I do not have television in my house which helps with being able to get away from the news cycle, but not entirely. Every time I log onto the internet or turn the radio on in my car I am privy to the clichés of current politics, and one thing is for sure – people are talking an awful lot about the so-called “middle class” now days.
As I ponder the concept of “middle class” I cannot comprehend for the life of me why anyone would deliberately want to be there – among the “middle class”. The mere fact that people allow themselves to be called this, let alone to strive toward it, is indicative of a lacking identity and chronic insecurity.
Middle, by definition, is halfway. It is neither here nor there, neither this nor that. Financially speaking, “middle class” is neither poor nor rich. Really? Is this what we dreamt of being when we were kids; is this what we are willing to settle for – the obscurity of neither this nor that? Most would agree that life rewards commitment to excellence, which middle, by definition, is the opposite of. The price for this neither here nor there-ness seems to be that the “middle class” has always borne the brunt of the economic cycles.
Economically speaking, for the poor among us it does not matter if the times are good or bad; times are always bad for them. But even for the poor there is a silver lining – they do not experience the fluctuations of the economic cycles as much as the middle class. They do not lose houses to foreclosure when they can’t make the payment because they were never able to buy houses; they didn’t earn enough income to qualify for a mortgage. The poor do not step down from a high-paying job because they were always making less. This may come across as callous, but this is simply true…
On the other end of the spectrum, the rich also don’t feel the economic fluctuations for the obvious reason that they are rich. To be perfectly fair, the rich would tell you that they do experience hardships when the economy goes bad. Yes they do, but what kind of problems would you rather have – the problems of the rich or the problems of the poor? I know what my preference is.
But then there is the “middle class” – completely in a category of its own, which is to say totally screwed, worse off than even the poor, and they usually don’t know it until it’s too late. The cycle goes something like this:
When the economy is good, the middle class get raises at work, which they promptly convert into vacations, cars, motorcycles, boats, time-shares, and big houses. Why shouldn’t they? They’ve worked hard climbing the corporate ladder. But while these things create an illusion of wealth, there is little foundation underneath the perceived affluence. The “middle class” simply borrow money to finance the lifestyle, and since it is easy to borrow the middle class usually pay too much for all of their “bling-bling”.
Then the economy turns bad. The middle class lose their jobs or are forced to take pay cuts and can no longer afford the payments for all of those “attributes of affluence”, and since they paid too much in the first place they cannot even sell them. Here come foreclosures and bankruptcies. Mind you – the rich don’t have to worry about those typically, nor do the poor. What drives this reality? There are two groups at fault – the facilitators and the doers.
In a consumer-based economy in which the monetary system is based on fiat currency, the currency must move in order for the economy to function well. Think of it as oil in an internal combustion engine. If the oil quits circulating and lubing all of the moving parts, the engine will cease-up. Similarly, in our monetary system, currency must keep circulating; and the faster the better.
Well, there is only one way to move the currency – you have to spend it. Thus, spending money is good for the economy, while saving is bad. With this being the case, do you think many politicians and people in the financial industry are going to advise the middle class to save? I think not. In fact, they will do what they can to make it easier to spend money. They will encourage credit; the more you borrow, the more you can spend! But, as I mentioned earlier, the poor do not have the ability to borrow, while the rich do not need to, which leaves you, “middle class” doing all of the borrowing.
But the decision to spend ultimately belongs with the consumer, and lack of financial knowledge suffices as an excuse only for so long. While the lifestyle is financed with the abundance of credit, it is driven by a desire to get something for nothing. The “middle class” tends to forget that they are the middle class, not the rich.
You see, poor people know exactly what they can and cannot have; what they can and cannot spend. They don’t get credit from the bank, so if there’s no money in the pocket, then there is nothing to spend. The rich, on the other hand, can have whatever they damn well please. But the “middle class” with its identity crisis gets it on the chin every time.
Predictably, in 2012 the middle class is struggling. The real unemployment number is around 15% nationwide, home values have gone nowhere in 12 years, credit has dried up, and due to the near 0% benchmark interest rate that the Federal Reserve has been holding, the “middle class” is losing the value of their savings.
So, I ask again. Why would anyone want to be middle class? Why not strive for more? Why not achieve affluent life style the right way? You know you want it. Why not learn how to become rich?
© Copyright 2012 Ben Leybovich and Just Ask Ben Why. All Rights Reserved.