Politics

Your Parents Were Middle Class Because Of The Soviet Union

59 Comments

I was born on a cold, windy, night in December of 1979.

My father was overwhelmed with joy to bring home his first born son for the holidays, but as with all new parents, he was anxious about the financial obligations of raising a new family.

He had just been hired to teach business classes at a NYC community college, receiving a full-time tenured position right after his first interview.  After he was hired my mother resigned from her job in Manhattan, and she planned on being a stay at home mother until my brother (born in 1982), and I were in grade school.

As my father sat down at the dining room table and started to review his financials, he had to make a tough decision between 3 investment options:

A) 5 year CD in a bank paying 12%

B) Mutual funds (on Jan 2, 1980, the Dow Jones closed at 847 and paid a average dividend of 6%)

C) A large home in Brooklyn with a driveway for $69,000. (NYC median income was @18k)

After some quick deliberation, my 32-year-old father decided on choice (B) AND choice (C). With a stay at home wife and a new-born infant, my father was able to purchase a large home in Brooklyn, a Ford Escort, and his union matched his mutual fund 401k contributions up to 10% annually.

So how was my father and other families like ours able to do it?  How can a  first year college professor purchase a home with two kids, and a stay at home wife?

BECAUSE OF THE SOVIET UNION.

Let’s be honest, my father didn’t have any competition. From the end of WWII to the end of the Cold War, The United States did not have any strong foreign competition, and we can thank the Soviet Union for that.

The Soviet Union, and the Iron Curtain that it cast over Europe, was the best thing that ever could happen to the United States. With little foreign competition, many U.S companies were able to form strong labor unions, the government could apply trade protections, and we also had an embargo with the entire Soviet Bloc including China, Russia, Ukraine, and half of Germany. My father’s main competition was mostly with other European-Americans living in the United States.

So When Did Everything Change?

In late 1989 the Berlin Wall started to come down, and the Soviet Union was disbanded in late 1991. Growing up in Brooklyn there was always some Chinese students in my classes, but in the mid 1990’s is when we started to see a lot of Russians, Ukrainian’s, and Pollack’s immigrate to NYC. My first impression was that they were mostly very poor, but extremely educated, and now almost 20 years later they have been fully integrated into American society.

When your father went for an interview in the late 1970’s or early 80’s, he was competing against “Vinny the Italian”, “Manny the Greek”, and “Frank from Pittsburgh”. Today if you apply for a job teaching business at City University in New York, you are interviewing against 15 Russians with kick ass GPA’s, your IT department at work is run by 35 Indians, and 95 percent of the items you that you own in your house are made in China.

My father had me around the same age that I am now, so let’s look at my 3 investment options:

A) 5 Year CD paying 1.5%

B) Mutual Funds: Dow Jones at 14,000 (will it shoot to 150,000 ? ) with an average dividend of 1.4%

C) Purchase my parent’s house for $890,000 (medium NYC income is$56K)

America has changed.  Job security doesn’t exist,  and a two income household has become a 3 or 4 income household.  That includes either two working adults with two working grandparents, or two working adults with grandma and her social security check. The middle class is gone in America and it isn’t coming back anytime soon. Outside of a major world war, the United States middle class will barely exist for the next several generations.

So what are the children of middle class European-American’s going to do?

A) Work harder

B) Find a middle class society outside of the U.S.

But now we have the American government paying out more in benefits then it collects in revenue. This obviously creates a big economic problem. I’ve always planned to live in the United States for my entire life , but if the living conditions start to quickly deteriorate I will sell my possessions and get on the first boat to Asia.

With two major recessions since 2001, and with the U.S. on the brink of another major one, how much more can the American middle class take?

Read More: Do Poor Americans Deserve An Ivy League Education?

59 thoughts on “Your Parents Were Middle Class Because Of The Soviet Union”

  3. Another factor to look at is how the cost of college has risen dramatically in the same period of time.

    1. The cost of education has outpaced the rise of inflation. Student loan debt has reached the one trillion dollar mark. Sad but true.

      1. NYU charges student’s $50K, the gov’t lends out federal student loan money, and then NYU goes around NYC buying up expensive real estate. College is becoming the biggest scam around…I still have $19K left of my own loans.

