This is a follow-up to last week’s “Middle-Class Shrug” blog.
—–
We hear about economic “pressure on the middle class.” Business media tell us the middle class is being squeezed. Popular media try to break our hearts with profiles of couples who have fallen out of the middle class and into desperation.
But the picture they paint is incomplete and distorted. The “squeezed” mostly remain an abstraction. The “fallen” families beloved of the media are, as often as not, a misrepresentation; they’re usually folk who made dumb decisions (mostly by buying houses they couldn’t afford at prices they should have questioned) and are now living with the consequences.
We don’t see the individuals of the middle class who’ve done everything right and lived responsibly. Nobody profiles the guy who kept his job, worked smart, bought a home he could afford, saw the financial collapse coming, budgeted carefully, cut expenses as needed — and is now getting completely screwed anyhow. This guy (or woman or family) isn’t getting hurt by some no-fault bad economy, but by an ever-tightening web of regulation, enforcement, hidden inflation, prejudice, and deliberate raping of resources by those above and below.
We don’t see profiles of people who are being used up precisely because of their middle-class virtues. But they’re out there. Judging by the comments on the first “shrug” post, plenty of them are reading this blog.
You know, and I know, that it’s disastrous to raid the middle-class to this point of stress, let alone to potential extinction. When the prosperous, responsible middle is withered beyond recognition, all you’ve got left is a kleptocracy with nobody left to steal from. Then the poor suffer because there’s nobody to provide real jobs or pay taxes to support them. The honest rich suffer because the market for their wares is reduced. And the predatory rich — those who’ve used political pull — move elsewhere in search of prey. Finding no freshly prosperous prey, they eventually become like jackals seeking corpses to gnaw.
We can ask how stupid these human predators must be to decimate the middle-class. But pity them; the predatory rich in government and government-connected businesses miscalculated. They thought they could feast forever.
Now millions of the middle class are struggling, angry but uncomprehending. They still plan to send their kids to colleges in hopes of a “betterment” that’s now only a costly fraud. They still hope “things will turn around,” not comprehending that the big dream is gone for good. They still support “their” government (however reluctantly) believing there’s no other option. They still hope against hope that the next stimulus or the next round of tax-and-loan-paid support for favored businesses will “put the country back on track.”
They still don’t have a clue about what’s really happened. The notion of shrugging would never occur to them (and as Matt noted in the comment section on the original post, the weight of layoffs and outsourcing, families to raise, elderly parents to care for, medical bills to pay, and so on is so heavy most couldn’t shrug it off even if they understood the concept).
But there’s a minority out there … the canaries in Western civilization’s big, dark coal mine … who are starting to say no. No to bearing imposed burdens. No to being sitting ducks for every new tax or regulation. No to maintaining a lifestyle that’s become largely an illusion. No to a belief system that has so blatantly failed them.
I’ve been watching one such person for years. His is no sudden, dramatic Atlas style shrug, but an evolution. He started adulthood as a super-talented go-getter (achieving multiple degrees from one of the world’s top schools). He became an entrepreneur and eventually a globe-hopping consultant, a noted expert in his field. Though never rich, he was one of those classic, solid upper-middle guys who created jobs for smart, able people and who advised other businesses. He built his retirement plan. He had his city place and his country place. He was probably too busy to enjoy his life, but he did all those right things for success.
He was awake and aware long before the crash of 2008. But I think that crash signaled him that his time had come. Here’s one of his big revelations, post-crash:
My firm’s revenues are one-fourth of what they were in 2008, and my personal income is similarly reduced. But my tax bill this year was one tenth of what is was in 2008. That’s progressive taxation for you! So I’m faced with the choice of doing the long days and weekends to build the business up, only to see most of the additional money stolen and used to kill, maim, and torture innocent men, women, and children all over the world, or simply coasting along, paying the bills but not saving so much as I used to. I’m also not writing year-end checks to the various governments that would buy a decent house in almost any place in the country.
Sure, he knew all about marginal tax rates and woefully named “progressive” taxation before the crash. But living it, and feeling responsible for its consequences, is a different thing.
