squeeze

The Middle Class Squeeze

Bill Hibbard

Submitted as an Op-Ed to the New York Times, 28 August 2008

Politics in 2008 are simple. The middle class is being squeezed. The details of the economy are complex, but the basic cause of the squeeze is simple. Capital's share of income is growing at the expense of labor's share. This is happening because technology is increasing the value of capital - smart machines are more valuable than dumb machines. The free market is skilled at accurately assigning values, and it is doing a good job of assigning more value to capital and less value to labor. The result is that the middle class, who earn their living by labor, are getting squeezed. Those who earn their living by owning capital are doing better.

The middle class squeeze can be stopped only by meddling in the free market or by stopping technological progress. Stopping technology in the US, while it continues elsewhere, would be a disaster. That leaves meddling in the market. But belief in free markets is fundamental to Republicans. The Democrats are more pragmatic about markets and so must win this year's political debate.

Ad hominem arguments are the time tested way to salvage losing debates. Hence we see ads comparing Barack Obama to vacuous celebrities, and hear pundits questioning his patriotism. Maybe it'll work. Politics in 2008 are simple.