Jimmy Zuma

Jimmy Zuma
Location
Washington, District of Columbia,
Birthday
August 01
Bio
After ten years haunting online political forums and much longer as a disability rights advocate, Jimmy Zuma started the online political journal, Smart v. Stupid. Since then, he has emerged as one of the left’s most direct new voices. Almost immediately, Jimmy was offered the opportunity to join the political team at Technorati where he writes DC Water Cooler, a weekly feature on what the politicians and pundits are talking about. Most recently, his columns began appearing in the Tucson Sentinel in Tucson Arizona. He is also an occasional contributor to OpEd News. Jimmy's goal is to return vetting to the marketplace of ideas, by elevating the status of smart ideas and debunking dumb ones.

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Editor’s Pick
DECEMBER 2, 2011 8:09AM

Stocks point to a dying middle class

Rate: 21 Flag

Quick, what are the top ten performing retail stocks this year?

Number one is Dollar Tree, one of those stores where everything costs a dollar, everything has “China” somewhere on the label, and quality is never the point–of–purchase reason. Number three is Dollar General, followed by Big Lots. Family Dollar is sixth. That’s a lot of dollars, but they’re mostly transacted in Georges, not Benjamins. Wal–Mart is number ten. Their market strategy is “cheap über alles.”

middle class tombstone attrib DonkeyHotey 300x At the other extreme, there are a few premium retailers. Whole Foods is number two. Macy’s is fifth. Nordstrom is ninth. They target customers in the upper income strata—the buyer segment most mainstream, middle–class people hope to join. Someday.

But entirely missing are any retailers who aim to sell to the mainstream middle. I suppose you could make the argument that Vitamin Shoppe is a middle class retailer (I wouldn’t) and one could argue that Costco aims at middle–class thrift buyers. You could also point to Macy’s attempts to down–market itself. In any event, the economy won’t be fixed on the backs of chunky vitamins and mega–packs.

In fact, retailers who sell to the middle class are hurting. JC Penny’s stocks are down 5.5% from the prior period. America’s mainstream–middle retailer Target is off 12.4 percent in share value. Kohl’s is negative too. Even Safeway, Fresh Market and Kroger took big hits this year.

What does it all mean?

  1. Middle class purchasing power is shrinking.
  2. As the middle class shrinks, its drop–offs won’t suddenly become homeless. First, they will travel through the economic tier that buys cheap crap from China. With luck, they’ll bottom out there.
  3. As more and more middles shop low, more of them will be forced to accept lower–middle and then lower income–strata jobs. When middle–class buyers disappear, employers don’t have the margins to pay middle–class wages.
  4. Rich people will only cover a small subset of the buying burden. Even if they have most of the money, they can’t—or won’t—support the American jobs base. Among the rich, there simply aren’t enough backs (to clothe) or mouths (to feed) to support a vibrant economy.
  5. Of the top twenty retailers, only about one fifth sells to the rich. Most sell to the poor. Not many sell to the middle anymore.
  6. This is happening now. Even positive economic news isn’t necessarily positive news for the middle class.

Do we really think we can support a viable economy with retailers whose most salient quality is “dollar?” Of course not. Serial entrepreneur Nick Hanauer (who sold a start–up to Microsoft in 2007 for $6.4 billion) recently wrote about this for Bloomberg. Hanauer says,

“The conventional wisdom that the rich and businesses are our nation’s ‘job creators’ is… false.”

We’ve written about this before—jobs are created by willing buyers, not by willing sellers. Hanauer takes it one step further,

“When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer.”

If the trend continues, there won’t be a middle class left to beg the rich for jobs they never did provide. But if we’re to save the middle class, Hanauer says we should increase taxes on the rich. Then we should spend the money to fund things that benefit everyone. Even the rich will benefit, he believes. In any event, we have nothing to lose by reinstituting fair taxing of the rich. Neither coddling, pampering, nor worshipping them has been successful.

