The Vanishing Middle Class The Vanishing Middle Class Prejudice and Power in a Dual Economy Peter Temin The MIT Press Cambridge, Massachusetts London, England First MIT Press paperback edition, 2018 © 2017 Massachusetts Institute of Technology All rights reserved No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher This book was set in Sabon LT Std by Toppan Best-set Premedia Limited Printed and bound in the United States of America Library of Congress Cataloging-in-Publication Data Names: Temin, Peter, author Title: The vanishing middle class : prejudice and power in a dual economy / Peter Temin Description: Cambridge, MA : MIT Press, 2017 | Includes bibliographical references and index Identifiers: LCCN 2016035191 | ISBN 9780262036160 (hardcover : alk paper)— 978-0-262-53529-8 (paperback) Subjects: LCSH: Income distribution United States | Middle class United States Economic conditions | Minorities United States Economic conditions | Equality United States | United States Economic conditions 2009- | United States Economic policy 2009Classification: LCC HC110.I5 T455 2017 | DDC 339.2/208900973 dc23 LC record available at https://lccn.loc.gov/2016035191 10 9 8 7 6 5 4 3 2 1 For Charlotte My wife, companion, and muse for fifty years Contents Introduction ix I An American Dual Economy  1 A Dual Economy  The FTE Sector  15 The Low-Wage Sector  27 Transition 41 II Politics in a Dual Economy  47 Race and Gender  49 The Investment Theory of Politics  61 Preferences of the Very Rich  77 Concepts of Government  87 III Government in a Dual Economy  99 Mass Incarceration  101 10 Public Education  115 11 American Cities  129 12 Personal and National Debts  137 viii Contents IV Comparisons and Conclusions  145 13 Comparisons  147 14 Conclusions  153 Epilogue 161 Appendix: Models of Inequality 185 Notes 191 References 209 Index 243 254  Index Labor (cont.) OSHA and, 90 pensions and, 31, 33, 69 production and, 3, 6, 16, 20, 24, 27–28, 30, 32, 59, 80–81, 84, 138, 155, 188 race and, 50, 55 reform and, 19 retirement and, 11, 25, 29, 33–34, 45, 90, 141, 156, 196n14 slavery and, xii (see also Slavery) Social Security and, 33, 45, 52, 69–70, 79, 90, 93, 141, 198n15 Solow model and, 187 subcontractors and, 30–31, 57 tenure and, 31, 52, 65 unemployment and, 104 unions and, 18–22, 28–29, 32–34, 64, 80–81, 116, 120 unskilled, 34 U.S Constitution and, 20 very rich and, 80 wages and, (see also Wages) women and, 59–60 workers’ compensation and, 4, 90–91 working conditions and, 18, 20 Labor share, 33 Latin America, xii, 6, 9, 32 Latinos, xiv, 157 cities and, 133 concepts of government and, 91 debt and, 144 dual economy and, 9–10, 13, 54–55 Great Migration and, 55 increase of, 53 integration and, 159 low-wage sector and, 35, 38–39, 55, 153–154, 195n19 mass incarceration and, 103–104, 106 Medicaid denial to, 91 NAFTA and, 55 population demographics of, 54 public education and, 118, 123, 127 War on Drugs and, 55, 110 Law Enforcement Assistance Administration (LEAA), 192–193n2 Lawyers, 20, 24, 60, 109, 116 Lead contamination, 35–36, 129–130 Lee, Robert E., 162 Let Us Now Praise Famous Men (Agee), 52 Lewis, Michael, 128 Lewis, W Arthur, 160 dual economy and, xiii, 5–12 FTE (finance, technology, and electronics) sector and, 20 Jim Crow movement and, 49 low-wage sector and, 28, 36 Nobel Prize of, 7, 49, 185 race and, 49 Lewis model, 192nn3,8 capital and, 6–7, 153 capitalists and, 6–8 cities and, 132 concepts of government and, 89 cross-country comparison and, 147 democratic model and, 160 developing countries and, 6, Dewey and, 155 dual economy and, xvii, 5–12, 62, 82, 89, 158 expected wage and, FTE (finance, technology, and electronics) sector and, 36, 101, 105, 153, 163 Great Migration and, 20 impact of, inequality models and, 186–190 infrastructure and, 11, 36 Investment Theory of Politics and, 62, 89 low-wage sector and, xiv–xv, 103 Median Voter Theorem and, 62 moving on from, 160 parts of countries and, 5–6 production and, public education and, 124, 192n10 spotty economic progress and, 5–6 taxes and, 153 transition and, 44 very rich and, 82 Liberalism and Social Action (Dewey), 155 Index  255 Liberals ALEC and, 19 Dewey and, 155–156, 159 FTE (finance, technology, and electronics) sector and, 17, 19, 21–22, 105 industrialization and, 155 Massachusetts and, 105 neoliberalism