Pinched: How the Great Recession Narrowed Our Futures and What We Can Do About It by Don Peck. Crown. 2011. 224 pages. $22.
In Pinched, journalist Don Peck paints a portrait of the middle class as jilted lover, nursing feelings of despair and betrayal. After doing everything right, the question this poor sop finds himself asking, over and over, like a funerary wail, is not “Why aren’t I good enough,” but the far more terrifying “Why aren’t I good enoughanymore?” There is no easy rejoinder. The American Dream has simply moved on and taken a new name. Our hero is left with only the awareness that his best days have passed him by.
The 2008 recession permanently altered the lives of millions of Americans, neighborhoods, and even entire regions of the United States. Peck shows that many middle-class, middle-skill jobs that existed prior to 2008 will never return, opportunities that had seemed perennial just a few years ago have permanently vanished. Labor experts such as John Challenger, writing in this magazine, have encouraged job seekers in low-growth areas to strike out for more-fertile ground. In fact, much of the advice given to the nation’s unemployed and underemployed has amounted to: Be adaptable, seek training, and move. These admonishments, while sound, are also callous. People forced by market conditions to make dramatic life adjustments are rarely thankful for the opportunity to do so.
In many respects, this current state of woe represents a culmination of trends that have been building for some time. Throughout the last 10 years, however, policy makers and financiers were able to postpone their full impact. The rapid appreciation in the housing market between 2002 and 2008 created an illusory sense of prosperity in the absence of real salary growth, which has budged little from the 1970s. Since the largest asset owned by most Americans is their primary residence, many people experienced an enormous, and artificial, expansion in net worth over the last decade. The losses resulting from the housing collapse will linger for a long time, affecting consumption and investment habits for years.
“Many Americans, even those who didn’t lose their jobs, lost a decade’s sense of progress. Long deferred, a decade’s disappointment has been concentrated in the past three years,” notes Peck.
Stagnant wages and vanishing jobs, compounded by the intractable housing crisis, have metastasized into to a very literal paralysis. Nearly one in four Americans owes more on his or her house than that house is worth. Peck points out that, in Arizona and Florida, the number is one in two, and in Nevada, two in three. Many individuals who are underwater on their home loans simply can’t move to a better economic environment, even if they wanted to. They’re caught between the proverbial rock and hard place, the mountainous amount of debt they owe and the cold truth of their home’s actual value.
All of this has fundamentally changed the demographic makeup of America’s white-picket-fence suburbs, which now house more poor people than do the nation’s urban centers. It’s an ironic reversal. In the 1950s, suburban developments were sold as a means to escape city squalor, which was understood as a thinly veiled allusion to non-Caucasian neighbors. Half a century later, actual squalor in these neighborhoods pits frustrated homeowners against equally desperate renters.
“This isn’t the neighborhood that I moved into,” one frayed suburbanite complained to Peck. “It’s never going to recover to what it was.”
Contrast this predicament with the plight, or more accurately flight, of the nation’s moneyed elite. While the American poor are stuck in place, the country’s rich are increasingly transient, pursuing the opportunities of an interconnected world and less concerned than ever with the future of the republic. A growing number of America’s rich are entrepreneurs, as opposed to inheritors of wealth. Their business aspirations are global in scope; they hire labor in Thailand to market products to consumers in China, or vice versa. Not surprisingly, the American elite have more in common with their fellow entrepreneurs from Asia or Europe than they do with their compatriots back home.
But, Peck cautions, don’t assume that today’s wealthy are leading lives of leisure. They’re more likely to be attached to a BlackBerry than a polo mallet. Because they work so hard, many are resistant to the notion that fortune may have played the determining role in their success. They may well be more philanthropic than their predecessors like the Rockefellers or Carnegies, but they’re also more aware of the depths of human need in places like Ghana, Bangladesh, and Papua New Guinea (locations where the Gates Foundation has significant investments). The struggles of the shrinking American middle class continue to look paltry in comparison to the circumstances of the majority of the world’s inhabitants.
“If the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” Peck quotes one CEO as saying.
Is the American middle class salvageable? Peck offers up a set of balanced recommendations toward that end. First, he argues for a return to the tax rates of a few decades ago, where the wealthy contributed much closer to 50% of their income to the government coffers, as opposed to the 35% they pay today. Peck dismisses the argument that increasing the tax burden on the rich would hurt the current recovery. Trickle-down economics is patently unviable in an environment where the wealthy are few and do a greater portion of their investing and consuming abroad.
Lawmakers may have overreached in their regulatory response to the 2008 market collapse, says Peck, so lessening regulations might help spur business. He also advocates a reconsideration of the nation’s current entitlement commitments, which, while popular among baby boomers, are unsustainable. Above all, only real government investment in research and development will put the country back on the road to prosperity, he argues.
Peck currently serves as a features editor for The Atlantic, and people who have followed that magazine’s coverage of the recession over the past two years and seen his cover feature story will find some aspects of this book familiar. But Pinched provides much original insight and should be considered a natural heir to Reisman, Glazer, and Denny’s The Lonely Crowd, and Thorstein Veblen’s Theory of the Leisure Class. Pinched is an excellent chronicle of the Great Recession’s hidden and long-term effects on the American psyche. In its wide scope and clear focus, it may go on to be the seminal book on this period in the country’s history.
About the Reviewer
Patrick Tucker is the deputy editor of THE FUTURIST magazine and director of communications of the World Future Society.
Originally published in THE FUTURIST, November-December 2011