American Reality from Chinese Perspective

Remember those who have nothing as you drink holiday libations

As I wrote today on the Christmas thread at Moon of Alabama, we are members of the Fortunate Class because we could easily be on that bench and our children too. But circumstances smiled on us enough so we at least have roofs over our heads and enough income to remain under it. Liu Bai, the author of the article that follows, uses a term familiar to Chinese gamers to present his perspective on what’s a very big, nasty, and shoved into the corner and ignored as much as possible by most politicians: “Killing Line.” Not being a gamer, I’m ignorant of the term, but the author’s explanation was understandable as I’ve been there several times in my life as has my wife. We’re well versed in the article’s topic, and I believe several Gym readers are too. The main reason I’m translating this is because of what it brings to light and the provocative substack essay it references. So, let’s read “When the Americans were hit by a ‘killing line’..”

In the United States, is it safe as long as you are not poor?

Not necessarily.

Recently, a word that originally belonged to the game world has quickly broken the circle on the Chinese Internet - “killing line”.

In the game, when the player’s character’s HP is below this line, it can be instantly finished by a set of combos. In reality, a superficially glamorous American middle-class lifestyle may actually be as thin as a piece of paper.

Rent, medical bills, insurance...... As long as an individual’s financial situation, social credit or survival resources fall below the threshold, they will smash down together like a set of long-designed combos, making you “Game Over.”

Jumping from the virtual world into American society has been given the “killing line” of cold survival and has become the life and death line for countless ordinary people to fall from decent life to the abyss of survival.

The “killing line” has become a very impactful metaphor for reality.

$140,000 poverty line: you are not poor, you are too “brittle”

For a long time, the United States has been portrayed as a society of “unlimited opportunities” in global public opinion: as long as you work hard, the risks are controllable after all, and there is room for maneuver in failure.

But the abundance of real stories from social media — unemployment, illness, rent, credit scores, insurance denials — piece together another picture: In the United States, many people were not knocked down by a single disaster but were quickly engulfed in a chain reaction.

This is exactly what the “killing line” means: not poverty itself, but the system below a certain threshold that no longer tries to fix you.

The concept of “killing line” is inseparable from a statement that has been repeatedly discussed in the United States recently: in some large cities, a family’s annual income of less than $140,000 makes it difficult to truly be “safe.”

This is not the official poverty line, but the “real survival line” that many Americans have calculated themselves.

This is precisely the problem—not a small amount of money, but there is no room for error.

The source of this statement is an article published on the Substack platform by Wall Street investor Michael Green.

According to Green, the current poverty line standard for a family of four in the United States—$32,150 per year—is seriously low and does not reflect the real cost of living in contemporary times.

He proposed that if a modern family wants to maintain “basic necessities”, the income should reach at least US$136,500, equivalent to 980,000 yuan.

This figure is far above the official standard and much higher than the median household income of a family of four in the United States (about $109,000).

The poverty line calculation method currently used in the United States is derived from the formula proposed by economist Molly Olshansky in 1963: take the minimum food expenditure as the benchmark, multiply by three times, as the basic cost of subsistence for the family.

But Green notes that this model was born in a completely different economic era than today. Housing, health care and transportation costs have risen significantly over the past few decades; childcare has changed from an internal family affair to a high-priced market service; the medical insurance coverage provided by employers continues to shrink, while the proportion of personal out-of-pocket payments continues to increase.

In Green’s view, the spending structure of today’s households has undergone a fundamental shift, continuing to apply algorithms from more than 60 years ago, “almost losing its explanatory power in reality.”

Using the New Jersey suburbs as a sample, he recalculated the basic cost of living for a family of four at about $136,500 a year, nearly four times the current official poverty line.

As economists put forward the concept of “Baumol’s cost disease”: thanks to globalization and technological progress, the prices of food, home appliances and other commodities are declining; However, the cost of labor-intensive services such as housing, medical care, education, and childcare is unparalleled.

Therefore, if the standard is to maintain “decent participation” in society (housing, medical treatment, and children), the real “poverty line” has been pushed up to $140,000 per year.

Countless middle-class families are hanging on this threshold of “decent”, and their predicament is not that they can’t eat, but that they are overwhelmed by the cost of a decent life.

This conclusion quickly sparked a strong backlash, for example, some pointed out that Green used the average expenditure in high-cost areas, rather than the minimum necessary costs actually borne by low-income groups.

In the face of skepticism, Green admitted that the sample like New Jersey is indeed on the high side, but even so, more and more families have little ability to save or prepare for the future after paying rent, medical care and childcare. These are all realities.

