38 thoughts on “A Large Middle Class Isn’t Necessarily Normal”

1. Appreciate the note about “Lazy choices for majors.” As a physics teacher, I’m constantly fighting the “it’s too hard!” reaction from students. It’s hard for you, but it’s also hard for Indian and Chinese students (and many of them study harder)! Ultimately, only “hard-to-get” knowledge is of any benefit in education. I wish you weren’t right about the historical uniqueness of a large middle class. “give me neither poverty nor riches, but only my daily bread.”

   1. 1/2) My study hall just had a discussion about this. The kids who care about learning (or at least understand that a good education is their ticket to a bigger paycheck) are furious that they have to be saddled with classmates who will disrupt their learning and (therefore) steal from their education as teachers have to stop lessons to deal with the malefactors.
      I also now have a regular stream of juniors & seniors asking me for college major advice. Every discussion ends with “oh that’s too hard” as I note what’s required for this week’s interest. I don’t know how many more home-grown engineers we’re going to have…

      3) On the AP Physics email-forum there’s been a discussion recently about the Khan Academy and online schools. That’s a technological “innovation” that several teachers on the forum fear will further divide the wealthy (who will pay for classroom teachers) from everyone else (who will get classroom baby-sitters & online teachers). There are significant practical difficulties (see #5) but then there’s #6: “money / resources vote more”. Any thoughts on the odds of this actually happening?

2. I agree 100% with your points. But given human nature I think its difficult to expect majority of the people in a country to vigilantly work on point 1, 2 and 5 after living through 40-50 years of unrivalled material comfort in history.

   We have had leaders that have been eagerly pandering to a naive/ignorant electorate for their own benefit instead of leading the people to do what is better for the future at the cost of today. At the same time, I am not sure we can elect anyone who doesn’t pander either.

3. I think the first two sentences and the last paragraph were unnecessary. David, I think you might have cut it yourself had you slept over it. Otherwise, couldn’t agree more with you. Thank you

   1. I agree. I see the OWS as an emotional response to realizing what a harsh world we live in after being fooled by our leaders/media/society as well as our own self-delutions. I think its an understandable response and its a voice that needs to be heard.

   2. Apologies. It is hard to focus something to the precise level of critique. I often get criticized for being too light/forgiving in my words.

4. With your logic, if a large middle class is an anomaly, then that makes something like OWS a normal and historically frequent occurrence.

   “If they have jobs, get to them, if not, go find one.” Isn’t the fact that there aren’t jobs why we’re in the current predicament? If the bailouts produced jobs, there would be no OWS.

   1. I wrote extensively against the bailouts, and how they did not preserve jobs. Where I differ with OWS is that protest can’t create jobs; neither can the government, on net. An effective protest, in my opinion, would generate a third party… OWS shows little ability to gather its strength and focus it effectively.

   2. OWS is not opposed to handouts and cronyism, see the heavy presence of union officials; the same people who took taxpayer money from the bailouts and unlike the banks, have not paid it back.

      OWS is just opposed the money is not going to them and their pet causes. That’s the difference between them and the tea party.

      There are jobs, but OWS is not qualified for them. Over 40% of companies cannot find qualified workers and there are over 3 million job openings that cannot be filled.

      Maybe OWS should go get retrained instead of looking for handouts.

      This country desperately needs a “ask not what your country can do for you, ask what you can do for your country” president.

5. David,

   Regarding your comment “I have a bias that modernity is more fragile than commonly believed”, it would be great to see a post elaborating on your thoughts here. I agree with the thought but would be very interested in seeing your reasoning.

   This is somewhat related to the whole question of what time period to use in parameterizing economic models; up until the financial crisis the post WWII era was often regarded as the only relevant period for determining parameters based on historical experience. Since then at least some modelers have sought to include some pre-WWII experience. In a broader context much of what we regard as nornmal today is true only for the period since the industrialization of Britain circa 1800. It is not clear that trends over that time period should be projected into the future.

   huskercr

6. This seems a reasonable riff on the chronological fallacy, assuming that the most recent history is most relevant simply *because* it is most recent. However, I don’t see why pre-modern economics should be normative, either.

   We live in a capitalist economy in which improvements in productivity continue to surprise to the upside. Such developments as improved technology and gains from trade show no tendency to slow, and they are the foundation upon which much of our global wealth has been built.

   If inequality is growing, you need to show why, since 1980, this has been so. Galbraith claims that it is due to the growth of the financial sector, but that is an argument from correlation. Trade and the rise of services explain some of the inequality, but not all of it.

   It’s good to acknowledge your biases, but to paraphrase Kissenger, just because you’re biased doesn’t mean you’re right.

   1. Doug:

      I believe inequality has been shrinking (globally), but growing in the US. To me, the growing inequality here is easy to explain.

