The Middle Class Squeeze, Part I

*Note to the Reader from CSL Editor Oliver DeMille:

Over the past weeks we’ve posted articles by Orrin Woodward, CSL’s new Leadership and Business Editor.

Enjoy Orrin’s latest article:

The Middle Class Squeeze, Part I: America & the Entrepreneur

In a 2011 article, reporter Stephen Marche pinpointed the painful paradigm of today’s middle class:

“There are some truths so hard to face, so ugly and so at odds with how we imagine the world should be, that nobody can accept them. Here’s one: It is obvious that a class system has arrived in America — a recent study of the thirty-four countries in the Organization for Economic Cooperation and Development found that only Italy and Great Britain have less social mobility. But nobody wants to admit: If your daddy was rich, you’re gonna stay rich, and if your daddy was poor, you’re gonna stay poor. Every instinct in the American gut, every institution, every national symbol, runs on the idea that anybody can make it; the only limits are your own limits. Which is an amazing idea, a gift to the world — just no longer true. Culturally, and in their daily lives, Americans continue to glide through a ghostly land of opportunity they can’t bear to tell themselves isn’t real. It’s the most dangerous lie the country tells itself.”

Everywhere I look, I am exposed to this bitter reality. The middle-class is experiencing a big squeeze.

On one side of the squeeze are the aristocratic elites. They have created special-deal monopolies (which raise the prices for all consumers), courtesy of government’s monopoly of force.

These “idle rich” enjoy a non-competitive life of leisure because they are allegedly “too big to fail.”

Since there aren’t any free rides in life, the perks provided by the government are paid for by the middle class through higher prices and reduced opportunities to advance. However, in order to maintain the special deals for the “idle rich,” the government must cultivate the support of another segment of the populace who approve of the unequal state of affairs.

The “Idle Poor”

Hence the government has created a new class of people – the “idle poor.” This group does NOT mean anyone who is out of work, but still looking.

Unfortunately, the government squeeze has left many hard-working people in this condition.

The “idle poor,” in contrast, have surrendered the very idea of personal responsibility and demand government support for their idle lifestyles.

They aren’t looking for work, they just expect the government to keep taking care of them.

The government creates and funds the “idle poor” to buy their votes as an insurance policy against the plundered middle class.

In this way, the “idle rich” are protected against the backlash of the middle class at the voting booth.

Meanwhile, the middle class surrenders its vast majority by splitting into meaningless parties (Democrat and Republican), that only ensure the “idle rich” rule with the bought-off “idle poor.”

In consequence, the middle class has forged its own fetters of economic plunder.

If the middle class were united against the idle rich, they would easily run the nation. But the middle class is split between Democrat and Republican—allowing the idle rich to stay in charge.

The poor are treated as “too small to win,” so the idle rich can continue to be “too big to fail.”

This is an unethical and ultimately immoral philosophy of life. Indeed, the poor, under freedom, can win in the game of life and the rich, in a similar state, can fail.

That, in a nutshell, is free enterprise.

Regrettably, however, we seldom follow this arrangement.

The politicians (of both the left and right persuasion) promise handouts to enough groups until they have enough votes for re-election, thereby continuing the middle class squeeze.

First, the idle rich bilk the middle class with monopoly positions protected by government politicians elected by the wealthy elite’s money.

Second, the idle poor squeeze the middle, receiving handouts courtesy of government taxes taken from the middle class.

Both idle classes receive benefits without effort.

In the meantime, the middle class runs faster and faster on the gerbil wheel, never seeming to get ahead.

What happened to Free Enterprise?

Please don’t misunderstand the point. I have nothing against wealth rightly earned, but the current crony-capitalism in the West is definitely NOT a free or just enterprise.

In fact, the worst result of the Middle Class Squeeze is the decline of the small business entrepreneur—the life blood of any healthy economy.

Indeed, in America, small business owners create 75% of all new jobs.

Why then, is government hounding this group out of existence though excessive taxation, regulation, and vituperation?

According to author Paul Sarvadi,

“By themselves, the goods, services and technology produced by American small businesses make up the world’s third-largest economy, after the United States and Japan.”

Entrepreneurs, in other words, created the economic miracle in America and if government continues its Middle Class Squeeze, the death of the entrepreneur will be the end of America’s economy as we know it.

William Sumner said it best in his classic essay on the forgotten man:

“All history is only one long story to this effect: men have struggled for power over their fellow-men in order that they might win the joys of earth at the expense of others and might shift the burdens of life from their shoulders upon those of others…

“But what folly to think that vice and passion are limited by classes, that liberty consists only in taking power away from noble and priest and giving it to artisans and peasants…They will abuse it just as all others have done unless they are put under checks…”

In other words, all classes of people will attempt to oppress others if given an opportunity, which is why justice demands justice for everyone.

If any group is oppressed, eventually all groups will be oppressed by the same power.

This is a historical fact and why Oliver DeMille and I wrote LeaderShift — to offer a realistic way out of the increasing political plunder and oppression of our time.

Will Durant wrote:

“Violent revolutions do not so much redistribute wealth as destroy it. There may be a redivision of the land, but the natural inequality of man soon recreates an inequality of possessions and privileges, and raises to power a new minority with essentially the same instincts as the old.”

Restoring the Entrepreneurial Dream

Call me crazy if you wish, but I truly believe that the middle class can restore justice and freedom by uniting together to restore the American dream.

For the American dream to be real, entrepreneurs must be able to rise through the ranks from nobodies to somebodies.

For instance, love him or hate him, Bill Gates is a classic example of a small business owner who made it big.

The Harvard drop out said in a recent interview: “When we got up to thirty employees, it was still just me, a secretary, and twenty-eight programmers. I wrote all the checks, answered the mail, took the phone calls.”

Entrepreneurs, who dream of making it big, must work think, work, and take risk to achieve their dreams.

The entrepreneurial mindset includes something that is more rarely found today—someone who will use his freedoms to accept responsibility and get the task done.

In truth, the West needs a resurgence of freedom and entrepreneurship to end the middle class squeeze and stop protecting the “idle” classes on both ends of the spectrum.

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Orrin Woodward co-authored the New York Times bestseller Launching a Leadership Revolution. His first solo book RESOLVED: 13 Resolutions for LIFE made the Top 100 All-Time Best Leadership Books List. Orrin was awarded as the 2011 IAB Leader of the Year.

Orrin has co-founded two multi-million dollar leadership companies and serves as the Chairman of the Board of the LIFE Business. He has a B.S. degree from GMI-EMI (now Kettering University) in manufacturing systems engineering. He holds four U.S. patents, and won an exclusive National Technical Benchmarking Award.

He follows the sun between residences in Michigan and Florida with his lovely wife Laurie and their children. Orrin’s leadership thoughts are shared on his blog – orrinwoodwardblog.com.