Now he’s wondering how long it will be before the federal government confiscates everbody’s private retirement funds by forcing them to invest in worthless government paper. And he’s taken action:
I liquidated most but not all of my IRA. … It hurt a bit to do so; I had spent the last 10 years making carefully researched investments in smallish companies, mostly in the commodities and natural resources sector. …
I had to wipe out most of those investments, and I didn’t have the luxury of timing the sales. So while I did very well, including two “ten baggers,” (you put in one bag, you take out ten bags) it felt like kicking down my own sand castle. …
I took all the money, deposited it in a new LLC’s bank account, and promptly wired nearly all of it back out. I bought a bunch of silver and gold. So what used to be capital invested in producing goods and services for people who want them now sits in a safe deposit box, where it benefits no one but me.
I did this primarily because it’s rather obvious that they will be coming for the private pension assets sooner than later. They did it in Argentina, they just did it in Ireland.
I am under no illusion that I have foiled them, but I have bought some time. There is now a step between the midnight passage of the law (or stroke of the pen, law of the land change in policy/regulations/interpretation) and them getting the money from me. Not so with bank or brokerage accounts, which they can freeze, re-allocate, tax, confiscate, or pretty much anything else they want with a few keystrokes. With the metal they have to find it, or I have to go get it first, then sell it, to pay their tax or whatever they decide to call this particular round of theft. I may have only a few days, but I will have more time than people with their money stored as bits on some computer.
So his shrug continues and in the classic (if slower) way — by removing capital and efforts from productive businesses and turning inward.
My friend is still an entrepreneur, but I wonder for how long. There was a time that his sort of very smart go-getter would rarely ever have quit. Even now he’s reluctant. But he’s headed in that direction in a way that looks inexorable — and doing so for reasons that plenty of others might quietly follow:
So perhaps I’ll explore more outlaw things to do, or maybe I’ll just contemplate, read, think, try to rejuvenate. I really don’t know at this point. But I do know that I’m not the only one. I suspect there are 10 or 100 small fry like me for every Jerry Della Femina that gets MSM write-ups.
I suspect this because I didn’t do this out of any principle or righteous anger. Rich men with no need to continue to work can afford those luxuries. I have principles and lots of anger, but they weren’t enough to get me to act, to convince me to tear down my precious investment portfolio and spend considerable time and money on another plan. I did it to protect myself, to prepare for what is coming. It seems that is a more powerful and effective motivation for me, and I don’t think I’m all that unusual in that respect. So while I’m shrugging, mostly I’m hunkering down, prepping and protecting.
The point about the parasites killing the golden goose is well taken. To be in the top 10% of income earners you need to make about $90,000 a year, well within what a successful small business owner can make. But that same top 10% pays about 70% of all income taxes. Convince the people who create real jobs that its a rigged game, not worth the effort, and tax revenues could collapse.
Which they have.
Have been busy with no time to comment, but have to stop and say this:
Many of the “middle-class” (remember when the middle-class was too proud to admit to being “poor”?) have now become the poor in reality — with no bootstraps to pull themselves up.
Many of those same middle-class, who hunkered down with shoulders to grindstone, are those we used to call “sheep.” Maybe they weren’t “sheep” at all, but merely too busy to lift their eyes and see where they were headed. There’s a price for that, and they/we are now paying it.
But if “experience is the best teacher,” the middle-class is starting to pay attention now. This may be a good thing for our progeny. Many will never again believe what they’re told, or blindly follow where they are led. Cynicism does have its purpose.
To back up your freinds fears of a government run against 401k etc I would share this link. The government is fixing to make another run against federal employee pension funds, to the tune of $66million.http://www.zerohedge.com/article/treasury-continues-dip-retirement-accounts-prepares-take-out-66-billion-chunk-make-space-new
I understand a lot of people might take the opinion that federal employees deserve to lose everything but most worked hard all their lives and dedicated themselves to doing their best. If the govt will do this to their own employees the rest of the citizens retirement funds are in the cross hairs next.
Putting physical Gold and Silver in a safe deposit box is a good idea except for two flaws. Those safe deposit boxes are in buildings owned by someone else, an entity that can not be trusted, Federal Banks. Also I was told by elder relatives that when the gold standard was left and gold ordered to be turned in to the government for paper, that safe deposit boxes had to be opened in the presence of government officers to make sure gold was not hoarded. Something think about.
Matt said:
“I understand a lot of people might take the opinion that federal employees deserve to lose everything but most worked hard all their lives and dedicated themselves to doing their best.”
I take great joy in contemplating the misery of all those IRS, ATF, DEA minions who all did their best and now are going to suffer for it. The deepest pit of hell is insufficient penance for the misery they have wreaked upon us.
