In his theory of evolution, Charles Darwin wrote of the key to a species’ continued survival being the ability to adapt as needed to environmental change. But being responsive to change is not an easy thing, whether it’s an organism’s slow adaptation of traits or an individual’s personal shift within a given economy.
You may likely be one of the “haves” in our economy. This group has benefitted greatly from the Federal Reserve-directed, low interest rate, asset-swelling recovery. If however, you are one of the “have nots”, you’ve reaped no benefit from the general recovery following the 2007-08 recession and indeed you may even have a lower income now than just eight years ago.
The middle class “have nots” have been on the short end of the economic stick for decades, going back to the early 1970s when the amount of income accumulating in the top 10 percent grew at 80 percent, while the bottom 90 percent grew at just 20 percent. It’s that top 10 percent of income earners who usually have assets like stocks and real estate and have benefitted from the Fed’s policies that have increased their value. The “have nots” with no or few assets have not gotten any benefit from the current recovery and have also not seen any growth in their income.
There are many reasons why the rewards of our rapidly changing economy have been spread unevenly across all income classes. These reasons include globalization (trade and foreign competition), technological change, and immigration among other things. We have whole industries that are in decline, while others are growing rapidly. The folks associated with the declining industries are getting a shrinking income from their efforts, while those in growing industries are seeing their income and net worth expand. Rather than complaining and looking for government assistance, it is important to first recognize one’s place in our economy and second to then adjust participation to the growing side of the economy.
This is not an easy thing to do in the short run; however, it is critical for anyone within a declining industry to be smart about where their working time is spent. It is important that everyone become more educated since those who’ve had some form of higher education have significantly lower rates of unemployment than those who did not graduate from high school. Further, it is not necessary to have college degrees as holders of associate degrees in the “hands-on arts” are also doing well in our economy. The class doing the best are folks with professional degrees. The critical element in moving from being a “have not” to a “have” is competence in operating in our economy.
We are in the last lap of the presidential election that will define how our economy functions for years to come. In our system the “haves” tend to defend their position from those that would change the rules of the game. The last time the outsiders got change was the Reagan election 36 years ago. Regardless of who is elected this November, our government should develop policies that help people move from being part of the “have nots” to full participants (“haves”) in the economy and hopefully a rapidly growing economy. While I am not a policy wonk, I would suggest that government assist with worker retraining for our growing industries, make moving from declining parts of our country to growing parts by making home transitions easier, and provide information about the opportunities in growing parts of our economy available across the country.
Capitalism is just one of several forms of socio-political economic systems. The general drift of successful economies is towards socialism to share the wealth across more of the economy. Yet capitalism not only survives but thrives primarily because it is the most responsive to change of all the economic systems. If you want to thrive, go with the flow and get involved with growing industries, continue to expand your education (both formal and informal), get more competent so you can help your employer become more successful and certainly become an investor in both real estate and other assets like stocks, mutual funds and exchange traded funds.
Even if you are retired, it behooves you to continue to participate in our economy and society as much as you are able. My father long ago told me that you can either “rust out or burn out” in old age. I choose burn out.
Nothing contained in this article should be interpreted as a promise or guarantee of earnings or investment results nor a recommendation for the purchase or sale of any security or sector.
