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America Without a Middle Class



July 24, 2010 – Comments (30)

Shamelessly copied from the Huffington Post, written Elizabeth Warren, and the truth as I see it. Read on:


Can you imagine an America without a strong middle class? If you can, would it still be America as we know it?

Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.

Families have survived the ups and downs of economic booms and busts for a long time, but the fall-behind during the busts has gotten worse while the surge-ahead during the booms has stalled out. In the boom of the 1960s, for example, median family income jumped by 33% (adjusted for inflation). But the boom of the 2000s resulted in an almost-imperceptible 1.6% increase for the typical family. While Wall Street executives and others who owned lots of stock celebrated how good the recovery was for them, middle class families were left empty-handed.

The crisis facing the middle class started more than a generation ago. Even as productivity rose, the wages of the average fully-employed male have been flat since the 1970s.


But core expenses kept going up. By the early 2000s, families were spending twice as much (adjusted for inflation) on mortgages than they did a generation ago -- for a house that was, on average, only ten percent bigger and 25 years older. They also had to pay twice as much to hang on to their health insurance.

To cope, millions of families put a second parent into the workforce. But higher housing and medical costs combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to squeeze families even harder. Even with two incomes, they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases -- but it hasn't been enough to save them. Today's families have spent all their income, have spent all their savings, and have gone into debt to pay for college, to cover serious medical problems, and just to stay afloat a little while longer.

Through it all, families never asked for a handout from anyone, especially Washington. They were left to go on their own, working harder, squeezing nickels, and taking care of themselves. But their economic boats have been taking on water for years, and now the crisis has swamped millions of middle class families.

The contrast with the big banks could not be sharper. While the middle class has been caught in an economic vise, the financial industry that was supposed to serve them has prospered at their expense. Consumer banking -- selling debt to middle class families -- has been a gold mine. Boring banking has given way to creative banking, and the industry has generated tens of billions of dollars annually in fees made possible by deceptive and dangerous terms buried in the fine print of opaque, incomprehensible, and largely unregulated contracts.

And when various forms of this creative banking triggered economic crisis, the banks went to Washington for a handout. All the while, top executives kept their jobs and retained their bonuses. Even though the tax dollars that supported the bailout came largely from middle class families -- from people already working hard to make ends meet -- the beneficiaries of those tax dollars are now lobbying Congress to preserve the rules that had let those huge banks feast off the middle class.

Pundits talk about "populist rage" as a way to trivialize the anger and fear coursing through the middle class. But they have it wrong. Families understand with crystalline clarity that the rules they have played by are not the same rules that govern Wall Street. They understand that no American family is "too big to fail." They recognize that business models have shifted and that big banks are pulling out all the stops to squeeze families and boost revenues. They understand that their economic security is under assault and that leaving consumer debt effectively unregulated does not work.

Families are ready for change. According to polls, large majorities of Americans have welcomed the Obama Administration's proposal for a new Consumer Financial Protection Agency (CFPA). The CFPA would be answerable to consumers -- not to banks and not to Wall Street. The agency would have the power to end tricks-and-traps pricing and to start leveling the playing field so that consumers have the tools they need to compare prices and manage their money. The response of the big banks has been to swing into action against the Agency, fighting with all their lobbying might to keep business-as-usual. They are pulling out all the stops to kill the agency before it is born. And if those practices crush millions more families, who cares -- so long as the profits stay high and the bonuses keep coming.

America today has plenty of rich and super-rich. But it has far more families who did all the right things, but who still have no real security. Going to college and finding a good job no longer guarantee economic safety. Paying for a child's education and setting aside enough for a decent retirement have become distant dreams. Tens of millions of once-secure middle class families now live paycheck to paycheck, watching as their debts pile up and worrying about whether a pink slip or a bad diagnosis will send them hurtling over an economic cliff.

America without a strong middle class? Unthinkable, but the once-solid foundation is shaking.

Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard and is currently the Chair of the Congressional Oversight Panel.

30 Comments – Post Your Own

#1) On July 24, 2010 at 9:16 AM, alstry (< 20) wrote:

America as you know it?

Hmmmmm.  Has someone been eating my blog?