and, 17, 21–22 Powell and, 21 Reagan and, 22 taxes and, 198n15 Libertarian Review journal, 84 Lincoln, Abraham, 51, 87 Loans bankruptcy and, 90 education, 137 forgiving, 196n14 government, 49, 198n15 nonperforming, 139 redlining and, 34, 53 S&L crisis and, 17 Social Security and, 198n15 student, 43–45, 137, 140, 196n14 writing down, 158 Lobbying, 15, 18, 24, 44, 83, 110–111 Low-wage sector African Americans and, 27–29, 34–40, 50–54, 153–154, 195n19 bargaining power and, 31 birth of, 27 capital and, 29, 32, 39, 42–45 cities and, 130, 135–136 college and, 29, 122 company boundaries and, 29–30 competition and, 31–34, 103 concepts of government and, 89, 92 cross-country comparison and, 147–150 debt and, 137–143 Democrats and, 154 demographics of, 10 discrimination and, 38, 153 disengagement and, 35, 117 dual economy and, 4, 8, 9–13 federal grants and, 35 financial crisis of 2008 and, 38 401(k) plans and, 33–34 FTE (finance, technology, and electronics) sector and, 11–13, 25, 27–29, 32–37, 153–155, 194n6, 205n15 Great Gatsby Curve, The, and, 46 Great Migration and, 27–29, 34–35 health care and, 154 hourglass job profile and, 28–29 housing and, 34, 153 ignored needs of, 80, 135, 142, 153–155 immigrants and, 27–28, 32, 35, 153 independent contractors and, 31, 52, 65 industry and, 28–34 infrastructure issues and, 157–158 Investment Theory of Politics and, 62, 65–70, 75 labor and, 27–40, 44, 103 Latinos and, 35, 38–39, 55, 153–154, 195n19 Lewis model and, xiv, 28, 36, 103 literacy tests and, 65–66 mass incarceration and, 38, 101, 103, 105, 107, 112–114, 153–154, 156 middle class and, 38 mortgages and, 34 North and, 27–29, 32, 34 pensions and, 31, 33, 69 police and, 39–40 poll taxes and, 58, 65 poverty and, 27, 35, 39–40 public education and, 115, 117, 119– 128, 130, 153–154, 160, 194n6 race and, 49, 55, 153–154 reform for, 156–159 Republicans and, 154, 194n1 retirement and, 11, 25, 29, 33–34, 45, 90, 141, 156, 196n14 segregation and, 27, 34 service workers and, 29–30 slavery and, 27 social capital and, 39, 153 Social Security and, 69–70 South and, 27–29, 34–35, 142, 194n1 subcontractors and, 30–31, 57 256  Index Low-wage sector (cont.) taxes and, 31, 36 transition and, 11, 41–46 unemployment and, 34, 37, 157 unions and, 28–29, 32–34 very rich and, 79–81, 84, 158 voting and, 40, 194n1 World War I era and, 27 World War II era and, 34 Luce, Edward, 61 Luddites, 155 Lynch, Loretta, 106 Majority minority oxymoron, 101, 110, 124, 154, 156 Malaysia, Manufacturing, 20, 32–35, 91, 194n10 Marginal product, Market booms, 128, 138, 188 Martin, Trayvon, 56–57 Martin Luther King Jr Day, 67 Mass incarceration African Americans and, xv–xvi, 101–109, 112, 153 ALEC and, 110–111 bail and, 40, 105–106 Ban the Box campaigns and, 38 Clinton and, 104 college and, 101–102, 105, 108, 110 competition for, 110–112 concepts of government and, 95 conservatives and, 110 Corrections Corporation of America and, 110 cost of, 105–106 discrimination and, 105 drugs and, 104–110, 112 federal funding and, 37 FTE (finance, technology, and electronics) sector and, 101–106, 109, 112–114 Great Migration and, 104 health care and, 108–109, 113 housing and, 105–106, 112–113 immigrants and, 103, 110, 112, 174–175 income distribution and, 109 industry and, 111 inequality and, 113 Investment Theory of Politics and, 66, 111 Jim Crow tradition and, xvi, 53, 104 labor and, 106 Latinos and, 103–104, 106, 174–175 lobbyists and, 110–111 low-wage sector and, 38, 101, 103, 105, 107, 112–114, 153–154, 156, 175 Nixon and, 104, 109, 173 North and, 104 police and, 102–103, 110, 112, 127, 157, 200n3 private prisons and, 110–112, 175, 201n21 public education and, 119, 126–128, 156, 176 rape and, 108–109 Reagan and, 104 reform for, 110–113, 156 rural areas and, 66 social capital and, 103, 107, 156 social control and, 38 societal functions of, 111–112 taxes and, 101, 103, 105 terrorists and, 95 two-tiered system of punishment and, 109, 113 unemployment and, 104, 113 U.S Constitution and, 108 U.S Supreme Court and, 107–108 very rich and, 109 voting and, 103–104, 112–113 War on Drugs and, xv–xvi, 104, 106, 110, 132 white rage and, 51 women and, 103, 106, 157 Mass transit, 133–135, 158, 203n18 Mayer, Jane, 83 McConnell, Mitch, 97, 162 Median income, ix–x, 9, 53, 144 Median Voter Theorem, xv, 61–62, 66–68, 71–74 