Response: The Secret Shame of Middle-Class Americans

The Atlantic, published a cover piece in May 2016 titled, The Secret Shame of Middle-Class Americans. The subject was the unstable financial position that many seemingly successful people are in.

The article was well written by an author who declares himself a part of the ashamed population he is writing about. As he ruminates on his situation, there was one thing I couldn’t help but notice – even after researching the topic and writing an article on it, he remains blind to the item he can most easily impact.

He writes, “The only thing one can do is work more hours to try to compensate. I long since made that adjustment. I work seven days a week, from morning to night. There is no other way.”

The above statement bothers me because it is a fallacy that is unfortunately shared by far too many people. The other option is, of course, that you can spend less money so that you do not need to work as much.

We can chose the level of luxury of our life. We can each explicitly and intentionally live a less expensive life. We can bike to work, we can not have a tv, we can live in a smaller house, we can have less stuff and take care of it so it lasts longer, we can upgrade our phones less frequently, we can cook more and eat out less and calculate the cost per calorie of various foods and optimize for meals that provide more nutrition-per-dollar, we can recalibrate our standard of living scale and properly recognize that luxuries are optional.

Poverty exists and is a complicated issue. Middle-class overspending is a very different issue. If you are not able to come up with $400 in the case of an emergency but have spent $50-100k in the past year, you have simply made poor decisions. Even a 1% adjustment would remedy your problem within a year. A 10% adjustment within a month.

The author does allude to understanding this at least in part. He states, “In my house, we have learned to live a no-frills existence. We halved our mortgage payments through a loan-modification program. We drive a 1997 Toyota Avalon with 160,000 miles that I got from my father when he died. We haven’t taken a vacation in 10 years.”

But even that semi-awareness is used, seemingly, as a tool to continue place the blame elsewhere. In fact, his no-frills life is very full of frills. That 1997 Avalon is a car, a luxury that requires monthly insurance, gas and maintenance costs. A luxury that is fine if he is able to afford it, but based on the facts we are presented with, it appears he can not. He has turned his dial too high and even the ‘no-frills existence’ he describes is in fact too luxurious for what he can actually afford.

After all of this I am left thinking of how the individual rolls up into society. One person is unable to fully take the blame for his past and continued living beyond his means. On a larger scale, 47% of people are in the same situation. The author attempts to relate this to stagnating wages and other macroeconomic issues. But perhaps we are placing too much blame on economics.

Perhaps the ‘shame’ the article describes is the equal and opposite reaction to the pride that leaves the author and other blind to their options and where to place the blame. If what we are talking about is poorly made individual decisions on a large scale, we might in fact be discussing a public health issue.

Increasing Our Standard of Living

The standard of living we enjoy on a macro level is always tied to hard work. That is the way we’re able to fight against the forces of nature in order to be able to control our environment, food supply, safety, etc.

Historically, as far as I can tell, our standard of livings has always increased based on one of three things happening:

  1. Creating economic disparity
  2. Borrowing from another time
  3. Increasing productivity

As I look at the standard of living I see around me, I see signs of all three. We could not afford much of what we use if it weren’t being created thanks to laborers making cents per day. We live in an economic system that enjoys the benefits of credit transactions that do not yet have a defined future end. We through ingenuity and hard work have created tools that let us do more with less effort.

Creating Economic Disparity

The first of these categories, that of economic disparity, offends me. I can not reflect on it without feeling a bit disgusted. These increases are a zero sum game. The plenty we can see around us comes at the expense of the hard work of another who gets to enjoy less than their share. While there have always been those that enjoyed the fruits of another’s hard work – the scale at which we can do so now is unprecedented. The top 62 people on the planet control as much wealth as the bottom 3.6 Billion. This is really hard to swallow – though I can certainly see how it ended up that way and make arguments for why it would be that way .

Borrowing From Another Time

The second category, borrowing from another time, is something I am hesitant of. We do so today in two primary ways – credit vehicles and resource depletion.

The former is the reason we have economic recessions every 5-8 years and depressions every 75-100. It is also a large part of what fuels governments collapsing, revolutions and wars.

The latter, the use of resources, shows a great lack of respect for future generations. This is a game of trade offs – with many resources, using more now means you will not have any later. Clearing a forest will give you more wood today but will stop the reproduction of the forest, leaving none for the future. Draining the aquifers will cause the ground to collapse so that they can not fill up again. Burning oil frivolously will poison the air.

Increasing Productivity

The third category, increased productivity, is so beautiful. The raw form is brute force, increased productivity through extra work – and even that provides double returns since every bit of energy spent working is not spent consuming.

The refined form of increased productivity is where the exponential gains lie though. To me, efficiency gains smell like utopia. We can travel farther with less energy thanks to the wheels of a bicycle. We can apply more nails with less effort thanks to the nail gun. We can harness the suns energy to heat water more efficiently than growing trees and burning wood thanks to solar water heaters.

Are We Doing It Right?

We have always assumed that the third category was true and the reason that there was success. That people got rich by adding value to the economy through increased productivity. That this was not zero sum.

I’m not certain that is true nor that we even have a good way of measuring whether or not it is. How do we quantify it? Units of work required per standard of living unit. Is that in jiggawatts or kilocalories? Can we even understand the full scope of the system so that we can properly normalize it?

Our ability to utilize the first two methods masks the fact that we might not, in fact, be increasing the third. Do we in fact enjoy a higher standard of living per unit of work put in today than we did 100 years ago? Or do I just enjoy a higher standard of living than my grandfather because I’m riding on the backs of a greater number of people, both poor and from the future?