In an interview with Fox News, Green further explained: “$140,000 is not a label of poverty, but a warning line—meaning you have to extremely refrain from spending and cut all non-essential spending to barely avoid debt.”

Despite ongoing disputes over specific numbers, there is a consensus on one issue: the cost of living in the United States, especially housing, health care and childcare, has indeed risen over the past few decades, far outpacing income growth.

In Green’s view, the continuous upward movement of the “killing line” in the United States is not accidental, but caused by many historical factors.

Since the gradual monopoly of trade unions in the 60s, efficiency has declined, but costs have been solidified and continuously pushed up. By the 70s, antitrust policies shifted, large enterprises accelerated mergers and acquisitions, market concentration increased, bargaining power tilted towards capital, and wage growth was suppressed for a long time. Later, in order to obtain higher returns, American capital took the initiative to relocate the manufacturing system.

“This is what American capitalism really is”

What Green didn’t mention is that deeper contradictions are hidden in institutional design. There is a paradox in the American welfare system: the harder you work, the greater the punishment you may receive.

When an American family’s annual income is at a low level of about $40,000, they can enjoy benefits such as food stamps, Medicaid, and childcare subsidies.

But once members work hard to raise their income to $60,000, $80,000 or even $100,000, they fall into the “welfare cliff”—as their income increases, benefits are drastically cut or eliminated, yet they begin to bear the full cost of extremely expensive health insurance, rent and college loans.

As a result, some middle-income households may have less disposable cash at the end of the month than when they were dependent on welfare after paying all their rigid expenses.

In other words, the hard-working middle class will be completely exposed to risks due to the loss of subsidy buffer, and once injured, they may be quickly “killed” by the system mechanism.

In fact, the “killing line” in the United States did not arise out of thin air but was the inevitable result of the endogenous logic of the capitalist system.

Shen Yi, a professor at Fudan University, pointed out pointedly: “The real characteristic of capitalism in the United States is the existence of a killing line. ”

This system is centered on private ownership of capital, and the starting point of all policy design is to “ensure the integrity of capital” rather than protect the dignity of human existence.

“In the eyes of capital, there are only two types of people: one is those who can contribute their own value to the appreciation of capital in various ways, and these people live above the killing line.”

And what about the other category?

“He has no way to bring value to capital temporarily or in the short term...... He is the object of elimination.”

These words almost broke the core logic of the killing line.

When a person shows signs of financial situation being broken down, the purpose of the system is not to “save people”, but to “reduce losses”. Under this logic, rescue is not the default option, cleanup is.

How long will it take for the United States to stay away from the threat of the “killing line”? Perhaps no one can give an answer. But what is certain is that the existence of the “killing line” has become an unavoidable scar in American society.

Behind it is the blood, tears and helplessness of countless Americans: I ran so hard just to stay where I was. Even closer to that abyss. [Bolded Italics My Emphasis]

The cold calculus of inhumane capitalism was well known when Marx wrote, and many nations have attempted to humanize it. But the problem is at the root where capital is deemed #1, not human existence. And thus the wonderment of people electing inhumane billionaires to positions of government control. And not just Trump. One needs to look at the Donor Class who selects and owns those it chooses, and that’s been ongoing well before the Citizens United ruling. The problem is both structural and systemic as much as philosophical—note the recitation of the Protestant Ethic of hard work being the key to a better life. The following is from Green’s substack entry which I urge everyone to read and share:

When you run the net-income numbers, a family earning $100,000 is effectively in a worse monthly financial position than a family earning $40,000.

At $40,000, you are drowning, but the state gives you a life vest. At $100,000, you are drowning, but the state says you are a “high earner” and ties an anchor to your ankle called “Market Price.”

In option terms, the government has sold a call option to the poor, but they’ve rigged the gamma. As you move “closer to the money” (self-sufficiency), the delta collapses. For every dollar of effort you put in, the system confiscates 70 to 100 cents.

No rational trader would take that trade. Yet we wonder why labor force participation lags. It’s not a mystery. It’s math.

I never did the math like he has; I lived the life as did my wife, as does my struggling daughter and my grandson, as does my wife’s daughter and her significant other. My wife’s son and girl live with us; yes, they’re both employed, but after saving very prudently for seven years, they’re very far from qualifying for a mortgage on a lot they could drop a manufactured home onto. And I’m sure many readers have similar stories to tell.

As I conclude, SiruiusXM is playing that Kinks Christmas tune, “Father Christmas,” which always rises within me when the days get short. IMO, most people within the Outlaw US Empire are angry because they’re very aware of their proximity to the killing line, although they may not understand the term. And they fear AI for excellent reasons as they somehow know the system sees them as expendable, and for them that’s unacceptable and somehow must be fought.

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