The Rise and Rise of the Middle Class

The Western middle class isn't disappearing, it's just having to compete with other middle classes.

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Rod Dreher links to a depressing post by author-blogger John Robb, who predicts that America’s (and Europe’s) middle class “ is soon to become a fond memory.”

Writes Robb:

The social contract that enabled this success, particularly the post-WW2 social contract that shared the increases in wealth generated by improvements in productivity with the more productive workers that enabled it, ended with the financialization of economic activity and globalization (and governments that facilitated and catalyzed the process). In sum, the increase in wealth the western middle class produced over the last three decades has been transferred to global financial elites (who misspent it) and mercantilist nations (China, Japan, Korea, Taiwan, etc.).

This analysis strikes me as problematic for a number of reasons. First, as this Drew Carey video commentary amusingly demonstrates, middle-class Americans, until the recession, were awash in cheap consumer goods, and could afford a standard of living far beyond the dreams of 1950s postwar suburbanites.

Second, I’m not sure it’s as accurate to say that the wealth created by the “financialization of economic activity and globalization” was transferred to elites, only subsequently to be misspent, as it is to say that much of that wealth was vaporous in the first place.

Finally, I think Robb is more right than he thinks when he says that the middle class is an “exceptional feature of modern Western history.” Yes: It was exceptional in large part because the conditions from which it emerged were exceptional. Namely: a global war that left Europe and Japan in rubble but America intact, plus an enormous economic boom that resulted from pent-up postwar consumer demand. This boom, and America’s lack of global competitors, enabled companies to strike extraordinarily generous bargains with labor unions.

The rise of India, China, and parts of Latin America is, broadly speaking, not simply the result of menacing “mercantilism,” as Robb believes. There are literally billions of people who don’t live in the West, see how it lives, and think to themselves: “I’m as smart as they are. I can do that job. Why can’t I have those toys?” Increasingly we’re finding out that they can. (Although, in the case of China, where domestic consumption is suppressed, citizens there should be asking that question of their own government.)

The Western middle class is not disappearing. It is struggling to compete with the emergence of other, non-Western middle classes--and that’s not necessarily something we should lament.