As we approach President Obama’s Second Inauguration, why do I have this overwhelming feeling that the Middle Class is dead? In both the UK and the US. And that the major political parties in both countries are complicit?
It’s a feeling which has been nagging at me for some time now. But it began to crystallize this past week when I read a series of newspaper articles:
- We are told that the US economy is almost back to its ‘historic’ regular annual growth of 3%, with stocks about to break through to a new record. Yet, unemployment among we mere minions remains high.
- At the grocery co-op where I have now worked for seven years (silent scream), sales reach new heights, week-by-week, and talk of three new stores electrifies the air – but my annual pay raise remains a pittance.
- All around us, we are told that the union-created US Middle Class is dying. But the 1% continue to thrive.
- Daily we read of the billions of dollars in settlements that banks are having to pay in penalties for their various malfeasances leading up to, through and after the Great Banking Crash of 2008. Yet, bank stock prices shudder only a ripple. Huge bonuses are back. Dodd-Frank has no teeth. And no-one cares.
- I regularly read the culture sections of The New York Times, and various fashion and lifestyle magazines, just to see what are the trends. And what I see is fashion extolling the virtues of glamour – in the middle of a recession which still bites for ordinary working folk. Luxury cars. Property in the Hamptons, going for gazillions. Who is this aimed at? Because, for sure, it isn’t intended for me and my mates.
On this occasion, he is wondering what is causing the change in consumer buying habits. He has noticed that the predilection of the Middle Class in the Seventies and Eighties to buy in cheap and in bulk (Sam’s Club, Costco) is dwindling. To be replaced by a tendency to buy more expensive, more consumer-friendly and more specialized. He cites local and organic produce and Tide-Pods.
Right. We’re on my territory now. He has my attention. But then his reasoning goes all to heck. Adam claims that the reason is that the Middle Class, due to the recession, are still having to work long hours, and do not have time to buy in bulk any more. Nor to separate their own portions of food and detergent. So, it is worth the extra pennies to have someone else prepare the portions. And, at the same time, no-one can afford to be ill. So, we eat healthier.
Hmm.
No, Adam. Sorry mate. I know. I see it every day. I work in a store that specializes in organic and Do-It-Someone-Else portions. The folks doing the latter are not Middle Class. They are a step up. Not quite 1%. More 3-4%. Annual salaries of $200,000 - $400,000. In jobs which service the 1%. Primarily computer or web-related.
They don’t buy this stuff because they are overworked. They buy this stuff because they are nouveau riche ponces. And they are showing off. To themselves. And because they can.
Bulk-buying is dying because these new, hmm, what shall we call them, I know, Middle Upper Class. Or MUC (Muck). The new MUC wouldn’t be seen dead in Costco. Let alone Sam’s Club.
The folks who buy cheap are ordinary working folks. Because it’s all they can afford. And they don’t buy bulk, because they don’t have that much cash at any one time.
Well. Seeing as we’ve just got past the Twelve Days of Christmas, I’ll say this observation led to a personal epiphany. I’ll spare you the yelling, screaming and staining of the living room walls. And leap straight to the thoughts that followed.
And bear in mind I’m still thinking as I write. As Daniel Day-Lewis said in ‘Lincoln’ (may that terrible and contrived disaster win only Razzies) – “I’m too lazy to stop writing”:
The 1% drive the economies of the US and the UK. I’m not talking trickle-down. So keep your hair on. Bugger all trickles down. That’s the point. But what it is that the 1% does, accounts for most of the dollar amount in the economy. Frankly, in economic terms, Great Britain has been reduced to the City of London, surrounded by a rather quaint tourist attraction called ‘England.’
The same is true (at least for the moment) with the emerging economies in the rest of the world. BRIC, and the countries close behind them – Bangladesh, Thailand, Egypt, Turkey, et al.
These are the folks buying the $1.2 million Bugatti hatchbacks, for the wifeys to take the kids to the faux grocery store. These are the people shopping at Bal Harbor. Buying villas in the Caribbean. And driving the fashion world’s obsession with old-style glitter and glamour.
Now, these folks need services. And those (everything from computer services to fashion to airline pilots) are provided by the new MUC. These guys and gals can’t swim with the sharks. They can’t donate millions. Or buy jetliners. But they can ape the lifestyle.
So, they buy the expensive brand fashion copies from Saks Fifth. They do Porsche, not Bugatti. And they want all that personal service that makes them feel grand.
Enter the old Middle Class. We poor buggers who are still struggling to pay off student loans. Teachers losing their jobs through budget cuts. Doctors getting hit by Medicare belt-tightening. College graduates mowing lawns to pay the bills. And some, who have accepted this might be a permanent change. And are going self-employed. Dreaming up niches to serve the new MUC. But at a much lower pay grade. Personal physical and motivational training is a favorite.
After that, what’s left? Well, the working folks. The working class. But, I hear you say, what of aspiration? What of all this talk by political parties on both sides of the Atlantic about wanting to support folks in their aspiration to work hard, play fair, pay in, get out, climb up, better life for kids, landing on Mars?
Bollocks. Not going to happen any more. And the pols don’t want it, either.
In the US, the myth is that the Middle Class there was created by the unions. Not so much in the UK. But the end result on both sides of the pond was the same. Out of the bipolar societies that existed prior to the Industrial Revolution (rich, poor, and some grasshoppers), grew a Middle Class, which was needed to provide middle management to run industries. White collar. Skilled blue collar. And the services to support them. Family GP. Family lawyer. Family banker – yes, they used to exist. Etc.
