Fed Economist Cheers Middle Class Squeeze

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July 26, 2006 12:38 a.m.
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The contempt of this government for the middle class sometimes becomes blindingly clear.

The New York Times ran a piece Sunday discussing a new Brookings Study showing how cities are becoming polarized, so that only the rich and the poor survive. Not to worry, says an economist for the Federal Reserve. Who cares if the fire fighters, police and teachers can’t afford to live in the city where they work?

Firefighters who want to live in high-priced cities can work two jobs, said W. Michael Cox, chief economist for the Federal Reserve Bank of Dallas. I think it’s great, he said. It gives you portfolio diversification in your income.

Only an economist would see working two jobs as “portfolio diversification.” The rest of us might just see it as an economic squeeze play in which the middle class has become expendable. Yeah, the rich need the services of these middle class service people, but truck them in from cheaper areas, like so many low-priced electronic gizmos from some foreign country.

This isn’t one rogue economist. This is a highly trained government official in a position of authority who says he just doesn’t care whether cities are places where the middle class can live.

His remark is entirely in keeping with a decades-long series of policy decisions that makes life for the middle class last priority. A new Brookings Report shows that the middle is disappearing from New York, San Francisco, and dozens of other cities. And that’s just peachy, says the only government official quoted in the story.

If no one really cares, then how much easier will it be to cut loose the middle class entirely? Why worry about predatory lending and home mortgage foreclosures, why regulate tricks and traps in credit cards or payday lenders, why fix public schools or think about how to provide universal health insurance? The rich are doing fine, and, according to the Federal Reserve economist, so long as service labor can be imported from elsewhere, life without the middle class goes on very nicely.

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