I was not taught how to be an American in school. I started in 1954. I learned to read and add. The rest I picked up by osmosis: work, Scouts, the people around me. Nobody sat me down and explained what a politician is for, what a vote costs, or how a household budget keeps a free country standing.
I still worked my way into the American Dream. House, family, a living. I thought that was the job. I also thought the schools were teaching my children what the country is, why it is worth keeping, and how you keep it. I was wrong. I was busy earning the life and I missed the dulling.
Then came the children after the dulling. My grandchildren do not think capitalism is bad. They believe it. That is different. A thought you can argue with. A belief they inherited from a classroom that never showed them a ledger, a title deed, or a parent who made payroll. They have been told that my generation did nothing for them. That is a professor’s sentence. We built the roads, the power, the food, the campuses they sit in. We also stopped explaining the machine while we were running it. Both are true.
If the middle class shrinks, a house becomes a prize you wait to be handed, and school teaches ownership as the original sin, young people will not vote to preserve a system they were never taught to run. They will vote for someone who promises to assign the prizes.
I am not asking anyone to apologize to their kids. I am asking one reader to sit down with one child or grandchild and do the thing the school did not do: explain what a free country actually costs, what a house actually is, and why “they gave me nothing” is a lie that feels true when nobody ever showed them the books.
If that conversation happens once, this note did its job. Passing on how a free country works is the first job of a free citizen. The rest follows from that, or it does not follow at all.
Thanks, Rich. Very well said. I especially agree with your point that we stopped explaining how the machine works while we were busy running it.
I grew up on the other side of that ideological divide, and perhaps that’s why I find it so strange watching young people in the West turn against a system they’ve inherited without really understanding what the alternative has looked like in practice.
And yes, you’re also 100% right about where the responsibility ultimately lies. If we want the next generation to understand these things, we probably shouldn’t assume somebody else is going to teach them.
It has always been fairly obvious to me that leftist politicians go out of their way to enact legislation that helps eliminate more of the middle class, and for this very reason. As the state grows, the people shrink in stature, prosperity, and independence. Green theocracy is a magnificent catalyst in doing so. If anyone wants proof, for example, try building your own house and navigate the regulatory impediments and costs involved.
I agree with the points you make. Only I live in Alberta Canada and I would say it's even harder to get ahead here, and that's coming from a single guy of 60 who has worked 6 to 7 days a week 12 to 18 hours a day.
I appreciate your outlooks on investments as that is what I live on now. I invested my money in stocks and physical gold.
Interesting stats here Lau and they certainly go a long way in describing the diminished expectations many young (and not so young) people must be feeling today. Sadly, there’s also a lack of perspective when it comes to buying into socialism or communism as a solution. Social comparison in wealthy western countries leads to an amplified feeling of relative deprivation. Nothing an education in the last hundred years of world history or a month in Cuba wouldn’t cure. Knowledge about the reality of communism would certainly help in motivating a person to look for a solution other than one with a track record of misery and failure. Personally, I think the fix could come with three changes: Term limits, sound money, and a flat tax on income. In that order.
Thanks, dr. B. I agree, especially on the lack of perspective. I’ve been to Cuba myself, and it’s difficult to reconcile the romanticized version of socialism you sometimes hear in the West with what you actually see on the ground.
Agreed, Liz. UBI would absolutely be the final nail in the coffin, creating an fully dependent and docile population. And that, of course, is exactly what those with the most power would ultimately want.
Thanks, bkrg2. Good eye, but they're two different measures:
43% is the share of all US household income going to the middle class. That's the chart.
51% is the share of American adults who live in middle-class households.
So, as I said in the piece, today the middle class is 51% of the people taking home 43% of the money. In 1971 it was 61% of the people taking home 62% — roughly its fair share. In other words, you could have done everything right over the years, stayed exactly where you were, and still watched your share of the country shrink.
I would push back on the thesis that "AI is coming directly for many of the white-collar jobs". That is not what I've seen. No one loses their job because of AI. Instead AI has allowed companies to accomplish significantly more on much shorter timescales than without it. Recent job numbers (arguably, these numbers mix a lot of trends together) suggests that labor participation is strong.