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#2) On July 24, 2010 at 12:50 PM, ChrisGraley (28.58) wrote:

This is a great article to point out the flaws of Keynesian economics.

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#3) On July 24, 2010 at 1:04 PM, Mstinterestinman (< 20) wrote:

Unfortunately its how our society has evolved the rich get richer and the poor get poorer and unfortunately the middle class are still poor compared to the rich.This is why I feel a goal to be rich is not unwanton greed but a responsible goal if you want to raise a family. You can't change the rules but you can make them work in your favor. P.S. Hard Work required.

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#4) On July 24, 2010 at 1:39 PM, topsecret09 (87.02) wrote:

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#5) On July 24, 2010 at 1:48 PM, uclayoda87 (28.61) wrote:

The hidden inflation of government spending makes everyone poorer, except those in the oligarchy who currently include politicians, many in Wall Street, large corporate executives and union leaders.  There are many roads to Serfdom, we are just following a very American way, through a willingness to give up freedom for fairness.

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#6) On July 24, 2010 at 1:48 PM, topsecret09 (87.02) wrote:

The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove it.....   83 percent of all U.S. stocks are in the hands of 1 percent of the people.
•    61 percent of Americans "always or usually" live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
•    66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.
•    36 percent of Americans say that they don't contribute anything to retirement savings.
•    A staggering 43 percent of Americans have less than $10,000 saved up for retirement.
•    24 percent of American workers say that they have postponed their planned retirement age in the past year.
•    Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
•    Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
•    For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
•    In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
•    As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.
•    The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
•    Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
•    In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
•    The top 1 percent of U.S. households own nearly twice as much of America's corporate wealth as they did just 15 years ago.
•    In America today, the average time needed to find a job has risen to a record 35.2 weeks.
•    More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.
•    or the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
•    This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
•    Approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.
•    Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
•    The top 10 percent of Americans now earn around 50 percent of our national income.    

Editor's note: Michael Snyder is editor of

The 22 statistics detailed here prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

So why are we witnessing such fundamental changes? Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.       TS

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#7) On July 24, 2010 at 2:33 PM, grantrobertb (< 20) wrote:

We got some tough times ahead folks. Might be a good time for a Million (or more) Man and Woman March on D.C. to really shake things up? What say you?

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#8) On July 24, 2010 at 4:06 PM, devoish (65.08) wrote:

So far we have heard from the "Government is the problem" crowd. It is a fast voice, almost, it seems, monitoring every typed word so quick are they to chime in.

And yet all these problems have grown since we elected Reagan - whose tax cuts we were promised would fund SSI. Who pulled support from unions by supporting "right to work" (for nothing) laws and we all post about working for nothing even after 4 years of college. We elected politicians who supported free trade with countries who did not.

The only economic law is supply and demand. Everything else is simply decisions. Allow unfavorable trade policys or insist on balance. Give handouts to the banks or handouts to the poor. Allow obscurly written contract language or insist on  clarity. Subsidize fossil fuels or subsidize renewables.

Or worst of all, pretend abdicating responsibility for Democracy to a wealthy few was smart.

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#9) On July 24, 2010 at 4:54 PM, Veritas1010 (20.22) wrote:

devoish, excellent commentary. "We have met the enemy, and it is us".

'A people deserve their government'.

 We let the wolves in (Income tax, statism, federal reserve, fiat currency, endless wars always against a new enemy, health care as a right), now let's engage in some modern variation of class-warfare and bash everyone and everything surrounding us for our woes. We as a nation have on the whole abdicated our personal responsibility as individuals and citizens - economically most assuredly, and some would argue morally for what safety in life and 'always low prices', decline, decay and tyranny is usually the end result.

 Read Ayn Rand or Taylor Caldwell, these ladies had it figured out!

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#10) On July 24, 2010 at 8:52 PM, devoish (65.08) wrote:


You misunderstand me. I believe the people we have elected have abdicated responsibility for the well being of America to deregulation for way to long. Evrywhere in the world there is small Government life sucks for way too many people. Only the active Governments have that solved.

I absolutely believe that when the pro business mouthpieces whine that high taxes reduce the motivation of the wealthy to invest, they are wrong, and if they were right the vast majority of citizens in the USA would be far better off.

