Introduction

The discourse around the decline of the middle class in the United States is a complex one, often attributing its demise to a combination of corporate practices and political inaction. Key issues include the outsourcing of labor to countries with cheaper workforce, designed obsolescence, and the politicization of capitalism. This article explores the multifaceted reasons behind the destruction of the middle class and the central role of corporate greed in this process.

Factors Contributing to the Decline of the Middle Class

Corporate Practices: Outsourcing and Designed Obsolescence

The decline of the American middle class is often linked to the outsourcing of labor to countries like Asia and Mexico, where labor costs are significantly lower. While it is true that American companies can produce goods more cheaply in these regions, an equally important factor is the strategic positioning by these firms to maximize profits through designed obsolescence and aggressive marketing.

For instance, the move by companies like General Motors (GM) and RCA to outsource production to countries with lower manufacturing costs was not just about cost savings. It was also a strategic decision to maintain high profit margins by exploiting a global labor force. The shift towards overseas production was facilitated by advances in container shipping, which drastically reduced transportation costs.

Corporate Greed: The Lewis Powell Memo and Market Manipulation

The decline of the middle class can also be attributed to a concerted effort by corporations to manipulate markets and consumer behavior. In 1955, Victor Lebow outlined the concept of perpetual consumerism, where marketing plays a crucial role in convincing consumers to buy, use, and discard products, fostering a cycle of constant consumption. This was further expanded in the 1971 Lewis Powell Memo, which served as a blueprint for the corporations to enter the political arena and shape the economy in their favor.

The Powell Memo laid out a political and judicial strategy to enshrine unbridled capitalism as the foundation of the American economic system. This lead to significant changes in doctrine, culminating in the Supreme Court’s decision in Citizen’s United v FEC (2010), which declared that corporate spending in political campaigns is a form of free speech. This decision removed significant checks on the influence of corporate money in politics, paving the way for further concentration of power and profits.

Political Inaction and Economic Policies

While the businesses are guilty of manipulative practices, political inaction has also played a role in the decline of the middle class. Elected representatives, often prioritizing the interests of corporations over those of their constituents, have left the middle class vulnerable. A lack of progressive policies to support working-class Americans has allowed significant wealth inequality to grow, further eroding the social and economic fabric of the country.

The Wharton effect, where leverage buyouts and private equity firms pushed for short-term gains at the expense of long-term sustainability, has contributed significantly to the decay of middle-class manufacturing jobs. The focus on stock buybacks and earnings per share has often come at the expense of the well-being of employees.

Conclusion

The decline of the middle class in the United States is a reflection of a broader failure to balance economic growth with social equity. Corporate greed, combined with political inaction, has led to the outsourcing of labor, exploitation of designed obsolescence, and a shifting of economic focus away from long-term stability to short-term profits. The USA, once a manufacturing powerhouse, has been reduced to a shadow of its former self, a reality that points to deeper systemic issues in the economic system.

The trouble we face is not merely a matter of if but rather how we can address these issues. It is essential to recognize the role of corporations and their political power, while also advocating for policies that support working Americans and promote sustainability and long-term prosperity.