Shorting the Middle Class?

Arianna Huffington complains about what she calls “the real Wall Street crime” at her online newspaper today in an entry entitled, “Shorting the Middle Class.” According to Huffington, big banks, for decades, have been “selling” the American people a promise of unending prosperity while in truth, they facilitated the transfer of wealth from America’s middle class to the richest segments of society. “The results,” she notes, “have been devastating: a disappearing middle class, a precipitous drop in economic and social mobility, and ultimately, the undermining of the foundation of our democracy.” And it’s all Wall Street’s fault.

The article cites a growing income disparity between the very poor and the very rich as well as the story of one Dean Blackburn from California who was laid off in February 2009 and hasn’t been able to find employment since. Blackburn, instead of quietly drawing a government welfare check, decided to launch his own Internet company. In spite of his laudable entrepreneurship though, he is dissatisfied with what he describes as a “change in corporate attitude — a change that means no one’s job is safe, and never will be, ever again.”

In a free-market economy, no job is “safe” in the sense that full employment can be ensured. Nor should it be. Nor has it ever been. Such is only possible in the worst of statist dictatorships and no reiteration of the circumstances under authoritarianism is required to convince the reader that confronted with these options, job insecurity is always preferable.

In Blackburn’s words, the American Dream is being undermined by the constant need to prove oneself. In the end, he sighs, “the odds are you’re going to wind up at the bottom eventually, unless you get lucky.”

And luck, adds Huffington, is what the American Dream now rests on. The system is rigged “to such an extent now that the way to keep your head above water is to get lucky.”

In a recession, even the most able of men may lose their jobs but even in a recession, able men will usually find work. And if they don’t, men like Dean Blackburn will set up a company of their own to keep making money. Hard work and perseverance still pay off and that has always been at the core of the American Dream.

Huffington predicts that unless substantial reform is passed, the United States will “slide toward a Third World system in which there are just two classes: those at the bottom and those at the top.” She is afraid of a society that has but winners and losers apparently while coveting the craving of the welfare state in which those unable to take responsibility for their own lives may blame all of their trouble on selfish bankers and robber barons — though living off their tax money of course.

In all fairness, Huffington doesn’t really provide an alternative. She doesn’t really explain what financial reform should entail other than complaining that the status quo won’t do. Should she ever truly contemplate a future without her much dreaded job insecurity; without personal responsibility and without the pursuit of rational self-interest, will she still want to see it become a reality?

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