to their top-flight private school, he would pass several troubled public schools, filled with children not nearly as lucky as his own -- trying his best to not see the tragedy staring him in the face. Finally, after, as he puts it, "every morning betraying the ideals I thought I lived by," he decided to stop not-seeing the problem and do something about it. At the moment, our country is afflicted with an epidemic of not-seeing (indeed, it would seem to be a requirement for the job of Treasury Secretary).

Which is why we created our "Third World America" section. There, the crises will be seen and the stories will be heard. And there will be many ways for you to get involved -- things we can all do to make sure we never find ourselves living in Third World America.

You can start by taking our Pledge for the America Dream.

As the section continues to expand, you will also find ways to: share your story; bounce back from adversity; build your financial literacy; stay informed; become an American Dream watchdog by monitoring the behavior of business leaders and politicians; connect with others to take action; help others build skills, finds jobs, and save their homes; and more.

Unemployment, foreclosure, bankruptcy -- these are all isolating experiences. And that isolation takes its toll. A 2002 study by researchers at Yale found that "high unemployment rates increase mortality and low unemployment decreases mortality and increases the sense of well-being in a community." Indeed, the recession has coincided with an increase in the suicide rate.

So we all need to do our part. The attack on the middle class may be ignored in Washington, but we can see it -- and do something about it -- in our own communities.

Though we can't let our leaders off the hook -- or fail to speak out when they, and/or their former mentors who got us into this mess continue to put forth policies that will hasten the decline of America's middle class -- we have to take responsibility for our communities as well.

So take the pledge. Send us your stories. Resolve to stop not seeing what's going on in your community. And take action.

If we don't change course -- and quickly -- Third World America could very well be our future.

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