[dolanbaker]

While the study found that today's families have a real income which is 13 per cent lower than in 2007-2008, because wages rose more slowly than inflation, 30 per cent of households had risen one income group.

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Walking up the down escalator at a slightly slower speed than the escalator is moving down.

[KaiserJeep]

While the study found that today's families have a real income which is 13 per cent lower than in 2007-2008, because wages rose more slowly than inflation, 30 per cent of households had risen one income group.

Read more: http://www.dailymail.co.uk/news/article ... z2y8LLi4vv
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Walking up the down escalator at a slightly slower speed than the escalator is moving down.

YES, absolutely. Inflation would be the reason that I'm having problems with my retirement plans. If it were not for inflation, I would have plenty enough.

In the time I have owned my present house, it first increased in value 500%, then crashed back to about 200% of the original value in 2008, and has now recovered to about 300%. Meanwhile those diversified Mutual Funds they tell me I should be investing in have stopped growing. Come to think of it, that stinking 401K retirement account does not have any good investment options anymore. Can't have all that wealth being hoarded by the Middle Class for the sake of a comfortable retirement.

In the time I lived here, regular grade gasoline went from $1.38 per gallon to $5.35, and is now $4.45.

Groceries used to average $10 bag, and now that would be $40 per bag. To add insult to injury, now I have to remember to bring my own bag.

The good thing is that the cost of Food, Gasoline, and Housing is not counted in that peculiar "inflation" measurement that is used to index the entitlements that those of us who are still working are paying to those of us who can work no longer, or who never actually worked and paid taxes, or who never even learned to read. (No, I don't know just when you are going to get your free "'Bama Smart Phone", so don't ask.)

Maybe those "Entitlement Folks" won't notice they are losing purchasing power. Plan B if they do notice is to blame the other major political party, and promise that if they vote for us, things will get better.

Yeah, that'll work, at least until we can pay back all those campaign contributors for their donations. But those darned old people are starting to annoy me....

[ralfy]

Let's call this relationship between the middle class and the elite a kind of dysfunctional symbiosis. As long as resources allow high consumption rates this symbiosis is not going away as you and many others have pointed out.

When resources constrain enough to slow way down economic growth than where is the fat to be trimmed? With the high consuming middle class.

Thus we will see that the elite, when they see the game is dwindling down on pumping up consumption, will move toward the opposite strategy of hording.

Some of that can be seen already as trillions of dollars of assets are sitting on the sidelines not being pumped back into the economy.

I think we underestimate how quickly this dysfunctional symbiosis can be abandoned.

We talk about how an eventual steady state economic system could be achieved and we often frame this as coming from some enlightened economic policies.

What I am pointing out here is that there is a far easier, more draconian, and probably for the elite a far more tempting path to take once resources are drawn way down. You disenfranchise that segment of the population who previously fed you but now is your competitor.

This rare moment in our species history where affluence was able to trickle down to a broad middle class was only possible due to fossil fuels. To assume that resource constraints will allow this segment of our population to continue is folly.

It will be a hollowed out form of capitalism that will promise much and deliver very little. Don't we see this already happening?

The middle class is screwed. And yes, this will be good for the biosphere and good for the long term goal of reaching sustainability.

Sorry to state the obvious.

My understanding is that goods and services are made available through resources and energy used by a large group of workers operating a system, and the more sophisticated the goods and services the larger and more complex the system. Given that, if the middle and lower classes fall apart, so will the elite.

[ralfy]

The largest employer, a mid size factory, in a small town decides to shift production to Asia. A couple thousand employees who dedicated their work and service were given a crisp letter of termination and thanked for their service. The decision by the CEO and CFO to move production was easy and they greatly increased their personal wealth as their labor costs were reduced by 80%.

Familiar story we all know. The heartlessness of the CEO and CFO to abandon, without a second thought, the relationship with all those loyal employees.

