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Source link: http://archive.mises.org/15417/the-myth-of-a-middle-class/

The Myth of a Middle Class

January 25, 2011 by

The concept of “middle class” implies that there are collective interests resting in the middle ground of a social hierarchy that never change and have to be preserved by a political authority. FULL ARTICLE by Cristian Gherasim

{ 30 comments }

The Anti-Gnostic January 25, 2011 at 10:30 am

One can acknowledge the reality of social class without resorting to Marxism. Humans are hierarchical animals, reflecting the Gaussian distribution of intelligence, ambition and other traits among individuals. Humans are also pack animals, forming families, enterprises, tribes, creeds, etc. There are many situations where individuals can perceive an attack on one as an attack on all, and close ranks to defend a mutually shared interest. Certainly this is how our ruling elites view things, to their individual members’ vast enrichment.

For those of us in the middle of the Bell Curve, most just want to live their lives and provide for their families even though we lack the talent to be Steve Jobs. In a free market society this is possible, as comparative advantage enables everybody to find their own small pond. If I can just keep my humble coin without the vagaries of inflation and taxation, I can still have a very good life even though I can’t do quantitative analysis and hire tax lawyers like Warren Buffett.

The elite and the net-consuming classes rightly regard the generally conservative, generally minarchist middle class as a hindrance, so they seek its destruction through fiscal, monetary and immigration policy, the goal being a two-tiered society like Mexico or the old USSR.

nate-m January 25, 2011 at 11:05 am

When I think of the ‘middle class’ I define it as the group of people that are productive enough that they provide for all their family’s needs without being forced to go into debt or welfare. Also they are not wealthy enough to be independently wealthy… that is they still depend on a regular pay check to get them through normal month by month living expenses. Also that they generally choose to go into debt to give themselves a ‘boost’ in living standards.

So if your willing to accept those definitions then it’s pretty obvious very quickly that whether or not your a member of the ‘middle class’ has less to do with how much money you make, but how you choose to live your life. There are people that have a personal income of 200 or 300 thousand dollars a year that are utterly dependent on their employers and wouldn’t not be able to maintain their lifestyle for more then a few months being unemployed. But there are plenty of people who make a quarter of what those people make in paychecks, but could quite easily quit their jobs and live the rest of their lives based on their investments with little or no loss in quality of lifestyle.

However the government sees the middle class as their great class of human cattle. The lives they burn away to maintain their debt, credit ratings and the consumer goods they purchase is the fuel that powers large privileged enterprise and government activities. You need to keep them well feed or risk losing your power and your economic engine.

Dave Albin January 25, 2011 at 11:35 am

Wouldn’t a liberal immigration policy make us all better off? If immigrants are paid less (voluntarily), goods and services would cost less, making us all wealthier.

J. Murray January 25, 2011 at 11:39 am

It would. Fear of immigration is partly a response out of the fear of the unknown and party because of the large welfare state that has been created around us. Without programs like publicly funded schools, there would be no illusion of rationality behind anti-immigration stances.

The Anti-Gnostic January 25, 2011 at 12:04 pm

It’s not fear of the unknown, it’s fear of the known: Third World immigrants with higher rates of social pathology.

The elite have the resources to insulate themselves from the effects of their taxpayer-subsidized labor arbitrage.

newson January 25, 2011 at 7:40 pm
Vanmind January 29, 2011 at 4:10 pm

*COUGH* Bigot! *COUGH*

Dave Albin January 25, 2011 at 11:41 am

The real problem we have is that a lot of what we call the middle class is propped up by the state. Government jobs, jobs that only exist due to regulations, people living 30 years on a state pension, etc. All things that will either be severely reduced or eliminated as they fail with more and more users. This is the real problem – the coming crash by the middle class. A natural, sustainable middle class would exist without all the propping.

The Anti-Gnostic January 25, 2011 at 12:10 pm

If a million immigrants a year is good, then ten million immigrants a year should be great. There won’t even be a middle class because we’ll all be filthy, stinking rich.

Jim Dahlberg January 25, 2011 at 12:38 pm

If ten million people chose to immigrate, that would be great. I see no problem. Ask them to bring their kids.

