The End of the Middle Class 2

Also see The End of the Middle Class

Hobos and welfare for America's Rich

Hobos and welfare for America's Rich

By Ambrose Evans-Pritchard July 6th, 2010
© Copyright of Telegraph Media Group Limited

Reading William Manchester’s Glory And The Dream over the weekend, I came across this remark from President Herbert Hoover, blurted out famously in the cruelest year of 1932.

“Nobody is actually starving. The hobos, for example, are better fed than they have ever been. Hobos are eating well, in fact one had ten meals in a single day.”

Itinerant worker looking for work during the Great Depression

Hoover took deep offence at reports that children were dying of malnutrition. This is not surprising for a man who first made his global reputation organizing food aid for Belgian children at the end of World War One

By then Hoover had lost the plot, a common problem for those over the age of 45 who stop thinking, stop observing, and rely reflexively on whatever set of views worked for them in the past (I am 52).

He never quite lived down these words. After he lost the lost presidency to Roosevelt in 1933, he was taken to see starving families in Colorado. Though Hoover was too self-righteous to admit error. He insisted that economy was well on its way to recovery until President-elect Roosevelt frightened everybody with his “socialistic” adventurism.

Republicans on Capitol Hill who backed the mobilization of $3 trillion of fiscal and monetary support to bail out the financial system are now going to great efforts to prevent the roll-over of temporary benefits to 1.2m jobless facing an imminent cut-off.

I don’t wish to enter deeply into an internal US dispute between Republicans and Democrats, but I do think think that the American political class will have to face up to the new reality of a semi-permanent slump for a decade or more that will blight a great number of lives. The cyclical recovery that normally makes it possible for most Americans to find a job if they want one is not going to happen this time because the overhang of debt, fiscal tightening, and a liquidity trap have combined to jam the mechanism.