Profit motive is only one form of greed and worked like a charm during the rise of consumption and the rise of the middle class.

When economic activity slows way down then other forms of greed take over. A shift takes place toward a steady state economy where the elite will express this greed like refusing to play and hording.

For the middle class that will be like when the irrigation gets turned off on a golf course in the desert.

Great for the local desert ecology. Bad for the grass.

The catch given this example is the rise of a new middle class in Asia.

On top of that, the employers ultimately profit not by keeping costs low but by increasing sales of goods manufactured, and that means a growing global middle class. Who else will buy the manufactured goods?

Unless employers move to Asia they will have to appease former employees, and that may mean extending credit to them and letting the economy shift to a service industry and consumer spending. In many ways, that's what happened in rich countries. The same phenomenon is taking place in some Asian countries, as workers move to more lucrative jobs outside manufacturing, and production outsourced to other poor countries.

This explains why resource and energy consumption has been growing globally for decades.

Any attack on that growing global middle class will be disastrous for the elite, as their profits and returns on investment will eventually drop. Much of their wealth, which consists of credit, will have less value.

[Pops]

and she would have said, "Hey alien, where can I buy those shiny pants you wearin?"
...

LOL, that's good!

I am saying for the venture capitalists, the elite who drive the economy ...

But it is also exactly my point, capitalists don't drive the economy, consumers do. Capitalists don't create desire, they satisfy it. The great ones like Steve Jobs may be able to fulfil a desire we didn't know we had, but consumption is a pull, not a push action. IOW, the trick is finding the "I want" button.

the elite will keep their wealth in their pockets, hording instead of playing the game.

[/quote]

Maybe, but most wealth will simply evaporate. As I said upstream, most of that wealth is ones and zeros, most of what's left will turn into spare capacity. Consider, half the world's equity evaporated in just 12 months between 2008 and 2009:



In fact, the world's market capitalization tripled -- - Tripled - between 2002 and 2008, You can't believe that is all real tangible stuff that can be hoarded.



There is no there there.

The rug pulling will be done by the consumers sitting at the kitchen table deciding which bill to pay. Not that they will have a choice and not that they will be laughing about it but don't think anyone is running the show, there is no wizard, the elites are no less vulnerable or powerful than the consumers who support them.

[SeaGypsy]

http://list25.com/25-most-expensive-yachts-ever-built/

I doubt the people who own these yachts are too worried about what the middle class think defines the elite, or what happens when the stock markets and general fiat collapse. If there is one place in the world they can load up on bunker oil, they can cruise around for years and wait if necessary while the world becomes Somalianized. The 99% is a total myth and a most misleading one. The so called western middle class are and have been living way better than the .01% were 100 years ago. My view is the true elites are tiny in number, maybe .000001%_ and as long as they have the physical means to keep their lifestyle going, they have little reason to worry about eventual global fiscal collapse.

[americandream]

World stock of capital will probably treble over the coming decades as the working classes (I disregard the "middle class" label, it is largely a fiction) worldwide plumb new depths in the degradation of mass consumerism.

[Ibon]

Your guys responses have taken me back to the drawing board as to my theory to what degree the elite would abandon the middle class. As many of you pointed out the resilience of capitalism will not easily change the economic structure that will continue to feed the middle class and even allow it to grow long into the contraction of our resource base regardless of how marginal the profit will be.

So where does this leave us? It is related to the many threads about the feasibility of a steady state economy once high consumption capitalism hits up against physical constraints.

At some point something has to give. Hundreds of millions of high consumption middle class world citizens brings to mind James Howard Kunstler’s famous line years ago about suburbia, that it was the greatest mis- allocation of resources in the history of the world. Remember that line? Well, suburbia is a symptom of the middle class so more accurately the middle class collectively represents the greatest mis-allocation of resources in the history of our species.

