Thursday, June 22, 2006

How The Middle Class Is Gradually Disappearing

by Dr. Adrian H. Krieg

Last week my wife was a bit under the weather so she asked me to go shopping and gave me a list of what we required.

Sticker shock would be a mild description of my experience in the supermarket. Naturally I am well aware of the meteoric rise in real estate, taxes and fuel prices, while the government still lies incessantly about a "1.5% inflation rate." Brother, if you believe government statistics I have this bridge in Brooklyn. . .

A little retrospective might prove interesting. When I came to the U.S. in 1952 I was 12 years old and spoke barely one word of English. My father had liquidated all our assets in Switzerland and we immigrated here. While my mother spoke fluent English because she had been a governess in Manchester, England for two years, my father and I did not speak English. My father did speak 14 other languages, many better than indigenous populations, so in short order he learned English, as did I.

By 1954 I worked part-time earning a big $10 per week for about ten hours work. In summer and during vacations I worked full-time, 45 hours in those days, and earned $40 a week. My father purchased a three-bedroom house in Larchmont, New York for $14,000. The same house without improvements sold in 1998 for $275,000; who even knows what it would sell for today?

Later in `57 we moved to another house in the same town that my father purchased for $35,000. Taxes on that house rose from $980 in `57 to $14,000 by `89. My mother sold that house in 1989 for $350,000 and I have been told by realtors that houses of that type and in that location were selling for over one million dollars in 2005.

By the time I got out of high school I had saved enough money to purchase a Chevrolet Corvette for what my father told me was an unconscionable price of $3,400. It was an 8-cylinder, which I modified to make it faster; fuel was 32 cents per gallon. I smoked an off-brand cigarette, which cost 14 cents per pack.

After a short stint in college I was drafted into the Army and upon discharge in 1961 I started my own business. I lived on the Lower East Side in Manhattan for a couple of years. My rent for a cold water walk-up was $32 per month. Rent for the same apartment today is $1,800 per month but now they get hot water!

About that time I purchased a Porsche for $3,200 – 365 type 4-cylinder with four Webber carburetors. Later I purchased a Ferrari California that had body damage and needed to be rebuilt. My friend did all the body work and I rebuilt the drive train. The car cost me $3,000 and I put another $5,000 in parts into it, plus about 200 hours of labor. I traded it to an Alfa Romeo dealer about three years later, even up, for a new Alfa Spider Super Liggera. I eventually gave that car to my wife.

I am certain you can see where I am going with this. As we now all know the government lies like a proverbial rug when it comes to reporting statistics of the economy and matters relating to labor. In the last 18 years, while Alan Greenspan was at the helm of the Federal Reserve, the dollar was inflated by 71 percent, but if we go back to 1985 inflation is 81 percent. In perspective, what an American was able to purchase in 1950 for $1 now costs about $19. Now, that's inflation!

As I purchased items in the supermarket, in every case I was astounded. Washing liquid $5.35, steak at $9.99 on sale for $7.99. I would not buy it and now know why we so rarely eat steak. The only people who did not even bother to look at the prices were those on welfare with food stamps and wick program tickets, who had been transported to the market in a taxi cab you and I paid for.

Reality can sometimes be difficult to deal with, particularly when the government has been lying to you for years. We just received an increase of my wife's Blue Cross shield medical coverage; the monthly cost has been increased to $441. Her Social Security check is $530. She is 64 but we have to pay this outrageous amount until she turns 65 in December. The morons in D. C. expect her to live on $89 per month for the next ten months.

In the meantime our Congressman, Katherine Harris, pays $300 per year for healthcare from A to Z for herself and any family member she might have to age 25. They gave us a Social Security increase in 2005; it was a hefty $24 for me, but they then deducted $12 for an increase in Medicare taxes. Then they changed the tax rate for income taxes on Social Security from taxing the first 50 percent to taxing the first 85 percent.

In the meantime, the Congress critters have given themselves a $3,000 pay increase in 2002, `03, `04, and in `05 another $3,500. Put another way, their salary increases they voted themselves from `02 through `05 are more than I get in Social Security in a year, and I paid in for over 37 years, while they paid nothing.

While our elected bums and the Federal Reserve are destroying our currency, our incomes are declining due to free trade, and mismanagement. America is rapidly turning into a two-class society, such as exists in South America, consisting of the plutocrat wealthy and the poor. The policies of the Democrats and Republicans that comprise The System are the engines behind it all.

The fact of the matter is that we as a society are being taxed to death without any discernable benefit to anyone but the bureaucrats and politicians, who might best be characterized as parasites. One of the hidden taxes is the benefit government derives from inflation. As inflation rises so does income, but the taxable income earned functions on an accelerated tax basis. The more you make the higher your tax bracket. As a consequence you earn more and then move up to another tax bracket and pay more while lowering your spendable income.

One comes to think, who benefits from this situation? There are a very limited number of beneficiaries of all this. First, the bureaucracies gain more employees and more money to waste. Politicians are able to increase their influence at the troughs of government largesse. The bankers are able to increase their bottom line as the currency is inflated. And lastly, the multinational corporations are able to increase their customer base while at the same time reducing their production costs by off-shoring their production.


Dr. Krieg's books are available from Northern Voice Bookstore


Anonymous Anonymous said...

Believe it or not, various SOCIAL programs of the last century were the main force of creating masses of middle class in this country. Now using slogans, such as "Capitalism is good, Socialism is evil", the politicians who are extremely wealthy, living on salary and benefits from TAX money, start cutting benefits for the middle-class and poor people. They diverse that money into their own pocket (by raising their own salary/benefits yearly) and wealthy corporations (by tax cuts and fundings). The problem is that people nowaday are too short sign (or stupid) to see the scam. Most people are heavy in debts, and yet still playing catching up with the Jones. They either work two jobs or happy to work lot of overtimes. They live for now, for themselves. The past generations worked hard, but they also saved and passed to their children. In the current situation, everyone is spending and no one thinks about saving. The culture of selfishness and greed are rampaged the country (despite of the constant chanting about "Christian values"). Some major social funds cut back, such as college student loans, will be deeply affected the future of the country. It'll be widen the gap between social classes, rich and poor.

7:26 AM  
Blogger Heimdahl said...

Hmmm, indeed. It appears the lesson of the stabilizing effect of a large middle class is lost on our elitist masters, much as it was the French nobility in the last decade of the 18th century.

If this was a Road-Runner cartoon, we would all be buying stock in the "Acme Guillotine Co".

Those who do not learn the lessons of history........blah, blah.

7:14 PM  

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