Medicaid, 91, 93, 142 Index  257 Medicare, xv, 91, 93 Mergers, 31 Metro, Washington, D.C., 135 Mexico, xii, 9, 54–55, 149 Michigan Detroit, 36, 116–117, 121, 123, 130, 177 Flint water crisis and, xv, 35–36, 129–130 State Department of Education and, 121 Microsoft, 31, 122 Middle class critical role of, ix cross-country comparison and, 147, 151 decrease of, x, 3, 9–10, 113 developing world and, 79 divisioned economy effects and, 155 financial crash of 2008 and, 10 FTE (finance, technology, and electronics) sector and, 24–25, 29, 96, 144, 147, 153, 155 growing income inequality and, ix (see also Inequality) life style of, 24–25 post–Great Depression building of, 53 postwar growth of, 88, 186 social programs for, 118 voter turnout and, 64 Milanović, Branko, 151, 204n6 Military, 204n13 arms industry and, 144 bomb robots and, 102 border issues and, 103–104 Central America and, 32 draft and, 16 FTE (finance, technology, and electronics) sector and, 102–104, 109–110, 112, 127, 143 high expenditures of, 23 immigrants and, 103–104, 127 Iraq and, 71–72, 92, 95, 102, 143 national defense and, 17–18, 93 police and, 103, 110, 127 private public oxymoron and, 143–144, 176 privatization of, 16, 22 technology and, 29 Milliken v Bradley, 116–117, 129, 142 Mincer, Jacob, 189 Minimum wage, 62, 72, 79 Minow, Martha, 111, 134 Mobility, 7, 32, 46, 133, 154, 159 Morgan, Edmund, 168 Mortality, 33, 39–40, 58, 126, 154 Mortgages bubbles and, 154–155 discrimination and, 117 Fannie Mae and, 138 FIRE sector and, 80 forgiving, 156 Freddy Mac and, 138 Great Migration and, 34 HAMP and, 139–140 hedge funds and, 203n5 housing and, 34, 44–45, 69, 80, 117, 137–140, 154, 156, 176, 203n5 Investment Theory of Politics and, 69 low-wage sector and, 34 race and, 117 reform for, 156 restricted access to, 117 security and, 138 transition and, 44–45 Mundell-Fleming model, 193n3 Murray, Charles, 132 Mutual funds, 31 NAACP, 116–117 National defense, 17–18, 93 National Federation of Independent Business, 97 National Review magazine, 51 National Rifle Association, 97 Native Americans, xi, 84 Neoliberalism, 17, 21–22 New Deal, 21, 52, 65, 80–81, 101, 141 New Federalism, 21–22, 35, 44, 83, 103, 110 258  Index New Jim Crow, 27, 49, 104, 154 New Jim Crow, The (Alexander), xvi Newman, Oscar, 131–132 New Yorker magazine, 83, 135 New York Times newspaper, 125 Nineteenth Amendment, 56, 58, 67 Nixon, Richard M depletion allowance and, 81 floating exchange rate and, 15 Ford and, 192–193n2 Johnson and, 15, 27, 192–193n2 Kennedy and, 81 mass incarceration and, 104, 109, 173 military draft and, 16 New Federalism and, 21–22, 35, 44, 83, 103, 110 Powell and, 17, 27, 117 Project Independence and, 16, 71, 143 public education and, 117 Rehnquist and, 95, 142 Roberts and, 142 segregation and, 27 Southern Strategy and, 15, 27, 35, 81, 117, 142 War on Drugs and, xv–xvi, 15, 37–38, 53, 55, 104, 106, 110, 132, 173 Nixon Shock, 193n3 Nobel Prize, 7, 49, 124, 186, 188 North cities and, 132–134 concepts of government and, 88, 94 FTE (finance, technology, and electronics) sector and, 20 Great Migration and, 20, 27–28 (see also Great Migration) Investment Theory of Politics and, 62–66 low-wage sector and, 27–29, 32, 34 manufacturing jobs in, 20 mass incarceration and, 104 public education and, 119, 125 race and, 51–53, 55, 59 unions and, 20 North American Free Trade Agreement (NAFTA), 55 Northeast Corridor, 134 Norway, 149 Obama, Barack, 25, 38, 81–84, 91, 96, 127, 199n12 Occupational Safety and Health Administration (OSHA), 90 Offshoring, 28, 32 Oil, 80–81, 204n13 depletion allowance of, 81 Koch brothers and, 17–19, 83–85, 92, 97, 110–111, 158–159, 193n12, 199n17 OPEC and, 16, 143 Project Independence and, 16, 71, 143 shock of, 16 Oligarchy, 65, 72, 87–89, 93–97, 115, 159 One-percenters CEO salaries and, 24 Reagan and, 22–23 tax cuts for, 22–23 very rich and, 3, 9–12, 22–24, 77–85, 92, 96, 155, 194n28 Organization of Petroleum Exporting Countries (OPEC), 16, 143 Oxymorons, 15, 101, 110-111, 156 See also Majority minority oxymoron; Private public oxymoron Page, Benjamin, 78–79 Panama Papers, 82 Participation rates, 141, 203n2 Pell Grants, 43 Pelosi, Nancy, 80 Pence, Mike, xv Pensions, 31, 33, 69 Pew Research Center, x, 3, 9, 192n10, 194n30, 195n19 Pfizer, 82 Philanthropy, 85, 121 Piketty, Thomas Capital in the Twenty-First