It's All About The Middle Class

The best economic scenarios we have ever seen came from a strong middle class.  The bigger the middle class, the more potent the economy. It also leads to a more stable country as a whole. It stands to reason that policies should be such that they encourage the middle class to expand.

The middle class are characterized by hard work and sensible values. On many levels they are part of their community. They value education as they understand the life long impact a good education has on an individual, both in an economic sense and quality of life.

When America was had a broad manufacturing base, it was easier to have a middle class. Goods were being sold around the world as America was the only place that could make these goods. It enabled factory workers without a college degree to get a decent salary that met their needs. Since then, other countries have taken over the bulk of manufacturing operations and this has lead to a shift in the type of work that one generally does. Many of these replacement jobs do not pay what the manufacturing jobs once paid. And so, this development was a blow to the middle class. As a result, we see various effects like both spouses working, a downshift in their purchasing habits and so on.

You might think that the best approach is just to bring back manufacturing. Easier said than done. This is a different world. At the time when manufacturing jobs were plentiful in America, most of the rest of the world were not able to manufacture to the capacity, quality of America. Today that is not the case. America must compete with very capable competitors and it isn't clear that America can beat them all the time.

We now live in a world where start ups like Instagram get bought by Facebook for 1 billion dollars. That was impossible in the days when manufacturing was king. The economy was much more spread out back then but there was little room for huge winners like that. Instagram is only one example. There are many. What if we could tap into that sort of entrepreneurship and set the stage for that to happen more frequently? Here is what I think could be done to make that the case.

One reason that a person will work for a company instead of building their own business is for the benefits such as health insurance.  We should disconnect businesses from being in the health insurance business. Where I get health insurance should have nothing to do with who I work for. If we can achieve health insurance independence, then someone would be free to engage in business building without having to be concerned about where health insurance will come from. Businesses would benefit too. They would no longer have to spend any time thinking about health insurance or negotiating with insurance companies to cover their employees.