6 ms·

How the Bubble Destroyed the Middle Class

56 points by mvs 15y ago

wccrawford 15y ago
I really hate it when reporters use words incorrectly. "And make no mistake, the middle class has been ruined: Its wealth has been decimated, " ... They only lost 10% of their wealth? That's not so bad. Oh wait, they mean completely destroyed, not decimated.
- LiteOn 15y ago
  http://www.google.ca/search?q=decimated http://www.google.ca/search?q=decimated
- jonnathanson 15y ago
  The writer and history buff in me loves that you have pointed this out. But I think the word "decimate" decoupled from its original meaning sometime between the fall of the Roman Empire and today.
  - njharman 15y ago
    As fellow history buff, I was fascinated to learn that decimation was used as recently as the 1930's. By Italy against Libyan tribesmen. But, I agree with you decimate has long had alternative meaning of "destroy almost completely"
    - jonnathanson 15y ago
      That is interesting. And it would make sense, given that 1930s Italy was run by a dictator who had a personal obsession with proclaiming himself the heir the Roman Empire. This is a fun tangent. And apologies to everyone else who's trying to stay on topic. This is why I love nested comment systems.
  - wgren 15y ago
    I think this happened sometimes during the last 15 years. I was surprised when I came to the US and was exposed to Fox news, I was surprised that they were using the word incorrectly all the time. "The forces were decimated in a surprise attack..." If enough people use it that way, it becomes the correct usage, of course. It is how languages (d)evolve.
- diogenescynic 15y ago
  He should have clarified what he means by decimated, but in some ways the word choice is suited: 47 per cent of Americans can't raise $2000 in 30 days without selling an asset...with nearly one quarter of $100k-$150k households reporting they wouldn't be able to find $2000...Only the final one-fourth said they definitely could find a way to make the payment: http://www.huffingtonpost.com/2011/03/17/could-you-come-up-with-20_n_837225.html http://www.huffingtonpost.com/2011/03/17/could-you-come-up-w... The statistics cited are from the Brookings Institute: http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2011_spring_bpea_papers/2011_spring_bpea_conference_lusardi.pdf http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2011...
dotcoma 15y ago
Bullshit. If America had a great middle class, ordinary folk would go on vacation in the summer, not to the movies like they do now and have done for decades. In the US, movies come out in the summer; even Newsweek used to have a Summer Movies special. In Europe, they come out in November or December, when the weather's shit and there's nothing better to do.
- dgabriel 15y ago
  Um, lots of families do BOTH of these things.
  - dotcoma 15y ago
    Thanks for leaving a comment. A lot of (pretty fascist, imho) people seem to have just down-voted me instead.
3pt14159 15y ago
I hate misleading graphs. First off, that graph should be logarithmic to show true changes in year over year percent terms (otherwise everything looks exponential in the long term) and secondly, the y-axis should extend to near the origin.
- fhars 15y ago
  You will have to scroll a long way to get near the origin on a logarithmic graph. (Or, the two parts of you advice on how to enhance the graph are mutually exclusive, the origin on a logarithmic graph is at minus infinity.)
  - 3pt14159 15y ago
    I specifically said "near" to avoid this heckle. :)
IdeaHamster 15y ago
Here's what I find most interesting about what has happened to the middle-class in America: When the middle-class in America was booming, you would have had to be crazy to leave America. Good job. Nice car. Family and a house? You're set! Why leave? Another way of viewing what has happened in the US over the past 20 years or so, is that the US middle-class is falling back to earth. Now the average middle-class family in America could move to just about anywhere in Europe and enjoy a pretty similar lifestyle to what they currently have in the US. Sure, gas is still more expensive and clothing is still a bit pricy, but it's nothing like it was in the 80s and early 90s. (I still remember seeing electric razors advertised for the equivalent of $150 on my first trip to Germany when the equivalent model in the US would've cost no more than $50.) Take that one step further, and the average American family could now potentially consider a move to one of the BRIC or CIVITS nations, and they would find themselves with only slightly less access to the luxuries they might expect in the US. Why is this important? Because I think that for the first time in the history of human kind, we might just be reaching the point where the choice of where to live and work could be made based solely on things like the climate or the culture instead of on things like "Can I eat?" or "Will I have a roof over my head?" That would be a world I would want to live in...
- sliverstorm 15y ago
