American “prosperity” (1999)

From the March 1999 issue of the Socialist Standard

Are most Americans prosperous? Are they “middle class”? Is the United States “a nation of shareholders”? Do most Americans actually have a stake in the country?

Despite popular belief, most Americans—members of the working class—are not rich; and, over the last ten years, their living standards have deteriorated quite dramatically. John Schmitt, economist with the Economic Policy Institute in Washington DC, writing in the Guardian (18 January) exposes the myth of American prosperity. For example, he mentions that despite the hype, most Americans do not own any shares:

“According to most recent available data from the Federal Reserve, 60 percent of households in 1995 did not own shares, directly or indirectly, including the US equivalent of unit trusts and pension funds. Many of those who do own shares own very few.”

About 72 percent of American households had direct or indirect ownership, or holdings, worth less than 5,000 dollars. During the 1980s, shareholdings rose quite dramatically, but from very low levels. Professor Edward Wolff has suggested that between 1989 and 1997, shareholdings more than doubled; but “the typical US household held only $7,800 in all forms of investment. And in 1997, the top one percent owned shares worth $2.5 million, while the next nine percent held shares valued at $275,000”. However, a typical household’s assets (such as the house in which they lived, and its contents) were worth about $90,000.

Against this Schmitt notes that:

“Debt levels have rocketed. Between 1989 and 1997 the typical household’s debts rose $8,200, after adjusting for inflation. The increase in debt exceeded the total value of the same household’s shares at the end of the period.”

Furthermore, against the apparent assets of many American workers, their liabilities in the form of mortgages on houses and apartments, car loans and numerous credit card debts, demonstrate that they are not only largely propertyless in the means of living, but are permanently in debt. With the recent crisis in world capitalism, and its increasing effect in North America, the situation for most American workers may well get worse in the near future.

Prosperous they ain’t!

Peter E. Newell