The Anti-Gnostic January 25, 2011 at 1:30 pm

How about this: instead of importing, say, Haitians here, we just import you to Haiti? That way you can get the full benefit of what life is like when all your neighbors are Haitian.

Jim Dahlberg January 25, 2011 at 1:49 pm

We are not importing Hatians. Hatians come here to make a better life for themselves, which is their right. And no, I don’t want to go to Haiti. I don’t even know where to begin with that comment.

nate-m January 25, 2011 at 3:06 pm

If all the hatians moved here then I would happily move to hatia. The weather is much nicer.

Vanmind January 29, 2011 at 4:09 pm

Your bigotry is showing…

Dave Albin January 25, 2011 at 3:53 pm

We would all be a lot richer without barriers to trade, regulations, etc. The free market would allow prices for everything (health care, housing, gas, especially) to fall drastically. More people are a key part of this.

The Anti-Gnostic January 25, 2011 at 4:48 pm

More people are not “a key part of this.” If it were just a question of high population density, then Bangladesh would be wealthier than Switzerland. If high population density were a good thing, the middle class wouldn’t be voting with their feet for the suburbs and all those faux ranches owned by East Coast millionaires out in Wyoming wouldn’t exist.

The elite up the ante by increasing demand for housing in lower population density (i.e., low-crime) areas. How ‘diverse’ do you think the Kennedy compound gets once the help has finished washing the dishes?

SirThinkALot January 25, 2011 at 6:12 pm

more people=more labor input. Ie. the more stuff you can get done, on top of that, areas with high population density are more likey to have enough people to support niche markets, in a city of one million people you need only attract 1% of hte population to stay in business, where as in a small town you’d to attract considerably more.

Its why, in general, you have more theater, more clubs and resturants, more shopping opportunity, and more production in large cities than small towns. More people to do jobs, and more people to support businesses.

Of corse more people does bring other problems, and some people would rather live away from all that, hence you have people living in small towns or even on houses miles from everyone else. And, at least in the US we have pleanty of space(all 6 billion people on earth could fit with releative comfort in the state of Texas alone).

And no, population density isnt the only thing determining a countries productivity, but it helps.

SirThinkALot January 25, 2011 at 12:38 pm

Yes, an almost completely open boarders would be an ideal, in fact I’d favor an almost completely open boarders: a basic background check to make sure theres no terrorist connections or serious criminal backgrounds, and you can come and live in this country. Although to be honest, thats assuming there will always be a government to enforce the ‘boarders.’ In an anarcho-libertarain society, the idea of ‘immigration’ would be pretty much meaningless.

However the existance of the welfare state complicates this somewhat: As long as its possible to come over and mooch off of the productive members of this country, there will always be some immigrants who will do so. I think we need to deal with the welfare problem before we can seriously handle the immigration problem.

Dave Albin January 25, 2011 at 3:49 pm

AC world = no state welfare. If we can’t deal with it, just wait until the federal government is insolvent and greenbacks are worthless.

Zach Bibeault January 25, 2011 at 12:30 pm

The easiest way to explode (hat tip Mises) the claims that X policy “hurts the middle class” is to insist that the person establish the upper and lower boundaries of that class.

For if a policy indeed has a direct concrete effect on one concrete “class” (which is impossible because individual actors cannot be classed), there would have to be an upper and lower boundary where — right outside the boundary — the effect would STOP.

Once you have established that, the person can no longer deny that phenomena affect people differently, not in one concrete fashion that defies the social sciences.

Richie January 25, 2011 at 1:09 pm

“…the person establish the upper and lower boundaries of that class.”

According to governmentspeak, the lower boundary is the income just above the poverty level for a family of four, and the upper boundary would be an income of $249,999.99. Any thing in between is considered “middle class” I guess.

augusto January 25, 2011 at 4:27 pm

“The easiest way to explode (hat tip Mises) the claims that X policy “hurts the middle class” is to insist that the person establish the upper and lower boundaries of that class.”

What are you talking about? There are very clear boundaries for economic classes.

I know this. I’ve done work with surveys, and there is this neat survey where they ask what kind and how many TV sets you own, what car you drive, what your income is, etc., and based on that, one can determine what “class” you belong to.