The problem with the shrinkage of the middle class rests clearly with the fiat monetary system. Real asset backed money would solve this rather quickly, but of course the US government would have to cut spending by 75%, which it won't do. It won't even cut spending 0.0001%. DOGE was run out of town for even suggesting that fraud exists.
Thanks, Thomas. I agree with you on the monetary side, as you probably know. But I think “no one loses their job because of AI” is an impossible argument to make. AI was explicitly cited in nearly 55,000 U.S. job cuts last year. So far this year, it’s been cited in more than 100,000.
And remember, we’re still in the very, very early stages of this.
That’s, of course, because AI absolutely allows companies to accomplish more with fewer people. That’s the productivity benefit. Great. But “fewer people” is also the point. It doesn’t necessarily mean companies fire half the office tomorrow. That’s too simplistic. It can mean they stop hiring, don’t replace people who leave, or need five people to do work that previously required ten.
Now, as I’ve said many times, I’m not buying into the whole AI-doom thing. I think the future is going to be amazing in many ways. Cheaper goods, longer lives, scientific breakthroughs, the works. But to actually reap the benefits of that future, you have to be one of the people on the right side of the transition. And unfortunately, I think most people won’t be. The transition is going to be painful, and the population is simply not ready for it.
So, no, I’m also not buying the argument that this revolution will create jobs just like every other one that came before it. The Industrial Revolution, tractors, assembly lines, computers, etc. But that misses the point. The AI revolution is fundamentally different. It isn’t built to make your labor more productive. It’s meant to make your labor unnecessary.
I go into that argument in much more detail in this essay if you’re interested:
The middle class home in the 60s did not have sidewalks. It did not have streetlights every close as today. ?Many had drainage ditches . Bathroom exhaust fans did not exist. No g f c outlets. Most neighborhoods did not have concrete curbs. When you build a new home today , the government says you have to spend a certain percentage on landscaping. It's a big percentage. Very costly. I have my pictures with my father and my older siblings in a wheelbarrow barrel.When you finally had enough money to plant trees in bushes. That adds value and increases your property tax. .. The housing crisis is simply government excess regulation and taxes.That's it. Builders can't build a 3 bedroom 2 bathroom house anymore.Because the overhead is simply too expensive.
You started this essay off with only 5% of those under 30 have achieved the American dream and how the other 95% are discouraged blah blah. Heads up peoples; they’re not supposed to get the American dream that early in their young, obviously entitled lives.
Ya would agree with you that there is huge entitlement among the youth… a Mercedes is no longer a symbol of wewlth where every punk has one because daddy made it easy… but oets be honest… think have changed for the worse and things changed drastically…
Thanks, Bill. Obviously, I wouldn’t expect most people under 30 to have achieved the American Dream yet. Definitely not in this day and age.
But you know what? In the past, many of them did.
In 1950, about 52% of 30-year-old Americans had both a family and a home. By 1990, it was 43%. Today, it’s about 15%.
I think that should tell you something. It certainly does tell me... including the importance of looking at these trends over time before making up my mind about what’s really going on.
I bought my first home five months out of college. I bought my first rental property 25 months out of college. I am 74. If you don’t see the difference between them, I don’t know how to explain to you.
I'm so intrigued by these comments. Why does no-one mention how the middle class has been robbed by the 1%? 'Leftists' 'green theocracy'? no it's tax cuts for the millionaires and the hell with everyone else. Why do you think the middle class share of income has fallen so far? I'll give you a clue - it's not the struggling young that have taken it. Democratic socialism is the have-nots asking for their money back!
I have been saving this all day. Now I am home from work.
I AM the "grandpa" times over.
The whining little sh*ts who decry their current position, should consider to "endure" their present state, live, and prepare themselves for the future...Virgil.