Also, a safe deposit box doesn’t have to be in a bank. See:
Oops, the link disappeared from the last comment.
https://www.backwoodshome.com/articles2/wood115.html
I agree with Matt and Woody and add to that, buy anything of value in cash (no record to use to come and metal detect your property, which will happen after they’ve gone thru available lists of who has what assets)……
As for the silent middle class that’s being dragged under the water too, on one hand I feel bad for them and on the other I can’t help but think they should have been more involved along the way….or at least louder – spread some of that common sense around a little better……While the masses of either “side” were busy doing what was best for them, the criminals (politicians) were sailing along with their agendas, unchallenged……
For those who are enlightened to what’s happening, and scrambling for cover, they still will suffer from the consequences of others…..it’s not if or when, it’s to what degree…..
Woody, I agree with you on the IRS, DEA and ATFE employees. There are still plenty of good ones to go around though.
The middle class was content as long as their jobs were holding out, investments paid off and taxes weren’t to high. Most were willing to vote the same party their parents had voted fore, afterall things were going good, no need to rock the boat. Many of the middle class are descended from parents that trusted the government, trusted the MSM, trusted their clergy etc. It takes a long time and/or calamitous events for people to change those long established patterns of trust.
Now that the MSM barely bothers to hide politicians lying and illegal conduct, investments are gone, inflation is starting to spiral and their kids probably won’t be able to afford college or even find a job they are noticing. The what to do about it part is the problem, many are convinced that something needs to be done, but are not positive that voting, for anybody will do it.
Claire … I think this is your best ever blog post
and it saddens me
I used to be an entrepreneur, hopeful, optimistic …
now …
now, I fear for my children’s future and only see dark clouds
so: do you have any hope Claire? do you have ANY reason for optimism, for belief that our lives will be better in 10 years than they are now?
Jake MacGregor,
“so: do you have any hope Claire? do you have ANY reason for optimism, for belief that our lives will be better in 10 years than they are now?”
I do. In fact, I hate to admit it (because my cynical self always hates to admit to optimism) but I saw the underlying assumptions of the post as being very hopeful. Do I think the country in general will be better in 10 years? Not likely! (Does anybody here think that?) If I were a parent, I’d also fear terribly for my children’s future; I don’t envy you or any other parents or kids today. Yet there are boundless creative possibilities in shrugging, building alternative communities, finding new ways to earn and live and trade. “Interesting times” lead to interesting adaptations. Necessity is a mother and all that. And aren’t you and your family living proof of that, even as you feel tired and fearful?
Hm. I think this is another blog post — so thank you for both your compliment and the idea. I’m sorry to have caused distress.
I shrugged in 1979, having finally figured out where LBJ’s nonsense was leading us. Shouldn’t have taken that dozen or so years, but I guess it took a while to climb up the learning curve.
thank you Claire, I look forward to that post
living in chronic pain (which will not stop this side of the grass) my optimism has been curbed
thoughts of hyper-inflationary collapse, peak oil, japanese radiation, never ending war, severe impingement of our constitutional rights … and that was just yesterday’s headlines :>)
i think i’ll simply stop reading on the web a few days of the week, start watching more Monty Python, and perhaps take up Alcohol as a hobby :>)
so, please, posit a post on Optimism … I’d deeply appreciate that!
While Claire writes about the “middle class,” the people she describes are in a much smaller group – small business owners, entrepeneurs. They are in the middle class but a tiny minority even among the middle class. They have to be a minority – a small business might employ 6 or 60 people, but there is only one owner.
Pat makes an excellent point: “Maybe they weren’t “sheep” at all, but merely too busy to lift their eyes and see where they were headed. There’s a price for that, and they/we are now paying it.”
Anyone who has owned a small business knows about this, it even has a name: Tyranny of the urgent. But as Pat points out, not just the employers are paying the price, but everyone else as well.
Naturegirl says that “I can’t help but think they should have been more involved along the way….or at least louder – spread some of that common sense around a little better……” but consider this comment (third hit from a google search on “middle class businessman.”
“I can see why a white middle-class businessman would like Ron Paul…?
But why would a working-class single mother with a sick child and no insurance vote for him? There are plenty of people who depend on gov’t services and support to survive, and here comes Paul saying all that stuff isn’t in the Constitutuion (sic) so it has to go. The young single mother doesn’t give a crap whether WIC or medicaid is in the Constituion. She’s not going to let her child go hungry or get sick out of respect for principle. Are Ron Paul supporters just counting on people like that not having the power/voice to make their feelings felt and just getting steamrolled?”