        1. Yup…so true…I live in nyc…just the other day in a newspaper called amNewYork there was an article on NYU expansion…college is big business.

        3. $19K in debt? Damn, captainpower, you should hit me up and I’ll grab you a beer in downtown. I guess you’re under the $25K average though

        4. Same thing is happening in Philadelphia, all the major colleges are expanding into the neighborhoods.

      1. I went to Hong Kong and took a job as a bouncer. Worked my way into my own business from there.

        1. Excellent man. As an expat myself, Hong Kong would be a bit too exotic for me, so I salute you.

    1. Ronin, I’m trying to make a comparison between generations. Most of our grandparents were broke as shit, baby boomers did pretty good, the millenial generation is generally stuck some where in the middle.

      1. Considering debt levels and taking inflation into account, we’re probably just as broke as our grandparents.

  6. Very good post and absolutely true!
    In europe the story was the same: our generous welfare system was designed to avoid that workers could vote for parties that were communist symapthizers (the italian communist party especcialy was the stronger of west europe). When USSR was gone the welfare benefits started to be “an excessive expense”…

  7. I highly recommend “The Creature from Jekyll Island” by G. Edward Griffin if you want to get a handle on why your choices are so much worse than your fathers. It also works for Roosh’s big ass book challenge

  8. You are nothing more than a crying pussy. Your lame excuses are pathetic. The last thing I would expect o hear from “real man” hyhy

    2. @7f4c3e5f880ccc1e814f7c6635d4ce96:disqus Would you care to respond to any of the cogent points raised in this essay or are you just an idiotic sack of shit?

    3. Except that technically speaking, his points are all valid. They’re also backed up by several books on economics that come from both the left and right sides of the political spectrum. Douglas Rushkoff’s “Life Inc.” is one of them I’d urge everyone to read.

  9. Yes, the times have changed, and every man in this country has to respond or become irrelevant.
    If you want to do more than simply survive, you have to learn the skills that will make you valuable AND you have to be entrepreneurial.
    You can’t simply follow your father’s ‘average man’ path and be a union-protected teacher for average students. You have to learn one or more STEMs, learn networking skills, and try to start your own business or join a small startup straight out of school. Try to get to know the money people who can fund you and the legal people who can advise you.
    Frankly, with your father’s business background, if he had been more future-oriented, he would been in finance or at least the private sector generally, and would have made the real money in the go-go 1980s. And would have piled every penny saved, aggressively, into the stock market.
    Like you mentioned, the Dow was at 833 in December 1979 and is at 14,000 now. He was probably spending on average American consumption trends instead of trying to take advantage of a market that was clearly on the general upswing.
    Adapt or die.

    1. Capitalism is in its last days. Networking is a waste of time. That is why I haven’t tried to make friends with you yet.
      Why the fuck is the New York Stock Exchange metting with the FARC and inviting them to invest in the US stock market? The FARC is a marxist guerrilla that hates US more than you hate your competitors in the job market.
      US owes so much fuckin’ money to Federal Reserve, which is basically a consortium of multinational banks that do not give a fuck about you or your mom.

      1. I wonder if anyone at anonymous is capable of hacking, and irreversibly scrambling, the records at the Fed, t the point where noone can know anything at all about their finances. Now that, would be cause for popping some prime vintage Krug!

        3. he was a total monster in original street fighter 2 also. I remember he was my favorite, I used to force-feed Chun Li dick a dozen times each fight. You remember the move, right? I think they ditched it in turbo, because it looked too sexual.

    3. Agreed, a dumb article. Correlation is not causation.
      Mostly, we’ve done this ourselves.
      We should agree that when the Chinese entered world markets, that extra BILLION pair of hands able to work really, really cheap made it difficult for US labor to maintain its incomes.

      1. Agreed. We should really be blaming the Treaty of Versailles which set in motion the machinery for the overheating of printing presses around the world and the creation of fiat currencies and credit.