Century and, x, 3, 156, 185 Index  259 inequality models and, 3, 156, 185–190, 207n3 Planned Parenthood, 57–58 Plutocrats, 3, 79, 87–88, 94–96, 131, 139, 205n15 Police bomb robots and, 102 Dallas sniper and, 102 debt and, 139 drug laws and, 104, 195n24 inner cities and, 132 low-wage sector and, 39–40 mass incarceration and, 102–103, 110, 112, 127, 157, 200n3 militarization of, 103, 110, 127 race and, 56–60 shootings by, 56–58, 60, 102–103, 203n7 speed traps and, 103 Politics Affordable Care Act and, xv, 18, 57, 91, 95, 141–142, 171 anger toward, x autocracy and, 87–88, 92–97 Bill Clinton and, 94–95, 104, 138 birther movement and, 38 Carter and, 16 Civil Rights Act and, 15, 20, 58, 133, 142 competition and, 85 corruption and, 74, 93 Democrats and, 154 (see also Democrats) deregulation and, 16–23, 32, 44, 85 federalism and, 21–22, 35, 44, 65, 83, 103, 110 filibusters and, 19 Ford and, 192–193n2 George H W Bush and, 17, 35, 71, 129 George W Bush and, 71–72, 89, 95, 127, 142–143 Golden Rule of, 75 House of Representatives and, 19, 62–64, 66, 80, 94, 96 Investment Theory of Politics and, 61–75 (see also Investment Theory of Politics) Johnson and, 15, 27, 53, 59, 89, 126, 192–193n2 Kennedy and, 15, 59, 81, 140 kleptocracy and, 93 Lincoln and, 51, 87 lobbying and, 15, 18, 24, 44, 83, 110–111 Median Voter Theorem and, xv, 61–62, 66–68, 71–74 NAACP and, 116–117 New Deal and, 21, 52, 65, 80–81, 101, 141 New Federalism and, 21–22, 35, 44, 83, 103, 110 Nixon and, 81 (see also Nixon, Richard M.) Obama and, 25, 38, 81–84, 91, 96, 127, 199n12 poll taxes and, 58, 65 Reagan and, xii, 22–23, 35, 38, 44, 53, 83, 95, 104, 129, 142–143, 195n27 Republicans and, 19, 162 (see also Republicans) Senate and, 19, 52–53, 59, 62–66, 72, 74, 80–84, 96–97, 107, 123 shopping and, 67–69 Southern Strategy and, 15, 27, 35, 81, 117, 142 state legislatures and, 19, 62–63, 95 Truman and, 81 Trump and, xii, 66, 81–82, 92, 154, 161–162, 198n11 War on Drugs and, x, xv–xvi, 15, 27, 37–38, 53, 55, 104, 106, 110, 132, 173 War on Poverty and, 17, 27, 126 Poll taxes, 58, 65 Pollution, 84 Popular vote, 62, 96, 164, 166 Poverty children and, 157 cross-country comparison and, 149 260  Index Poverty (cont.) FTE (finance, technology, and electronics) sector and, 15 growing, 116 inner cities and, 13, 131–132 low-wage sector and, 27, 35, 39–40 persistent, 44 public education and, 116–117, 123–124, 126 War on Poverty and, 17, 27, 126, 192–193n2 Powell, Lewis ALEC and, 19 memo of, 17–18, 77, 83, 193n6 neoliberalism of, 21 Nixon and, 27 U.S Supreme Court and, 17–22, 27, 77, 83, 111, 116–117, 193n6, 194n2 Prejudice, 20, 38, 60 Preschool, 123–127, 156–157 President’s Council of Economic Advisers, 46 Presidents Day, 67 Princeton University, 49 Private prisons, 110–112, 201n21 Private public oxymoron, 101, 110–111, 156 Private public schools, 101, 110–111, 120–121, 127, 140, 143, 156 Privatization colleges and, 44, 101, 120–122 concepts of government and, 16, 19, 21–22, 44, 101, 110, 112, 120–122, 134, 158 mass transit and, 134 military and, 16, 22 prisons and, 22, 101, 110, 112, 120 public services and, 19 state enterprises and, 21 Production Bretton Woods and, 24, 32 conservatives and, 80–81 economic growth and, 3, 138 Industrial Revolution and, 87, 155 inequality models and, 188 Lewis model and, offshore, 28, 32 Project Independence and, 16 subcontractors and, 30–31, 57 very rich and, 80–81, 84 women and, 59 World War I era and, 20, 27–28 World War II era and, 80–81 Professional Air Traffic Controllers Organization (PATCO), 22 Project Independence, 16, 71, 143 Property rights, 57, 81 Property taxes, 43, 103, 130 Public education, xvi, 176–178 Abbott decisions and, 124 African Americans and, xiv, 115–122, 125–128, 154, 157 benefits of early, 156–157 Broward County, Florida and, 118–119 Brown v Board of Education and, 116, 119, 195n16 charter schools and, 120–123, 177–178 cities and, 129–130 competition and, 127 conservatives and, 124 declining state support for, 42–44 democracy and, 115 discrimination and, 117 drop outs and, 42, 45, 108 failure in, 118–120 federal grants and, 129 financial crisis of 2008 and, 118–119, 128 FTE (finance, technology, and electronics) sector and, 115, 117, 119, 122, 127–128 GI Bill and, 34, 43, 52, 65 Great Migration and, 116–117, 125 Head Start and, 126–127, 156 high