Must-Read: Peter Temin: Six Orienting Questions:

  1. What is the W. Arthur Lewis "dual economy model"?
  2. Why is economic growth in the "subsistence" sector absolutely opposed by those who profit from the "industrialized" sector--and who control the levers of political-economic power in the society?
  3. What tools does the power elite use to maintain the dual economy structure?
  4. What policies would break up the dual economy structure?
  5. Why do entrepreneurs seeking profits not take steps to "route around" the blockages that maintain the dual economy structure and generate growth in the "subsistence" sector?
  6. When and why did the U.S. become a dual economy?

March 9, 2017, Thursday, at 2 PM, in the Blum Center Board Room at U.C. Berkeley:

Peter Temin: The Vanishing Middle Class: Prejudice and Power in a Dual Economy: "The middle class, defined as households earning from two-thirds to double the median American household income... <http://amzn.to/2mlKfpH>

...went from earning over three-fifths of total national income in 1970 to earning only just over two-fifths in 2014. The lines in gure 1 were horizontal before 1970, but they are continuing their movements after 2014.... The income share lost by the middle class went to people earning more than double the median income.... I employ an economic model that was created over sixty years ago... the Lewis model... the original model of a dual economy... two separate economic sectors within one country, divided by different levels of development, technology, and patterns of demand. This definition reflects the use of the Lewis model in the eld of economic development, and I adapt it in this book to describe current conditions in the United States, the richest large country in the world. This is less paradoxical than it sounds because the political policies that grow out of our dual economy have made the United States appear more and more like a developing country....

The politics that emerge from our dual economy prevent us from acting sensibly to reconstruct our ailing educational system. As we will see, we now have two systems of education, one for each sector of the dual economy. Schools for the richer sector vary in quality, and the best of them are well within the American historical experience. By contrast, schools for the poorer sector are failing. Attempts to x these schools have been known primarily for their spectacular failures. The legacy of slavery hangs over attempts to provide every child with an education. It was illegal to educate black people under slavery, and politicians today neglect education of the poor by implicitly invoking this racist history....

  • American history and politics, particularly slavery and its aftermath, play an important part in the widening gap between rich and poor.
  • A well-known, simple model of a dual economy
  • Ways to work toward greater equality so that America will no longer have one economy for the rich and one for the poor.

Many poorer Americans live in conditions resembling those of a developing country -- substandard education, dilapidated housing, and few stable employment opportunities. And although almost half of black Americans are poor, most poor people are not black. Conservative white politicians still appeal to the racism of poor white voters to get support for policies that harm low-income people as a whole, casting recipients of social programs as the Other -- black, Latino, not like "us." Politicians also use mass incarceration as a tool to keep black and Latino Americans from participating fully in society. Money goes to a vast entrenched prison system rather than to education. In the dual justice system, the rich pay fines and the poor go to jail.


Claudia Goldin: "The Vanishing Middle Class is a book for our unsettled times. We are a divided nation economically and politically, brought on by recent changes in the demand for and supply of skill layered on top of a long history of racial politics. Part social commentary, part history, part academic inquiry, Temin's book tells us how the two parts of the modern dual economy can be glued back together."

Gerald Jaynes: "Arguing that the high-wage sector promotes inequality and deterioration of the middle class through its disproportionate influence on political decision making in various areas such as criminal justice, education, and social welfare policy, The Vanishing Middle Class is a significant addition to the existing literature on inequality."

Heather Boushey: "This is not the way the American Dream was expected to play out.... Temin argues that the distribution of gains from economic growth today make the United States look like a developing economy... build[ing] on the dual sector model developed in the 1950s by W. Arthur Lewis.... Temin['s]... dual sectors are finance, technology, and electronics, or FTE....Mem-bers of the FTE sector seek to keep their own taxes low and suppress the wages they pay so as to maximize their profits. Mass incarceration, housing segregation, and disenfranchisement all serve—among other things—to keep the low-skill sector in a subservient labor market position. These developments play out along racial lines set by the nation’s history of slavery. The bridge between these two sides of the economy is education....This is why Temin’s top policy recommendation is universal access to high-quality preschool and greater financial support for public universities. His second recommendation is to reverse policies that repress poor folk of any race.... Alas, neither of these recommendations is potent enough to overcome the fundamental problems.... If we want to revive our vanishing middle class... we’ll need to do more to undermine the dual economy structures he so accurately details."

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