Many US commentators fail to understand the difference between Socialism and Social Democracy. The US Socialists do have some crazy policies, but what most US youth want is want nearly all the rest of developed countries have - governments who actually care about people and control the rise of wealth inequality. Not Socialism, not govt ownership of business, just more spending on people, a rational health system, and higher taxes on the extreme rich. Only in the US is this demand seen as extreme.
If things don’t change and the wealth increases and the middle class shrinks, then things do eventually get revolutionary. The outcome then is always bad.
If you think the US income to House Price is bad, try examining the ratio in other countries. Eg; in NZ it’s about 7%.
You do need to note that current houses are far larger and far nicer than 1960 houses. I’m old enough to remember how small and cold they were. Also Women going to work meant that couples could afford to pay far more for houses, and they competed for nicer locations, by bidding the price higher and higher. It’s single income families who suffer. This meant that the move from single to dual incomes didn’t do as much for family consumption as we expected, just gave a one time wealth boast to boomers like myself.
Thanks M J. To be clear, I was looking at the trend in one country here, the U.S., and how that ratio has changed over time. That’s the whole point of the comparison. I’m looking at the progression within the same country, not trying to establish whether Americans have it better or worse than people elsewhere.
On your point about house size: yes, homes today are bigger than they were in the early 1970s. I’ve seen estimates putting the increase at around 50%. But even if you adjust for that, it still doesn’t come close to explaining the gap. Shrink today’s median home back to 1970 dimensions and the income-to-price ratio goes from 20% to somewhere around 30%. That’s still barely half the 58% it was in 1970. So, no, bigger houses don’t explain the decline.
I do agree with your third point about the second income not necessarily making families richer, though. It used to be that the wife’s income could serve as a backup, a failsafe if the husband lost his job or the family hit hard times. Today, in many households, both spouses have to work just to keep everything going. And if either one loses a job, suddenly they can’t keep their heads above water.
To me, that’s another indication of exactly what I was talking about in the essay. Thanks, again.
Important points on the stress crushing the middle class. I don't know the answers, overall, but where any of us sees an opportunity to counter the trend and accellerate healthy societal alternatives we should act or vote, if that's the best or only option, accordingly.
pretty simple solution - gold standard. Fiat money is the problem, and the Cantilon effect that naturally occurs because of it. Government prints money, it goes to the chosen few, who inflate the USD price of real assets, like houses, cars, farmland, equities.
Agreed with Thomas. Until then, as I’m fond of saying, there are no collective solutions, only individual ones. But people inevitably need to understand what’s happening at the collective level, too. Hopefully, I contribute to that in some small way.
pressure builds until we have a 1776, 1865 or 1991 event. I much prefer the rather bloodless 1991-style myself, but I suspect it will be a lot more like 1865. Until then, build family.
Of course. Is that news to anyone? Wish we read more about solutions and investment opportunities. And forget about universal basic income …that’s just welfare on steroids and a talk billionaires give to wash themselves.
P.S. Also, Sandra, just to make sure, are you getting the monthly issues, investment recommendations, and alerts from the paid side? I ask because you mentioned wanting to see more investment opportunities, and every so often those emails land in someone’s spam folder. You can also find everything on the website. Just make sure you’re signed in with the same email address you used to subscribe.
Thanks, Sandra. You’d be surprised how many people look at the rise of democratic socialism and seem to think it just materialized out of thin air.
As for UBI, I didn’t talk about it in this piece. But I have written about it before (one example below). I do think we’ll eventually get some form of UBI, and that it will make a large part of the population even more dependent on politicians and the state. Which, of course, is exactly how they’ll like it.
I was not taught how to be an American in school. I started in 1954. I learned to read and add. The rest I picked up by osmosis: work, Scouts, the people around me. Nobody sat me down and explained what a politician is for, what a vote costs, or how a household budget keeps a free country standing.
I still worked my way into the American Dream. House, family, a living. I thought that was the job. I also thought the schools were teaching my children what the country is, why it is worth keeping, and how you keep it. I was wrong. I was busy earning the life and I missed the dulling.
