The Economic Advisor

Honey, I Shrunk the Middle Class!

One of the hallmarks of a free society is a vibrant and growing “middleclass.” As the economy throughout the world goes through the transition from mega-factories run by multinational conglomerates to the age of global entrepreneurship we must be vigilant that the middleclass is not lost in the process.

When an economy goes through a transition there are many forces competing to fill the void left by the old economy before the new economy becomes established. We are now in that critical time when those competing forces are fighting for control and it is our job to ensure that economic freedom prevails.

The first competing force is government. All across the globe, unemployment is skyrocketing, people are rightly concerned about their future and the future of their families as they see their livelyhood disappear. Everyone wants a solution today because the basic requirements of life, food, shelter and clothing do not take a holiday because your job has disappeared. One solution is to turn to the government for immediate assistance.

Relying on the government as the engine behind economic recovery would be nice except that government is a consumer of wealth rather than a creator of wealth. A consumer of wealth can only redistribute what it takes from others. Governments do not produce goods and services that people want, need or desire, yes they have services that people are required by law to use, e.g. purchasing a registration for your automobile, but this type of service does not increase productivity and, therefore, create wealth.

There are instances where governments have attempted to replace free market production with government directed production with typically poor results. Two examples in recent history are the production of the Yugoslavian manufactured automobile called the Yugo. This car was a quality nightmare and a consumer disaster. It failed miserably and was mercifully taken off the market after only a few production years. The other example is the lack of consumer goods on the shelves of grocery and general merchandise stores. Shoppers would stand in line for an entire night in order to purchase such consumer staples as toilet paper and milk.

A free market can respond quickly to the needs of consumers because the only purpose of the free market is to respond to consumer needs. A government exists to serve the needs of the government, the consumer is, at best, an afterthought and the result is a society where the government elite prosper and the overwhelming majority struggle to provide even the barest necessities to their families while the middleclass all but disappears.

The second force competing to fill the void when an economy is the criminal element. Unfortunately, we live in a world that includes people who will use any excuse to steal from others. As seen in many countries when people are in distress, evil people will use that distress to lie, cheat and deceive people so they can steal what they have.

You can look at countries across the globe to see this taking place today. Stealing humanitarian aid provided for those who are starving, creating a “black market” to sell goods in limited supply and charging extorting exoribant prices for these goods and using violence and intimidation to obtain desired behavior. As with government control, the few prosper while the many suffer, the only difference is who determines who the few who prosper will be.

A free market can equalize supply and demand so that almost everyone can obtain the goods and services they need at reasonable prices. For those few who are too poor to afford any price free people have proven their generosity over the decades.

The final force competing to fill the void is the free market where entrepreneurs and businesses strive to provide value to consumers to satisfy their wants ans needs. Value carries with it the elements of quality, utility (meaning that the product or service will work well to satisfy the consumers want or need) and reasonable price. When a free and open market fills the void created by an economic shift people in all economic classes benefit, yes, the rich do well financially, the middle class prospers and the poor jave the opportunity to move into the middle class. For those who cannot do what is necessary to support themselves the rest of society will have more than enough to provide for them.

You can become the entrepreneur who fills the void and satisfies the wants and needs of the consuming public and ensures that middle class not only survives but prospers.

Contact us at http://www.wealthcreatorsgroup.com to get the whole story.

http://www.wealthcreatorsgroup.com can show you the path to success in the new economy. Are you ready to embrace the new economy or do you need to embrace the new economy? Those who venture into the new economy will be the successes we read about in our computer news updates. Those who struggle against the change will be left with what remains after the leaders take what the new economy offers the leaders their reward.

David Doerr has a B.A. in economics and was an economic and financial consultant for 22 years. After discovering that life is full of unexpected events he has answered the call of the new economy and invites you to do the same.