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Although the basic, and obvious, conclusion is that the United States is worse prepared for economic collapse than Russia was, and will have a harder time than Russia had, there are some cultural facets to the United States that are not entirely unhelpful. To close on an optimistic note, I will mention three of these. I will say nothing particularly original here, so feel free to whistle your own cheerful tune as you read this.
Firstly, and perhaps most surprisingly, Americans make better Communists than Russians ever did, or cared to try. They excel at communal living, with plenty of good, stable roommate situations, which compensate for their weak, alienated, or nonexistent families. These roommate situations can be used as a template, and scaled up to village-sized self-organized communities. Communism (obviously, under a more palatable name) makes a lot more sense in an unstable, resource-scarce environment than the individualistic approach. Where any Russian would cringe at such an idea, because it stirs the still fresh memories of the failed Soviet experiment at collectivization and forced communal living, Americans maintain a reserve of community spirit and civic-mindedness.
Secondly, there is a layer of basic decency and niceness to at least some parts of American society, which has been all but destroyed in Russia over the course of Soviet history. There is an altruistic impulse to help strangers, and pride in being helpful to others. Americans are culturally homogeneous, and the biggest interpersonal barrier between them is the fear and alienation fostered by their racially and economically segregated living conditions.
Lastly, hidden behind the tawdry veneer of patriotic bumper stickers and flags, there is an undercurrent of quiet national pride, which, if engaged, can produce high morale and results. Americans are not yet willing to simply succumb to circumstance. Because many of them lack a good understanding of their national predicament, their efforts to mitigate it may turn out to be in vain, but they are virtually guaranteed to make a valiant effort, for "this is, after all, America."
In the second half of the twentieth century the single most important economic thing that happened is that millions of mothers poured back into the work force, and that's the only thing that kept family income rising. Starting in about 1970 a fully employed male's wages completely flattened out, and in fact, a fully employed male today, on average, median, earns about $800 less than his dad earned a generation ago. So, [for] the family, unlike the first seventy years of the twentieth century, where productivity went up and wages went up, there becomes a split. Wages flatten for men and the family does better only if they can put two people on the workforce, and the norm switches from a one-earner family to a two-earner family, for those who are lucky enough to have it. Now if that were the only thing that's happened, you'd think we should be richer. We should have more savings, we should have very little debt. But expenses in the same thirty-year period far outstripped what the families are spending, and I'm not talking about consumer price index.
Here's the division. I want to compare a mom, dad and two kids today with a mom, dad and two kids thirty years ago, when you started a family in 1971, as I did. What happens on spending? Start with the consumption. This is what everyone [supposes], again, in the popular media, why are people in trouble: too many GameBoys, too many iPods, too many $200 sneakers. In fact, families today, adjusted for inflation, spend less on clothing, less on food, including eating out, less on furniture, less on appliances, than they spend a generation ago. Where they spend more is for three-bedroom, one-bath house. The median family is spending 80% more on mortgage payments, adjusted for inflation, than they spent a generation ago. They're spending about 75% more for health insurance than they spent a generation ago. Because today they need two cars instead of one, they're spending about 60% more on cars. They're paying for child care, which of course, they didn't a generation ago.
Because the mother was home.
Because mother was home, and they are paying more for taxes because of progressive taxation: when you've got two incomes that second one is being taxed at a higher rate than if they were being taxed separately. So, a generation ago -- let me see if I can do this as a picture. The median American family in the United States spent about half of its income on those basic fixed expenses: the mortgage, health insurance, transportation, taxes, nothing on child care. Today the median two-income family is spending 75% of their income on those five basic expenses, and with two people in the work force they actually have fewer dollars left over than their one-income parents had a generation ago to cover everything, to cover all the flexible things, food and clothing and savings and vacations, and all the other kinds of expenses that come up. So, what we have today is two people working full-time, flat-out, hard-bore, and they actually have less money to spend than one person working full-time just one generation ago.
And the older system had a built-in backup, and this system does not because both are already working. Talk a little about that, because this is a very vulnerable family that we have today because of the job market, healthcare, illness, and so on.
That's right. So, what's happened is not only has the picture changed on the family budget but now take a look at the risk side. A generation ago, if dad got sick or got laid off, mom -- and that's who it usually was -- didn't just sit home and wring her hands, she went to work. And yeah, she didn't make as much money as moms make today when they go to work, she didn't have as much experience, but every dollar she made was a new dollar, a dollar that had not been built into the family budget. So, between unemployment insurance and the new dollars that mom could bring in, they could survive a period of unemployment, a period of illness. They had a little extra something. A child who had extra expenses, mom [would] go to work, you could add a little extra on.