This tool is very commonly used in marketing and product development. It helps entrepreneurs decide what the market is for their products.

Funny thing is, there are studies that show people who own the same things, have the same income and the same family structure, often have the same interests and the same attitude towards life.

Dick Fox January 25, 2011 at 2:29 pm

How many people do you know who are striving to be middle class?

Stranger January 25, 2011 at 6:39 pm

The middle class is a product of the capitalist system, and can be understood using Marxism’ relation to capital theory. Simply put, traditionally you were either a property owner or a peasant. Property owners would get the right to vote, but peasants were considered politically dangerous and did not. Under capitalism, small artisans who owned their own tools and enterprise were driven out of the market by large capitalists who employed labor to work from capital they were alienated from. This labor, while not wealthy enough to own the capital they used to earn their living, was still wealthy enough to own assets, such as houses, bonds, or shares. They were not, on the other hand, empowered to make economic decisions over what production the economy should undertake.

The middle class is therefore defined as the class of people with assets to protect, but with no familiarity with the workings of the market economy.

sweatervest January 25, 2011 at 7:30 pm

“Under capitalism, small artisans who owned their own tools and enterprise were driven out of the market by large capitalists who employed labor to work from capital they were alienated from.”

Then why didn’t all the small artisans start employing labor? What made the would-be “large capitalists” more capable of accomplishing this?

You can certainly define the “middle class” as the last line of your post, but this fails to explain why there is any distinction at all, and does not establish that it is any harder to move out of this class than it is to move around within it (socioeconomically, that is). Thus any social theory that uses this class division as a basis will produce flawed results. The classes of society exist in our heads, not in actual society.

That’s what I think of when I think of the “myth” of the middle class. A middle class is whatever you want to define it as enclosing, but this categorization makes no impact on society. It cannot be a caste. The artisans are “pushed out of the market” only if they continue to refuse to employ labor.

nate-m January 25, 2011 at 8:11 pm

Then why didn’t all the small artisans start employing labor? What made the would-be “large capitalists” more capable of accomplishing this?

A lot of them did. The small artisans that did start employing labor and engaging in mass production are the ones that became large capitalists.

The ones that didn’t went off and did something else that was more useful for the economy surrounding them.

Stranger January 25, 2011 at 8:41 pm

You are missing the point. The political regime of the middle class will be vastly different from the political regime of the capitalist or “traditional property” class. The latter will favor the market economy, while the former just wants their assets protected from competition.

This explains why political regimes were much more favorable to the market economy in the 19th century than in the 20th, when power was transferred to the middle class.

John P. Cunnane January 27, 2011 at 8:46 am

Man is fundamentally social. The examples involving the Kennedy compound and some wealthy people buying ranches is anecdotal but in both cases they are likely second homes, not primary residences. Density does provide critical mass for the arts, sports, all kinds of goods and services that can’t be supported in less populated areas.

Unfortunately you can’t have open borders with statist, nationalistic economic policies.

The one point that is not addressed here but is made often by Mises and the writers and lecturers at the Institute is that man is not purely economic. Many people, seemingly more and more, do what they need to do in school and in their jobs in order to get by. They may value leisure time, socializing, there favorite sports team, family time, night life, et al over further financial gain. Perhaps those decisions have short term benefits and long term consequences. In my experience people that live this way are often happy. The government sees it as their mission to reallocate financial resources from high economic achievers, often made successful by years of disciplined study or toil, to those that may have valued other priorities. I am not saying that opportunities are always equal and their are not strivers that fail but in many instances people live their values and benefit in different ways. You can’t reallocate the sexual pleasures of someone that spent their lives chasing beautiful people or the good times had by those staying out late. You can’t reallocate the joy a musician feels by mastering an instrument or the joy an artist feels by honing is talent. You an easily reallocate the money saved by the workaholic, business owner, innovator. But it is illiberal and unfair to do so.

Dave Albin January 25, 2011 at 11:54 am

I enjoy my inexpensive yet quality food every day thanks, in part, to legal and illegal immigrants. Get out in the fields and work for little money – oh wait, you’re a native born American…..

nate-m January 25, 2011 at 4:12 pm

Get rid of the welfare state and the that would fix half of the problem. Get rid of immigration law would solve the other half.

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