  On the downside, if you can find exactly what you have here, somewhere else, the cohesiveness of "here" will dissolve, community spirit will be lost and the desire to defend what you have will dissipate. Why spill blood defending This Land when That Land over there is just as good? I'm a pretty solitary guy most of the time, but I do feel we stand to lose a lot if the sense of "we have something special here, we need to cultivate and protect it accordingly" vanished.
  - bartonfink 15y ago
    Why invade That Land when These Other Lands are just as good and are happy to help you out?
- Lewisham 15y ago
  This is a very consumerist outlook (you're American, no?) I don't think many people in Europe spent a large amount of time wishing they lived in the US, I don't think many do now. Europe is not some sub-standard America. When the pound was strong (2:1 against the dollar), British people could come to the US and have comparable, if not better, buying power than Americans. There was not a large number of people wishing they could live in the US. Nice place to visit, though. Consuming stuff, and attaining status based on it, is not unique to America, but my experience shows its more highly-prized. It's a good, visual metric for your progression, and I get that. When I lived in New Zealand, it was positively brutal to be a consumer of much of anything. I was on an above average wage (as my first job), and I still couldn't really afford much in the way of furniture or electronics. However, my quality of life was so good, it didn't matter. They had a wonderful community, a relaxed working atmosphere, and good people. Americans could move to NZ tomorrow (particularly those in IT). You're trading in one idealism for another, but it certainly never had anything to do with "Can I eat?" or "Will I have a roof over my head?" but "What do I value?" Personally, as a Brit, I'm quite enamored with burritos, Costco, and sunshine, so I like it here in CA. But that's a choice I made, and it never had anything to do with how much money I have.
kemiller 15y ago
I don't know why people keep thinking class is about personal income. Edit: this is relevant because their evidence that the middle class is shrinking comes in the form of a drop in the share of total income earned that accrues to the middle quintile, from 17% to 15%. That's an interesting result, but it doesn't really say anything interesting about the "middle class". In my book, if you have to go into work every day or you can't pay the mortgage, you're middle class. You have a job, you have secured debt, you own your home, and your income comes from employment. I will bet you that a much larger span of that spectrum, up to and including most of the top 5%, meet that description. Those at the top might be "upper middle" and enjoy a lifestyle that others envy, but that doesn't make them upper class.
- knieveltech 15y ago
  Probably because class is about personal income.
  - mkr-hn 15y ago
    It's not that simple: http://en.wikipedia.org/wiki/Middle_class http://en.wikipedia.org/wiki/Middle_class
  - kemiller 15y ago
    No, it's not. It's certainly not about which evenly-spaced quintile you're in. It's about HOW you make your money, and what you spend it on. Consider: do you really think everyone making 88K or more should be considered "upper class"?
    - knieveltech 15y ago
      I fail to see the relevance of how one makes one's money to the class discussion and 88k is an arbitrary number. The classic "American Dream" lifestyle is typically defined as home ownership, two cars in the garage, three squares a day and sufficient disposable income to be able to comfortably afford to raise children and save for retirement. So, assuming this works as a definition of "middle class", anyone not capable of all of the previous due solely to financial constraints is therefore "lower class". Based on my experience, $120k annual household income in a low cost of living area barely squeaks over the bar if you use this metric. $175-$200k annual household income seems more realistic to me given the retirement clause. Where the line gets drawn for "upper class" is harder to define, but I think we can all agree an upper class exists.
orofino 15y ago
While this is interesting, I think it misses the fundamental issue, our (American) view of wealth. If people looked at a home as a consumable with nominal value, this wouldn't be a problem. The article hints at the core issue, middle class families have on average $100K in savings. If, instead of purchasing large houses out in the suburbs with large yards, they purchased something more modest and within their means, the house wouldn't be the center of their financial universe.
- nhaehnle 15y ago
  I do believe the article is spot-on about why there is no recovery from the crisis that actually reaches the population at large. The headline is a bit misleading, however. It's not that the bubble destroyed the middle class. The bubble was a way for the middle class to continue living a happy life despite the fact that there income share was continually being reduced. Instead of consuming on income, they consumed on the housing bubble. So it's not the bubble that destroyed the middle class - the article basically says so itself - it just delayed the inevitable and made the decline much more spectacular.
julnepht 15y ago
"off topic" But I cannot remember when was the last time that an article from yahoo.com got over 50 votes on HN !