The essence of the survival of the Middle Class was the recognition that they aspired to a lifestyle working folk could not afford, ever. But they couldn’t pay for it up front in cash, as did the rich. And so developed the whole concept of pay in now-get out later services. Especially for public services, like education, pensions and now, health.
But those days are over. Forget how we got here, or why. But the 1-4% don’t need pay-in. And they don’t want to pay the taxes to give it to others. But, I hear you say, surely they want to keep the Middle Class happy, because they represent market and labor? Not no more.
The 1-4% can find both elsewhere in the world. Industry is dying in the US. It was declared rigor mortis some time ago in the UK. The 1-4% no longer need overpaid, underworked white collar or skilled blue collar.
But surely the pay-in schemes still exist? Nope. They are under daily attack from budget cuts, at both national and local level. I owe an apology to FB mate, Chris Telesca, with whom I fenced the other day about Obamacare. After which I read that, under Obamacare, insurance premiums for the self-employed and middle-level payees (the classic Middle Class) are about to go up by double digit percentages. And this wasn’t foreseen – or worse still, deliberate?
Without a doubt, the next step in ‘fiscal prudence’ will be the re-introduction of means testing. Which will almost certainly reduce the provision of pay-in services only to the very needy. In turn, bringing the old Middle Class down to the level of other working folk. Which leads me now to re-label the old Middle Class as the new Upper Working Class.
What of the unions? The folks who created and surely would now protect the US Middle Class? Well. As goes manufacturing industry, so go the unions. And unions in the US are becoming ever more irrelevant. But don't the Democrats rely on them during Presidential Elections? Nope. Not any more. Two successful election efforts by Barack Obama put paid to that myth.
But hang on, what about all those political parties (cf. British Tory rebrand) yelling about Jobs, Family and Education for the Middle Class? Oh yes. You can have a college education. But unless you intend to sell out to MUC (at which point law firms, investment bankers et al will happily pay off your loan as a golden ‘hey there’), then you’re stuck in penury for most of the rest of your working life.
Jobs? Why would any government spend money from the dwindling public piggy bank to create uncompetitive jobs? When they can get election cash from the 1% in return for tax breaks to allow the 1% to export jobs to Myanmar?
Family? Ha. Take a good long look at how benefit reform is helping Middle Class families in the UK. For sure (and I applaud it), there may be better and more sensible coverage for the disadvantaged, without the welfare trap. But the Middle Class are getting razed.
Their ‘benefits’ are being taken away, one-by-one. Child benefit has already gone. And in the past few months, a new scheme began, under which every single employee is having to fork out a monthly amount for their own private pay-in pension plan, to supplement the state pension.
Expect this formula to become the template for benefit ‘reform’ in the US.
Ah ha. I hear you say. But what about the Democrats? They’ll fight for the Middle Class. They will continue to work to keep in place a system that allows social mobility from working to Middle Class. No, they won’t.
First, the money isn’t there. Secondly, the votes aren’t there. We just had the most polarized Presidential and Congressional Elections since 1864. All the talk was of the 1% buying the result. Well, that didn’t happen. But what did happen was that, against the flow, Romney got 47% of the vote. And Congress remained Republican – and Tea Party. This wasn’t the work of the 1%. This was the work of the 3-4%, silently, but determinedly, voting to maintain their newfound lifestyle.
The new MUC, risen from working folks and the old Middle Class, safe in their gated communities, educated but not worldly-wise, nouveau riche but not noblesse oblige. Guilty. Self-contained. Selfish. They don’t want to share. They don’t like giving back. They don’t like taxes. And they don’t give a fig for maintaining the Middle Class, or offering a leg-up for the working folks. And here’s the rub. They will only become more potent as a voting base.
I don’t care about Dems saying that Hispanics and Asians are natural Dem voters. No, they aren’t. Everything about their culture will have them working their asses off to see their offspring aspire to MUC. If you want to know what America might look like with third generation Hispanics and Asians, try Singapore, South Korea or Texas.
The Dems are going to be fighting hard to maintain any voting base they can find. And there is the dagger in the heart of the Middle Class. Why would Dems want to support and extend a new reality that has folks aspire to leave the working ranks and join the Republican MUC?
It is my view that you will see Dems increasingly working towards keeping their voters as a client base. As the British Labour Party did in the Seventies and Eighties. Oh. It will be wrapped up all pretty in language about re-discovering our purpose. Putting working folks first. But what will transpire is a Democratic Party focusing its advocacy on directing the reduced public purse towards those same working folk, and away from the Upper Working Class.
If you allow a situation where the UWC can no longer receive benefit or the leg-up needed to meet aspiration, they slip back down the salary scale, to find themselves shopping at Dollar General, with every other working person. And that’s where the Dems of the future will want to keep them.
So. Even though we may have a short-lived hiccup of Republican hand-wringing. Which we already have had in the UK. But Dave Cameron chose hugging a hoodie over wringing his hands. We will move to a bi-polar political situation where a right-wing, tax-hating Republican Party (or British Conservative Party) will regularly face off against a newly-energized, worker-loving/trapping social Democratic Party (or British Labour Party of old). And the Middle Class will be a footnote in the history books.
So. What to do? For myself. I learn from Occupy. Or my lesson with Occupy. Forget the system. Don’t waste time trying to bring it down. Who cares? Become self-sufficient, and live outside of the system as much as possible. Oh. And hope that your self-penned pop song does viral …
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