All the literature in comparative politics, writings about democracy, democratization, point to the importance of the middle class as the foundation of a working democratic system. What are the long-term implications of what you're saying? I mean, obviously bankruptcy is one, but it would seem to suggest that, just as in foreign policy, our domestic policy system is not working very well, if at all, and it has long-term consequences for what we're going to be in the future.
Absolutely. A strong middle class is what gives us a strong democracy, it's what gives us a strong economy, it's what makes us flexible and able to compete in the world, it's what makes us who we are. Here's what I fear. Here's what I think these data point toward. I think they point toward a larger upper class -- I don't want to take away from that, there are more people who are doing well, and I'm not just talking about at the billionaire level, I'm talking about at the $150,000 - $200,000 level. It's a bigger group. If you don't get sick, if you don't lose your job, if you don't have a divorce, if you don't have a death in your family, none of the stumbles hit you, and you've got a good job and you hang on to it for forty years, you've got a good chance to be in a new upper class that is larger. But the rest is just one big underclass. It's families that are living paycheck to paycheck, who are dealing this week with debt collectors and next week with late fees and 29% interest on the credit card, who are on a treadmill that they can never get out of debt, never put anything aside in the way of savings. They have sort of better moments and worse moments, but it's no longer the differentiation between the poor and the middle. It's between the upper and everybody else, because everybody else lives on a financial cliff, and some are getting pushed off, some are just going to hang on the edge of the cliff. I fear we are moving toward a two-tier society and that government policies have pushed us in that direction, have encouraged that division, have made it more comfortable for those in that larger group of well-to-do, and much more dangerous for those who are the big underclass in America.
If one were to address this as a political problem, I hear in our conversation two elements that strike me as rather important, if one is going to change the political configuration. One we talked about, which is the religion, which is articulating a set of ideas about virtue and goodness which don't address the problem at all, as you pointed out. The other is America's role in the global economy. We're spending ourselves into debt, and to make it appear that we are doing economically better than we are, we're essentially giving people as much money as they want at adjustable-rate mortgages which we will now discover may create problems. But in fact, the Japanese and the Chinese are willing to finance this, so long as we continue to buy their products. So, these are two very powerful political configurations, what we're doing internationally and the way we're presenting a narrative at home, that strike me as quite formidable, and that only collapse will change things.
I'll tell you both my hope and my fear, as I draw these together. I put my nickel on education. If Americans are going to remain competitive, that that's our only shot. We can't afford to waste a single young person in America. We need to get as many of them as well educated as we can, and that means on through college. That has become the new secular religion. Twice as many people believe that the moon shot landing was faked than believe you can make it in America without a college diploma. So, we have this huge appetite for, "That's the final thrust to get my children a chance to be in the middle class: college." And yet, what's happening with college? We don't pay for it collectively. We make families pay for it individually and we make the students load up on debt so that the next generation's huge division is that the children of well-to-do families, who can afford to pay for the college education for their children, have a leg up. They start their adult lives, if nothing else, at least dead flat broke -- right? -- at least at even. The children of that huge underclass start with tens, sometimes hundreds of thousands of dollars in debt. For some it'll be a good investment, and for some it will be the rock that will sink them. They start the great American race fifty yards behind the starting line, much less the finish line. They're got all this debt that they've got to manage and all this debt they've got to pay off. And we've written the laws to make it that these debts are non-dischargeable -- you can't get out of these debts. If you get sick you still have to pay these debts, if you don't have a job you still have to pay these debts. Really tough.
To put this in a global context, we need an educated America to help us compete around the world, to make good jobs, to make there be a reason to have good jobs here in America. What I fear is that we not only have mortgaged our homes, have mortgaged our incomes going forward, between the sub-prime mortgages and the credit card debt and the payday loans, but that the way we're financing...
My conclusion is that the Soviet Union was much better-prepared for economic collapse than the United States is.
I have left out two important superpower asymmetries, because they don't have anything to do with collapse-preparedness. Some countries are simply luckier than others. But I will mention them, for the sake of completeness.
In terms of racial and ethnic composition, the United States resembles Yugoslavia more than it resembles Russia, so we shouldn't expect it to be as peaceful as Russia was, following the collapse. Ethnically mixed societies are fragile and have a tendency to explode.
In terms of religion, the Soviet Union was relatively free of apocalyptic doomsday cults. Very few people there wished for a planet-sized atomic fireball to herald the second coming of their savior. This was indeed a blessing.