Greece, France And The USA

| May 10, 2012 | 1 Comments

Americans would do well to consider the ramifications of the turbulent economic and political events in the euro zone. Compare  this turbulence to the relative political stability and economic growth in the world’s strongest emerging economic powers known as The BRIC nations.  While comparisons between austerity and growth are fuel for debates, neither of these approaches is the reason that 11 of the 17 euro zone members have undergone regime changes since the failure of Lehman Brothers.

Earlier this year, the Washington University of St. Louis presented the results of a comprehensive study compiled in 2011. The topic was the middle class and its place in various global economies. Interestingly, the survey reported that most political figures do not fully understand the criteria that define the middle class. This is especially true in the United States, where income is designated as the basic and only factor defining the middle class.



The U.S. is not alone.  The study revealed that in most free capitalistic economies, income is accepted as the defining standard of a class.  Goldman Sachs executive Jim O’Neil aptly stated that what the world needs is more BRIC nations.  Apparently, developing economies agree.

In comparing these economies to the euro zone and the US, the most glaring difference is the way government managed capitalism handles the middle class.  Washington University establishes the income factor as one of four equal components that determine the status and viability of the middle class. Brazil, Russia, India and China are the four major emerging economies.  The group is considering adding South Africa and Indonesia to their “trade alliance,” which is more than a trade alliance.

The four equal components of the middle class are:

  • Access to education
  • Ability to acquire real estate
  • Access to health care
  • Access to income

Considering those four factors, it should be no surprise that Greece is in upheaval, France is in transition to their first socialist government since Francois Mitterrand’s takeover in 1981 and the unwillingness of Congress to represent the middle class is mind boggling.  The 2012 Presidential Election will tell a lot about the direction of the US economy as viewed by the middle class. It looks like a rough time for any incumbent.

By most counts the extremist politics of the Tea Party has eliminated centrists from the Republican Party. Congressional members are more committed to Grover Norquist than they are to their constituents.

To win the Presidency, Romney faces an uphill fight.  His stated positions in the Republican debates simply lack appeal for the ever expanding ranks of disillusioned middle class voters. Romney knows he must navigate to more centrist voters.  With the nomination in hand, Romney knows he has the Republican extremists in his pocket because no matter how far he moves to the middle, he is better than Obama.

While the majority of the country does not approve of Obama’s handling of the economy, this does not mean they support Romney, whose positions change on a daily basis according to his audience’s preferences.  With a middle class that has lost their homes or whose mortgages are upside down, these voters still hold the lack of regulation advocated by GW Bush as the cause for the recession and housing crisis.

With the cost of education soaring out of control and with millions of college graduates standing in unemployment lines and unable to pay back their education loans, the middle class is losing access to education.  Meanwhile, the histrionics surrounding public and private health insurance, is leaving many middle class families uninsured.

Like Greece, Italy, Portugal, Spain, England, Ireland, France and other established economies, unemployment in the US remains too high as income continues trending down.  The middle class may not approve of Obama, but a majority of Americans believe he has personal integrity and credibility; a man of the People.

With Romney, the debates clearly identified him as a 1 percenter who has his money invested outside the US. At a time when the US is trending away from a middle class in favor of a society of haves and have-nots, the middle class may have one last stand.  If the common man shows up at the polls, it will be a Republican defeat.  If the middle class does not show up, Obama will be looking for work.

In 2020, Goldman Sachs expects China to be the second largest global economy.  India and Brazil will be the third and fourth largest economies.  Russia will be the fifth or sixth largest economy.  By 2030, China may overtake the US at the top of the ladder.

More international money was invested in Brazil than in any other nation in 2011.  The country has virtually no unemployment.  Brazil is living large and spending big.  After countless losing battles with volatile inflation, Brazilians do not save money.

India’s economy is booming, growing at leaps and bounds.  The housing market is in high gear.  The importance of education is a top priority and the middle class can easily afford excellent educational opportunities.  Comprehensive health care is affordable.

In Russia, the fate of the middle class is in transition.  Putin promises better education, better health care and more private housing, touching three middle class components.  The economy is on the mend and is expected to grow by 6 percent in 2013.

In China, the biggest concern is inflation.  Income is up for the middle class who can now purchase housing.  Education is serious business in China. The state gives the populace access to a sound educational system.

India is a free economy but the state manages the middle class quite effectively.  Brazil, China and Russia are government run capitalistic economies.  The BRIC economy credit ratings are stable. The economies are growing with gusto.  They are also influencing developing economies by providing a functional model.

If the next Congress is dysfunctional, it will not matter who the next President is. The middle class will be devoured and a two caste society will exist. The fate of the middle class is simple.  Either clean house in Washington in 2012 or pay the consequences.

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1 Comment on "Greece, France And The USA"

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  1. James Bingham Hampton says:

    Couldn’t have said it better. One fact that I believe has not been addressed is the underwhelming number of Repiblicans voting in the recent primaries. Possibly a sign of things to come. Thank you Hiland!


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