school and, 25, 119–121, 126 human capital and, 121, 124, 126–127 immigrants and, 123, 125, 159 inadequacies of, 42–46, 116, 118 income distribution and, 115 Index  261 industry and, 115–116 inequality and, 124, 128 integration and, 34, 80, 115–117, 120, 122, 128, 159 Latinos and, 118, 123, 127 Lewis model and, 192n10 long payoff of, 11 low-wage sector and, 115, 117, 119–128, 130, 153–154, 160, 194n6 mass incarceration and, 119, 126–128, 156 Milliken v Bradley and, 116–117, 129, 142 Newark and, 122–123, 127 Nixon and, 117 North and, 119, 125 old school buildings and, 129–130 philanthropy and, 121–122 poverty and, 116–117, 123–124, 126 preschool and, 123–127, 156–157 private public schools and, 101, 110–111, 120–121, 127, 140, 143, 156 prosperity and, xiii reform for, 118–119, 122, 125–127, 130, 135, 156–160 resources for, 116 segregation and, 117–121, 154 slavery and, 133 social capital and, 117, 124, 126–128, 156 South and, 119, 125 spending on, 121, 126 STEM subjects and, 120 student loans and, 43–45, 137, 140 taxes and, 46, 117–119, 124, 196n14 teacher salaries and, 25, 116, 118, 121, 194n31 testing and, 118–122, 127 tutoring and, 121, 202n18 Union City and, 123–127 unions and, 116, 120 U.S Constitution and, 124 U.S v Yonkers and, 131 voting and, 115 women and, 115–116, 118, 120 World War I era and, 133 Putin, Vladimir, 93, 166 Putnam, Robert, 11–12, 39, 189 Race African Americans and, 50 (see also American Americans) Asian, 6, 9, 32, 144 capital and, 52 civil rights and, 15, 20, 22, 27, 53, 56–59, 67, 72, 94, 104, 113, 133, 142 Civil War and, ix, 15, 17–18, 51, 65, 88, 94, 107, 204n13 class and, xii college and, 52, 119–121 conservatives and, 56, 58–59 Democrats and, 51, 58–59 discrimination and, 15, 20–21, 38, 51–54, 56, 58, 66, 89, 105, 117, 153, 195n29 diversity and, 49, 51, 128, 156 equal protection clause and, 58, 67, 102 farmers and, 50, 52 Fifteenth Amendment and, 15, 56, 58 FTE (finance, technology, and electronics) sector and, 10, 49, 55 full citizenship and, 15, 22, 159 Great Migration and, xii, xiv, 20, 27–29, 34–35, 52–55, 104, 116–117, 125 immigrants and, 50–55 industry and, 53 inequality and, 49–60 integration and, 13, 34, 80, 82, 106, 115–117, 120, 122, 128, 142, 157, 159 Irish, 54 Jews, 54, 120 Jim Crow policies and, 27, 49, 51–53, 58, 65–66, 104, 107, 154 jury duty and, 59 labor and, 50, 55 Latinos, 9–10 (see also Latinos) Lewis and, 49 262  Index Race (cont.) low-wage sector and, 49, 55, 153–154 mortgages and, 117 North and, 51–53, 55, 59 police shootings and, 56–58, 60, 102–103, 203n7 public education and, 115–128 racecraft and, 50–55, 61, 66, 82–83, 88, 91, 101, 109, 115, 153, 155, 200n12 Republicans and, 56, 59 scientific evidence and, 49–50 segregation and, ix, 27, 34, 53, 80, 117–121, 131, 153–154, 195n16 slavery and, xii, 17 (see also Slavery) South and, 50–59 supremacist organizations and, 193n9 unemployment and, 52–53 universities and, 52 voting and, 51, 56–59, 194n1 wages and, 49, 55, 60 white flight and, 34, 38, 117, 125, 203n7 witchcraft analogy and, 50 Race between Education and Technology, The (Goldin and Katz), xiii Rail, 133–134, 158 Rand, Ayn, 21, 81 Rankine, Claudia, 56 Rape, 56–57, 108–109 Rawls, John, 92 Reagan, Ronald, xii, 44, 83, 95, 171 debt and, 142–143 federal grants and, 35, 129 full citizenship of African Americans and, 22 mass incarceration and, 104 neoliberalism of, 22 one-percenters and, 22–23 taxes and, 22 unions and, 22 War on Drugs and, 53 Welfare Queens and, 38, 195n27 Real wages, 3–4, 21, 32–33 Reconstruction, 27, 51, 65, 67, 159 Redlining, 34, 53 REDMAP, 96 Reform debt and, 156, 158 Dodd-Frank Financial Reform Act and, 18, 176 Dodd-Street Wall Street Reform and Consumer Protection Act and, 93 infrastructure issues and, 129–137, 156–158, 180 labor law and, 19 low-wage sector and, 156–159 mass incarceration and, 156 mentally ill and, 107 police and, 102 prison and, 110–113 public education and, 118–119, 122, 125–127, 130, 135, 156–160 Social Security and, 69–70 tax and, 22 Rehnquist, William, 27, 95, 116, 142 Republicans ALEC and, 19 control of state legislatures by, 95–96 Investment Theory of Politics and, 61, 66 low-wage sector and, 154, 194n1 packing attempts by, 96 race and, 56, 59 REDMAP and, 96 very rich and, 80, 95–97 Republican State Leadership Committee (RSLC), 95 Retirement, 