56 points by mvs 15y ago

I really hate it when reporters use words incorrectly. "And make no mistake, the middle class has been ruined: Its wealth has been decimated, " ... They only lost 10% of their wealth? That's not so bad. Oh wait, they mean completely destroyed, not decimated.

LiteOn 15y ago
http://www.google.ca/search?q=decimated http://www.google.ca/search?q=decimated
jonnathanson 15y ago
The writer and history buff in me loves that you have pointed this out. But I think the word "decimate" decoupled from its original meaning sometime between the fall of the Roman Empire and today.
- njharman 15y ago
  As fellow history buff, I was fascinated to learn that decimation was used as recently as the 1930's. By Italy against Libyan tribesmen. But, I agree with you decimate has long had alternative meaning of "destroy almost completely"
  - jonnathanson 15y ago
    That is interesting. And it would make sense, given that 1930s Italy was run by a dictator who had a personal obsession with proclaiming himself the heir the Roman Empire. This is a fun tangent. And apologies to everyone else who's trying to stay on topic. This is why I love nested comment systems.
- wgren 15y ago
  I think this happened sometimes during the last 15 years. I was surprised when I came to the US and was exposed to Fox news, I was surprised that they were using the word incorrectly all the time. "The forces were decimated in a surprise attack..." If enough people use it that way, it becomes the correct usage, of course. It is how languages (d)evolve.
diogenescynic 15y ago
He should have clarified what he means by decimated, but in some ways the word choice is suited: 47 per cent of Americans can't raise $2000 in 30 days without selling an asset...with nearly one quarter of $100k-$150k households reporting they wouldn't be able to find $2000...Only the final one-fourth said they definitely could find a way to make the payment: http://www.huffingtonpost.com/2011/03/17/could-you-come-up-with-20_n_837225.html http://www.huffingtonpost.com/2011/03/17/could-you-come-up-w... The statistics cited are from the Brookings Institute: http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2011_spring_bpea_papers/2011_spring_bpea_conference_lusardi.pdf http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2011...

dotcoma 15y ago

Bullshit. If America had a great middle class, ordinary folk would go on vacation in the summer, not to the movies like they do now and have done for decades. In the US, movies come out in the summer; even Newsweek used to have a Summer Movies special. In Europe, they come out in November or December, when the weather's shit and there's nothing better to do.

dgabriel 15y ago
Um, lots of families do BOTH of these things.
- dotcoma 15y ago
  Thanks for leaving a comment. A lot of (pretty fascist, imho) people seem to have just down-voted me instead.

3pt14159 15y ago

I hate misleading graphs. First off, that graph should be logarithmic to show true changes in year over year percent terms (otherwise everything looks exponential in the long term) and secondly, the y-axis should extend to near the origin.

fhars 15y ago
You will have to scroll a long way to get near the origin on a logarithmic graph. (Or, the two parts of you advice on how to enhance the graph are mutually exclusive, the origin on a logarithmic graph is at minus infinity.)
- 3pt14159 15y ago
  I specifically said "near" to avoid this heckle. :)

IdeaHamster 15y ago

Here's what I find most interesting about what has happened to the middle-class in America: When the middle-class in America was booming, you would have had to be crazy to leave America. Good job. Nice car. Family and a house? You're set! Why leave? Another way of viewing what has happened in the US over the past 20 years or so, is that the US middle-class is falling back to earth. Now the average middle-class family in America could move to just about anywhere in Europe and enjoy a pretty similar lifestyle to what they currently have in the US. Sure, gas is still more expensive and clothing is still a bit pricy, but it's nothing like it was in the 80s and early 90s. (I still remember seeing electric razors advertised for the equivalent of $150 on my first trip to Germany when the equivalent model in the US would've cost no more than $50.) Take that one step further, and the average American family could now potentially consider a move to one of the BRIC or CIVITS nations, and they would find themselves with only slightly less access to the luxuries they might expect in the US. Why is this important? Because I think that for the first time in the history of human kind, we might just be reaching the point where the choice of where to live and work could be made based solely on things like the climate or the culture instead of on things like "Can I eat?" or "Will I have a roof over my head?" That would be a world I would want to live in...

