Podcast Summary: The Peter McCormack Show

Episode #135 – Michael Green – The Benchmark That Broke America
Date: December 11, 2025
Host: Peter McCormack
Guests: Michael Green, Connor

Overview

This episode dives into the profound shifts in Western capitalist societies—especially the US and UK—that have eroded economic mobility, squeezed the middle class, and fueled widespread resentment and disillusionment. Michael Green, known for his incisive economic commentary and viral essays, joins Peter and Connor to analyze why so many people feel stuck, the structural flaws in welfare and taxation, the dangers of monopolies, the myth of progress, and the prospects for real reform. The guests discuss both data and lived experiences, connecting personal stories with systemic analysis, and explore what it would take to rebalance society toward broad-based opportunity.

Key Discussion Points & Insights

1. The Loss of Control and Stagnant Opportunity

Extended Adolescence and Economic Stuckness

• Michael frames contemporary malaise as a loss of agency—the traditional "pursuit of happiness" has become unattainable for many young people, resulting in prolonged dependence and resentment.
  • "They're saying, 'Hey, I'd love to be an adult. I can't afford to be an adult.' And so I'm stuck in this extended adolescence..." —Mike [00:34]
• Growing up means financial independence, but rising housing and childcare costs have kept people at home.
• This feeds generational tensions and pessimism about the future.

Contradictory Signals About Progress

• From a think-tank or academic level, society is told "things have never been better," while many individuals experience insecurity and stagnation.
• Michael notes the disconnect: "Unemployment is rampant, they can't find jobs in their careers, they really don't understand how they're supposed to ever buy a house..." [02:17]

2. The Gut Punch & The Realities Behind Economic Sentiment

The Power of Viral Dissent

• Michael's turning point was witnessing coordinated mocking of the claim that life was once affordable, even for single-earner families.
  • "Why would you spend so much time and effort trying to extinguish this complaint?" —Mike [04:44]
• He realized that policymakers, himself included, misunderstood the depth and legitimacy of this affordability crisis.

Affordability vs. Inflation

• Even low inflation means nothing if people's incomes are already far below their consumption needs. He offers a clear analogy:
  • "If you are at 100 is your consumption level and 90 is your income level and both go up by 2%... you're further in the hole." —Mike [06:04]

3. Poverty Line Critiques and Misleading Metrics

Origins and Problems with the US Poverty Line

• The poverty line was based on a 1960s calculation of food as ~1/3 of family budgets, tripled to set a minimum income. But since then, essentials like housing, childcare, and health have grown much faster than food.
  • "The poverty line today is... codified [in] 1969, and then we inflated it by the CPI index..." —Mike [14:51]

CPI and Hedonic Adjustments

• CPI (Consumer Price Index) is meant to adjust for quality improvement, but often reflects the consumption patterns of the wealthy, not the poor.
  • "Poor people don't get to make that choice. So when you adjust the CPI to reflect that... you're capturing the experience of rich people, not the experience of poor people." —Mike [19:08]

Welfare Cliffs

• Government programs create perverse incentives: As recipients earn more and cross eligibility thresholds, benefits are abruptly taken away, trapping people in poverty or lower-middle status.
  • "Once people start beating the thresholds at which those benefits are provided, the benefits are taken away." —Mike [29:21]
  • "Instead of providing people with support that allows them to lift out... we start basically pushing them back down." [30:47]

4. Shrinking Middle Class and Economic Cliffs

Squeezing the Center

• Rising minimum wages haven’t triggered matching increases up the income scale, leading to wage compression that leaves the lower-middle and middle class increasingly precarious.
  • "People are being dragged from the middle class into the cliff... that’s going to create... people who will never be able to retire." —Connor [32:12]

Multiple Financial Cliffs for Families

• Childcare is a new, massive expense, compounded by regulation and risk management. Loss of affordable childcare can be life-altering for two-income families.
  • "For a two-family, two-child family... the average is about $25,700 a year that is being spent on childcare..." —Mike [39:33]
• Having children or moving out of the family home become huge financial leaps—resulting in collapsing birthrates and delayed adulthood.

5. Monopolies, Competition, and the "Cost of Participation"

Rise of Private and Public Monopolies

• Both government services and major corporations increasingly behave as monopolies, removing competitive pressures to lower prices or improve quality.
  • "When you create a monopoly, you've... created an entity that... benefits from under supplying." —Mike [33:50]
• Privatization without competition simply converts public inefficiency into private rent extraction.

Regulatory Capture

• Large corporations use their resources to set rules that make it harder for entrants (small businesses) to compete, further entrenching monopolies.
  • "Is it malice? No, they're telling you this is the state of the art of safety..." —Mike [73:46]

6. Income, Productivity, and the Relative Decline of Labor

Disconnect Between Productivity and Wages

• If wages had kept up with productivity, most families would be financially secure. Instead, wage stagnation combined with asset inflation has funneled wealth upward.
  • "If you actually look at that number again and... what would have happened if wages kept up with productivity gains? We'd be at those levels." —Mike [58:12]
• The "labor share of GDP" has sharply fallen—from 70% to under 60%—while capital's share has soared. Michael emphasizes the distinction between absolute and relative poverty, both of which have grown more acute.

Asset Owner Privilege

• Asset holders (real estate, equities) have benefited from policy and inflation, increasing inequality—something even those benefiting from it often recognize as destabilizing and unfair.

7. Globalization, China, and Financialization

China Effect and Deindustrialization

• Western policymakers promised access to Chinese consumers, but in practice, capital moved for cheaper labor, leading to the destruction of Western industries without reciprocal benefits.
  • "The capital moved to China to exploit labor that contributed to the continued decrease of the labor share." —Peter [107:29]
• Now, China’s productive capacity threatens global oversupply, and western policy is belatedly returning to industrial tariffs and local investment.

