Wheat from the Chaff Blog

The following lecture features Elizabeth Warren speaking about the current crisis in (and looming collapse of) the American middle class.

This presentation is almost 58 minutes, but I highly recommend it for anyone interested in long term social and economic trends and the future of the middle class. Warren is a Harvard law professor who is a well-known commentator on debt and family issues. (She’s even appeared in Michael Moore’s Capitalism: A Love Story.) In this lecture, her basic thesis is that the typical American family (two parents, two kids) does indeed earn more income – even adjusted for inflation – than its counterpart in the early 1970’s. This is mainly due to the addition of a second income, usually from the wife. On the other hand, there have been many extraordinary increases in costs (mostly inelastic) that have overtaken this increase in income, to the point that the 1970’s family actually has more disposable income and more financial flexibility.

There are many impressive aspects to her presentation. First, it shows the relevance and usefulness of good statistical data. It is culturally fashionable to dismiss statistics, but the evidence Warren uses is illuminating and provocative. It confirms some things I felt were true, but have never been able to confirm or quantify. Second, her conclusions seem difficult to ignore or refute, and they are plainly scary if one thinks about them for too long. Warren’s point about the move from a three-class society to a two-class society is particularly chilling. Third, while certain cost challenges are clearly American in nature (e.g. health insurance), many others, like housing and education, pertain to middle class Canadians like myself. Finally, her insights into the declining costs of food and clothing, as opposed to the increasing costs of electronics and child care, provide a sense of fairness and balance that is often missing in popular political discourse. Generally speaking, this is a thought-provoking use of an hour.