The shrinking of the middle class is something we should all be concerned about.
But it isn't caused by tax policy: outsourcing and automation of traditional "middle class" jobs are a much bigger force.
We really need to figure out what the middle-class jobs of the future look like. What is above menial service job like retail, and below specialized trades like software?
Even people with college degrees struggle to get into the middle class these days. That should scare us all.
I have no answers to this, but I'm pretty sure tax policy isn't going to fix it, nor would protectionism.
The shrinking of the middle class is something we should all be concerned about.
What's the evidence that the middle class has really shrunk? There's certainly evidence that the very highest incomes have climbed substantially since, say, 1980, but can you find numbers that suggest that there are fewer households making at least middle class incomes? Here's a good bit from a guy at Brookings earlier this year:
Krueger’s claim of a shrinking middle class relies on the same peculiar definition. Specifically, “middle class” is defined as having a household income at least half of median income but no more than 1.5 times the median. I re-ran the numbers using the same definition and data source as Krueger and found that the entire reason the middle class has “shrunk” is that more households today have incomes that put them above middle class. That’s right, the share of households with income that puts them in the middle class or higher was 76 percent in 1970 and 75 percent in 2010—two figures that are statistically indistinguishable.
Economists know a lot about how to create wealth. They know very little about creating jobs.
Jobs are temporary inefficiencies and a lot of economic growth comes when you get rid of them. We've automated most of our farming, but we don't have 90% unemployment because all the farm jobs went away.
One thing is how fast technology grows related to how fast workers can adapt. 'Race Against The Machine' is a thesis that technology is now growing so fast workers can't keep up. I don't know if I buy it, but it's something to keep in mind.
I don't know if your statement about economists is intending to be a factual statement of economists' view of the state of economic science, or your opinion on what modern economic theories are good at. It's not clear to me personally, to be frank, that economics know a lot about how to create wealth either.
That said, this is not an acknowledged weakness -- Keynes' magnum opus was The General Theory of Employment, Interest and Money, which spells out in great detail how these things are related. The core of this theory is still widely held in economic circles, which is why the mandate of the Federal Reserve keeps shifting from "controlling inflation" to "maximizing employment" -- because this is thought to be something that is controllable through manipulation of interest and money.
But it isn't caused by tax policy: outsourcing and automation of traditional "middle class" jobs are a much bigger force.
We really need to figure out what the middle-class jobs of the future look like. What is above menial service job like retail, and below specialized trades like software?
Even people with college degrees struggle to get into the middle class these days. That should scare us all.
I have no answers to this, but I'm pretty sure tax policy isn't going to fix it, nor would protectionism.