The coming collapse of the middle class

[swag]

Run time: 57:37 https://www.youtube.com/watch?v=akVL7QY0S8A   Posted on YouTube: January 31, 2008 By YouTube Member: Views on YouTube: 0   Posted on DU: April 10, 2008 By DU Member: swag Views on DU: 1237

 
Talk begins at 4:45. This is very long, but worth watching if you have some time.

Distinguished law scholar Elizabeth Warren teaches contract law, bankruptcy, and commercial law at Harvard Law School. She is an outspoken critic of America's credit economy, which she has linked to the continuing rise in bankruptcy among the middle-class.

There is some discussion of these topics going on at Economist's View, Prof. Mark Thoma's econo blog.

[Viva_La_Revolution]

1. Thanks!

how ya been? :hug:

[swag]

2. Been good. How you been?

[ihavenobias]

3. I'm very interested in this...

I'll have to find some time this weekend. In the meantime, it deserves a rec.

[Elspeth]

4. Some highlights for those who can't watch the video: (WOW)

Here are some of Warren’s figures:

*ALL DOLLARS ARE ADJUSTED FOR INFLATION

*ALL INFO ON CONSUMER SPENDING COMES FROM THE US COMMERCE DEPARTMENT

*BASED ON FAMILIES WITH ONE DAD, ONE MOM, and TWO KIDS OF AVERAGE INCOME

A. Family Income

1970
Family Income: only one income 32K year

2004
Income, 73K year, UP 128% per year, entirely due to mothers in the workforce. Fully employed males make $800 less per year than their dads did in real dollars in 1970.


B. Family Savings

1970
Savings: roughly 11% of income

2004
No Savings at all. Actually negative savings in past 5 years, meaning that debt outweighs savings.



C. Family Purchases/Consumer Goods

1970
Consumer goods actually cost MORE in real dollars

2004
Clothing prices: DOWN 30% from 1970
Food (including eating out): DOWN 18% from 1970
Appliances: DOWN 52% from 1970
Also DOWN in price: baby food, cars , cigarettes, dry cleaning.
Slightly up: electronics (by $300/year), dog food, and alcohol




So why, with more income and a reduction in prices on most consumer goods, is the average American family in debt instead of saving more income?



D. Mortgage:

1970
Many entry level homes were NEW HOMES, just built.
Averaged 5.8 rooms
2004
MORTGAGE: UP 76% in real dollars. (This is due to the cost of housing. The mortgage rates are actually lower than in 1970)

Most entry level homes are NOT new homes. Most 1st time home buyers are living in homes that are 25 years old or more (The Mc Mansions are actually 3rd or 4th time home purchases and only represent the top 20% of income earners)

Average 6.1 rooms. That means 1st time buyers are getting an additional 2nd bathroom or 3rd bedroom but not both.




E. Health insurance:

1970
Employer sponsored

2004
Health insurance, employer sponsored: UP 74% from 1970



F. Car Expenses:

1970
1-Car family

2004
Car Expenses: 2-car family , Expenses UP 56%






G. Child Care:

1970: non existent expense

2004
Child Care: Up. (Warren says 100% for the sake of argument, but points out that the rate is infinite/non-existent mathematically)


H. Taxes:

1970
(only taxed on husband's income)

2004
Taxes, on joint income, UP 25%


I. TOTAL FIXED EXPENSES

1970
Fixed expenses (Mortgage, Car, Health Insurance, Taxes) came to about 1/2 the family income (1 working male)

2004
Fixed expenses, plus child care, come to 3/4 of the family income (2 working parents, about 128% more per year in income than in 1970, dad making $800 less per year in real dollars.)



Warren’s points:


*The biggest expenses are the most inflexible and have gone up at very high rates in real dollars over 34 years.

*The smaller expenses, which are the most flexible, have actually gone down.

*The fixed expenses lead to the lack of cash flow for spending or saving; there are fewer total dollars left after fixed expenses. This leads to borrowing on credit, and, eventually bankruptcy.

[gateley]

6. You see it laid out like this and it is DAUNTING. Thanks!! nt

[Elspeth]

9. You're welcome.

That's why I did it. I figured a 20 minute academic lecture would put some folks to sleep.

[gateley]

5. We NEED to watch this. nt

[Sanity Claws]

7. Everyone should see this

I do a lot of reading and have not seen anyone explain the problem of the shrinking middle class like this.

[Elspeth]

8. She's very good.

I will probably watch it again.

[Elspeth]

10. Oh, someone should email this to the Obama campaign.

And the Clinton campaign.

[DaLittle Kitty]

17. Did Not John Edwards Lead On This Issue and Was Roundly Dissed By The Corp. Media Whores?

:puke:

[likesmountains 52]

11. Thanks, I started the video thinking I might watch half or so...but I could not turn it off

I'm forwarding this to my kids tonight. Anyone who thinks the video might be too long...watch it!

[Systematic Chaos]

12. A lot of the data from this presentation is from 2003 - 2005.

Therefore, it doesn't even take into account the tremendous runups in the cost of food and energy since then.

We were that screwed then. How screwed are we now? :cry:

[ClayZ]

13. K and R

[progressoid]

14. Kicking for required viewing.

[lumberjack_jeff]

15. That was outstanding. Thank you so much for that. n/t

[JohnyCanuck]

16. Seriously ill? Need costly drugs? Go broke or die

Has the financial tipping point of life vs. death finally arrived? Do you now need to be financially healthy (meaning rich) to ease suffering from or survive diseases such as multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers (such as metastatic breast cancer)?

The lead story in the print edition of today’s New York Times reports this chilling fact:

Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases.

With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, like $10, $20 or $30 for a prescription, no matter what the drug’s actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.


Simply put: For some drugs, you no longer pay a fixed amount as a co-pay; you pay a percentage of the drug’s cost (up to a certain amount, under some plans).

SNIP

If you’re suffering from the relapsing-remitting (RRMS) form of multiple sclerosis, you may be taking Copaxone to reduce the relapse rate. The drug may cost nearly $2,000 a month. Your co-pay might have been a flat-fee $25 a month in a three-tiered plan. Under Tier 4 or 5, the co-pay may be a percentage of the whole cost.

At 25 percent of Copaxone’s cost, your co-pay could hit $500 a month (unless capped at a specific amount). That’s a life-altering 1,900 percent increase.

http://www.scholarsandrogues.com/2008/04/14/seriously-ill-need-costly-drugs-go-broke-and-die/