  11. “Outside of a major world war, the United States middle class will barely exist for the next several generations.”
    That’s the only reason the US has ever gone to war. Its good for the economy. Expect another one soon.
    PS: you’ll probably love Asia. I do. Especially South and Southeast. 🙂

    1. Seriously, if you truly believe the idea that destroying productive capacity is “good for the economy”, you need to find a better metric for measuring economic goodness. That tired old slogan is as pathetic and obviously untrue as the nonsense attributed to Keynes about burying bottles of cash and then digging them up somehow being good for anything beyond backaches.

      1. Didn’t you hear, they’re handing out Nobel prizes to people who believe the broken window fallacy? Krugman, NYTimes moron, advocated war to pump some Keynesian goodness into the economy.

    2. The only reason we saw massive growth after WW2 is because European production was hammered and the US was the only game in town until Japan basically single handedly took away our automotive and electronics monopoly and now our manufacturing is gone due to cheap labor in Asia. There’s political and monetary policy to blame but you can’t have 27 million manufacturing jobs go to China in 10 years and not say there’s some fundamental reasons at play (like $20/hr vs $1/day). We briefly held off the effects and then some during the 90’s thanks to a tech/internet boom and then until 2007 thanks to a housing bubble, but at this point, I think we’ve run out of monopoly money to throw around.

  12. It’s true that the USAs great economic boom before the 1970s was due to it being the only industrial base not bombed or nationalized after WWII. But the Soviet Union was far less the reason for the US remaining wealthy.
    The slide first began after Germany and Japan rebuilt their infrastructure post WWII, and then the formation of OPEC and Iranian revolution helped end cheap energy.
    Things really shifted after Dung Zhao Peng in China said ‘let us be rich’ (or however you spell his name) and began China’s economic miracle…so the slide really began in the 70’s.
    The Soviet Union never ever was a real economic competitor to the West, before, during, and after the Cold War…China however is, it’s economic liberalization is far more to blame for the West’s new competition than Russia and Eastern Europe ever were.

    1. Until very recently, you’ll have a very hard time pinning blame on a declining US middle class on “competition” from abroad. With recently, I mean the great realignment of energy/oil prices around 2006; reasonably assumed to be at least partly due to increased Chinese consimption.
      Prior to that, there were fiendishly few things that the Chinese did, that took anything away from Americans’ ability to do what they used to do.
      The big change from postwar boom to late century decline, is much more likely to be due to the change from a the half assed Gold standard under Bretton Woods, to the fiat free for all that has been the norm since Vietnam. This is what has given rise to the gigantic leech called the financial industry; as well as giving other aspiring leeches much less push back against extracting wealth from the productive classes.
      If the Fed still had to maintain convertibility of the dollar to gold at a fixed rate, they simply would not have had the opportunity to destroy people’s ability to get more than 0.5% return on their savings, just s they could furnish the wealthy and/or well connected with unlimited size negative interest loans and trillion dollar bailouts. Which would have led to a realignment of housing and other “asset” prices, making those things more affordable to people who have an income, and prefer to buy things for money they have earned and saved, instead of hocking themselves to a bunch of finance leeches.
      Simultaneously, absent the Fed’s ability to debase the dollar to their heart’s content, there would be no such thing as the myth of “safe” treasuries, which would allow basic market mechanisms to allocate credit to prudently run private borrowers, rather than governments. Meaning; more Americans would be employed doing productive, wealth creating stuff. With fewer of them being paid million dollar pensions for spending 20 years shooting Latina newspaper ladies for the crime of driving a pickup truck; in between trying to disarm civilian Americans, who after all can’t be trusted to know what’s appropriate to do with guns….
      At some point, basic natural resources do form a limitation on growth. Oil is probably already there. Water may well be next. And at some point, it will become land area. Then, zero sum games do start making sense for modeling the word economy; but aside from that, the nonsense that the “Chinese are taking our jobs” is simply yet another diversion from the central issue in our current dystopia: The government, and those it preferentially serves, are taking our jobs. Destroying our livelihoods. Maleducating our sons into manboobs, and our daughters into whores. Robbing us to hire a bunch of incompetent goons under the pretense that those will “protect us”; then using that myth to justify having said goons prevent us from equipping ourselves to protect ourselves etc., etc. Get rid of those guys, and replace them with as close to nothing as possible; and the Chinese can ching and chong all they bloody well want to, with no deleterious effect on any productive person over here.

