It seems the captains of industry, finally, are waking up to the economic pain that the American middle class has been feeling for years. Don’t be alarmed. This is not some sudden, newfound sense of benevolence, or concern for us as people. Rather, the cable TV industry’s become worried that, while we may still want our MTV, we just can’t afford it anymore.
Cable executives recently gathered at an industry event say their biggest competitive worry isn’t Netflix or some new Apple gadget, but just good old fashioned poverty. “There clearly is a growing underclass of people who clearly can’t afford it,” says Time Warner Cable Chief Executive Glenn Britt. “It would serve us well to worry about that group.” Britt’s underclass is us: you and me and the rest of the American middle class.
Our wages have been stagnant for so long that, faced with real choices like putting food on the table and putting gas in our tanks, something has to give. And, correctly, the choice we’re making is disconnecting our boob tubes. The real surprise is that it’s taken so long for corporate America to come to this realization.
The truth is that we Americans have been making choices to cut back spending for years now. Nor is cable TV the only business to feel the pinch. A recent poll found that half of all Americans are cutting back on products and services due to the high prices they’re paying to fill up at the gas pump alone. These consumers are spending less on everything from clothing, to entertainment, to groceries, and more. That means we’re putting a lot less money in a lot of corporate cash registers. All of this is a direct effect of the huge income inequality that’s become prevalent in the United States.
According to the Economic Policy Institute, between 1948 and 1979, a period of strong overall economic growth and productivity in the United States, the richest 10 percent of families accounted for 33 percent of average income growth, while the bottom 90 percent accounted for 67 percent. The overall distribution of income was stable for these three decades, and middle class consumers spent accordingly.
In an extreme contrast, during the most recent economic expansion between 2000 and 2007, the period that led up to the great recession, the richest 10 percent accounted for a full 100 percent of average income growth. It should come, then, as no surprise that we’re spending less across the board and that we have much less money to hand over to corporate America for all of their lovely goods and services. Given that middle class consumers have been the majority driver of the U.S. economy, it’s easy to see then why the economy is still in so much trouble. Corporate bigwigs have been lulled into complacency by 10 years of Republican-driven tax cuts for the wealthy. But corporations and rich people can’t get by forever on tax cuts alone. They eventually need revenue and income, too.
The whole situation reminds me of the dot com bust more than a decade ago. A lot of arrogant folks in Silicon Valley thought they could forego making a profit and keep living forever off their venture capitalists’ checkbooks. Of course, they couldn’t, and a lot of them went out of business. That was the dot-com bubble that burst. Call this the tax-cut bubble, and it’s about to pop, too. We in the middle class would more than gladly hand over our cash to Wal Mart, Starbucks, and yes, Comcast; if only we had some.
I suspect the cable TV folks are just the first ones who will start figuring that out.Powered by Sidelines