Tuesday, November 28, 2006

The Not So Disappearing Middle Class

More is more

Mainstream thought (Workers likes to puncture conventional wisdom) is that the rich are getting richer and the poor are getting poorer, and that therefore the middleclass are disappearing. Even the CIA World Factbook says this about the American economy.

Yet like always it is all in how you measure it. Brink Lindsey compares the US in 1970 with the US in 2004 and finds, 1) infant mortality has fallen 30%, 2) those below the poverty level have the same amount of color TVs, clothes dryers, air-conditioning, dishwashers and refridgerators as did the average American, 3) 69% own their own homes compared to 63% before, and 4) 28% of people have graduated from college compared to 11% before.

Of course this says too that we may value human life by the stuff we have, and, that the value of a college education has gone down, or, more, specifically, the value of highschool education has gone down.

Bob Sutcliffe has shown in his work that across most countries the middle groups have a consistent share of national income, it is only among the percentages of the richest and poorest that the percentages differ, eg., the middle gets the same but the rich get more and the poor get less. But this too is somewhat distorted. Yes the rich get richer, and however, the poor get richer as well, just not at as fast a pace. Therefore, the poor aren’t getting poorer, they just aren’t getting as rich as fast as the rich are (this assumption of course is true if you look at a decrease in infant mortality worldwide and decrease in malnutrition amongst all ages worldwide as proxies for income). It is the increasing difference, or increasing wealth gap, which bothers people.

Of course this is where moral and political philosophy comes in. One way to reduce this income or wealth gap is by a public policy of forced redistribution of assets (or of course another way is direct philanthropy by the super rich which we see happening with the Gates, Clinton and Soros foundations to name just a few). This is more or less the rationale behind foreign assistance, a wealth transference between rich and poor countries (but note this is a nation-state transference not a people one. And in fact was originally created for the West to purchase the political influence of the poor nations so that they would side with the West instead of Stalin under the Cold War. The wealth transference justification has only come to the fore with the fall of the USSR in 1989.)

The other alternative is to realize that people have different ambitions, abilities and luck – and have these things at different points in their lifes - and to create a level playing-field in which people can create their own wealth, so they can too get rich if that is what they want, without having the playingfield distorted against them by special interests. This is a society which is less controlled, eg more free.

So is equality of outcomes or equality of opportunity the better moral position ? That might be the fundamental question of the question of the “disappearing middle class.”