Red Scare.

I've been lazy. I'm behind in my posting, and I'm a bit behind the times with this topic.

Over the past couple months, I've heard people toss around the accusations that Obama is guilty of trying to incite class warfare. This, combined with anything that requires social responsibility labeled as "Communist" or "Socialist" is meant to scare people out of left leaning ideas. 

I'm sorry, but what? Take a second and look at what's going on in the political scene right now. You have two parties, one made up of mainly middle class, with the majority of the party base being liberal, college educated adults. The second party consists of two very disparate groups, the "working class" who pride themselves as "values voters" and the rich who want to remain rich and not waste their money on social programs. I had originally intended to contrast the first group with fiscal conservatives, but it seems we're fresh out, seeing as our government has run our debt clock up to $10 trillion.

Wow, I'm not biased at all. 

Then again, we've always had some disjunct in America - the terms blue collar and white collar go back quite a ways. The accusations of Obama trying to incite class warfare by pitting the lower and middle classes against the rich are made out of the fear that the richest maybe 5% of Americans won't benefit form outrageous tax cuts any longer.

My question is who orchestrated the giant schism between the middle and working classes?

Since when in this modern age has a college education made you an elitist? How did we arrive at the term "Elite Media?" and how does that exclude Rupert Murdoch's Newscorp and FOX news? How does the Republican Party survive an economic crisis when it is composed of two fundamentally different economic groups, and spouts economic policies that benefit the smaller at great cost to the larger?

Maybe I read too much Marx or Gramsci in college, but it seems like evidence of manipulation by a ruling class. Whenever something comes up that benefits the majority of Americans, like socialized healthcare, or higher taxes (less tax breaks for the wealthy) to fund social programs, it's labeled as wealth redistribution and slapped with a title we're conditioned to fear: Socialism. (about 1:20 in the video)

It seems Americans have a high tolerance for income disparity, preferring equality in opportunity versus equality in outcome like they have in Europe.

I've been doing some reading on economics to try and understand more of what's been going on. Generally, I've gotten by by listening to Roy go on and on while we climb and try and pick things up from NPR, but I recently found Robert Reich's blog and I'm going to lift something straight for that. The post is titled Are we headed for another Great Depression?

Probably not. But go back 75 years and you'll find eerie similarities. Marriner S. Eccles who served as Franklin D. Roosevelt’s Chairman of the Federal Reserve from November, 1934 to February, 1948 gave his view of what caused the Depression in his memoirs, "Beckoning Frontiers" (New York, Alfred A. Knopf, 1951):

As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation s economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

That is what happened to us in the twenties. We sustained high levels of employment in that period with the aid of an exceptional expansion of debt outside of the banking system. This debt was provided by the large growth of business savings as well as savings by individuals, particularly in the upper-income groups where taxes were relatively low. Private debt outside of the banking system increased about fifty per cent. This debt, which was at high interest rates, largely took the form of mortgage debt on housing, office, and hotel structures, consumer installment debt, brokers' loans, and foreign debt. The stimulation to spending by debt-creation of this sort was short-lived and could not be counted on to sustain high levels of employment for long periods of time. Had there been a better distribution of the current income from the national product -- in other words, had there been less savings by business and the higher-income groups and more income in the lower groups -- we should have had far greater stability in our economy. Had the six billion dollars, for instance, that were loaned by corporations and wealthy individuals for stock-market speculation been distributed to the public as lower prices or higher wages and with less profits to the corporations and the well-to-do, it would have prevented or greatly moderated the economic collapse that began at the end of 1929.

The time came when there were no more poker chips to be loaned on credit. Debtors thereupon were forced to curtail their consumption in an effort to create a margin that could be applied to the reduction of outstanding debts. This naturally reduced the demand for goods of all kinds and brought on what seemed to be overproduction, but was in reality underconsumption when judged in terms of the real world instead of the money world. This, in turn, brought about a fall in prices and employment.

Unemployment further decreased the consumption of goods, which further increased unemployment, thus closing the circle in a continuing decline of prices. Earnings began to disappear, requiring economies of all kinds in the wages, salaries, and time of those employed. And thus again the vicious circle of deflation was closed until one third of the entire working population was unemployed, with our national income reduced by fifty per cent, and with the aggregate debt burden greater than ever before, not in dollars, but measured by current values and income that represented the ability to pay. Fixed charges, such as taxes, railroad and other utility rates, insurance and interest charges, clung close to the 1929 level and required such a portion of the national income to meet them that the amount left for consumption of goods was not sufficient to support the population.

This then, was my reading of what brought on the depression.

Those in power should look at history much more closely, or at least pay some people to do it for them, it'd be good for the economy.