Then came the children after the dulling. My grandchildren do not think capitalism is bad. They believe it. That is different. A thought you can argue with. A belief they inherited from a classroom that never showed them a ledger, a title deed, or a parent who made payroll. They have been told that my generation did nothing for them. That is a professor’s sentence. We built the roads, the power, the food, the campuses they sit in. We also stopped explaining the machine while we were running it. Both are true.
If the middle class shrinks, a house becomes a prize you wait to be handed, and school teaches ownership as the original sin, young people will not vote to preserve a system they were never taught to run. They will vote for someone who promises to assign the prizes.
I am not asking anyone to apologize to their kids. I am asking one reader to sit down with one child or grandchild and do the thing the school did not do: explain what a free country actually costs, what a house actually is, and why “they gave me nothing” is a lie that feels true when nobody ever showed them the books.
If that conversation happens once, this note did its job. Passing on how a free country works is the first job of a free citizen. The rest follows from that, or it does not follow at all.
Thanks, Rich. Very well said. I especially agree with your point that we stopped explaining how the machine works while we were busy running it.
I grew up on the other side of that ideological divide, and perhaps that’s why I find it so strange watching young people in the West turn against a system they’ve inherited without really understanding what the alternative has looked like in practice.
And yes, you’re also 100% right about where the responsibility ultimately lies. If we want the next generation to understand these things, we probably shouldn’t assume somebody else is going to teach them.
Amen brother
It has always been fairly obvious to me that leftist politicians go out of their way to enact legislation that helps eliminate more of the middle class, and for this very reason. As the state grows, the people shrink in stature, prosperity, and independence. Green theocracy is a magnificent catalyst in doing so. If anyone wants proof, for example, try building your own house and navigate the regulatory impediments and costs involved.
>>Green theocracy is a magnificent catalyst in doing so.
💯
planned demolition
I agree with the points you make. Only I live in Alberta Canada and I would say it's even harder to get ahead here, and that's coming from a single guy of 60 who has worked 6 to 7 days a week 12 to 18 hours a day.
I appreciate your outlooks on investments as that is what I live on now. I invested my money in stocks and physical gold.
Thanks, Duane. I appreciate you sharing that. Sounds like you’ve certainly put in the work over the years. I’m very glad to have you here.
Interesting stats here Lau and they certainly go a long way in describing the diminished expectations many young (and not so young) people must be feeling today. Sadly, there’s also a lack of perspective when it comes to buying into socialism or communism as a solution. Social comparison in wealthy western countries leads to an amplified feeling of relative deprivation. Nothing an education in the last hundred years of world history or a month in Cuba wouldn’t cure. Knowledge about the reality of communism would certainly help in motivating a person to look for a solution other than one with a track record of misery and failure. Personally, I think the fix could come with three changes: Term limits, sound money, and a flat tax on income. In that order.
Thanks, dr. B. I agree, especially on the lack of perspective. I’ve been to Cuba myself, and it’s difficult to reconcile the romanticized version of socialism you sometimes hear in the West with what you actually see on the ground.
And I’m 100% on board with your three fixes.
It’s disappointing that kids don’t seem interested in understanding how Aristotle and Karl Marx saw the middle class so differently:https://lizlasorte.substack.com/p/in-pursuit-of-happiness-can-the-middle?r=76q58&utm_medium=ios
UBI may be the final nail in the coffin pushing us to full dependency, following the final Tytler cycle to bondage.
Agreed, Liz. UBI would absolutely be the final nail in the coffin, creating an fully dependent and docile population. And that, of course, is exactly what those with the most power would ultimately want.
Check the statement
"As I write this, the American middle class is 51% of the adult population. In 1971, it was 61%."
Shouldn't it be 43%, not 51?
Regardless, it's a helpful post to explain the rise of pre-Socialism.
Thanks, bkrg2. Good eye, but they're two different measures:
43% is the share of all US household income going to the middle class. That's the chart.
51% is the share of American adults who live in middle-class households.
So, as I said in the piece, today the middle class is 51% of the people taking home 43% of the money. In 1971 it was 61% of the people taking home 62% — roughly its fair share. In other words, you could have done everything right over the years, stayed exactly where you were, and still watched your share of the country shrink.