It took 40 years of a New Deal, a World War, and a Great Society to create a vibrant middle class in the United States. It took thirty years of Reaganomics capped by eight years of unregulated capitalism to bring our middle class to its knees. If we let our middle class die, it’ll take thirty years and a real—not rhetorical—class war to get it back.

Nobody wants that.

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A friend of mine works in a furniture business owned by a relative. The relative made lots of money by selling fridges, stoves and basic furniture to working-class and lower-middle-class. His sons thought that was boring and when they took over they bought and tried to sell only *fancy* stuff...and nearly ran the business into the ground.

It's the masses who support an economy. Pulling the rug out from under them and shipping their jobs overseas, and then calling them lazy for being unemployed - not an effective strategy.
Another cogent analysis Jimmy. Is there any hope for this country to get that middle class back?
Excellent post. I miss the middle class. It was so comfortable. I am a dollar store person now. How did that happen? I was lazy, I admit it.
"If we let our middle class die," what?

you see the congress in action, they have gutted the nation, and you expect they will suddenly change?

americans watch politics, they don't act. they can protest, but they can't vote. not for plans and not for laws. they can vote for people, and by that act they turn over to politicians their only and pathetic power. if you want government for the people, this is not the answer. 'for the people' is only accomplished 'by the people.'
I live in Los Angeles and I feel like the middle class has just vanished.
The question becomes:
Can there be "middle class" jobs in a globalized service economy?
At the height of economic strength, America had a manufacturing economy...that faded, as countries with cheaper labor undercut our dominance.
Corporations are not people, but people, when it comes to getting the most for their money, act like corporations. We buy cheap, feeding the beast.
The people have to change if we want the system to change.
obsolete- as in not needed - not needed for corporate or cannon fodder - every inch we have gained was fought for...by others, now dead that most do not even know existed.

this country has never been fair or just. "gains" were made by the people for two reasons - 1 blood, 2 the elite needed manpower to create or defend wealth.

The gi bill produced too many smart people who created a generation of people that almost made this into a just nation - the blow back has been twice as fierce - and now we are no longer smart enough as a people to get it.
"rich people march on washington every day"
--i.f. stone

"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both."
--supreme court justice louis brandeis

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
--upton sinclair

"One withstands the invasion of armies; one does not withstand the invasion of ideas."
--victor hugo





occupy party reaches critical mass/seismic effect--now what?
My father was born during the Great Depression and came of age during the post-war boom, a time of wealth creation unparalelled in human history.I get the impression that our fathers thought this was the natural order of things, one that would continue without any intervention on anyone's behalf.

Sometime around 1973, our rulers decided they didn;t need the middle class anymore. And while a generation of Rip van Winkles snored in front of their television sets, their leader were busy shredding the social contract that made it possible for them to go from hardscrabble beginninings to comfortable affluence in half a generation.
I'm middle class right now. But all it would take is one major health crisis or job loss, and I'd be living in a van down by the river.
OMG don't say it is true but the figures speak for themselves. Thanks for the eye opener.
Modern Oligarchies have shipped all the jobs overseas and consolidated into a small number of stores. The result is an enormous amount of merchandise that is falling apart after only a few months. Sneakers that used to last two years in the seventies, one year in the nineties fall apart in 4 to 6 months now; toasters and coffee pots that used to last longer than many people remembered, perhaps over ten years now break in one or two years.

This can be partially reversed if an enormous amount of people start saving their receipts and return every crappy product for a free replacement. this may be more effective if the returns are during busy times and the customers insist on handling them in front of the store in front of witnesses so that people are constantly reminded of the enormous amounts of cuts that have been going on at the expense of the consumer. This won't be a guarantee since they will only search for another way to scam consumers but it will make it harder for them and remind the public they're being ripped off by corporations and politicians.

