The hollowing out of the American middle class is because the huge, wealthy middle class was a post-war anomaly, from a time when the US had the only intact industrial plant in the world, and lack of communication technology and logistical sophistication meant production had to be localized and centralized. So, if you happened to be living in the right places in the US, you could have a house and a car and put a couple kids through college on an (artificially-inflated) factory worker's wage. At the same time, 80% of the population of the world was on the edge of starvation.

Now, thanks to better logistics and communications, companies can move jobs to where labor is cheaper. This has pulled billions of people out of poverty, dramatically reduced the price of goods, and generally improved global well-being--but that was at the cost of the 1% of the 1950s, which is to say the American working class. Now, if you work in a factory in the US, you only make a single-digit multiple of what a factory worker in Korea, Mexico, Germany or Italy makes (though you still have a double-digit advantage on much of the world).

It wasn't sustainable to have a tremendously wealthy middle class in a world that was mostly starving. No amount of trade barriers could maintain that: you're relying on a world market with very little competition, and the other 7 billion people aren't going to be content to sit on their hands.

What you want to do instead is to develop new, cutting-edge, high-paying industries, and thereby keep a competitive advantage on the rest of the world. Maybe you could, I dunno, develop top-notch schools to lure all the best and brightest people from around the world to your country, invite them in, encourage them to stay, and get them to innovate and create here rather than elsewhere. That might just result in whole new, massive, high-paying industries that pick up the slack left by your diminished industrial dominance.

Seems like a good idea to me! But hey, instead, you could always try slamming the door shut, chase out all the dirty foreigners, and just rely on your inherent and intrinsic American superiority to carry you forward. I'm sure that'll work just as well.

One of the big changes in the post war era was that immigration was massively opened up in 1965. From 1924 to 1965 the US had very restrictive immigration laws, which led to labor shortages, which allowed unions to become strong, rising wages and the expansion of the middle class. Since 1965 we've had declining union participation.

This is simple supply and demand. If you restrict the labor supply, the value of labor increases.

The same thing was observed after the Black Death, which killed off 30 to 50% of Europe's population. There were labor shortages, which increased the bargaining power of labor, and increased wages.

It's really funny US companies suddenly start pretending they don't believe in supply and demand when it comes to labor.

You really going to mention all that, which had some impact on the US middle class, but you're not going to mention anything about the US "wealth distribution" dynamics which has had its regulations and protections removed to the demise of the middle class?? Income tax roof being more than double before, corps being taxed more than double, the top earner vs bottom earner of any corporation much closer.. Less workarounds, no-one using the stupid "buy-borrow-die" strategy that is all too common now..

This argument never made sense to me. Why would the rest of the world being poor cause a huge middle class in America? Why would the rest of the world recovering cause the US to suddenly get poorer.

Like post post ww2 say we produced 1 car for every American. Also we produced 1 house for every American. Every car and house was produced in America because Europe was bombed to shit. Now 20 years later, Europe has recovered a bit and can start producing cars and houses again. Why wouldn't the US still be able to produce 1 car for every adult? Oh sorry, Germany is no longer a pile of rubble, you and your spouse need to share a car now. Also your adult kids need to move back in with you, no house for them either.

This is obviously absurd. US would be even richer since they no longer had to spend massive amounts of money funding the war effort and then massive amounts of money rebuilding Europe. Hollowing out the US middle class was a choice, not some law of nature.

The elephant in the room is how dismal more and more Americans quality of life is. Home ownership is out of reach. Living in the city at all is often out of reach. They have to work multiple jobs and those jobs often mistreat them.

I can see the argument that a large and super consumerist middle class might not be sustainable. However, for society to function, the alternative still needs to provide people with a decent quality of life.

It'll work well for the rest of the world.

Though in this position, maybe China gets greedy.

So, if I understand correctly, your view we should continue pretend the H1-B is something called a "genius visa" and the best bet for prosperity is not for current citizens to have well-paying jobs but to increasingly import people from other nations and pay them less?