      The “Asian Tigers” (Hong Kong, Singapore, Taiwan and South Korea) showed that a small country could build itself into a modern, industrialized economy by devaluing the country’s currency, such that the local wages became more globally competitive and so that capital flowed into the country (in addition, they strongly subsidized exports, education, and a few highly-specialized industries).

      In the 1980s, China began to follow much of the same strategy (see [1]), devaluing the yuan by about 5x, which kicked off China’s current industrial boom. In response, more low-skilled jobs moved away from the US. However, as China’s population is about 15x the combined population of the Asian Tigers, these changes have had a much stronger effect on the US job markets than when the Asian Tigers took similar actions. Furthermore, such a large population makes it hard for China to specialize in a few high-tech areas.. but China has still been quite successful at pulling low-paying manufacturing jobs overseas, raising hundreds of millions out of poverty in the process.

      It’s only within the last 20 years that you hear people talk about US consumers buying “cheap crap from China”, and this trend is the cause. The US has held its ground in its own niche areas, but many of these areas require advanced degrees. Since low-paying jobs have their wages eroded, while high-paying jobs here continue to do well -> growing wage inequality.

      See this image (from [2]):
      http://www.frbsf.org/news/speeches/2006/1106bb.gif

      ~Ben

      [1] http://en.wikipedia.org/wiki/File:1_RMB_to_US_dollar.svg
      [2] http://economistsview.typepad.com/economistsview/2006/11/janet_yellen_ec.html

7. “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?”

   Is there some factual basis for this broad statement or is it merely a convenient premise for starting your tirade?

   “Lazy” choices? When really smart people can barely guess what is going to happen to the market even seconds into the future how can you “blame” young adults for making “wrong” choices when choosing majors that they will be completing four or more years into the future?

   Then just throw in the veiled “welfare mom” reference in point 5.

   To the chronological fallacy I would also add simple Survivor Bias. The arrogance of those lucky enough to have made the “right” choices who must justify their success in a way that eliminates any sense of responsibility to anyone other than themselves.

   1. As for the first point, I didn’t think anyone would question that. Agricultural societies, Monarchies, Aristocracies of old had far more income/wealth inequality than we do now.

      And, this is not a tirade. This is something that I have wondered about for a long time. I genuinely hope that having large middle classes is normal. I fear that it is not so, perhaps you have read my post, “Rethinking Comparable Worth?” That one is even more controversial, though it didn’t generate the heat that it did with you.

      Yes, lazy choices. I have seen it in my own children, and in children my children associate with. This is a common problem, as Duran and Alex, two high school teachers who are quite bright, would tell you about. It is all too easy to avoid math and the sciences, and engineering, and settle on lesser areas like economics, business, philosophy, etc. I single those out, because that is the way I went. If I had it to do all over again, I would have stayed in Chemistry, and you wouldn’t be reading me now, most likely.

      You show your own bias with your welfare mom comment. I always fault the man. I have adopted five children that men would not take responsibility for, in addition to the three that I sired with my wife. Men create poverty through their unwillingness to own up to their actions, the results of which create female and child poverty.

      Your last comment presumes too much. Some of us work in the trenches, trying to aid the poor, most of which is trying to change ingrained life habits, and it isn’t easy. You try helping people who have made a hash of their lives, and you will find that it is hard work. The government can offer various types of assistance, but that is valueless without changing the attitudes of people so that assistance is a desirable thing to them.

      My wife would be annoyed with you, because she looks at my hard work with pride that I made the right decisions for the good of all of us, and all those around us that we aid. Me? I understand. It is unpopular to suggest that some people are lazy, though we all know it is so. I knew that when I wrote this, but I took the risk anyway, because it needed to be said.

      If you still have more to add, go ahead. My friends and I are conservative, but have been active in poverty ministry.

      1. You show your own bias with your welfare mom comment. I always fault the man. I have adopted five children that men would not take responsibility for, in addition to the three that I sired with my wife. Men create poverty through their unwillingness to own up to their actions, the results of which create female and child poverty.

         David, I think you are wrong here and have it backwards, and I literally could type out a PhD dissertation here, as the state of current male-female relations, sexuality, marriage is an area of intense interest to me that I have studied in-depth. You don’t understand the cause-effect here.

         Short version. Up until the 1960s, female sexuality was controlled by culture and religion. The sexual revolution unleased female hypergamy. Google that and start reading. Women are the sexual gatekeepers. They have been so for thousands of years. Men can only engage in bad behavior to the extent women abdicate that role. Men pursue, women choose. Things fall apart when women choose badly and unwisely.

         Start reading here:

         http://dalrock.wordpress.com/2011/11/15/40-years-of-ultimatums/

         I have papers I can e-mail you if you want further exploration of this topic.

         One interesting question on my mind is how much has the monogamous relationship with a father and mother been responsible for economic success and to what degree will its breakdown contribute to economic stagnation and problems.

