May 14, 2012
“BEIJING — Juan Lu and her husband, Jun Gao, can’t suppress their new-car grins. The young Chinese couple have taken delivery of their first car, a Ford Mondeo midsize sedan, from a Ford dealership in western Beijing. They are part of a burgeoning middle class that wants to trade in their subway tokens for their own wheels to get Lu to work at the hospital and Gao to his government job, and also take them away for a weekend holiday.” Detroit Free Press, May 6, 2012.
In 2009 18 million cars were sold in China compared with about 14.5 million in the U.S. For the new Chinese affluent classes the hot sellers are BMW, Ferrari, Jaguar and Audi. The best selling car in China last year was Buick. In my youth in southern Ohio, Buick was considered the rich doctor’s car.
“Confronting the worst job market in decades, many college graduates who expected to land paid jobs are turning to unpaid internships to try to get a foot in an employer’s door. While unpaid post college internships have long existed in the film and nonprofit worlds, they have recently spread to fashion houses, book and magazine publishers, marketing companies, public relations firms, art galleries, talent agencies — even to some law firms.” New York Times, May 6, 2012.
No doubt the next election will be fought on middle class blues. The prevailing sentiment is that the rich have done marvelously well over the last few decades. The poor are always with us but at least they have welfare and safety nets. The middle class has taken it on the chin and is on the way out.
I beg to differ. The death of the middle class in America is much exaggerated. We do have reason to worry about all classes.
I have always considered myself a member of the much-satirized middle class. Karl Marx divided people into working class (proletariat), middle class (bourgeoisie) and ruling class (rich owners). Lenin vowed to “wipe the bourgeoisie off the face of the earth.” Mao Zedong did his best to do just that. Neither succeeded, but along the way they managed to cause mountains of misery.
Today it is the bourgeoisie who have triumphed in Russia and China, and indeed around the world. In the U.S. the Occupy Wall Street demonstrators want to divide the country into two new classes, the 1% rich and the 99% suffering. Republicans and Democrats argue over who is conducting a class war.
I thought America was a classless society.
I realize that is naïve. From the beginning there have been divisions between rich and poor and there still are. But not as many and not as sharp, I would argue, as any time in the past.
The 1% do enjoy fabulous wealth today. They can buy a box at the Super Bowl or the Metropolitan Opera. They can fly in private jets to ski or play golf in Spain, Chile or New Zealand. They can luxuriate in hotels, townhouses, vacation cottages, that set them back five thousand dollars a night. They can have multiple multi-million dollar homes in New York, Aspen, Palm Beach and London. (You can get a glimpse of their greed reading the ads in publications like The New York Times, The New Yorker or The Wall Street Journal.)
The 1% have more power and can give generously to political candidates or get their name immortalized by gifts to colleges, libraries, symphony halls and foundations. They not only have a couple of Cadillacs, Mercedes or Rolls, they have full-time chauffeurs to drive them.
But the middle classes are not slouches either when it comes to wealth. They enjoy riches the likes of which has never before been seen in in all of human history. They can see the Super bowl or the Opera on large screen digital TVs and have better views than in box seats. The upper middle class (top 20% or so) can fly to ski or play golf in Spain, Chile or New Zealand. Faster and as comfortable in first class on commercial jetliners. They can buy luxury on cruises or dream spots around the world.
Many middle and even lower middle classers (the middle 60 or 70% of income) have second homes in Florida, the North Woods, Vermont, or the Colorado Rockies. They don’t have multi-million dollar homes but they do have pretty nice layouts with air-conditioning, two or three bathrooms, fancy kitchens, family rooms, home offices, two-car garages filled with great tools and gadgetry, Internet access, cable TV with hundreds of channels, etc., etc.
In the booming fifties and sixties we middle class folks were lucky to have a single bathroom, no family room, no home office, black and white TV, no air-conditioning, and subway tokens or bus passes instead of cars. Upper middle classers today drive two or three late model sedans, SUVs, or a Prius. Lower and mid-middle classers (as well as many downright poor) have minivans, trucks, Fords or Toyotas that are good enough to pass safety and environmental inspections.
As to power, the average middle class family can’t match the political gifts of the 1%. On the other hand worthy of note in the current Wisconsin recall imbroglio it is the incumbent Republican governor, Scott Walker, who has a higher percentage of small donors (those who give less than $100) to his campaign than his democratic challengers who boast about being the voice of the 99% versus the 1%.
If you thought Wall Street was the exclusive territory of the top 1%, think again. The percentage of Americans who invest independently in stocks and mutual funds is 54%. In the current recession this is down from 67% in 2002. This doesn’t even count the larger percentage of middle class folks who benefit from pension funds supported by dividends from Exxon-Mobil, Wal-Mart and McDonald’s. Over half the American public owns a smart phone, Android or iPhone. Over three-quarters own computers and are able and do surf the Internet.
All families in the U.S. spend a smaller percentage of their income on basic food and shelter than any families in world history. The low prices on basics are due to advances in efficiency and productivity made possible by the free market and globalization. (Education and health-care are important exceptions here.)
What’s the point?
Without question the middle class in America is going through a rough time in this recession. But it is still rich beyond the dreams of any previous middle class including the one I grew up in during the great depression—or in my teaching and family-raising days in the New York City of the booming 50s and 60s. True, the incomes of middle class families have not risen as much as the incomes of the top 1% during the past decades. Inequality in the U.S. is greater now than when I was young. Inequality is greater in all developed countries than when I was young.
In the booming days of the 50s and 60s inequality was low in most of Europe and the Far East. In the aftermath of WW2 everyone was poor and the environment was a basket case.
Europe today is rich, but in deep trouble. The social welfare states in many countries like Spain, Greece, Italy, Ireland, UK, Netherlands and France have overpromised goodies—cradle-to-grave benefits—that they can’t deliver. Germany is still doing okay but balking at bailing out its neighbors with more grants and loans. Populations are shrinking; the proportion of oldsters is exploding; citizens are rioting to resist cutbacks; the young are demanding more benefits; entrepreneurs are a vanishing breed; leaders are resorting to higher taxes on the rich, more debt and more regulation for everyone; far right and far left parties are ominously growing.
Not a good act to follow.
Bill Stonebarger, Owner/President Hawkhill
P.S. For long term view see my book, Twilight or Dawn: A Traveler’s Guide to Free-Market Liberal Democracy. Available on amazon.com or hawkhill.com.