      1. I think you are both right.Malinvestment was made possible by fiat currency. And fiat made it possible to engage destructive social engineering. These helped weaken America as the rest of the world awoke from communist slumber and rebuilt their post-war mfg base.

  14. It wasn’t just the Soviet Union which held back the world outside of America. It was more that the Third World, which was already backward by the time the Europeans began colonizing it, had been drained by imperialism. World War II devastated the European economies, and Communist economic policies held down everyone pressed under them.
    Our parents were middle class because of imperialism, fascism and communism. The US outlasted all of them, and now the rest of the world is either incorporating American ideas and economic values (and prospering), or is denying them (and stagnating). The American system works, better at least than the alternatives hitherto posited. It’s just that Americans are now a victim of their own success, because now the rest of the world is adopting its system.

    1. What was the American system until 100 years ago definitely worked well. There may even have been some residual good left until as recently as 20-40 years ago. Nowadays, America is simply coasting along on residuals: Great wealth from more civilized eras, educational institutions from back then, cultural and linguistic hegemony derived from back then etc., etc. Can’t coast forever, though, as the Romans figured out once they too become more obsessed with taxing each other and obsessing over the supposed “greatness” of whatever snake oil salesmen happened to be elected Senator at any given time.

  16. What is it with the manosphere with its constant pushing of protectionism and immigration restrictions? In an efficient market, if foreign firms or workers are chosen it’s only because they’re more optimal. If you’re really so worried about the impoverishment of American workers, you could just subsidize them with taxes on the newfound productivity gains of the companies hiring foreign workers.

  18. Great Article….. a second part of this is that the collapse of the USSR and opening of China also created a 20 year economic boom, that is about to end… ops….. anyone remember the 1930s depression ? I thought not….. I wonder how the facebook generation is going to deal with life when they can’t afford things so easily any more….. ouch!!!!…. WW3 here we come….

  19. U.S economic decline isn’t based off of foreign competition. The USSR hurt the U.S economy because it hindered trade from a large part of the world. The more labor materials and markets you have the better. The real reason is based off of U.S economic policy itself that hinders our productivity and competitive edge. Its not the result of a third party.

  20. Well we started trading with china in the Nixon administration, so correct some facts. We also did trade with Russia (agricultural).

  21. Sorry, but the Iron Curtain was a Churchill’s idea. And the first countries to built it (metaphorically) were the Western ones.

  22. There is something you left out. Because the rhetoric of the Soviet Union focused so much on exploitation of the working class, Western countries had to decide what was the best way to combat their rhetoric. Do you simply say that workers in the West were treated just dandy? Well, the overcrowded tenements and armed strikebreakers make for poor photographs in the newspaper.
    So, you make peace. You allow some degree of unionization. You grit your teeth and start to add benefits. If you’re the government, you start to stitch together a social safety net. The stakeholders – management, unions, government, and voters (with some overlap among the groups) benefit from the arrangement as long as possible.
    Then starting in the 70s, the arrangement starts to get stressed. Companies realize they can set up shop overseas, and not deal with pesky unions/voters, and often a more compliant political class. Unions, fearful of their position, rather than becoming more competitive and flexible, restrict new entrants and raise their price in the face of increasing competition. Voters put into office politicians who promise more goodies, but without the taxes to pay for them. But the arrangement still holds, but that hold is tenuous.
    Then, the USSR goes bust. There is no other nation which tries to set itself up as an example for other nations to follow. Even China’s growth, while brisk, is not considered transferrable to other nations. Nor is Beijing interested in some sort of clash of ideas with the U.S., it’s #1 market. But management now can access cheap labor anywhere in the world, buy up politicians cheaply in multiple languages. In the U.S., unions are now largely in the public sphere. And voters still demand their goodies.

  23. We told you we gonna gonna leave you without an enemy.
    Without USSR USA got fat, lazy and complaisant. Wars on ‘drugs’ or ‘terror’ is not gonna get your blood pumping. You need a worthy opponent to keep you in shape. You need an enemy.

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