The Vanishing Middle Class (MIT Press) by Peter Temin

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Peter Temin is an economist, economic historian, Professor and writer born in 1937. The Vanishing Middle Class: Prejudice and Power in a Dual Economy is his last economics essay, published in March 2017. Former Head of the Economics Department from 1990 to 1993, he was appointed Elisha Gray II Professor of Economics at Massachusetts Institute of Technology in 1993. He has been Elisha Gray II Professor Emeritus of Economics at M.I.T. since 2009.

After graduating (with highest honors) from Swarthmore College in Economics (1959), Peter Temin earned a Ph.D. at MIT (1964).

Since the 1960s, he has written about American economic history in the 19th century, including The Jacksonian Economy (1969), Causal Factors in American Economic Growth in the Nineteenth Century (1975), and Reckoning with Slavery (1976), which is about the slave economy and its effects. His analysis are notably about 19th century industialization, like with Engines of Enterprise. He is concerned about labor scarcity to economic development, and the role of general equilibrium models in studying economic history. After drawing conclusions from his analysis, he would apply them to the study of the business cycle in the 19th century.

He drew other conclusions in his 1971 paper on Central Banks and Economic and Social Welfare programs, which led him to write what is probably his most influential and best known work: Did Monetary Forces Cause the Great Depression? (1976).These conclusions are that it was probably not primarily the actions of the Federal Reserve in response to the economic downturn of 1930 which turned a recession into the most far reaching slump in the modern economic period, but rather an autonomous drop in demand.

He would later revisit this thesis in his 1989 work Lessons from the Great Depression as well as publish several papers building on his conclusions. He joined, in some way, the conclusions of Keynes and Friedman: the Great Depression started with troubles in the ‘real economy’ later expanded to the financial world via speculation and money destruction.

It seems that his 1987 empirical survey of AT&T, entitled The Fall of the Bell System, has affected how new entrepreneurial businesses are viewed.

Peter Temin is the coauthor of Keynes: Useful Economics for the World Economy and of The Leaderless Economy.

Let’s discover today his last essay, The Vanishing Middle Class: Prejudice and Power in a Dual Economy (March 2017).


The United States is becoming a nation of rich and poor, with few families in the middle. In this book, MIT economist Peter Temin offers an illuminating way to look at the vanishing middle class. Temin argues that American history and politics, particularly slavery and its aftermath, play an important part in the widening gap between rich and poor. Temin employs a well-known, simple model of a dual economy to examine the dynamics of the rich/poor divide in America, and outlines ways to work toward greater equality so that America will no longer have one economy for the rich and one for the poor.Many poorer Americans live in conditions resembling those of a developing country — substandard education, dilapidated housing, and few stable employment opportunities. And although almost half of black Americans are poor, most poor people are not black. Conservative white politicians still appeal to the racism of poor white voters to get support for policies that harm low-income people as a whole, casting recipients of social programs as the Other — black, Latino, not like “us.” Politicians also use mass incarceration as a tool to keep black and Latino Americans from participating fully in society. Money goes to a vast entrenched prison system rather than to education. In the dual justice system, the rich pay fines and the poor go to jail.

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