Saturday, December 14, 2013

What's Next?

When I was growing up in the 60's in middle class America dads went to work, moms stayed home, kids went to schools.  The "Leave it to Beaver" America.  Then somehow it evolved into both moms and dads had to to go to work to keep families going. To keep the America dream going both dads and moms have to go to work.  If there is a divorce, there still has to be ways found to continue that two incomes coming into the house.  Somewhere along the way people started to then use credit cards more and more.  When I was a kid you saw cash, people didn't pay for things with credits cards.  Now you have dads and moms working with the extra debt of credit cards, then maybe having to have a second mortgage.   What's next?

When I was a kid College was cheaper and families could afford to send their kids to College.  Kids weren't taking out student loans to go to College. Most college kids didn't have a car  Students could make enough money in the summer and with their parents help kids could go to college with no student debt.  Somewhere along the line college started to became more and more expensive.  Kids take out student loans to get a College education so as to get a good job to live the American dream.  A College degree now is like what a high school degree was back in the 50-60's.  No College degree, we don't want you in the white collar working world.  Now the problem is that in many fields there are no good jobs.  If you are a student in science and engineering fields you will have no problem.  Many other fields good luck.  So then its onto getting a Master degree and then hoping to get a job.    Hoping that those jobs are out there instead of having to take a job in the service industry and getting stuck there when in fact you really want to do something else but can't  since there are no opportunities.  What Obama called a "deficit of opportunity".

Economists can say more about this and I will get my numbers slightly wrong but the overall idea I hope to get through.  Over the last 15 to 20 years salaries for most Americans have been stagnant.  The wealth being generated especially after this great recession is going to the top 10% and more of it really going to the top 1%.  Most Americans are not seeing the recovery from the recession.  The rich are getting richer and the middle class is not.  We have heard that for years, now we are really seeing it in the middle and upper middle class.  Some Economists worry that we will become a society of  folks centered around a lower yearly salary with the top 1% getting most of the wealth.  Look at income distribution data in the US with numbers of households  versus income.  This distribution is flat out to about $40,000 per year in household income then it  starts an exponential decay.  Half way down that exponential decay are families that make around $80,000 per year per household.  It then keeps dropping away from that.  I'm going to guess that if current social and economic trends continue  these numbers are not going to get better.  This means  there will not be much in terms of upward mobility of these numbers adjusted for inflation.   The area under this curve is constant.  There  is only so much income.   What we would like to see of course is that $40,000 and $80,000 move higher and that the exponential decay is quicker.  Not so many households in the $1,000,000 and up but more in the middle and lower income brackets. Ideally one would  like to see more of a Gaussian distribution.  In fact that's what I naively thought that's what the data would show not the actually distribution we have.  Will this happen?  No, but then this begs the question.

What's next?

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