11, 25, 29, 33–34, 45, 90, 141, 156, 196n14 Rice, Condoleezza, 71 Road to Serfdom, The (Hayek), 21 Roberts, John, 142 Roe v Wade, 58 Romney, Mitt, 24, 181–182 Roosevelt, Franklin D., 21, 52, 65, 80–81, 101, 141 Rubin, Robert, 113 Rural Renaissance, 20 Russakoff, Dale, 123 Russell Sage Foundation, xvii Index  263 Russia, 58, 93, 166 Rust Belt, 20 Ryan, Paul, 165 Salaries, 8, 24–25, 45, 116, 118, 121 Savings, 7, 12, 17, 105–106, 185–187 Savings and Loan Associations (S&Ls), 17 Scaife, Richard Mellon, 17 Scalia, Antonin, 96 Schorr, Lisbeth, 115 Seawright, Jason, 78–79 Second Reconstruction, 159 Securities and Exchange Commission, 93 Segregation African Americans and, ix, 27, 34, 53, 80, 117–121, 131, 153–154, 195n16 Brown v Board of Education and, 116, 119, 195n16 cities and, 131 housing, 153, 195n16 Jim Crow policies and, 27, 49, 51–53, 58, 65–66, 104, 107, 154 legally enforced, 53 low-wage sector and, 27, 34 Milliken v Bradley and, 116–117, 129, 142 Nixon and, 27 public education and, 117–121, 154 very rich and, 80 World War II era and, 195n16 Service workers, 29–30 Sessions, Jeff, 174, 177 Seventeenth Amendment, 63 Shaw v Reno, 67 Shelby County v Holder, 65, 89, 142, 159, 168, 204n11 Slavery, xi–xii, 159 abolitionists and, 51, 54, 58 cities and, 133 Civil War and, ix, 15, 17–18, 51, 65, 88, 94, 107, 204n13 concepts of government and, 88, 94 conservatives and, 56 cross-country comparison and, 148 equal protection clause and, 58, 67, 102 expansion of, 50–51 FTE (finance, technology, and electronics) sector and, 17, 22 indentured servants and, 50 Investment Theory of Politics and, 64 Irish Americans and, 54 legacy of, xiii, 133, 179 Lincoln and, 51 lower human status and, 51 low-wage sector and, 27 public education and, 133, 179 voting rights and, ix white rage and, 51 Snyder, Rick, xv, 36 Social capital bridging vs bonding, 195nn31–32 cities and, 131–133 dual economy and, 12 inequality models and, 189–190 low-wage sector and, 39, 153 mass incarceration and, 103, 107, 156 public education and, 117, 124, 126–128, 156 Putnam on, 11–12, 39, 189 transition and, 42 Social Security, 33, 45, 52 debt and, 141 government loan for, 198n15 phasing out of, 93 reform for, 69–70 standard of living and, 90–91 Trust Fund of, 69 Solow, Robert M., 163, 186–189, 207n3 Soros, George, 85 South concepts of government and, 88, 91, 94 FTE (finance, technology, and electronics) sector and, 15, 17, 20, 22 Great Migration and, 20 (see also Great Migration) 264  Index South (cont.) Investment Theory of Politics and, 62–67 Jim Crow policies and, 27, 49, 51–53, 58, 65–66, 104, 107, 154 low-wage sector and, 27–29, 34–35, 142, 194n1 oligarchy of, 88 public education and, 119, 125 race and, 50–59 Reconstruction and, 27, 51, 65, 67 slavery and, 94 (see also Slavery) very rich and, 80–81 voting rights and, 142, 194n1 Southern Strategy, 15, 27, 35, 81, 117, 142 Soviet Union, 22 Spain, 149 Stagflation, 16, 20–21 Stanford University, 57 State Department of Education, 121 State legislatures, 19, 62–63, 95 STEM (science, technology, engineering, and mathematics), 120 Student loans, 43–45, 137, 140, 196n14 Subcontractors, 30–31, 57 Suffrage, 58, 64, 67 Switzerland, 149 Syrian refugees, 148 Tariffs, 21, 32–33 Taxes capital gains and, 24 cities and, 129–130, 134–136 concepts of government and, 89–92, 95 cuts in, 15, 19, 22, 71, 79 debt and, 158, 196n14 dual economy and, 10, 12 Earned Income Tax Credit and, 79 FTE (finance, technology, and electronics) sector and, 15, 17–18, 22–24, 155, 182 government benefits and, 10 incentives and, 10 increase of, 17, 79, 91–92, 103, 141, 155, 198n15 inequality models and, 185–186, 190 Investment Theory of Politics and, 62, 65 Kennedy and, 15 Lewis model and, 153 liberals and, 198n15 loopholes and, 24, 81–82 low-wage sector and, 31, 36 mass incarceration and, 101, 103, 105 one-percenters and, 22–23 Panama Papers and, 82 poll, 58, 65 property, 43, 103, 130 public education and, 46, 117–119, 124, 196n14 Reagan and, 22 reform and, 17, 22 S&L crisis and, 17 sales, 103 Social Security and, 33, 45, 52, 69–70, 79, 90, 93, 141, 198n15 tariffs and, 21, 32–33 very rich and, 79–82 Technology See also FTE (finance, technology, and electronics) sector bomb robots and, 102 driverless cars and, 31 low-wage sector and, 28–30, 32 Luddites and, 155 mass transit and, 203n18 