I would push back on the thesis that "AI is coming directly for many of the white-collar jobs". That is not what I've seen. No one loses their job because of AI. Instead AI has allowed companies to accomplish significantly more on much shorter timescales than without it. Recent job numbers (arguably, these numbers mix a lot of trends together) suggests that labor participation is strong.
The problem with the shrinkage of the middle class rests clearly with the fiat monetary system. Real asset backed money would solve this rather quickly, but of course the US government would have to cut spending by 75%, which it won't do. It won't even cut spending 0.0001%. DOGE was run out of town for even suggesting that fraud exists.
Thanks, Thomas. I agree with you on the monetary side, as you probably know. But I think “no one loses their job because of AI” is an impossible argument to make. AI was explicitly cited in nearly 55,000 U.S. job cuts last year. So far this year, it’s been cited in more than 100,000.
And remember, we’re still in the very, very early stages of this.
That’s, of course, because AI absolutely allows companies to accomplish more with fewer people. That’s the productivity benefit. Great. But “fewer people” is also the point. It doesn’t necessarily mean companies fire half the office tomorrow. That’s too simplistic. It can mean they stop hiring, don’t replace people who leave, or need five people to do work that previously required ten.
Now, as I’ve said many times, I’m not buying into the whole AI-doom thing. I think the future is going to be amazing in many ways. Cheaper goods, longer lives, scientific breakthroughs, the works. But to actually reap the benefits of that future, you have to be one of the people on the right side of the transition. And unfortunately, I think most people won’t be. The transition is going to be painful, and the population is simply not ready for it.
So, no, I’m also not buying the argument that this revolution will create jobs just like every other one that came before it. The Industrial Revolution, tractors, assembly lines, computers, etc. But that misses the point. The AI revolution is fundamentally different. It isn’t built to make your labor more productive. It’s meant to make your labor unnecessary.
I go into that argument in much more detail in this essay if you’re interested:
https://www.snafuinvesting.com/p/ai-wont-just-take-your-job-it-will
The middle class home in the 60s did not have sidewalks. It did not have streetlights every close as today. ?Many had drainage ditches . Bathroom exhaust fans did not exist. No g f c outlets. Most neighborhoods did not have concrete curbs. When you build a new home today , the government says you have to spend a certain percentage on landscaping. It's a big percentage. Very costly. I have my pictures with my father and my older siblings in a wheelbarrow barrel.When you finally had enough money to plant trees in bushes. That adds value and increases your property tax. .. The housing crisis is simply government excess regulation and taxes.That's it. Builders can't build a 3 bedroom 2 bathroom house anymore.Because the overhead is simply too expensive.
You started this essay off with only 5% of those under 30 have achieved the American dream and how the other 95% are discouraged blah blah. Heads up peoples; they’re not supposed to get the American dream that early in their young, obviously entitled lives.
Ya would agree with you that there is huge entitlement among the youth… a Mercedes is no longer a symbol of wewlth where every punk has one because daddy made it easy… but oets be honest… think have changed for the worse and things changed drastically…
>>think have changed for the worse and things changed drastically…
Exactly my point.
Thanks, Bill. Obviously, I wouldn’t expect most people under 30 to have achieved the American Dream yet. Definitely not in this day and age.
But you know what? In the past, many of them did.
In 1950, about 52% of 30-year-old Americans had both a family and a home. By 1990, it was 43%. Today, it’s about 15%.
I think that should tell you something. It certainly does tell me... including the importance of looking at these trends over time before making up my mind about what’s really going on.
I bought my first home five months out of college. I bought my first rental property 25 months out of college. I am 74. If you don’t see the difference between them, I don’t know how to explain to you.
I'm so intrigued by these comments. Why does no-one mention how the middle class has been robbed by the 1%? 'Leftists' 'green theocracy'? no it's tax cuts for the millionaires and the hell with everyone else. Why do you think the middle class share of income has fallen so far? I'll give you a clue - it's not the struggling young that have taken it. Democratic socialism is the have-nots asking for their money back!
