The USA is a unique country, people can freely move from the upper economic classes to the lower and vice versa. In general those in the lower 20% economically in the USA don’t stay their very long and move up as to middle class. In general what are the things that effect where in the economic class structure of America people reside: There are two basic factors that determine success intelligence and drive. It is obvious that people like Bill Gates have both a large amount of intelligence and drive, his wealth and ability to keep it are proof. If we look at a pot head who quit school we find an individual with neither drive nor intelligence, and is most probably poor (or living in his mother’s basement).
Let’s compare boxers. Mike Tyson, who was highly driven and became rich, even though it is obvious that intellectually he’s no Einstein. His lack of smarts resulted in a relatively quick loss of most of his wealth. Mohammad Ali on the other hand is highly driven and is obviously smart. His drive and skills lead him to riches, and his intellect allowed him to keep it, and even expand on them (One might also note that Tyson was a thug of poor moral character and Ali is noted as being generous).
We can arbitrarily divide the economic classes in to 5 parts; poor; lower middle class, middle class, upper middle class, and rich. Of course there are exceptions to all generalities. If we compared drive and intelligence to economic class we’d most likely derive this type of graph:
How can the government affect economic classes? They cannot affect intelligence that is pretty much determined by genetics. Can the government affect people’s drive to succeed? Obviously it can. Right now we see a shrinking middle class. This is most likely because the government’s current policies are driving people to have less self drive. If we punish those people who are self motivated and reward those people who are not self motivated we will end up with more people who are less motivated. If you can be assured of shelter, food, and health care doing nothing, what is the incentive to do more? If you are punished by having more of what your efforts produce confiscated and given to those who exert little effort then where is the incentive to do more?
If your rich and motivate and have the means to move, and there are places where less of your profits are taxed and your cost of doing business is lower, what would you do? Move of course. Drive and Incentive are influenced by what the government does. Highly driven people find a way to keep what their labor produces. People with little drive don’t move or can’t move and are stuck. The rich provide jobs to those of us who are not as smart and as driven. Government actions which influence motivated driven people to move leave the less driven less smart of us with less opportunity.
Detroit is a prime example, what was once the Motor City is now a ghost town compare to what it once was. Michigan in general has seen an exodus for decades. Many of the car companies that were there disappeared of the three that remain 2 went bankrupt, the other moved to Kansas, Georgia, Canada, Mexico, and other places where it was allowed to keep more of its earnings. Why doesn’t any car company even consider building in the Midwest much less Detroit anymore? Because people who run rich car companies are smart and driven and don’t make stupid decisions.
Rush Limbaugh is another example, he is highly driven and arguably of above average intellect despite his often lapses in logic. Faced with ever increasing taxes in NYC he moved his EIB studio to Florida. Trump talked about this and noted that the producers are moving away and soon if things don’t change there will be no rich left to tax in NYC. This is also the general explanation for urban sprawl; if you’re smart and driven you probably have the means to move, so re-locate yourself to where taxes/regulations are less. Compare suburban taxes to urban taxes. A simple cost benefit comparison determines how far you’re willing to travel. The poor have no means to move so are stuck, the middle class have more means to move so are in the immediate suburbs, the rich have gated communities or multiple living locations. Government actions influence our drive as well as where we all live and work.
The current crop of leaders in Washington, understand that their actions will affect how and where people live and work. They just get it all wrong. They think that rewarding less driven people will help them become more driven. They think punishing the more highly driven people will result in more highly driven people. They think that smart people won’t change their behavior to maximize the retention of their efforts. Smart people will either move physically or move the distribution of their earnings so that the government confiscates less.
The question most people ask themselves in light of the government’s current actions is: Why work harder if the government is just going to take what I earn? Why take a financial risk when if it succeeds the government gets the profit? Why get more of an education and work when I’ll get fed, free health care, shelter, and everything if I just have a baby (or more by having another baby)?
We need less government, more government only discourages people from becoming more driven and rewards those who are less driven, thus we see it in a shrinking middle class.
Between 1776 and 1976 the world saw a huge explosion in wealth. In 1776 there were very few wealth, and very few “middle class” and the vast majority of the world including the colonies was poor. In that 200 year time frame the world saw a huge increase in the wealth of a huge number of people, and advances in technology and living conditions, roughly equivalent to 5000 years worth of previous advancement. The reason, Liberty! Which is the basic belief that all men should have equal rights, including property rights, and thus the ruling elite should not have unlimited access to the efforts of others. There’s a great book on the subject called The 5000 Year Leap you should read it.
We are currently seeing a significant loss of liberty in the name of security and social justice, from the GOP and the right over war mongering, and from the Democrats and left with increased social welfare. The results of this is that we are seeing more poor, greater concentration of wealth in fewer people as it was before liberty took hold, and slower advances. Compare 1900 to 1960 advances to those from 1960 to 2010. In 1900 the time to travel by mass transit (train) across the country was measured in days, in 1960 it was down to around 5 hours. Today it’s still around 5 hours, government regulations effectively killed commercial supersonic transport. Obviously there are many advances in the past 50 years, but but they are not happening anywhere near the rate of advances from the previous 50 years. In 1955 we happily envisioned an affordable flying car in everyone's garage; with today's nanny state it is obvious that that dream is dead, the government for our own good would never allow it. As we watch our liberty erode, we watch civilization slow down and return to rule by elite, and subjugation of the rest. The shrinking middle class is just a sign of the loss of liberty.