The business section of yesterday's Honolulu Advertiser had an article called TARP panel's chief could lead new consumer agency.
It's about Elizabeth Warren, a Harvard University law professor who is head of the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP).
I once wrote here about Warren's speech "The coming collapse of the middle class.” (That video of her speech is very interesting and well worth watching. She is one of my heroes).
When I first heard it, I thought: How coincidental that the U.S. hit its peak oil production in 1970, the same time period she used as an example of when the American middle class was strong. In 1970, the Energy Return on Investment was 30 barrels return from one barrel of energy used to obtain it. Today that ratio is 10 to 1 or so.
Could the decline in our middle class be related to our decrease in net energy? Could it be that technology is not beating the decline in net energy? And we have to make up for it by working twice as hard? Just asking.
Some of Elizabeth Warren's points, from our previous post:
In the 1970s, a married couple with two kids had one parent in the workforce and saved 11 percent of their income. To get into the middle class, their kids needed to get a high school diploma and to be willing to work hard. That 12 years of education that their children needed, to get into the middle class, was free.Warren says that the most important thing that happened in the first two-thirds of the 20th century was that women entered the work force.
In the 2000's, a similar married couple with two kids must have two people in the work force – because, she says using numbers adjusted for inflation, median mortgage payments in 2005 are 76 percent higher than they were in 1970. Health insurance – in a healthy family with employee-sponsored health insurance – costs the family 74 percent more. Childcare costs have increased 100 percent, and as compared to the 1970s family a 2000s family has the expense of a second car because of that second person in the workforce, and because of that second income their tax rate is up by 25 percent.
In comparable dollars, the 2005 family is actually spending much less on clothes, food, appliances and cars than the 1970s family did; it’s the non-flexible, big ticket and important expenses that have increased so dramatically and that require that second income.
So a comparable married couple with two kids in 2005 has no savings (compared to the 1970s couple, who saved 11 percent of their earnings), and 15 percent of their income is in credit card debt as they try to keep up.
To launch their kids into the middle class requires 16 years of schooling, and the 2005 family has to pay for the first two years (preschool) and the last four years (college) themselves.