A lot of people did make noise. They were loud. They gave Ron Paul more money in a single day than any political candidate in history.
But their enemies just gave more money to more people. Half of the country doesn’t pay a dime in income tax, but more than half take home some money from the feds.
The middle class business owner wasn’t silent. He/she was simply outspent. What should they have done about that?
Shrugging looks better and better.
When talking about a “better” future I think we need to define better. I think many people see a better future as a return to the prosperity of the Reagan years (not that prosperous to many) or a return to the mythical golden years of the 1950’s.
I believe the future will be better, but not until some pretty horrific worse. What I don’t know is what better looks like. It might be some kind of weird conservative utopia or it might be a high-tech version of 1880’s agrarian America if you follow the resilient community line of thought. Reagardless, the future will arrive and it will be an interesting, scary journey.
[…] Part II […]
I agree that an interesting, scary journey awaits us. You catch little glimpses of things that may be from time to time: Ardunio-controlled steam engines, “open source” tractors, “mesh potato” private telephone and internet services… The technology is there, but will anyone bother to take it off the shelf and use it?
This is where I think Jake’s concern comes to the fore: It’s not a question of technology. We’re a remarkably adaptable species and irreverent as hell over our supposed limitations, which we tend to overcome with astonishing regularity.
It seems to me that the matter is one of integrity in the most literal sense. If there is optimism to be had, it will come in the form of a return to recognition of principles derived from observation of reality and integration of those principles into a coherent philosophy.
This is not as high-sounding as it seems. It’s really nothing more than what used to be termed “Common Sense” (with a nod to Thomas Paine). But, after more than two centuries of dragging the ball and chain of Kant, Hegel and their postmodernist brethren around, most of us can barely write or speak clearly, let alone think in anything resembling a rational manner. “Philosophy” as a friend once observed, “is not optional.”
This is what needs to be addressed with all vigor and speed. Without it, we’re certainly headed back to a Dark Age, when people not only forgot how to do things, but that certain things could even be done. That is the outcome of a loss of rational thought.
This is an extremely tall order. Building and stocking a retreat is child’s play compared to the work that lies before us. Certainly, stockpile your “beans, bullets and bandaids,” but never for an instant neglect your intellectual development. In the end, what each of us becomes and is able to transmit to the next generation in the way of a rational culture of freedom is far more important than anything else we will accomplish.
There’s reason for cautious optimism here, but only because — if one looks closely — the embers of the Enlightenment aren’t quite dead yet. Find them, clarify them, bring them to back to life and spread them. There is nothing more challenging, worthwhile or valuable.
The uninvolved, politically inactive, can’t-tear-me-way-from-mowing-my-yard, “where’s my cheap imported goods?”, fast-food drive-thru American Middle Class now wants to drop out completely. Oh, bravo.
Entrepeneurs – consider offering stock in your company on the glbse – there are crypto capitalists that would love to see you succeed.
Don’t fret – there is an agile new David out there…
“I take great joy in contemplating the misery of all those IRS, ATF, DEA minions who all did their best and now are going to suffer for it. The deepest pit of hell is insufficient penance for the misery they have wreaked upon us. ”
And with those evil .gov folks, also the employees of places like Veterans Affairs Medical Centers….who care for the veterans, injured and not, as well as their families. 19yrs in uniform, 12yrs in service to the veterans, and I’m one of those ‘soiled, unclean .gov’ employees who will never see a retirement. Not in this lifetime.
Guessing, if your attitude is as verbalized above, you’ve never given anything to your country besides lip service. I just hope you’re one of the ones I get to turn back at the front door as they get shut when our doctors, nurses and technicians start to shrug.
The core problem: too many paper claims on too few real resources. Before you say or do anything else, read this: http://en.wikipedia.org/wiki/Peak_oil
Good Luck!!!
“Guessing, if your attitude is as verbalized above, you’ve never given anything to your country besides lip service. I just hope you’re one of the ones I get to turn back at the front door as they get shut when our doctors, nurses and technicians start to shrug.”
~~~~~~~~~~~~~~~~~~~~~~~
Sorry, but you guessed wrong. I’m a Navy Veteran, 1967 to 1971.
I got my first taste of Veterans Benefits when I tried to get a VA loan to build my house a few years after my discharge. The red tape was hip deep and after months of futile “help” from veterans advocates in .gov I gave up and got a bank loan without their help or guarantee.
