What is happening to the middle class? It seems to be disappearing. This is a question puzzling our society today. General Motors ingenious business idea in 1989 builds a clear picture of one answer to that question. In 1989, General Motors started a new business tradition. At a time when they were highly successful and profitable, they began laying off their American workers and closing the American factories. They then built new factories in Mexico and employed Mexicans at a much lower rate. This had three results. It contributed to the Mexican society and tax system, which could be viewed as a virtuous act of charity. It made General Motors upper-class head executives a lot richer, thereby defaulting the idea of charity. And it turned many tax-paying American middle-class workers into destitute lower-class Americans on welfare (Roger & Me).
When a company that builds its success on the American capitalist system and employs thousands of American to produce its product removes its production system into another society, the laid off workers are not easily absorbed into the local jobs. There are not nearly enough extra jobs to go around. These laid off workers now add to the number of people dependent on the welfare system, taking taxes instead of contributing. There is more draw on the welfare system and less people paying taxes to fund it. The elite few that run these corporations get richer and use their money to influence things to their advantage that should be for the better good of America. They promise some of their money (made by using Mexicans or Indians instead of Americans as workers) to politicians in exchange for passing laws advantageous to the business. American society is all about improving the economy and contributing to it, all except for the people that really benefit from it, the ultra-rich who own and run these companies. Companies that become successful on the capitalist system in America should be required to keep their production within the capitalist system, and not be allowed to take advantage of other types of economic societies in a capitalist manner. This would ensure our capitalist society continues to work as a successful system of equality, keeps the American Dream a reality, and does not weaken and lose its meaning as is happening now.
The America Dream of being able to succeed and become rich no matter where you come from, if you work hard at it, is becoming more a dream and less a reality. The middle-class IS disappearing, that is apparent. Mobility is stagnant in this country which prides itself on its lack of social class and attainable mobility (Scott and Leonhardt). Rising standards of living and extensive credit lines have blurred the appearance of the social class lines, but behind the appearance is the reality that most of it is bought on credit by the lower class. It will stay with them their entire lives, crippling their financial stability while they try to pay off their debts and making it even harder to get ahead financially, especially if they lose their job. Meanwhile the ultra rich buy these same things outright and do not need to worry about owing anybody anything. Money they earn is theirs alone and free to use it to become even richer.
This includes their education and their children’s education, which they can pay for outright and it will not follow them the rest of their lives. They can also pay for the best education in the most elite schools, landing them the top choice for the dwindling jobs available to college educated people. Lower class people set on the American Dream and willing to take the risk of buying loans to pay for their college will usually have those loans follow them a long way after they are out of school, even when they find a job to be able to begin paying it back. The off-shoring tactics of many American companies has made getting a college education even riskier for the lower classes. They offshore their jobs which require an education, removing the chance at a middle-class or upper middle-class move for a lower class American who has worked hard to be able to fill that job. Between 2000-2003 it was found that college educated people had the toughest time finding a job because the companies could find a cheaper alternative in another country or replace them in some other way, such as with technology (Cooper). This leaves many college educated people scrambling for low class jobs in hopes to keep up with their college loan payments, while getting placed in the welfare system to make ends meet. They receive no reward for any of the effort they went to, to try to attain the American Dream.
Big businesses that have built themselves up on the American system are now dumping the system, working in every manner to keep themselves getting richer and everyone else poor. They outsource their available jobs and influence politicians with their money, asking for tax cuts while they dump Americans into the welfare system, creating an overburdened system with less taxes coming in to fund it. They claim that outsourcing is good for the economy because it allows their business to create higher paying, cutting-edge jobs for Americans (Cooper). Where are these jobs they talk about? They are being transferred to other countries too. “Today, many good-paying manufacturing jobs are being sent overseas, as are many of the high-tech jobs that were supposed to replace them.” (Greenblatt) What about the people that went to college to be able to work for them and are now making minimum wage and trying to pay off their tuition debt? What about all the tax money the government is having to spend on the welfare system to support these replaced workers? What about the huge bonuses the company executives are now getting while they take advantage of enormous tax subsidies and turn their middle-class workers into people on welfare?( McIntyre)
People who use our capitalist society to succeed, and then take their capitalist ventures into non-capitalist societies need to be reined in. They should not be allowed to cheat the system that helped them succeed. The government should recognize that the money they receive from big businesses is not enough to shore up the weaknesses in our society caused by from big business taking its production into other societies, and should pass laws regarding companies that start in America on our system, and how they need to stay in our system or it will weaken as it is beginning to do. The American Dream and right of a business person in our society is to make money, but it should not extend to taking advantage of other types of economic societies. Social responsibility is not enough for these company executives who are only intent on getting more for themselves. Their tax cuts that they wrangled out of the government also need to be rescinded. As they are cutting workers and contributing to the pull on welfare while they support people in other countries, they should have to pay their extra share of taxes. William Domhoff reports on skyrocketing wealth for the ultra-rich while the lower class enjoy a decline in wealth, “It’s due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it’s not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay. It’s also worth noting that only the first $105,000 of a person’s income is taxed for Social Security purposes, so it would clearly be a boon to the Social Security Fund if everyone — not just those making less than $105,000 — paid the Social Security tax on their full incomes.” The tax cuts proposed to help businesses make more jobs has obviously so far only made more loopholes to cut jobs and keep more money. This needs to be rectified along with making sure they keep their production in America, instead of outsourcing to contribute to other economies and take away from ours.
These tax cuts for them decrease funding for the welfare system, the safety net put in place to help out those with no other options. The safety net by definition should give those without other options the opportunity to create other options for themselves, and support them while they do it. Specifically, it should provide education to find other jobs or produce new innovations. It should also provide healthcare that won’t cripple them financially for the rest of their lives. Replacing the taxes on the rich to create better welfare programs along with requiring American corporations to employ American workers would put the system back on the right track. The rich man might not be able to get instantly exorbitantly richer, but it would keep the lower-class out of poverty and possibly give them an opportunity to improve their own status and provide for their family a good education and hope for success. Bringing back more jobs and taking back the taxes on the ultra-rich would shorten the divide between the classes.
Moore, Michael. “Roger & Me”. 20 December 1989. Video.
Domhoff, William G. “Wealth, Income, and Power” Who Rules America?
September 2005 (updated July 2010).Web. August 13 2010.
Cooper, Mary H. “Income Inequality”. Congressional Quarterly, Inc. April 17, 1998 • Volume 8, Issue 15. Web. August 14 2010.
Cooper, Mary H. “Exporting Jobs”. Congressional Quarterly, Inc. February 20, 2004 • Volume 14, Issue 7. Web. August 14 2010.
Greenblatt, Alan. “Upward Mobility”. Congressional Quarterly, Inc. April 29, 2005 • Volume 15, Issue 16. Web. August 15 2010.
“Layoffs and CEO Compensation” Daily Headlines. University of Arkansas. October 03 2006. Web. August 17 2010.
McIntyre, Bob “Tax Subsidies Reward Job Cutters” Citizens for Tax Justice. September 19 1996. Web. August 17 2010.
Scott and Leonhardt. “Class Matters: Shadowy Lines That Still Divide”. New York Times. May 15 2005. Web. August 10 2010.