Steve Gunderson

The dismembering of the middle class in America is a seismic shift in society. It has gigantic, unpredictable effects for the country above and beyond the ones we are seeing today. This subject gets a lot of treatment, and someone whose expertise and authority I looked forward to was Gunderson’s.

Unfortunately, the first four chapters consist of 100 pages of all stats you knew of, gathered in one place, that don’t add to your knowledge or perspective. There are no revelations, no interpretations, no conclusions.

He loves throwing out all manner of data, without any context. For example, the CBO reports for “the top 1% of the population with the highest incomes, after-tax household income grew by 275%.” That’s impressive, I guess. But so what? It’s the quality of that increase that counts. And it’s coming not from producing valuable goods and services that have ancillary benefits to the economy, like employment, but from brokering deals, from buying up debt derivatives, and just plain gambling. None of that benefits the overall economy. The result today is that only 61% of Americans over 20 have a job. But Gunderson doesn’t go there. He says income inequality has no effect on the middle class.

It gets sillier. He concludes the stats chapters with absurd claims like: “Neither (political) party created the middle class nor caused its demise.” That’s of course because Gunderson is a Beltway politician. It is precisely their dismantling of the Glass-Steagall Act for their donors’ benefit that led to the bubble, to the recession, layoffs, overwhelming debt and the destruction of life savings. It is precisely this proud blindness to what’s directly in front of them (and what they themselves have done) that prevents our leadership from moving the country – anywhere. This one statement of his is far more revealing than anything else in the book. It’s why the USA is declining.

Finally, Gunderson gets into education, his real point. “Do some simple math,” he says. If a child that currently benefits from $1000-$1500 a year of education investment from his family received just another $1000 a year, what sort of difference will that make for that child’s lifetime income? Unfortunately, that child will be saddled with $30-$80 thousand dollars in debt by graduation, starting out in a very deep hole none of his forebears had to deal with (and no job either). And unless that child has the means to spend three thousand a month for a few more years while enduring an unpaid internship, that well-paid career will never even get started. So yes, income inequality is directly related to the disappearance of the middle class. Americans today are actually looking at skipping university, because low-paid jobs are the only future they see. But Gunderson doesn’t go there.

He reiterates that growing income inequality does not result in the disappearance of the middle class. Yes it does. In ways all his superficial stats don’t show. If top management pays itself 50% of the income of the company, there’s that much less for the rest of the workforce. It’s why more Walmart employees are on food stamps than at any other company. But his stats don’t show that. If Apple is sitting on 137 billion dollars in cash, largely offshore, that’s $137B that’s not being invested in new startups in the USA. How many times have we seen private equity funds buy a company and strip it down for resale? They hire expensive management and load up the company with debt. Management and the investors pocket the money from the debt, and the remaining employees are lucky to get any kind of paycheck. So of course there’s a connection between income inequality and the disappearance of the middle class. The top 1% is very busy sucking the air out of the room. But Gunderson doesn’t go there.
Instead, he claims it’s not the income inequality, but the “curbing of upward mobility” that is the villain in this drama. And upward mobility is his code for higher education. That simple.

The second half of the book finally gets us away from all the stats and into some discussion. Thankfully, Gunderson gets right to his ideas for the future (on page 108). He has three broad areas:

1. Create a system for lifelong learning by engaging public sector/private sector partnerships.
2. Create a growth economy in the United States, enabling most Americans to work, succeed and build a future.
3. Create a new era of income security for individuals and families.

Of course, there cannot be any argument against any of this. It is hardly the first time someone has pointed out that investing in higher education by the government pays off in higher income taxes for life. Sadly, until and unless Congress’ mandate is changed to solving structural problems from its current protecting party interests, the program doesn’t stand a chance.

There follows a long paean to private sector colleges. By sheer coincidence, Gunderson is president of the association of private sector colleges. There is no discussion of primary and secondary solutions to get kids into higher ed, nor any discussion of the voucher and homeschool movements whereby parents seek to keep their kids out of the system. This is why.

He ends with some inspiring stories of individuals overcoming adversity, and several repetitions of his own family’s story of a side job repairing motors turning into a Chevrolet dealership in western Wisconsin. But no steps to restore the middle class in today’s acidic environment. There is no New Middle Class that I could find.… (plus d'informations)