Elizabeth Warren has been predicting the collapse of the middle class for years and unfortunately, her predictions are coming true. In this hour-long lecture, she deconstructs the myth that middle class Americans are in trouble because they are irresponsible, or spent too much at the mall. Instead, she shows in fascinating detail how flat-lining salaries, rising prices for housing and education, and the need for two cars (because it takes two incomes to cover expenses) have put many families not only in debt, but one paycheck, or one medical emergency, away from financial disaster. These economic realities combined with ruthless financial industry practices have brought working families to their knees.  According to Warren:

Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can’t make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.

There are many factors that caused this train wreck, yet the business and financial deregulation of the Reagan, Clinton and Bush years is probably central to this disaster.

Deregulation unleashed the anti-social mentality of the business elite, allowing them to engage in business practices that fueled dangerous bubbles in the tech and housing markets. They maximized profits for themselves and their stockholders and left middle class Americans struggling to stay afloat. Any sense of responsibility toward the ordinary working person was incinerated in the rush to create “innovative” financial products, such as credit swaps and derivatives. It was all a giant ponzi scheme and as long they were making vast amounts of money, they didn’t care what was happening to the rest of America. Their salaries and bonuses entered the realm of the obscene while families continued to sink under unmanageable debt. Throwing gas on the fire, “savvy” businessmen created tricks and traps for the consumer, shipped middle class jobs overseas, hid profits in the Cayman Islands, or passed on toxic environmental pollution to the taxpayer.

Defenders of deregulation believe that an anti-social, ruthless business class has to be tolerated because it creates wealth for the rest of us. This is the old “rising yachts float all boats” mythology propagated by yacht owners. In reality, deregulation produces the wreckage of the middle class we are experiencing today. Thanks to our deregulated “free market system,” America is on its way to becoming a second rate country.  A yawning gap between the very rich and the newly minted poor, who once considered themselves solidly in the ranks of the middle class, will continue to grow.  If we do not reform our electoral process, our government and our economy so that it supports a viable, solid and secure middle class, the United States will continue to deteriorate.

In order to strengthen our middle class, and our country, we need an educational system that links training to careers, a single-payer health care system that cares for all, a regulated market economy that encourages innovation and entrepreneurship, and socially responsible business practices.

Photo: courtesy of Susan Walsh/Associated Press

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