The middle class is mad as hell

Op-Ed by Andrew Tisch, co-chairman of the Board of Loews Corporation

Andrew Tisch (Photo: Loews Corporation)

“We know things are bad — worse than bad. They’re crazy. It’s like everything everywhere is going crazy so we don’t go out anymore. We sit in the house, and slowly the world we are living in is getting smaller and all we say is, ‘Please at least leave us alone in our living rooms…we’re mad as hell and we’re not going to take this anymore.’”

The speaker of that quote is Paddy Chayefsky’s Howard Beale. The movie is Network, and though it was released 43 years ago, it feels more relevant than ever.

So many Americans — especially those in our beleaguered middle class — share Howard Beale’s anger and alienation.

What does it mean to be middle class? It depends on who you ask, what people make and where they live. But I think of middle class as a state of mind.

Decades ago, the middle class mindset was defined by aspiration and by a belief that if you worked hard, you could buy a home, support your family and send your kids to a good school. And you could often do it on one salary. Life was good and getting better.

Today, middle class aspiration has curdled into anxiety. Even as wages stagnate and both spouses go to work, the basic cost of living has spiraled upward. Family health insurance premiums and housing costs growing are twice as fast as workers’ earnings; and the cost of attending a public four-year college has tripled in the last 30 years.

While this has happened, the ratio of CEO pay to that of the average worker has grown from 30 to 1 in 1978 to 278 to 1 today.

Is it any wonder that people are mad as hell don’t want to take it anymore?

The dysfunction and polarization in Washington are both a cause and a symptom of this anger. These are a cause because Washington’s decisions — and indecision — have played a direct role in the decline of America’s once-great middle class. And these are a symptom because angry citizens are electing angry and intolerant candidates who see compromise as a form of treason.

For the first time in history, wealth can be created without assets. And some people take advantage of that while others do not.

You don’t need pipelines, steel mills, factories and legions of employees to build a great company. You just need an idea and an internet connection. At its peak, General Motors employed 850,000 people worldwide and over 600,000 of them in the U.S. Today, Microsoft and Apple — the world’s two largest companies — combined employ less than one-third the people that GM did.

And America’s leaders — in government, business and elsewhere — still don’t know what to do about it.

And there is no silver bullet. There is no quick fix, and the manufacturing jobs likely are not coming back.

But here is what I do know. For too long, too many leaders have focused exclusively on today, with little regard for tomorrow.

Politicians do what they need to do to get through the next election, which typically involves peddling simple slogans to complex problems and trying to divide rather than unite just as companies do what they need to do to get through the next quarter.

This approach is failing not only this generation but those to come.

In business, there is a line item on every company’s budget called maintenance capex, which is short for capital expenditures for maintenance. This line item isn’t sexy and when a company’s finances are tight, maintenance capex is the easiest to cut because the cost of deferral does not show up immediately. That is until your ship turns into a rusting hulk of metal or the assembly line completely breaks down. Then the bill comes due and it is usually much more expensive than if you had just paid a little each year to maintain the asset.

Well, the bill for America’s underinvestment in our middle class — and our future — is coming due.

Our failure to rebuild our infrastructure, to invest in education, to deal with our national debt is just like a business endlessly deferring its maintenance capex. The bill eventually comes due and it keeps getting bigger the longer we wait.

Meanwhile, Democrats and Republicans in Washington seem increasingly focused on destroying one another to the exclusion of addressing the defining challenges of our time. A recent Brookings Institution report found one-quarter of all jobs in the U.S. could be disrupted by artificial intelligence, but AI didn’t even merit a mention in either of the official Democratic or Republican party platforms released before the 2016 election.

When Howard Beale made his primal scream over 40 years ago, it felt to many as if America was in permanent decline. We were not.

Leaders — in business and government — made bold reforms and American ingenuity was unleashed to tackle previously intractable problems.

America desperately needs its leaders to rise to the occasion once again, to stop tearing one another down and to start rebuilding a middle class that has always been, and always will be, the key to American strength and prosperity.

Andrew Tisch is the co-chairman of Loews Corporation, a co-founder of the political reform group No Labels and co-author of the book “Journeys: An American Story.”

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