They have cut manufacturing expenses to the bone and sent advertising, shipping and distribution costs through the roof and increased their profits by using their market power to steal from everyone else. If you google "planned obsolescence blogspot" you'll find hundreds if not thousands of blogs by people that are fed up with this incredible volume of corruption but the Mass Media doesn't mention it at all. They have a built in financial incentive to look the other way; they get an enormous amount of revenue from those that are selling crap. Since their getting a big share of the money being stolen from the public they spread the corporate propaganda to hide it.
If "the rich" can't be counted on (because there aren't enough of them, as you say) to spend America into prosperity, it's curious that taxing them more will make any significant difference other than making the "everything is just so unfair" crowd feel better somehow.

Were you on the ball, Jimmy? Did you buy any "Dollar" stocks? Or would doing so have been "hypocritical" to your message? Are the "Dollars" guilty of taking advantage of poor people? How about stocks of payday lenders? What if the latter didn't exist? Would you complain that poor people were being discriminated against by lenders?

All of your pieces sound like a collection of current left-wing talking points. Demonize "the rich," claim to represent the poor and middle class. Accuse so and so's for not understanding the Constitution's pro-individual bent, then turnaround and advocate for a pro-"progressive" regulation, heavy-handed government role in American lives. Give all sorts of credit to big government programs for what you think is "good," demonize Reaganomics and "the last eight years" for everything you think is bad.
Do you have any original thoughts? Solutions?
Didn't think so.
I don't think the problem is the rich. There are always going to be some who are richer than others. What are you really advocating for? Do you support the "free education" free healthcare" "free money" crowds of the "Occupy" movement?
How do you institute your "fairness" doctrine fairly?
Or is it as simple as saying, "BRING DOWN THE RICH!"??
Sorry; but you are clearly wrong. The upper class is disappearing.

BMW passenger car (preferred by the rich) sales declined 14.2% over all models during November 2011 when compared to November 2010. On the other hand, Toyota Division passenger cars (preferred by the poor) recorded sales of 66,108 units during November 2011, an increase of 14.7 percent over November 2010.

Your problem is, of course, that you have used the incorrect silly data to justify your load of watery spoor. However, I have used the correct silly data to justify my load.

Perhaps you are correct in your belief that it is the smart verses the stupid. Just when will a smart person show up here?
You said this: If we let our middle class die, it’ll take thirty years and a real—not rhetorical—class war to get it back.
Nobody wants that.


What are you talking about? I want it. I think a vast quantity of people want it. And they will see it as inevitable, given the impossible situation we are in.

And the more I see, the more I think such a war is winnable. Yes, the rich might have sonic cannons and other similar weapons to use...at first. But they have to be wielded by people who will inevitably hate the rich. And look at how the IED's were used against the supposed superior technology of the American military. People with ingenuity and determination can beat the so-called weapons of the wealthy.

Yes, it's war and death and loss. Did you think anything was ever significantly changed without those?
This is just one of many examples and articles written about the shrinking middle class, so it doesn't need to stand alone as evidence the middle class is shrinking. Of course, one would have to be informed to know that, and UncleChri is certainly far from informed. The fun part is he's not at all bright, but thinks he is. Those types always provide Smart people the most fun.
On the upside, now you have an example of Stupid to confirm the blog title. Thanks, Chris.
Jimmy - Can you please define middle class. Without a clear definition then there is no way to know who you are talking about. So many people are talking about this dying middle class. But no one seems to define it.

Also ,what about the poor. I find it interesting that the so called middle class has become so self interested lately. I guess as long as things were OK for the middle it was easy want to tax the rich (not the middle) to help the poor. Now the middle seem to be worried about nothing but themselves.
It was as much the Reagan deficits as the deregulation. Deficit spending subsidizes owners of capital at the expense of the working class. Deficits either drive up real interest rates or drive in foreign investment, thereby boosting trade deficits and lowering industrial wages.
Jobs are created by willing buyers, which is to say, demand. Amen.
"Neither coddling, pampering, nor worshipping them has been successful." Love this line. The irony that the people who need the least coddling get the most is stunning.