Tenure, 31, 52, 65 Tepper, David, 82 Terrorism, 83, 95, 143 Texas, 57–58, 80–81, 84, 102 Theory of Justice, A (Rawls), 92 Toyota, 34 Transition African Americans and, 41–42 capital and, 42–45 college and, 41–46 financial crisis of 2008 and, 45 FTE (finance, technology, and electronics) sector and, 11, 41–46, 154 Index  265 human capital and, 44 industry and, 41, 43 inequality and, 46 Lewis model and, 44 low-wage sector and, 11, 41–46 mortgages and, 44–45 social capital and, 42 student loans and, 43–45 very rich and, 148, 151 wages and, 41–46 Troubled Asset Relief Program (TARP), 139, 203n4 Truman, Harry S., 81 Trump, Donald, xii, 66, 81–82, 92, 154, 198n11 Trump University, 66 Tuition costs, 43, 46, 105, 150 Tunnels, 134–135 Tutoring, 121, 202n18 Twitter, 38 Uber, 31 Ukraine, 58 Unemployment cities and, 132 debt and, 141 FTE (finance, technology, and electronics) sector and, 16, 21 Investment Theory of Politics and, 64 low-wage sector and, 34, 37, 157 mass incarceration and, 104, 113 participation rates and, 141, 203n2 race and, 52–53 very rich and, 78–79 Union City, 123–127 Unions African Americans and, 20–21 autoworkers and, 33–34 FTE (finance, technology, and electronics) sector and, 18–22, 28–29, 32–34, 64, 80–81, 116, 120 Heritage Foundation and, 18 individual freedom and, 17–19 Investment Theory of Politics and, 64 low-wage sector and, 28–29, 32–34 public education and, 116, 120 Reagan and, 22 very rich and, 80–81 United States Institute for Peace, 18 Universities debt and, 139–140 FTE (finance, technology, and electronics) sector and, 43–46 inadequate resources of, 116 need for refinancing, 157 race and, 52 student loans and, 43–45, 137, 140, 196n14 teacher salaries and, 194n31 transition and, 42–46 tuition costs and, 43, 46, 105 undue hardship and, 44 women and, 57 University of Manchester, University of Phoenix, 43 U.S Chamber of Commerce, 17, 27, 95 U.S Constitution abortion and, 57–58 Affordable Care Act and, 141–142 Articles of Confederation and, 62 autocracy and, 96 balanced budget and, 193n20 bankruptcy and, 81 choosing senators and, 62–63 citizenship and, 15, 22, 159 compromises in, 62–64, 88 democratic framers of, 88 Fifteenth Amendment and, 15, 56, 58 Fourteenth Amendment and, 51, 58 ignoring of, 97 individual rights and, 81 Investment Theory of Politics and, 62–65 Jim Crow laws and, 65 labor and, 20 mass incarceration and, 108 Nineteenth Amendment and, 56, 58, 67 public education and, 124 Seventeenth Amendment and, 63 slavery and, 94 Voting Rights Act and, 65, 89, 142 266  Index U.S Department of Justice, 102–103 U.S House of Representatives, 19, 62–64, 66, 80, 94, 96 U.S Postal Service, 134 U.S Senate concepts of government and, 96–97 Finance Committee and, 81 Investment Theory of Politics and, 62–66, 72, 74 labor law and, 19 mass incarceration and, 107 public education and, 123 race and, 52–53, 59 state legislature election of, 62–63 very rich and, 80–84 U.S Supreme Court abortion and, 57–58, 72 Affordable Care Act and, 141–142 Brown v Board of Education and, 116, 119, 195n16 Bush v Gore and, 89, 95, 199n2 Citizens United and, 84–85, 95, 158–159 equal protection clause and, 58, 67, 102 mass incarceration and, 107–108 Milliken v Bradley and, 116–117, 129, 142 Powell and, 17–22, 27, 77, 83, 111, 116–117, 193n6, 194n2 Rehnquist and, 27, 95, 116, 142 Roberts and, 142 Roe v Wade and, 58 Scalia and, 96 Shaw v Reno and, 67 Shelby County v Holder and, 65, 89, 142, 159, 199n2, 204n11 U.S v Yonkers and, 131 vacancy on, 96–97 War on Drugs and, 17 U.S v Yonkers, 131 Very rich Affordable Care Act and, 91–92 African Americans and, 77–78, 82 capital and, 185–186 capital gains and, 24 CEO earnings and, 24 competition and, 85 conservatives and, 80–85 democracy and, 81, 85 Democrats and, 80–81, 84 financial crisis of 2008 and, 80 Forbes 400 and, 77, 82–83, 85, 92 FTE (finance, technology, and electronics) sector and, 77–81 hedge funds and, 23–24 housing for, 131 income distribution and, 77, 79–80, 84 industry and, 80, 82, 84–85 infrastructure and, 79 Investment Theory of Politics and, 77–80, 84–85, 158–159 Koch brothers and, 17–19, 83–85, 92, 97, 110–111, 158–159, 193n12, 199n17 labor and, 80–81 Lewis model and, 82 low-wage sector and, 79–81, 84, 158 mass incarceration and, 109 national product and, 3–4 one-percenters and, 3, 9–12, 22–24, 