I have read the imaginations of Ayn Rand. Her disciple was Alan Greenspan. Small Government advocacy gave us GW Bush a blunder that has reduced America toward third world status and before that Ronald Reagan who set in motion the policys that have a made an honest days work in the USA disrespected and underpaid.

In every country where elected Government does not take an active role in directing resources where needed, private industry misallocates those resources. Every time, unless you can find that very elusive "free market" success story.

Even in America the last thirty years of non interventionist small government advocacy has led only to a Government captured by a wealthy few. The only non violent solution is the election of an overwhelming majority of liberal do-gooder activists.

"A people deserve their Government". I certainly agree with that.

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#11) On July 24, 2010 at 11:53 PM, ChrisGraley (28.58) wrote:

You have to go back further than Reagan devoish.

You can't pick and choose your tyrants.

Alan Greenspan went totally the opposite of Ayn Rand's wishes.

Every country where government takes an active role in allocating resources, mis-allocates resources.  With power comes corruption.

The liberal do-gooders had their chance this time and they blew it. All they had to do to win the hearts and minds of the masses was to use the money that they gave to the banks and put in their own pockets to create jobs. It would have still been wrong to artificially inflate the economy, but they would have stayed in power. They proved to greedy to do even that and when they have mouthpieces like Pelosi spouting off the "let them eat cake!" rhetoric, they should not be surprised when they go decades without power.

Not that the conservatives are any better. Corporate welfare and corporate lobbying corrupts their organisation as well, but they would have at least created jobs to maintain power. The Liberals struggle with economics and it's pretty obvious.



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#12) On July 25, 2010 at 12:00 AM, whereaminow (< 20) wrote:

The refuge of the intellectually dishonest is calling a central banker, who by definition manipultes the rate of interest on the monopoly currency, a free market disciple. 

The only reason to do that is either because you're ignorant, or you hope your audience is.

David in Qatar

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#13) On July 25, 2010 at 12:35 AM, catoismymotor (< 20) wrote:

Even in America the last thirty years of non interventionist small government advocacy has led only to a Government captured by a wealthy few.


What has happened is the poor and the wealthy have both continued exhibiting behaviors that have kept them destitute or brought them more success. One group is happy living on Uncle Sam's Plantation. The other has fought like hell to get off, stay off and thrive. You get what you put in, people get what they deserve.


Cato, The grandson of a former North Carolina share cropper.

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#14) On July 25, 2010 at 4:56 AM, whereaminow (< 20) wrote:

Even in America the last thirty years of non interventionist small government advocacy has led only to a Government captured by a wealthy few.

Federal Government Constant (2000) Dollar Outlays, 2000-2007 by General Type and Category 
(Billions of Dollars)

2000 - 2007 % Increase

National Defense
2000  294.4
2007 475.1
61% Increase

Non-Defense Total
2000* 1,495
2007 1837.1
23% Increase

Payment for Individuals
2000 1054.6
2007 1397.1
32% increase

Social Security and Railroad Retirement
2000 410.5
2007 487.7
19% increase

Federal Employees Retirement and Insurance
2000 100.3
2007 116.0
16% increase

Unemployment Insurance
2000 21.1
2007 27.1
28% increase       

Medical Care
2000 362.7
2007 559.9
54% increase
Student Assistance
2000 10.9
2007 24.9
129% increase

Housing Assistance
2000 24.1
2007 27.0
12% increase       

Food and Nutrition Assistance
2000 32.4
2007 46.3
43% increase

Public Assistance and Related Programs
2000 88.3
2007 103.4
17% increase

Other Transfers to Individuals
2000 4.3
2007 4.7
10% increase

*Items also include All Other Grants, Net Interest, Off-budget amounts, and Undistributed offsetting receipt.

Source: The 2008 Statistical Abstract, U.S. Census Bureau

Boy, that's some small government advocacy at work!  Sure as hell must be the small gov people's fault! 

David in Qatar


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#15) On July 25, 2010 at 5:54 AM, devoish (65.08) wrote:

David, Cato, and Chris,

Excellent points all three of you.

