Now Reading:
-
01
The Squeeze Out: Why Labor is Crushing Your Living Standards
Introduction to the Squeeze Out
The concept of the “Squeeze Out” refers to the systematic financial pressures that are being applied to the working and middle class, causing them to lose wealth and assets, while the rich continue to accumulate more. This process has been gradually increasing over the years, especially since the 1980s, and it has been exacerbated by policies that favor the wealthy.
Historical Context: Post-WWII Wealth Distribution
Historically, post-WWII society saw a significant shift in wealth distribution. For the first time in history, many working-class families in the UK and other Western nations were able to own homes, receive pensions, and accumulate wealth without being saddled by significant debt. This was a unique period—an anomaly in history—where a broader middle class emerged, providing ordinary people with some financial security.
However, before this period, and outside of the Western world, the general global pattern was one where there was extreme wealth inequality. A small elite held most of the wealth, while the majority of the population lived in poverty. Even in the UK, the early 20th century was marked by widespread poverty, with many people living under harsh conditions.
The Post-WWII Shift
After WWII, a key turning point occurred: wealth distribution began to shift. The government became a major player in controlling and distributing wealth, with the middle and working class gaining more financial power. This shift was driven by high taxes on the rich, which prevented the wealth from concentrating in the hands of the few. Families were able to own homes without crippling debt, and the standard of living for the working class improved significantly.
Stage 1 of the Squeeze: Tax Cuts and Asset Accumulation
The first major shift towards the “Squeeze Out” happened in the 1980s when tax cuts for the rich became widespread. This began with the Reagan administration in the U.S. and the Thatcher government in the UK. These tax cuts allowed the wealthy to accumulate vast amounts of money, which they used to buy up assets—especially property and stocks. The rich, with their wealth, began outcompeting the working and middle classes for ownership of valuable assets, particularly real estate.
For the middle and lower classes, this initially seemed positive. As property prices increased, many people saw the value of their homes rise, and some could even sell their homes for a profit. It felt like everyone was getting richer. However, this growth in asset prices was not driven by economic growth or improvement in living standards for the working class—it was driven by the wealthy using their financial advantage to buy up the available assets.
The Rich Start Buying Up Assets
The process of asset accumulation by the wealthy had a significant impact. As rich individuals and corporations bought up properties, stock market shares, and other assets, prices began to rise. Ordinary people, especially those with limited wealth, were forced to sell their assets or take on debt in order to keep up. Those who couldn’t afford to buy homes found themselves pushed further and further into debt.
At first, this rise in asset prices was somewhat bearable for the working class, as they were still able to sell their properties and retire with some level of comfort. But over time, this process led to a significant reduction in the amount of property owned by the working class. The rich had bought up the majority of the assets, and those in the lower classes were forced to sell their properties, leading to fewer people owning homes.
Stage 2: The Debt Crisis and Economic Depression
As asset prices continued to rise, the wealth gap widened. The wealthy accumulated more, and the poor became increasingly reliant on debt to sustain their lifestyles. With more and more people unable to afford homes or property, they turned to borrowing, taking out larger mortgages and loans to buy what they could not afford.
But as the system continued, a point came when the wealthy had accumulated enough assets and capital, and they stopped lending to the working class. The rich, seeing that the lower classes were drowning in debt, stopped giving loans. This led to a financial crisis for the majority of society, as people who were previously able to borrow money could no longer access credit.
This sudden halt in credit and lending triggered an economic depression. People couldn’t spend as much, businesses suffered, and more and more individuals were pushed into poverty. The government, in an effort to maintain social stability, began stepping in to provide support for the working class. But this created its own problems.
Conclusion of Part 1: The Squeeze Out Begins
In summary, Stage 1 of the “Squeeze Out” began with the tax cuts for the rich, which allowed them to accumulate vast amounts of wealth. This accumulation of wealth led to rising asset prices, which squeezed the working and middle classes out of property ownership. The poor and middle class were increasingly forced to sell their assets to the rich or take on debt. This started a cycle that led to economic depression in Stage 2 when credit was no longer available to the majority of society.
This is just the beginning of the squeeze. As wealth continued to flow to the rich, the next stages will show how the government and middle class will continue to be squeezed, and how this ultimately affects the economy and society as a whole.