Physical constraints will force an increase in efficiency as we see in transportation fuel or the efficiency gains in industrial agriculture. One of the remaining low hanging fruit where our global civilization can achieve greater efficiency is constraining the current values and consumption habits of the middle class.
Some of you see this process as just letting geology and the market do its work. That no tweaking or engineering on the part our elite will be required.

Do you all really believe that the consequences of human overshoot will result in the elite or those in charge surrendering this process over passively to the market?
I don’t. Such a very huge parameter of this systemic problem is human response which is far more important than geology, the economy or climate change. These questions come to mind

So how will those in charge respond?
How will the masses of disenfranchised look to their leaders?
How will leaders contain the social upheavel?
How can we engage the unemployed with a meaningful and dignified existence.
How will we balance brutality and enlightened response
What grass roots movements will take hold
What will dominate, nationalism or regionalism.
Will the children of the Koch brothers be doing permaculture?

I am left hanging in the wind here folks.

[Plantagenet]

Do you all really believe that the consequences of human overshoot will result in the elite or those in charge surrendering this process over passively to the market?
I don’t….

So how will those in charge respond?
How will the masses of disenfranchised look to their leaders?
How will leaders contain the social upheavel?
How can we engage the unemployed with a meaningful and dignified existence….

I am left hanging in the wind here folks.

The pattern of the economic response to overshoot is already clear from what has happened over the last five years.

Millions of people simply get sidelined from the economy. They wind up unemployed or they can only find low wage or part time jobs. They receive enough government benefits to stay alive and comfortable---housing aid, welfare checks, foodstamps, unemployment benefits, obamacare, medicare, etc., but they will never get a good job again, and they no longer really count for anything in the economy. They don't even show up anymore in the unemployment statistics.

The economy warehouses the excess folks and slims down to a smaller, younger, more productive number of workers who are a subset of the population. The people lucky enough to have good jobs do their best to pretend that everything is OK and things can continue on as before. The people left on the sidelines are dependent on their meagre "benefits" and aren't interested in any fundamental changes in the system the might interrupt their food stamp benefits etc.

The system stumbles on.

[americandream]

The elite and capitalism are one and the same so seeing them as separate elements will confuse you. They exist concomitantly with the expansion of capitalism and the systems collapse will mark their disappearance. These facts essentially revolve around the transition of culture during capitalism's plummet into accumulation failure, a culture which will contain the seeds of what is to follow. The process is fundamentally external human decision making but there is an element of subjective dialectics at play which of course there will be given our sentience.

[Pops]

Quite a bunch of questions Ibon, lol

My knee-jerk short answer is normalcy bias will control.

Think about the video of the tsunamis in Japan and Indonesia. People are just kind of standing there watching this wall of water coming at them but they have no frame of reference, no experience with which to gauge just how dead they already are just by being there. This was part of what I was trying to get to in the Kool Aid thread: that deer-in-the-headlights, stubbed-toe-but-can't-feel-it-yet, I-knew-it-was-a-train-but-failed-to-vacate-the-tunnel - feeling.

The "elites" still put on their pants one leg at a time, I doubt they are more expecting of the things we talk about any more than the average joe. After all they are the .01%, they built that, they're John Galt and Gatsby rolled into one so the rules don't apply! I expect them to be just as sanguine as J6p, maybe more so, right up until J6p goes belly up. Then they'll attempt to foreclose or maybe buy up his property (as has happened in real estate lately) but they'll find that instead of buying low to sell high, they bought high and there is nowhere to go but down.

You remember "Dots", we talked about dots incessantly for a while, I'm sure lots still do. I suspect the dots will just keep on getting thicker and thicker and the only way to recognize what is going will be to squint real hard, like the super pixelated photo of Lincoln.

Eventually everyone will get it but as I mentioned above, most wealth is denominated in 1s & 0s and goes away as soon as you pull the plug. Not that that is any consolation and not that it doesn't mean a big civilization wide tantrum. I just don't see money as having much value when there is nothing to buy - kiinda why I've never gone in for the PM bit.