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Mass Consumption Created and Killed the Middle Class

Ford Assembly Line 100 years ago. These people made enough to think they could buy a car!

The rise of the middle class was fueled by mass consumption. The simple picture we learned in school had a lot of truth. Everyone wanted a washing machine, so factories turned out washing machines. The people who worked at those factories earned decent wages, and once they bought a washing machine, they wanted a dryer and a car. The people who worked at the factories building dryers and cars made decent wages too, and they wanted washing machines too, and cars and dryers and televisions. When the machines wore out, people could buy nicer newer ones, and as their kids came along, they could buy the used stuff when they started their own homes, and then aspire to newer and better ones in the future.

This is called “Fordism” after Henry Ford: “mass production of inexpensive goods coupled with high wages for workers.” It all more or less worked, and of course there are a lot of details and important factors and so on, but basically it worked. And one of the main reasons it worked is that the people who built the things people wanted earned decent wages. It was realistic for the average hard working person to aspire to the middle class of house, car, helping the kids get a good education, and then a decent retirement. That’s the definition of middle class by the White House Middle Class Task Force, the one that makes little sense in today’s new economy.

Then the rich moved the jobs overseas. Corporate honchos and their flacks and pet economists told us that this was all good, because we could buy the same things, only cheaper, because those foreign workers were paid so little. It seemed sensible to everyone except the growing crowd of people who never found another well-paying job, who were priced out of buying even the cheap stuff, and who couldn’t find anyone to blame but themselves for their financial failure.

Ugly Chart from FRED

In the same way, small retail businesses were driven out by the likes of Walmart and Walgreens and Amazon. The people who operated small shops and pharmacies and bookstores found jobs, but at drastically reduced wages. People who operated small diners got jobs as store managers at Hardee’s. People who owned local bars found themselves tending bar at TGIF. Their incomes dropped. In each case, the difference went to centralized securitized businesses.

I once represented a guy who ran a coffee shop with good internet connections and made a decent living. Then Starbucks opened a store nearby. Most of his customers stayed with him, but Starbucks got all the new coffee business, and he couldn’t grow enough to meet the increases in rent built into his lease and went out of business. The manager of the new Starbucks make far less than my client took out of the business, and the line workers make a lot less than my client’s employees. The profits go to Seattle to pay the executives there, and a bit spills onto the shareholders.

The economists who predicted that things would be just wonderful didn’t ask themselves how people could afford to buy them when all the jobs and all the small businesses went away. They seem to have assumed that things would work out, because capitalism is just so wonderful. But those service jobs don’t pay enough to justify the aspirations of the workers to the middle class fantasy.

The plain fact is that you can’t have a middle class society built on mass consumption of identical items when you don’t pay workers enough so they can buy cheap stuff. As long as the rich want all the money, and use recessions and depressions to insure a huge supply of desperate workers, there won’t be a middle class. There will just be a big group of people who want but can’t have.

So here’s a story. Not far from my client’s coffee shop, near the University, a small group of people built a mini-brewery in a restaurant. The food wasn’t special, fish and chips, reuben sandwiches and the like, but it went great with the craft beers and ales, and the restaurant is profitable. People go for lunch and dinner and for drinks after shows, the college kids go, and so does the rest of the community.

The unexpected thing that happened was that people learned what good beer tastes like, and they don’t want mass produced beers any more. Instead, they buy local and regional craft brews. These people became cheerleaders for good beer, and by extension, for good wines, good coffee, and good hard liquor, and good food. They suddenly see the value of well-made clothes, and other artisanal goods.

You see the same thing in Portland, where the tech crowd and the arts crowd and the hipsters from all parts of the community won’t consider bad beer, and restaurant staffs proudly tell you where the mussels came from, usually some Pacific cove they promise produces the best mussels you ever ate. These people are cultural leaders, and there are plenty of more people in Portland who suddenly realized that they like good food, and aren’t going to chain restaurants anymore.

Sure, you can find Olive Gardens in Chicago, but why go there when you can eat at any one of dozens of fabulous local and real Italian restaurants for about the same price, and keep the money in your home town?

This principle offers one idea for a way forward: mass consumption for badly paid and overworked people replaced by sustainable middle income lives based on local production and consumption from small sustainable artisanal businesses.

Other posts in this series:
The Middle Class is Not for Itself
Capital Accumulation But Not For You
High Class
Middle Class Muddle
Thinking About Class Structure of the United States

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