This is not likely to be a popular post. Just warning you.
I have a bias that modernity is more fragile than commonly believed. One aspect of that is income/wealth distributions. Inequality was far more pronounced in the past, and was fairly stable in being so. So why should the last 150 or so years not be viewed as a possible aberration?
Let me give you five or so reasons why the middle class should shrink:
1) Education — middle classes in the developed world were relatively large when the education systems produced a large portion of the educated people of the world. That is no longer so, and relative education levels have tipped against the US. Any surprise that we fall behind?
2) Lazy choices for majors/jobs — “follow your bliss” is stupid advice if no one wants to fund your bliss. All prosperity comes through serving the needs of others. Follow their bliss, not yours, and you will do well.
3) Technology — some technological advances aid equality, and some aid inequality — we have been getting more of the latter lately. If a technology aids one person to serve many at low marginal costs, it will aid inequality, unless the technology is broadly shared and used.
4) Global Conditions — Resources are scarce. Capital is somewhat scarce. Unskilled labor is not scarce. Skilled labor is somewhat scarce. For those that have not prepared themselves to be productive by having needed skills, it is a tough time. You won’t be carried along by the prosperity of your nation, because there are many others competing against you overseas, which was not true in the 50s, 60s, and 70s. (Nor even the 80s and 90s, in degree…)
5) Personal Ethics — Societies that tolerate many children conceived out of wedlock, and no-fault divorce create an underclass of poor women with children, and the children are far less able to compete because they have no father figure.
6) Politics won’t change things — this is yet another hard reality. People may vote, but money/resources “vote” more. Especially in societies where education has slumped, power gravitates to those that will better the whole, even if it means the elites get more.
Someone please send the memo to the “Occupy” crowd, and tell them that have succeeded at being the “freak show” amid changing times, but utterly irrelevant to the changes happening around the globe. If they have jobs, get to them, if not, go find one. You might be relevant then.