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Is it Exceptionalism, or Economic Regression? The Shrinking of the Middle Class in Western Democracies
by Dr. Emanuel Paparella
2017-06-15 10:44:05
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We have all heard the economic lingo employed by experts in the field: working class, middle class, class war, job growth, recession, unemployment, average national income, collective ownership, individualistic capitalism, trade wars, trickle down economics, central bank, Federal reserve, interest rates, debt remission, currency manipulation. And the list goes on and on. It can get downright confusing and perplexing; it is often used to better obfuscate an economic issue. One detects the phenomenon in the pages of many magazines of opinion. But there is one such term which creates a particular kind of confusion: “income inequality.” The quote above by Noam Chomsky renders the idea.

Politicians do not much like to refer to it. It exposes as no other term can, a trend which has become almost normal in the last thirty years or so within Western democracies: the rich are getting richer and amassing enormous wealth, tripling and quadrupling their income every decade, while the middle class stagnates or falls behind. This is true not only for oligarchies but for democratic political systems too; at least those based on market capitalistic economics.  The gap has been getting progressively wider and does not promise to abet any time soon. This is especially true for the US.

Here is some revealing data from Pew Research here in the US: An analysis that weighs the U.S. against 11 countries in Western Europe shows that America holds the tiniest middle class, with just 59% of the United States’ population falling between rich and poor on the income scale. By contrast, 72% of the German population falls into that middle-income bracket — defined by Pew to be between two-thirds the country’s median income and double the median — as does 80% of the Danish population.

The insight here, which may conjure up a paradox, seems to be this: the higher the income inequality, the smaller the middle class. Eventually one ends up with “trickle down economics” and with 1% of a country’s population owning more than 50% of its national wealth; which, if truth be told, is a prescription for a Banana Republic.

America among all Western industrialized democracies is also exceptional in this respect: it has  the largest share of people that are considered low-income. Just over a quarter of the U.S. population (26%) live in low-income households, compared with 13% in the Netherlands and 14% in Norway.

There’s another interesting feature to the Pew data: While the U.S. middle-income segment is smaller than in European countries, it takes a higher income overall to make it into that group. The median income for a middle-class household in Italy is $35,608. It’s $44,000 in France and $46,000 in Denmark. But in the United States it’s $60,084.

In Europe, one might only have to make $5,000 more to get to the middle class, but if one is considered  poor in the United States — one needs to climb $30,000 to become middle class.  Unlike in Norway, where eight out of 10 people are in the middle-income bracket, one may misguidedly feel that it means more in the United States. The hard fact to swallow whether one is on one side or the other of the Atlantic is that in most of the places that Pew conducted its social research, the middle class is actually losing members, not gaining them. Consider the chart below:


But there is a caveat for the Europeans too. Between 1991 and 2010, while the United States’ middle-income segment shrank from 62% of the population to 59%, seven of the 11 European countries also saw their middle class decline, some even more sharply than in the US. Only Netherlands, France, Ireland, and the U.K. saw an actual increase.

So, inequality seems a shared experience across the Atlantic, proving the above mentioned axiom that as democracy decreases and goes into deficit, so does distributive justice. Nevertheless our “brilliant” professors of economics continue to expatiate on the glories of global capitalism and trickle-down economics in our universities. One should be grateful, they advise us, that one is at least eating and not starving to death. Grateful to whom? To entrepreneurial greedy and manipulative benefactors of the ilk of Donald Trump and Co., of course. After all, isn’t the whole of life is a great economic transaction?


But, as President Abraham Lincoln, a genuine president, wisely informed us some time ago: “one can fool some of the people all the times, and one can fool all the people some of the times, but one cannot fool all the people all of the times.”


Check Dr Emanuel Paparella's EBOOKS
Aesthetic Theories of Great Western Philosophers
& Europe Beyond the Euro
You can download them for FREE HERE!

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