After rising in every decade and every generation since the 1830s, and creating the surplus and investment which sustained the creation of a vast and prosperous middle class, wages began to fall in the U.S. in the mid 1970s. hey are falling now at the fastest rate in fourteen yeas, with no end in sight.

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The Wall Street bail out has preserved the wealth of the nation’s wealthiest. At the same time, the vast array of federal subsidies for welfare, housing, health care, food stamps and other benefits has sheltered the nation’s poor from the ensuing economic catastrophe.

The middle class is bleeding to death as it supports both, and there is no end in sight.

Unemployment continues to soar. Mortgage defaults have extended beyond the subprime market into the ranks of the formerly credit worthy but newly unemployed middle class.

There will be no turn around anytime soon. Manufacturers now report that the drop in factory orders will reduce already anemic U.S. manufacturing by 12% this year, far worse than the 8% drop forecast only three months ago. 

America desperately needs jobs: to create taxpayers, reduce unemployment and welfare, create a demand for American goods and services and more jobs, and begin to make a dent in a federal deficit that has mortgaged the future of the nation’s young people.

But there is no real focused and funded effort to create those jobs. The so-called stimulus bill has had no effect on unemployment, and the administration is reduced to making spurious claims about millions of new jobs that no one can document.

What is going on? The shorthand answer is that the rescue of Wall Street has effectively bankrupted the federal government, and there is no money left to fund infrastructure or revitalize American manufacturing to the level required to put America back to work.   

But the more important understanding is that both major political parties have failed. The historic Republican and Democratic Parties are equally dead and gone, and the United States is now effectively governed by an alliance of the old Republican guardians of corporate profit and the new Democrats whose careers and lives have been in the interconnected educational, financial and political institutions of urban America. 

Neither has any real interest in the great middle class of suburban America. Each has been captured by interest groups of the right or left and both have been subverted by Wall Street. 

This has been coming for a long time.

While equally self righteous social conservatives and social liberals duked it out in the headlines and on talk shows, a sea change in the American economy went largely un-noticed.

After rising in every decade and every generation since the 1830’s, and creating the surplus and investment which sustained the creation of a vast and prosperous middle class, wages began to fall in the U.S. in the mid 1970s. They are falling now at the fastest rate in fourteen years, with no end in sight.

The Reagan administration, with substantial support from Democrats in Congress locked into place an economic model that elevates corporate profit above almost every human need, the so-called “trickle down” economics.

The innate disposition of corporate owners and investors to depress wages in order to increase profits became the policy of the U.S. government. This led to the elimination of good paying jobs, the decline of U.S. manufacturing and the transformation of the United States from a nation of producers into a nation of consumers.

As corporate profits rose, those who benefited of course began to spend more to protect their advantages, and the lobbing of succeeding congresses and administrations by these interests became a growth industry.

No industry spent more and more lavishly than the finance industry: in the decade between 1998 and 2008, more than $3.2 billion to lobby the federal government, apart from campaign contributions.

Not surprisingly, it paid off.

At the same time, the U.S. Congress re-wrote the rules of campaign finance for federal office, reduced the role of political parties as the middlemen who directed the collection and disbursement of campaign funds, and replaced them with a direct flow from various constituent interest groups to the candidates.

This arrangement locked in the rightward and leftward trajectory of the GOP and Democrats respectively and tied those elected to the money and its interests. And there is now no tie that binds like that between Wall Street, the Congress and the administration.

The axis of middle class misfortune.

In order to restore the prosperity of the American middle class, there must be massive jobs creation. Infrastructure is the place to start.

This will help stimulate American manufacturing, but will not be sufficient to restore it as an engine of American prosperity and take full advantage of the U.S. domestic market of 340 million – a huge asset.

U.S. imports, especially from Asia are declining as a result of the collapse of the U.S. economy. When the economy recovers, the policy of the U.S. must be to depress imports from these and other low wage paying countries, in favor of those from higher wage paying countries like Europe, to put the U.S. on a competitive basis in its domestic market.

U.S. wages must rise and corporate profits decline. But that will never happen so long as Wall Street owns Washington. To break that stranglehold, there must be public financing of federal elections.

Authors Website: http://www.publicbankingpa.org

Authors Bio:

Author of the forthcoming novel "Pursuits of Happiness," a director of the Public Banking Institute and chairman of the Pennsylvania Project. Mike is an international transportation and logisics executive with broad experience in U.S. government and politics. Mike has lived in the first world and the third world, traveled widely and done business on five continents.