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The Middle Class Falls

by Tomasz Konicz Thursday, Jul. 10, 2008 at 12:55 AM

The population has to get used to gas prices three times higher than four years ago. Rising energy- and food prices and the real estate crisis accelerate pauperization tendencies in the US.


“Food insecurity” - Rising energy- and food prices and real estate crisis accelerate pauperization tendencies in the United States

By Tomas Konicz

[This article published in: Junge Welt, 6/13/2008 is translated from the German on the World Wide Web,]

It was a ghostly car ride, journalist Alexander Cockburn reported recently. On the last Saturday in May 2008, he was driving on Interstate 199 between Oregon and California in the afternoon during the long Memorial Day weekend. Normally this is a main thoroughfare, an exhausting stretch in the most congested “bumper to bumper” traffic. However this weekend Cockburn could cover this stretch in record time. The traffic volume was so low that it could have been “two in the morning.”

The soaring fuel price triggered a “shock” in the US population comparable to the 1973 oil crisis. The population must get used to gas prices “three times higher than four years ago.” Many of the families that customarily took long jaunts through the countryside on the extended weekend decided to spend Memorial Day at the nearby mall given a price of four dollars for a gallon. The typical highway motels and the tourism branch altogether were not the only sufferers under the diminished joy in travel of US citizens. The transportation industry has already announced over a thousand bankruptcies of small businesses. Independent truckers who manage nearly a fifth of goods traffic in the US face “immediate ruin” on account of higher gas prices according to Cockburn.

Broad sectors of the US population are strained by the extra costs. In the meantime the crisis affects the substance of the US. The lower middle class confronted with stagnating real wages for decades sees itself exposed to a pauperization process in view of the burst speculation bubble on the real estate market and soaring costs of living, an impoverishment on a large scale that threatens to permanently change the social structures of the US. A TV-report of MSNBC recently focused on wage-earners who seemingly belonged to the middle class. They have their own houses and secure jobs but are still forced to rely on non-profit food banks. The director of a food bank in Virginia told MSNBC that 50 to 60 percent of their “clients” come from the falling middle class.

The oil price raises the price of all other goods, declared a representative of “Second Harvest,” the union of US food banks. “If the gas price continues climbing, we will experience a catastrophe.” Many of these institutions feeding the needy can no longer distribute food to all the stricken. The readiness to donate of private persons and businesses slackens, the representatives lament. A recent survey of 180 organizations joined in “Second Harvest” showed 99 percent of them registered a 20 percent increase of food recipients on average. In 33 big cities, the number of needy persons climbed dramatically up to 63 percent within a few months. According to Vicki Escarra, the chairperson of Second Harvest, the current crisis is “by far the worst situation” in the 30 years of the cooperative union’s existence.

Hunger and malnutrition were widespread before the outbreak of the crisis in the US. The president of the non-governmental Food Research and Action Center, Jim Weill, tried to describe the seriousness of the situation before a hearing of a congressional subcommittee. Already in 2006, before the eruption of the financial crisis and the current wave of higher prices, 35 million US citizens, eleven percent of all households, were financially unable to afford adequate food, Weill said. Families with children are 16 percent of those facing food insecurity. In 2006 ten percent of all households with children did not have adequate food. On account of the soaring inflation and the consequences of the real estate crisis, many of these people find themselves in the status of “food insecurity.” Food prices rose six percent in the last quarter in the US. That was the greatest price hike in 18 years.

The US statistics – like official German numbers – are massively beautified. The renowned US journalist Chris Hedges described official government data as “Potemkin statistics” that benefit the interests of US capital. The US economy would have long been seen in a recession if no statistical tricks had been used, Hedges said. The inflation rate would be around ten percent if the standard method of calculation were applied. The term “unemployed” has also been modified so that the official data is now “worthless.” The real unemployment in the US may be ten percent, not 5.5 percent as recently announced.

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