Here’s Part 1 of your requested summary, keeping it under 5000 characters:
The Squeeze Out: Why Labor is Crushing Your Living Standards
Introduction to the Squeeze Out
The concept of the “Squeeze Out” refers to the systematic financial pressures that are being applied to the working and middle class, causing them to lose wealth and assets, while the rich continue to accumulate more. This process has been gradually increasing over the years, especially since the 1980s, and it has been exacerbated by policies that favor the wealthy.
Historical Context: Post-WWII Wealth Distribution
Historically, post-WWII society saw a significant shift in wealth distribution. For the first time in history, many working-class families in the UK and other Western nations were able to own homes, receive pensions, and accumulate wealth without being saddled by significant debt. This was a unique period—an anomaly in history—where a broader middle class emerged, providing ordinary people with some financial security.
However, before this period, and outside of the Western world, the general global pattern was one where there was extreme wealth inequality. A small elite held most of the wealth, while the majority of the population lived in poverty. Even in the UK, the early 20th century was marked by widespread poverty, with many people living under harsh conditions.
The Post-WWII Shift
After WWII, a key turning point occurred: wealth distribution began to shift. The government became a major player in controlling and distributing wealth, with the middle and working class gaining more financial power. This shift was driven by high taxes on the rich, which prevented the wealth from concentrating in the hands of the few. Families were able to own homes without crippling debt, and the standard of living for the working class improved significantly.
Stage 1 of the Squeeze: Tax Cuts and Asset Accumulation
The first major shift towards the “Squeeze Out” happened in the 1980s when tax cuts for the rich became widespread. This began with the Reagan administration in the U.S. and the Thatcher government in the UK. These tax cuts allowed the wealthy to accumulate vast amounts of money, which they used to buy up assets—especially property and stocks. The rich, with their wealth, began outcompeting the working and middle classes for ownership of valuable assets, particularly real estate.
For the middle and lower classes, this initially seemed positive. As property prices increased, many people saw the value of their homes rise, and some could even sell their homes for a profit. It felt like everyone was getting richer. However, this growth in asset prices was not driven by economic growth or improvement in living standards for the working class—it was driven by the wealthy using their financial advantage to buy up the available assets.
The Rich Start Buying Up Assets
The process of asset accumulation by the wealthy had a significant impact. As rich individuals and corporations bought up properties, stock market shares, and other assets, prices began to rise. Ordinary people, especially those with limited wealth, were forced to sell their assets or take on debt in order to keep up. Those who couldn’t afford to buy homes found themselves pushed further and further into debt.
At first, this rise in asset prices was somewhat bearable for the working class, as they were still able to sell their properties and retire with some level of comfort. But over time, this process led to a significant reduction in the amount of property owned by the working class. The rich had bought up the majority of the assets, and those in the lower classes were forced to sell their properties, leading to fewer people owning homes.
Stage 2: The Debt Crisis and Economic Depression
As asset prices continued to rise, the wealth gap widened. The wealthy accumulated more, and the poor became increasingly reliant on debt to sustain their lifestyles. With more and more people unable to afford homes or property, they turned to borrowing, taking out larger mortgages and loans to buy what they could not afford.
But as the system continued, a point came when the wealthy had accumulated enough assets and capital, and they stopped lending to the working class. The rich, seeing that the lower classes were drowning in debt, stopped giving loans. This led to a financial crisis for the majority of society, as people who were previously able to borrow money could no longer access credit.
This sudden halt in credit and lending triggered an economic depression. People couldn’t spend as much, businesses suffered, and more and more individuals were pushed into poverty. The government, in an effort to maintain social stability, began stepping in to provide support for the working class. But this created its own problems.
Conclusion of Part 1: The Squeeze Out Begins
In summary, Stage 1 of the “Squeeze Out” began with the tax cuts for the rich, which allowed them to accumulate vast amounts of wealth. This accumulation of wealth led to rising asset prices, which squeezed the working and middle classes out of property ownership. The poor and middle class were increasingly forced to sell their assets to the rich or take on debt. This started a cycle that led to economic depression in Stage 2 when credit was no longer available to the majority of society.
This is just the beginning of the squeeze. As wealth continued to flow to the rich, the next stages will show how the government and middle class will continue to be squeezed, and how this ultimately affects the economy and society as a whole.