Reagan ran as a small government advocate, gave tax advantages to the wealthiest and was full of shit and set in motion the policys that began the decline of the middle class in America.

Greenspan preached "free market" advocacy and the free marketeer was also full of shit.

GW Bush ran as a small Government advocate, gave tax advantages to the wealthiest and least productive Americans, creating the greatest income inequalities this Country has seen in 100 years, borrowed like a drunken gambler and spent like Imelda Marcos in a shoe store.

 Sure as hell must be the small gov people's fault! - Hopelesslylost

Maybe if I was as dumb as a rock I would vote to elect the next small government advocate and hope for a different result.

The Liberals struggle with economics and it's pretty obvious. - ChrisGaley

Libertarians struggle with economics. You fail to understand that the word "economy" means "redistribution of wealth". You promote a Government or lack thereof that encourages a concentration of wealth in the hands of a "productive" few who are not "productive" and have become the captured Government you fear.

And then try to pretend it is not the fault of your politics.


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#16) On July 25, 2010 at 8:27 AM, whereaminow (< 20) wrote:

You fail to understand that the word "economy" means "redistribution of wealth".  

Not quite. An economy is a voluntary redistribution of wealth.  You advocate a coerced redistribution of wealth.  That is the negation of an economy.

As for all this small gov nonsense, let's walk through this:

Person A to Person C: Don't go over there it's dangerous.
Person B to Person C: Go over there, it's ok.

Person C says: "I'm a supporter of Person A's ideas, but I'm going to go over there anyway."

When C gets run over by a train, Person B yells to anyone who will listen: "That's what he gets for supporting Person A!"

Person A says "Huh?"

David in Qatar

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#17) On July 25, 2010 at 12:41 PM, FreeMortal (28.65) wrote:

Person A: I believe government is inherently bad, so I'm going to vote for Person B who will agree with me.

Person B: I also believe government is inherently bad so I will appoint Person C who agrees with me and will fight regulation wherever possible.

... after financial crisis

Person C: I screwed up.  There was a flaw in my ideology.

Person A: You see!  Government is inherently bad!

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#18) On July 25, 2010 at 1:33 PM, whereaminow (< 20) wrote:

Yeah, that doesn't really work.  The Austrian School (and most Libertarians)  has never supported deregulation of the fractional reserve banking system.  The position of the school has always been that frb is fraud.  They also support abolishing the Federal Reserve.  I don't remember that happening.  My memory does get hazy though.

David in Qatar

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#19) On July 25, 2010 at 8:33 PM, ChrisGraley (28.58) wrote:

Devoish you seem to forget that Carter did a pretty good job of screwing up the economy before Reagan got there.

The real damage to the economy was done by Woodrow Wilson and FDR.  

It's been downhill ever since.


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#20) On July 25, 2010 at 11:36 PM, devoish (65.08) wrote:


I disagree.

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#21) On July 25, 2010 at 11:54 PM, goalie37 (88.96) wrote:

I agree with Ozzfan.  I have long ago deserted any hope or belief in our system.  The only solution is to look after your own back.  I know that sounds horribly cynical, but there is nothing promising coming from anywhere between the most rabid tea partier and the most militant left winger.

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#22) On July 26, 2010 at 3:50 AM, whereaminow (< 20) wrote:


Either he's ignorant of history or intentionally deceitful.  Carter was the frist to "deregulate" the S&L's.  

Of course, we libertarians know that deregulation is always just a change in who gets favored by the government's rules, and not the removal of government the name implies.  Orwellian, always.

David in Qatar 

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#23) On July 26, 2010 at 5:55 PM, ChrisGraley (28.58) wrote:

I know you disagree devoish.

To you, Carter was happy times just like Obama is happy times now.

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#24) On July 26, 2010 at 7:38 PM, devoish (65.08) wrote:

Either he's ignorant of history or intentionally deceitful.  Carter was the frist to "deregulate" the S&L's - Hopelesslylost

Neither. The economy was not screwed up at that point, by that action.

If you want to consider that one of the first deregulatory steps into the current mess, I would agree with you, but I do not believe you think so.