sliverstorm 15y ago
On the downside, if you can find exactly what you have here, somewhere else, the cohesiveness of "here" will dissolve, community spirit will be lost and the desire to defend what you have will dissipate. Why spill blood defending This Land when That Land over there is just as good? I'm a pretty solitary guy most of the time, but I do feel we stand to lose a lot if the sense of "we have something special here, we need to cultivate and protect it accordingly" vanished.
- bartonfink 15y ago
  Why invade That Land when These Other Lands are just as good and are happy to help you out?
Lewisham 15y ago
This is a very consumerist outlook (you're American, no?) I don't think many people in Europe spent a large amount of time wishing they lived in the US, I don't think many do now. Europe is not some sub-standard America. When the pound was strong (2:1 against the dollar), British people could come to the US and have comparable, if not better, buying power than Americans. There was not a large number of people wishing they could live in the US. Nice place to visit, though. Consuming stuff, and attaining status based on it, is not unique to America, but my experience shows its more highly-prized. It's a good, visual metric for your progression, and I get that. When I lived in New Zealand, it was positively brutal to be a consumer of much of anything. I was on an above average wage (as my first job), and I still couldn't really afford much in the way of furniture or electronics. However, my quality of life was so good, it didn't matter. They had a wonderful community, a relaxed working atmosphere, and good people. Americans could move to NZ tomorrow (particularly those in IT). You're trading in one idealism for another, but it certainly never had anything to do with "Can I eat?" or "Will I have a roof over my head?" but "What do I value?" Personally, as a Brit, I'm quite enamored with burritos, Costco, and sunshine, so I like it here in CA. But that's a choice I made, and it never had anything to do with how much money I have.

kemiller 15y ago

I don't know why people keep thinking class is about personal income. Edit: this is relevant because their evidence that the middle class is shrinking comes in the form of a drop in the share of total income earned that accrues to the middle quintile, from 17% to 15%. That's an interesting result, but it doesn't really say anything interesting about the "middle class". In my book, if you have to go into work every day or you can't pay the mortgage, you're middle class. You have a job, you have secured debt, you own your home, and your income comes from employment. I will bet you that a much larger span of that spectrum, up to and including most of the top 5%, meet that description. Those at the top might be "upper middle" and enjoy a lifestyle that others envy, but that doesn't make them upper class.

knieveltech 15y ago
Probably because class is about personal income.
- mkr-hn 15y ago
  It's not that simple: http://en.wikipedia.org/wiki/Middle_class http://en.wikipedia.org/wiki/Middle_class
- kemiller 15y ago
  No, it's not. It's certainly not about which evenly-spaced quintile you're in. It's about HOW you make your money, and what you spend it on. Consider: do you really think everyone making 88K or more should be considered "upper class"?
  - knieveltech 15y ago
    I fail to see the relevance of how one makes one's money to the class discussion and 88k is an arbitrary number. The classic "American Dream" lifestyle is typically defined as home ownership, two cars in the garage, three squares a day and sufficient disposable income to be able to comfortably afford to raise children and save for retirement. So, assuming this works as a definition of "middle class", anyone not capable of all of the previous due solely to financial constraints is therefore "lower class". Based on my experience, $120k annual household income in a low cost of living area barely squeaks over the bar if you use this metric. $175-$200k annual household income seems more realistic to me given the retirement clause. Where the line gets drawn for "upper class" is harder to define, but I think we can all agree an upper class exists.

orofino 15y ago

While this is interesting, I think it misses the fundamental issue, our (American) view of wealth. If people looked at a home as a consumable with nominal value, this wouldn't be a problem. The article hints at the core issue, middle class families have on average $100K in savings. If, instead of purchasing large houses out in the suburbs with large yards, they purchased something more modest and within their means, the house wouldn't be the center of their financial universe.

nhaehnle 15y ago
I do believe the article is spot-on about why there is no recovery from the crisis that actually reaches the population at large. The headline is a bit misleading, however. It's not that the bubble destroyed the middle class. The bubble was a way for the middle class to continue living a happy life despite the fact that there income share was continually being reduced. Instead of consuming on income, they consumed on the housing bubble. So it's not the bubble that destroyed the middle class - the article basically says so itself - it just delayed the inevitable and made the decline much more spectacular.

julnepht 15y ago

"off topic" But I cannot remember when was the last time that an article from yahoo.com got over 50 votes on HN !