Financialization: Profiting from Leverage and Structure, Not Innovation

• Instead of making things better, financial engineering and consolidation have let speculators and monopolists reap rents, while reducing competition, innovation, and opportunity.

8. Degenerated Political and Social Discourse

Policy Failure by Incompetence, Not Conspiracy

• Most systemic issues are not due to malicious intent, but to thoughtless policy inertia and regulatory capture by special interests.
  • "I think it's mostly incompetence. ...Never substitute conspiracy when incompetence will suffice." —Mike [30:59]

Cultural Malaise and Societal Fragmentation

• Both hosts and guest lament the decline in social trust and the rise of political and class resentment.
  • "I don't feel happier than I did two years ago, five years ago. Because what we have is chaos around us." —Connor [79:43]
• Even those who are "winning" economically feel little satisfaction amidst so much broader insecurity and tension.

Relative vs. Absolute Poverty

• Michael underscores that in wealthy societies, it’s relative poverty—the inability to participate on equal footing—that most undermines cohesion.
  • "Charitable behavior, altruism, is a function of surplus. If I've got 58 bananas, I'm more than happy to give you one. But if you and I are fighting over the last banana, there is no altruism there." —Mike [82:02]

9. Pathways Toward Solutions: Policy, Taxes, and the "Rule of 65"

Tax Code as Leverage Point

• Michael advocates for a thorough reform of taxation—raising corporate taxes, closing loopholes for wealthy asset holders, ensuring inheritance is taxed as ordinary income, and smoothing out welfare cliffs. He’s especially critical of financial devices that allow top earners to avoid taxes.

Tariffs and Trade Policy

• Thoughtful reintroduction of tariffs to protect domestic industries and workers, balancing the interests of capital and labor.

The Rule of 65

• Michael’s practical proposal: orient policy around the well-being of the 65th percentile household, ensuring the broad aspiring middle has security and opportunity.
  • "If we build our emphasis in society about making sure that [the 65th percentile] segment... does better and better, and we score our legislation... around those individuals, we're capturing a much broader segment..." —Mike [160:39]

Democratic Participation and Local Reengagement

• Recognizing that change is possible—democracy affords more opportunity than most realize if citizens are informed and engaged.

Guarding Against Backsliding

• Any reform risks reversal; constant vigilance and civic engagement are necessary.

Notable Quotes & Memorable Moments

• "Why would you spend so much time and effort trying to extinguish this complaint?" — Mike [04:44]
• "Once people start beating the thresholds at which those benefits are provided, the benefits are taken away..." —Mike [29:21]
• "When you create a monopoly, you've... created an entity that... benefits from under supplying." —Mike [33:50]
• "If you are at 100 is your consumption level and 90 is your income level and both go up by 2%... you're further in the hole." —Mike [06:04]
• "Charitable behavior, altruism, is a function of surplus... but if you and I are fighting over the last banana, there is no altruism there." —Mike [82:02]
• "We've squeezed the middle class... and that's going to create this other cliff which... is the people who will never be able to retire." —Connor [32:09]
• "If you build a model that says it's all going to work out in the end, your model is going to tell you it's all going to work out in the end." —Mike [113:47]
• "Asset holders have benefited from this inflationary system. ... It's 100% benefited me, and I don't like the outcome of it." —Connor [96:52]
• "You are going to have to raise taxes on higher income individuals if you want to fix this. But the irony is... our society actually ends up in aggregate, much richer." —Peter [123:02]
• "We're not just failing the very poor—we're failing the productive, striving middle too." —Mike [94:43]
• "We've allowed ourselves to be distracted from the environment in which we can influence it." —Mike [159:23]

Timestamps for Key Segments

• [00:00]–[04:44] – The malaise of extended adolescence and economic stuckness
• [06:04]–[11:38] – Affordability crisis; inflation vs. lived experience; viral Twitter catalyst
• [14:36]–[26:58] – History and distortion of the poverty line; CPI problems
• [27:03]–[31:56] – Welfare cliffs; traps in the social system; middle class squeeze
• [39:06]–[46:53] – Childcare, cost of family formation, and multiple "cliffs"
• [50:17]–[52:58] – Housing price escalation; loss of geographic social mobility
• [54:30]–[56:47] – Monopolies, regulatory capture, and competition
• [58:12]–[63:55] – Labor share, wage stagnation, and society's relative poverty
• [73:14]–[76:17] – Small business barriers, regulatory garbage, and entrepreneurship
• [94:43]–[101:18] – The Rule of 65, special interests, and union/political pitfalls
• [104:07]–[114:07] – China, financialization, and international system breakdown
• [142:38]–[154:10] – Corporate taxes, inheritance, and the practical politics of redistribution
• [160:39]–[161:53] – Summing up the "Rule of 65" and sustaining reform

Conclusion: Restoring the Promise of Participation

The episode weaves personal anecdotes, economic history, policy critique, and philosophical reflection into a powerful call for a rebalancing of Western society. The aim is not socialism or punitive redistribution, but a restoration of broad-based opportunity—the pursuit of happiness, not just the defense of property. Michael Green argues that with informed policy (tax, welfare, industrial, and trade) and a clarified sense of social purpose, it's possible to revive the dynamism and optimism that have ebbed away. The solution lies not in burning down the system, but in using the tools of democracy, reason, and honesty to hold power accountable—especially on behalf of those in the middle who, though "invisible," are vital to societal flourishing.

"It's time for the rest of us to wake up and recognize that the unique feature of democracies is it's one man, one voice vote—not one bitcoin, one vote; not one dollar, one vote; not one pound, one vote." —Mike [159:23]