What Happens When there is No Longer a Middle Class?

12 Sep 2017 10:17 AM | Mike Lillich (Administrator)

By Oren Levin-Waldman


First published online in the Yonkers Tribune.


As troubling as the events of Charlottesville have been, there are issues that go beyond marching White Supremacists and Neo-Nazis, as repulsive as they are. In response to the first group there were counter-protests from some on the left who were also violent. There is absolutely no excuse for hate groups carrying torches reminiscent of the Klu Klux Klan in the South. But there is also no excuse for violent responses. And yet, we are likely to see more such clashes in the months and maybe years to come.


Some will argue that two extremes on either side is a symptom of the absence of a viable political center where it is clear that there are shared core values. In the U.S. those values are liberty, freedom, democracy, free expression and assembly, rule of law, peaceful transfer of power, and equal opportunity. This last value specifically speaks to the ability to achieve upward socioeconomic mobility. Although these are indeed core American values shared across the political spectrum, there are nonetheless sharp divisions over how to bring these values to fruition.


And yet, it isn’t so much that the political center has fallen out as it is that middle class has, and that the greatest challenge the new global economy poses is that of opportunity. If anybody wants to be reminded of history, there is no question that the roots of Anti-Semitism were deeply rooted in Weimar Germany following World War I. But the principal reason for Hitler’s rise was the runaway inflation brought about by the imposition of oppressive reparations by the victorious powers. Moreover, this coupled with the humiliation of Germany being forced to accept full blame for the war.


Obviously the travails of the middle class in the U.S. don’t really compare to the circumstances of Germany following World War I. But most models of democracy are united in one basic theme, which is that in the absence of a middle class, in which case there are two extremes in wealth and income, the circumstances are ripe for social strife, violence, and even revolution. Moreover, we have to assume that world leaders following World War II, not wanting to repeat the mistakes of the post World War I aftermath, understood this all too well.


The U.S. Marshall Plan to rebuild war torn Europe, including Germany and Japan, rested on an assumption that there had to be economic opportunity and prosperity if another war was to be avoided. These were understood to be essential ingredients if democracy, especially in those countries where there had been no tradition of it, was to flourish.

A broad middle class has long been deemed essential to the maintenance of democracy. When there are extremes in wealth and income, the political process often becomes skewed to representing the interests of the more affluent and wealthy. The system becomes less responsive, and ultimately non-responsive, to those at the bottom of the income distribution. Democracy, however, requires the representation of all on an equal basis.


Extremes in wealth and income in the U.S. have only resulted in a polarization in American politics. This polarization has enabled those at the top of the income distribution to be able to devote more time and resources to supporting political parties and/or candidates who are strongly opposed to redistribution, which includes any types of policies that might benefit the poor, the blue collar working class, and even the middle class.


Econometric models of democracy maintain that democracy prevails when there is less inequality. Why? Because economic equality effectively reduces the pressure for redistribution, which could occur as a byproduct of mass revolution and the subsequent creation of an authoritarian regime. Authoritarianism, on the other hand, tends to be prevalent in those countries where inequality is high. The redistributive demands of the worse-off citizens on the wealthy are particularly intense in highly unequal societies.


The assumption is that through redistribution public officials can avoid strife and head off potential violence. This is based on the further assumption that unrest is often a consequence of inequality. Arguably these models assume authoritarian regimes, which are more likely to democratize in response to great inequality. Democratization is likely to occur in order to prevent a revolution which is considered to be a credible threat when society is considered to be sufficiently unequal.


Of course, in a democratic society, or at least a nominally democratic one, the next logical response to inequality would be redistribution. In An Economic Theory of Democracy Anthony Downs argues that public officials pursue policies that benefit themselves. They are more likely to be responsive to the wealthy because they will contribute to their campaigns. Because the poor may become restless, public officials then purchase their quiescence with programs that enhance their money utility. By purchasing the quiescence of the poor, they are free to pursue those policies of greater benefit to the wealthy.


Downs’s logic would imply redistribution, but what happens when public officials simply respond to the wealthy and ignore those at the bottom? After all, a global economy where capital is mobile requires that business climates be favorable to investment. That means lower taxes. Redistribution, however, only fuels the perception that the business climate is unfavorable to investment.


The reality is that there has not been greater redistribution in response to growing inequality. Rather we have seen greater polarization. It is because of the lack of response to the plight of the middle class that we have such polarization in American politics. If the models are correct, it is only a foregone conclusion that there will be more violence. The violence may not begin as a traditional revolution, but as fringe groups protesting and counter-protesting one another.


It does not help when the concerns of the working class are dismissed or deflected by identity politics, or simply a politics of “resistance.” On the contrary, those who feel that their concerns are being ignored are more likely to join fringe groups, if for no other reason that it gives them a sense of identity. If we need any more evidence for why more needs to be done to restore the middle class, we need look no further than the events of the last few weeks.

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