77–85, 92, 96, 155, 194n28 plutocrats and, 3, 79, 87–88, 94–96, 131, 139, 169 political contributions by, 79–80 preferences of, 77–85 production and, 80–81, 84 Republicans and, 80, 95–97 segregation and, 80 South and, 80–81 taxes and, 24, 79–82 transition and, 148, 151 unemployment and, 78–79 unions and, 80–81 wages and, 79–81, 84 World War II era and, 80–81 Vietnam War, 15–16 Volcker, Paul, 16, 20 Voting, xv choice of Tuesday for, 66 concepts of government and, 88–89, 94–96 Index  267 Fifteenth Amendment and, 15, 56, 58 information for, 67–75 Investment Theory of Politics and, 61–75 literacy tests and, 65–66 low-wage sector and, 40, 194n1 mass incarceration and, 103–104, 112–113 Median Voter Theorem and, xv, 61–62, 66–68, 71–74 picture ID requirements and, x, 65–66 poll taxes and, 58, 65 popular vote and, 62, 96 prisoners and, 66 public education and, 115 race and, 51, 56–59, 58, 194n1 restriction of, ix–x, 65–66, 142–143, 159, 204n11 Seventeenth Amendment and, 63 Shaw v Reno and, 67 Shelby County v Holder and, 65, 89, 142, 159 slavery and, ix (see also Slavery) timing of elections and, 67–68 turnout rates and, 63–65 women and, 56, 58, 64–65, 67, 94 Voting Rights Act, 15, 58, 65, 67, 89, 94, 142, 159 Wages concepts of government and, 89–92 dual economy and, 3–13 FTE (finance, technology, and electronics) sector and, 16, 20–23, 25, 41–46 growth and, 3–4 Investment Theory of Politics and, 62, 65–70, 72, 75 low-wage sector and, 3, 27–41, 41–46 (see also Low-wage sector) race and, 49, 55, 60 real, 3–4, 21, 32–33 transition and, 41–46 very rich and, 79–81, 84 Walker, Scott, xv Wall Street, 24, 93 Walmart, 122 Walton family, 121 Warmth of Other Suns, The (Wilkerson), 20 War on Drugs, x, xv–xvi, 15, 27, 37–38, 53, 55, 104, 106, 110, 132 War on Poverty, 17, 27, 126, 192–193n2 Warren, Elizabeth, 53 Washington, George, 162 Washington Consensus, 21 Water systems, 35–36, 129–130 Welfare Queens, 38, 195n27 Welfare state, 21, 80, 101, 104 Whistle blowers, 84 White flight, 34, 38, 117, 125, 203n7 White rage, 51, 101, 104 White supremacist organizations, 193n9 Wilkerson, Isabel, 20 Wilson, William J., 34–35, 39, 132 Witchcraft, 50 Within Our Reach (Schorr), 115, 124 Women, 12, 156 abortion and, 57–58, 72 bodily integrity and, 56–58 civic identity of, 56 college and, 57, 116 concepts of government and, 94 coverture and, 56 employment and, 59–60 English family law and, 56 equal protection clause and, 58, 67, 102 Fifteenth Amendment and, 15, 56, 58 health care and, 56 inequality and, 12 Investment Theory of Politics and, 61, 64–65, 67 jury duty and, 59 mass incarceration and, 103, 106, 157 occupations available to, 59–60, 116 pregnancy and, 58 production and, 59 property rights of, 56–57 268  Index Women (cont.) public education and, 115–116, 118, 120 rape and, 56–57, 108–109 suffrage and, 58, 64, 67 universities and, 57 voting rights and, 56, 58, 64–65, 67, 94 Worcester Polytechnic Institute, 57 Workers’ compensation, 4, 90–91 World War I era, ix, xi concepts of government and, 94 FTE (finance, technology, and electronics) sector and, 20–21 inequality and, 186 Investment Theory of Politics and, 67 low-wage sector and, 27 municipal water systems and, 129 production and, 20 public education and, 133 voting restrictions and, 67 World War II era, ix baby boomers and, 69, 104, 128 Bretton Woods and, 15 concepts of government and, 88, 92 conservative business movement and, 80–81 FTE (finance, technology, and electronics) sector and, 15, 21 GI Bill and, 34, 43, 52, 65 Investment Theory of Politics and, 69 low-wage sector and, 34 postwar prosperity and, 54, 88, 92, 186–188 production and, 3, 80–81 segregation and, 195n16 very rich and, 80–81 Zuckerberg, Mark, 122 Zucman, Gabriel, 82 ... The Vanishing Middle Class The Vanishing Middle Class Prejudice and Power in a Dual Economy Peter Temin The MIT Press Cambridge, Massachusetts London, England First MIT Press paperback edition,... on the research that led to this book.11 I An American Dual Economy A Dual Economy The American middle class is vanishing, as can be seen vividly in figure The middle class s share of total income... countries in Asia, Africa, and Latin America where there were many farmers engaged in small-scale agriculture and only a few areas where long-distance trade or industrial production was taking place