Wednesday, December 28, 2011

Is the Middle Class disappearing?

Politicians on the left love to bemoan the "disappearing" middle class. The theory goes, because a small cadre of elites horde a disproportionate amount of wealth, the rest of us writhe in poverty.

Observationally, this makes no sense. I am middle class. The vast majority of people I know are middle class. This stands to reason, since my age correlates to middle class earning potential.

But hey, maybe I live in some sort of Minnesota conservative cocoon. But here's a fact that throws a wrench in the whole enterprise of middle class disappearance: Median household income in America is the second highest in the world. Adjusting for various indices, the median household in America live better than that of every country other than Luxembourg.

I think we can all agree Luxembourg is a bit of an odd cat. It is, literally, ruled by a Duke. It has an army of 800. It's also a tax haven, thanks to a lack of banking transparency. It is basically a suburb of three other countries. We cannot unilaterally replicate the Luxembourg model.

So, if we are to believe the middle class is disappearing, we must then assume very few residents are close to the median. Half the country is decidedly in the money, at the expense of the other half.

If I grant this is true (it isn't) then this means nearly half of our households are quite rich. Considering the lower 50% includes former felons, drug addicts, and those who are flatly unwilling to work, the odds of anyone with the wherewithal to read my blog being (or becoming) rich are quite good.

Of course, half the country isn't rich. Most of the country is, in fact middle class in a nation with the most expansive, wealthiest middle class in the world.

Ironically, were it not so, the disappearing middle class bit would lose all appeal. It works best if, rather than diminishing, the middle class is expanding, so as to encompass the vast majority of American voters. In other words, most of us are so close to the median, and will remain so for life, we lack for upward mobility.

Therein lies the secret appeal of the argument. Conceptually, nobody cares if they are middle class, or if there is a middle class. However, almost every person of comfortable means considers themselves to be middle class, including the demonstrably wealthy. I've slept in 6th bedrooms of those who claim to be middle class.

And of course, nobody wants to disappear, or feel as though the lifestyle they enjoy is soon to be a relic. What Obama and other politicians are really saying is you, the voter, are disappearing. The drumbeat of news stories highlighting the massive fortunes of this or that elite only adds to this impression.

But the impression doesn't square with the facts. Essentially, if there is a way to make economic life better for Joe Schmoe than our system, the world hasn't discovered it.

If we want to improve life for the middle class, we could look to the only other countries that are even close to our median income. Luxembourg has an extremely unregulated banking system and low taxes. Norway might as well have "drill, baby, drill" written into its Constitution.

Occupy that.

In reality, the left is principally concerned with inequality. They believe a country composed of billionaires and the homeless alike in fundamentally unjust, and take it as an article of faith government is compelled to make this not so.

But forging new solutions is risky. Asking government to socialize health care, banking, medicine etc... is inviting an intrusion into our economy (to say nothing of our liberties) that could end quite badly. It invariably requires sacrifice from the middle class.

That's a tough sell to the richest nation in the world. And so it behooves the self-styled innovators to tell a nation of internet-connected, overfed, new-car-buying voters all they have worked for is being usurped by a nefarious elite.

Historically, aggressive efforts to make the very rich pay their fair share (which is code for however much an opportunistic politician demands of them) have either destroyed the middle class, or made scapegoats of certain races, dissidents or intellectuals. Would that happen in America? Maybe, maybe not.

Is it worth the risk, if we have the opportunity to end poverty? Maybe, maybe not.

But rather than pretend large-scale government programs are aimed at restoring the middle class, the left should forthrightly make its case. Those who internalize the narrative and become indignant at the betrayal of the middle class lifestyle are either ignorant or dishonest.

In short, the middle class isn't disappearing. Don't worry about it.

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