OK!
I have been saving this all day. Now I am home from work.
I AM the "grandpa" times over.
The whining little sh*ts who decry their current position, should consider to "endure" their present state, live, and prepare themselves for the future...Virgil.
Is not that what we did?
Blessings.
Many US commentators fail to understand the difference between Socialism and Social Democracy. The US Socialists do have some crazy policies, but what most US youth want is want nearly all the rest of developed countries have - governments who actually care about people and control the rise of wealth inequality. Not Socialism, not govt ownership of business, just more spending on people, a rational health system, and higher taxes on the extreme rich. Only in the US is this demand seen as extreme.
If things don’t change and the wealth increases and the middle class shrinks, then things do eventually get revolutionary. The outcome then is always bad.
If you think the US income to House Price is bad, try examining the ratio in other countries. Eg; in NZ it’s about 7%.
You do need to note that current houses are far larger and far nicer than 1960 houses. I’m old enough to remember how small and cold they were. Also Women going to work meant that couples could afford to pay far more for houses, and they competed for nicer locations, by bidding the price higher and higher. It’s single income families who suffer. This meant that the move from single to dual incomes didn’t do as much for family consumption as we expected, just gave a one time wealth boast to boomers like myself.
Thanks M J. To be clear, I was looking at the trend in one country here, the U.S., and how that ratio has changed over time. That’s the whole point of the comparison. I’m looking at the progression within the same country, not trying to establish whether Americans have it better or worse than people elsewhere.
On your point about house size: yes, homes today are bigger than they were in the early 1970s. I’ve seen estimates putting the increase at around 50%. But even if you adjust for that, it still doesn’t come close to explaining the gap. Shrink today’s median home back to 1970 dimensions and the income-to-price ratio goes from 20% to somewhere around 30%. That’s still barely half the 58% it was in 1970. So, no, bigger houses don’t explain the decline.
I do agree with your third point about the second income not necessarily making families richer, though. It used to be that the wife’s income could serve as a backup, a failsafe if the husband lost his job or the family hit hard times. Today, in many households, both spouses have to work just to keep everything going. And if either one loses a job, suddenly they can’t keep their heads above water.
To me, that’s another indication of exactly what I was talking about in the essay. Thanks, again.
Important points on the stress crushing the middle class. I don't know the answers, overall, but where any of us sees an opportunity to counter the trend and accellerate healthy societal alternatives we should act or vote, if that's the best or only option, accordingly.
The people in charge Republicans and Democrats do not want a healthy little class. That is obvious.
pretty simple solution - gold standard. Fiat money is the problem, and the Cantilon effect that naturally occurs because of it. Government prints money, it goes to the chosen few, who inflate the USD price of real assets, like houses, cars, farmland, equities.
Agreed with Thomas. Until then, as I’m fond of saying, there are no collective solutions, only individual ones. But people inevitably need to understand what’s happening at the collective level, too. Hopefully, I contribute to that in some small way.
pressure builds until we have a 1776, 1865 or 1991 event. I much prefer the rather bloodless 1991-style myself, but I suspect it will be a lot more like 1865. Until then, build family.
Of course. Is that news to anyone? Wish we read more about solutions and investment opportunities. And forget about universal basic income …that’s just welfare on steroids and a talk billionaires give to wash themselves.
P.S. Also, Sandra, just to make sure, are you getting the monthly issues, investment recommendations, and alerts from the paid side? I ask because you mentioned wanting to see more investment opportunities, and every so often those emails land in someone’s spam folder. You can also find everything on the website. Just make sure you’re signed in with the same email address you used to subscribe.
Thanks, Sandra. You’d be surprised how many people look at the rise of democratic socialism and seem to think it just materialized out of thin air.
As for UBI, I didn’t talk about it in this piece. But I have written about it before (one example below). I do think we’ll eventually get some form of UBI, and that it will make a large part of the population even more dependent on politicians and the state. Which, of course, is exactly how they’ll like it.
https://www.snafuinvesting.com/p/ai-wont-just-take-your-job-it-will