Both my parents are WWll veterans. I’ve seen the kind of care dispensed by VA clinics and you can rest assured I’ll not be asking for anything from them, ever.
We all have to live with the consequences of our decisions, like it or not. You chose government service and you’ll have to live with the results of your (in my opinion) poor choice. I’m sorry if you feel that I don’t value your service highly enough. You are probably a nice guy, a loving family man and a dedicated public employee, but you are being paid with stolen money. When the supply of stolen money dries up you shouldn’t be surprised when you find yourself unemployed and abandoned by the government you so loyally served. Governments have a long history of doing that.
I really _am_ sympathetic to your dilemma but I don’t see any reason why I should feel responsible for your plight or for your continued employment. I really hope you find a way out of your situation. Good luck and best wishes.
How long before members of the productive class (now something like 60% of the population, yes..?) have enough of their efforts being redistributed and squandered by the fedgov and simply amend their w-4 exemptions to “99” and stop filing a “tax return”..? If I do it alone I will be persecuted and prosecuted.. If a million people do it, what are “they” going to do..? Make more laws..?
BTW.. one cannot eat gold or silver.. nor shoot it.. nor grow it.. it’s only good so long as there is someone with something of true intrinsic value who is willing to take it in barter.. brass, copper and lead are far more usable “precious metals”.. JMHO..
I wonder just how long it will be before the self made millionaires and multi-millionaires of up to 100 million or so figure out that the game is rigged and that as long as they and their assets are in America that they are in the crosshairs of the federal bureaucracy? This is when they are going to figure out that they have only two options 1)Stay in America and get screwed out of everything that they have. 2)Get out and take what they can of their wealth with them. Given those choices I know which one I would pick.
Woody Says:
June 8th, 2011 at 7:15 am
“Guessing, if your attitude is as verbalized above, you’ve never given anything to your country besides lip service. I just hope you’re one of the ones I get to turn back at the front door as they get shut when our doctors, nurses and technicians start to shrug.”
Well no. I have 21 years military service. 6 years active in ground combat units. I’ve never been to the VA, have no interest in going. Won’t have any interest in the future. I never filed the paperwork for the pension either. If you think some one is interested in your whining about your pension, or attempting to use emotional blackmail, think again. As the poster essentially said I have no interest in your self made pity party. I worked briefly for the fedguv and quit because I couldn’t stand the evil stupidity, mindless vapidity, laziness and corruption.
Leonard,
You and I are definitely on the same page. In the opening paragraph of my comment I was quoting “millerized”
Sorry for the confusion.
Millerized wrote: “Guessing, if your attitude is as verbalized above, you’ve never given anything to your country besides lip service.”
Just half my income for my whole adult working life. Buzz off.
But wait, you conflate “the country” with the “State.” You fought for the State in the military. The country (America, which would continue to exist if the United State (not a typo) disappeared tomorrow,) had no need for you to go overseas and slay foreign monsters. The country was not in any danger. The pocket linings of the politicians and their cronies? Yes. They were at risk. You’ve made them very happy, and made them very much money.
I recommend reading what General Smedley Butler, USMC, twice the recipient of the Medal of Honor, had to say when speaking about “what he gave,” and “what he fought for.” He was able to be honest with himself (only after he retired, unfortunately.)
“I spent 33 years and 4 months in active service as a member of our country’s most agile military force–the Marine Corps. I served in all commissioned ranks from second lieutenant to Major General. And during that period I spent most of my time being a high-class muscle man for Big Business, for Wall Street and for the bankers. In short, I was a racketeer for capitalism. [he means corporatism] I suspected I was part of a racket all the time. Now I am sure of it. Like all members of the military profession I never had an original thought until I left the service.” -General Smedley Butler, USMC, “War is a Racket.”
Decades ago, long before ever reading (or hearing of) Atlas Shrugged, I vowed that I would never start a business that had to hire employees. Why? Many reasons, but the most important among them was to avoid dealing with regulations.
And I’ve always avoided engaging in regulated economic activity. Why would anyone go there?
I was shrugging before I knew what to call it. Reading Atlas Shrugged merely gave it a convenient name.
My apologies Woody it was I who screwed up the attribution. Thanks for the correction. I am very aware of Smedley Butler and couldn’t agree more. The pity is we don’t learn until after. I guess I just hung on because I liked jumping out of airplanes and all that. My mistake.