Continuing on that compare and contrast of the middle class, both now and “then”, I began to wonder what, exactly, the middle class is.
Because the genesis of this project involved Ben over at Drudge Retort, I thought it should include what he thought:
Here’s a good definition of the middle class:
MIT economist Frank Levy believes that those in the middle class have enough money to afford the basic building blocks of a good life, including a house, a car and money to pay necessary bills. He suggests that families in their prime earning years are middle class if they fall between $30,000 and $90,000.
I like that as a working definition; simple, easy to visualize and a well understood process from taking $50-90k in today’s money and pivoting backwards to “yesterday’s” money.
However, I couldn’t help but wonder if there wasn’t another definition. Maybe something surrounding what we consider the “American Dream”. I’ve always thought that middle class was being able to have “some” nice things. Kinda like, a car, maybe two. Own your own house with the “white picket fence”. Send your kids to college.
Maybe what we need to do is identify a specific basket of goods and see how much money the middle class family has left over. Maybe both.
Originally there were two major classes — the peasants and the aristocracy. The middle class was small — the guilds and shopkeepers. They grew, but it wasn’t until the industrial revolution that the growth of commerce and industry created a powerful new “middle class” with their own ideology, liberalism. (Here liberalism means a belief in markets and individual liberty along with limited government – Lockean liberalism). As the peasants fled to the cities because the farms didn’t need them, they were cheap labor. They were paid barely enough to subsist, and if they had children, they’d have to work too. Living in squalor, children unable to get an education these former peasants became the new “working class,” which got their own ideology, “socialism” (the workers should share the profits).
From there a great compromise was reached. The workers would not revolt or disrupt business as long as reforms were made to guarantee them the right to unionize, have basic needs met (education, health care, unemployment insurance), enjoy decent working conditions, and have real opportunity for their children to build a better future. This compromise varies in scope across the industrialized world, but in my mind it turned the one time working class into the new middle class. They weren’t poor, and they had well paying productive jobs – the backbone of the economy. Their kids could aspire to great things, or choose to work in the factories.
My fear is that as we’ve lost the productive portion of our economy, the working/middle class is getting smaller, with fewer opportunities, and this hurts the overall economy. As you and others pointed out, those in poverty have access to a lot of benefits and aid. We need a vibrant well paid productive “working/middle class” to get back to economic sustainability. It may not be factories in the 21st century, but we have to produce stuff that others want!
This compromise varies in scope across the industrialized world, but in my mind it turned the one time working class into the new middle class.
I have not done any studying of the history of the creation of the middle class; this certainly sounds plausible. However, I see the same flaw in this argument that exists in the argument that we exploit third world labor:
“peasants fled to the cities because the farms didn’t need them”
I don’t buy that specific thinking.
Anyway. The point of my “Middle Class Series” is to see if there is a way to measure:
1. What DOES the middle class mean
2. Are there more of them, fewer of them or less of them.
Is the middle class fading away or, if they do exist, are they REALLY worse off today than they were, say, 50 years ago.
The middle class worker is a person who either has a special skill or access to a special tool or machine. This makes is possible for the worker to perform a specific task with greater efficiency than the average person.
In 1960, it was easy to find high productivity machines in need of dependable operators. This was the common path to the middle class. Since many of those machines are now being operated by computers or Asian workers, middle class workers in this country now need to focus on the skill component. Here is the tricky part. How does a person develop a financially viable skill that others will not be able to readily duplicate? The hardest part of this question, is that each person will have a different answer. The middle class workers of the past could be trained in unison, because they all needed to know how to run the same machines. The skill centric middle class worker of the future needs to be developed individually.
How does a person develop a financially viable skill that others will not be able to readily duplicate?
I’ll focus on the “financial viable” aspect of your post.
I think the answer to that is to stop pricing the middle class out of a job. The more that we increase the cost of doing business here in America; wages, insurance, vacation, taxes … the more we will see labor move overseas.
In the same way that I expect manufacturing companies to purchase copper from the cheapest source, I expect corporations to purchase labor from the cheapest source.
Actually you left out a large part of the upper middle class, namely the merchant class. This is what really opened up the later middle ages in Europe and set the stage for the Renaissance. They clashed with the craft guilds for power. They lent money to the Kings to wage wars and also to land rich, cash poor Aristocrats.
US workers have employment costs put on them by our nanny government that our competitors do not have. German workers make very high wages yet for some reason they successfully compete with slave labor in China. If the neo-socialist idiots who have run our great country into the ground would just stop trying to regulate every single part of our lives, American industry will create the jobs, and good paying jobs.
Again, Germany and Japan have found ways to prosper competing with low wage economies. We can too, but not with the leaders we’ve had lately.
In the American Colonies entrepreneurs like Benjamin Franklin gained real power and became leaders of the Revolution.
If the neo-socialist idiots who have run our great country into the ground would just stop trying to regulate every single part of our lives, American industry will create the jobs, and good paying jobs.
The mistake the Left makes is treating labor as if it’s a human condition. They define it the same as they define the laborER. If they would look at labor in the same way they look at steel, cotton or lumber, they would begin to have a conversation that treats labor as it truly is – commodity.
There is an article in National Review by Kevin D. Williamson and he goes into what Socialism really is. We Conservatives throw the term around quite loosely to describe the current crop of Democrats. According to him we have it wrong.
We believe it is redistribution of income and wealth. He argues that redistribution is not Socialism. To support that argument he tells about Mikhail Gorbachev trying to save the Socialist economy of the USSR from collapse in 1988. The Soviets had been trying to equalize incomes and Gorbachev came to the realization that it destroyed discipline, creativity, and morality. That it was not compatible with scientific socialism. The plan was more important than redistribution of income.
Mr. Williamson makes the case that Socialism is central planning, that’s it. He says that the central flaw in central planning is the lack of real market prices. Socialism puts a value on a good or service based on a formula of it’s input of labor and materials. A real market price is what someone is willing to pay at any point in time.
Rational economic decisions are not possible with out prices stemming from market place transactions. The plan cannot work with out that information. To real Socialists, Mr. Williamson explains ” The Plan ” takes on religious status. When the plan fails to work, economically frustrated Central Planners deny needed goods and services to their repressed citizens.
In the US the most obvious example of central planning socialism is public education.
He says that the central flaw in central planning is the lack of real market prices. Socialism puts a value on a good or service based on a formula of it’s input of labor and materials. A real market price is what someone is willing to pay at any point in time.
The allocation of scare resources with alternate uses.