Monday, February 6, 2012

Reinventing the Middle Class

While we watch the confusing economic indicators alternate between “turning around” and “sinking further into oblivion,” there’s something far more fundamental under way with the economy in this country. We’re talking about the 99 percent and Mitt Romney’s tax returns, but these topics cloud the already complex topic of what is happening to the middle class in this country. 

Our image of the middle class is rooted in later 20th century U.S. society – a unique period when our country was the only developed nation in the world untouched by World War II, which allowed us to help rebuild nearly every other developed nation that had been devastated by years of intense war and destruction. This allowed our economy to thrive by supplying other countries with everything they needed. Jobs were plentiful and the middle class as we know it was born; however, capitalism in an industrial-based economy does not naturally create a middle class. It structurally creates “haves” and “have nots” as noted by Andrew Carnegie who said individuals, “… under the free play of economic forces, must, of necessity, soon be in receipt of more revenue than can be judiciously expended upon themselves; and this law is as beneficial for the race as the others” (Wealth, 1889). His rationale at the time was that capitalists would make a lot of money and would then redistribute their excess wealth to those in need through philanthropy. In a post-industrial economy, it’s just not that simple. *

We may think of the loss of manufacturing as a recent phenomenon in the past decade, but U.S. Department of Labor figures show that manufacturing employment actually peaked in 1980. I just finished Bill Clinton’s “Back to Work” that provides a pretty clear picture of where we’ve been and posits some interesting ideas for getting the economy moving. He makes the point that as manufacturing slowed, the technology boom of the 1990s grew the economy. However, the post-dot.com economy was based on manufacturing value (hedgefunds, derivatives, etc.) instead of products, unsustainable components (housing, etc.), and exchange activity (service industries) – none of which provides for long-term economic success. And here we are.

Whether or not the middle class is shrinking depends on what statistics you manipulate – it is or it isn’t. However, amidst this backdrop, I am increasingly convinced that entrepreneurship and an entrepreneurial spirit will be essential in revitalizing our economy and reinventing the middle class in this post-industrial information age. Large corporations will continue to play an ever-significant role in the economy, but as they are able to trim costs (and labor) to increase profits, the jobs have to come from somewhere. An entrepreneurial-based economy will continually develop businesses that identify a unique niche and then network and interact with one another and provide good-paying jobs. Instead of our community having five employers with 1,000 jobs, we can more easily sustain fifty employers with 100 jobs. Smaller, leaner, more nimble entrepreneurs will diversify the local economy and sustain this region for the next several decades. 

This is why MVCC is working hard to develop smart resources for entrepreneurs through the Challenge and Opportunity Campaign. We have a strong business program that provides a great foundation for new entrepreneurial offerings and our Center for Corporate and Community Education, along with the MVCC Foundation, can provide the necessary resources and networks that will help MVCC, along with all of our partners, build entrepreneurial capacity right here in the Mohawk Valley. Stay tuned …

If you have any questions or comments on this post, please contact me at presblog@mvcc.edu.

* This blog was greatly informed by Anirban Basu’s presentation to the Strategic Horizon Network in June 2008.