Of course, we libertarians know that deregulation is always just a change in who gets favored by the government's rules, and not the removal of government the name implies. - Hopelsslylost

In all this time that may be the nost accurate statement that you have made. Except the part that says "Libertarians know".

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#25) On July 26, 2010 at 8:39 PM, ChrisGraley (28.58) wrote:

Neither. The economy was not screwed up at that point, by that action.


We agree on that devoish. It wasn't creating the S&L crisis alone where Carter screwed up the economy, He also laid down the stagflation blueprint that the Obama administration is following now.  He also signed the Chrysler corporation loan guarantee act to bail out Chrysler long enough so Obama could bail them out now. There have been plenty of presidents that were bad domestically, but made up for it with their foreign policy. Carter is not one of those presidents. (Neither is Barak Obama, Nobel Peace prize for doing nothing and all!) The Iran hostage crisis was mismanaged from the start and so was the oil embargo. 

I did like one thing about Carter though. As bad as he was, he did manage to beat out Ted Kennedy in a primary before he lost to Reagan. 

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#26) On July 26, 2010 at 9:05 PM, FleaBagger (27.45) wrote:

It's pretty clear that devoish is intent on blurring the lines between libertarians and neoconservatives. We've told him the truth hundreds, perhaps thousands, of times, and yet he keeps conflating libertarian and neocon. At this point, mendacity is the only reasonable explanation.

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#27) On July 27, 2010 at 7:01 AM, whereaminow (< 20) wrote:


Don't forget that Carter created the abomination known as the Department of Energy.  The DOE then tried to centrally plan the distribution of gasoline in America, with the result that the head of the DOE eventually called the whole charade a complete joke and recommended the reinstatement of market forces, in defiance of Carter's wishes.

David in Qatar

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#28) On July 28, 2010 at 3:09 PM, devoish (65.08) wrote:

Main Entry: men·dac·i·ty Pronunciation: \men-ˈda-sə-tē\Function: noun Inflected Form(s): plural men·dac·i·tiesDate: 1646

1 : the quality or state of being mendacious
2 : lie

Ouch! And here I thought the problem with defining a Libertarian was that you guys cannot agree what you are.

We've told him the truth hundreds, perhaps thousands, of times, and yet he keeps conflating libertarian and neocon. - Fleabagger who thinks he is like Hopelesslylost who thinks he is like ChrisGraley who thinks he is like...

Personally fellas, I think Democratic government is Libertarian whether you like the results of your beliefs or not.

All I KNOW is that you guys sound just like the Republicans/Conservatives always whining about Government and praising "free markets".

And then you'll say "he talked like a Libertarian but he fooled us". "He said he was for small Government but now that we are living in his disaster he didn't mean it".

Moving on.

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#29) On July 30, 2010 at 9:45 AM, jasenj1 (39.41) wrote:

Late to the party, but I'll throw in a few words.

"Free market" depends on consumers being knowledgable enough to make intelligent/rational decisions. This might work when you're buying cows or chickens, but when you're buying complex things like cars or houses with parts sourced from all over the globe, and with no idea of the quality or safety of the various subcomponents, there must be a proxy for the consumer who can 1) Inform them on the quality & safety of products 2) Enforce some level of quality & safety so that people aren't being sold dangerous products.

That model extends out to things like banking, health insurance, cell phone contracts, etc. The proxy can be private entities like Consumer Reports, but they have no enforcement power to keep hazardous products off the market. That's where government steps in.

One of the government's primary duties should be to establish & enforce quality/safety standards on the goods & services being offered to the population. This ranges from banning lead in paint, to coal mining working conditions, to mortgage terms.

Unfortunately, IMHO, the US government has fallen down on this primary duty. In a quest to stay in power, elected officials have cozied up to corporations who have $$$ even though corporate interests are often at odds with the citizenry.

Enough rambling. 


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#30) On July 30, 2010 at 10:47 AM, whereaminow (< 20) wrote:


"Free market" depends on consumers being knowledgable enough to make intelligent/rational decisions.

No, it really doesn't.  Not one free market supporter claims this.  This is a claim of statists and hacks that created bs like "perfect competition."  It has nothing to do with free market economics.

David in Qatar 

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