8. Spot on David, spot on!!!

9. First I want you to know I am not upset with what you wrote yesterday. However it did give me some fearful dreams last night of trying to work in an environment of ever increasing poverty and solitude. So there was a part of me that wanted to be snarky and say, does that mean with what’s happening to Europe means the conservatives are ready to abandon the marginalized now, just as the liberal abandoned them decades earlier when the grant money started running out.

   Perhaps what’s important here is, what kind of world do you envision when the middle class is gone? I started working on that vision seven years ago in the hopes of creating a better, proactive reality. But sometimes I fear society has become so fragmented that there will never really be a way to implement proactive strategies.

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11. Would you provide a link to

    Rethinking Comparable Worth?

    Thank you.

    1. http://alephblog.com/2008/06/21/rethinking-comparable-worth/

    2. Thanks to Luke for providing the link. I was gone.

12. Countries that are more equal, as measured by the Ginnie coefficient, have the lowest standard of living. Those with the highest dispersion have the highest standard of living. The poorest in this country are in the top 5% of global income distributions. You can have an equal society, where everyone is poor (except the political class). Equal societies are the goal of dictatorships, communist, and socialist regimes.

    This also highlights the problems with government interjections in the student loan market. You are given the same amount regardless of major, despite vastly different payoff probabilities.

    1. I don’t think that’s true, HistorySquared. Take a look at a map of the world, sorted by Gini coefficients:

       http://en.wikipedia.org/wiki/File:Gini_Coefficient_World_CIA_Report_2009-1.png

       Most of the 1st-world countries have particularly low Gini coefficients, with the US being the big exception, and to a lesser extent, Japan. It is certainly *not* true that the most-equal countries generally have the lowest standards of living, nor that those with the highest dispersion have the highest standards of living, unless you believe Botswana and Columbia to be rich and prosperous countries.

       The converse is not true; while rich countries tend to be equal, and unequal countries tend to be poor, you can find plenty of poor countries that are more equal than the US.

13. Western European countries facing bankruptcies and a Japan that is poised for a debt crises (and perhaps hyperinflation) are not models that i would consider as successful arguments for more government redistribution to promote “fairness.”

    I would look perhaps at the countries of tomorrow: South Korea, Hong Kong and Singapore – all of which have very high gini coefficients. Conversely, you have Pakistan, Kurdistan, and Tajikistan with low gini coefficients.

14. I agree with most of your comments, except this: ?societies that tolerate a lot of children born out of wedlock .. create an underclass of poor women”

    Better review your history. We?ve lived through many centuries of ?underclasses of poor women? with illegitimate children (whether or not there existed a middle class). During those hundreds of years, illegitimacy was not publicly tolerated at all, but continued non-stop thanks to unscrupulous royals, businessmen, politicians, and popes, all of whom publicly denounced immoral behaviour but practiced it in private.

    The middle class got bigger when people finally spoke the truth about what was happening, and women weren?t shamed into hiding anymore.

    I?ve met just as many lazy, screwed up rich kids as successful, hard-working kids from broken homes. All it takes is a community of people that care, not just 1 or 2 parents.

    1. Sorry, but this is relatively certain. Most poverty in the US is female headed households with kids. I fault the men here. You sire a child, you support the mother and child.

       And also sorry, but illegitimacy was a lot lower in the past. There is some historical revisionism going on, but when society did not tolerate sex outside of marriage, guess what, there were fewer single mothers with kids. What was more common was single fathers whose wives had died in childbirth.

       Yes, there have been many within the rich that led immoral lives in times of old, but less so among the poor, where it could lead to your death.

       1. Sorry, but this is relatively certain. Most poverty in the US is female headed households with kids. I fault the men here. You sire a child, you support the mother and child.

          I largely agree, but going back to my previous comment, why are women having sex with irresponsible men unlikely to support their offspring. That is actually a pretty complicated question with answers that take you far down the rabbit hole.

          1. Last comment for the night….thought to ponder. Why do serial killers and prison inmates get sexual interest from women and things like love letters? Is there any equivalent behavior from men toward female sociopaths?

             Female sexuality is a fascinating thing, and there were very good reasons society had strong cultural restraints/shaming around it up until the 1960s, and that there were heavily influences on who they would mate with beyond just their own choices.

             Not sure how radical some of this sounds, but the fact is there are some very uncomfortable truths here once you really explore this.

15. Yes most poverty-stricken households are led by women, but it?s not caused by a declining middle class or immoral acceptance of illegitimacy. There are plenty of countries around the world where illegitimacy is considered unethical and is severely punished, but it?s still growing everywhere – NA, Asia, and Africa.

    One reason is because women are discovering that they don?t have to stay married to alcoholics or drug addicts or philanderers. That’s actually been a step in the right direction.

    But, at the same time, women don?t have access to the same wages or good jobs or education. Then if those women each raise 2 kids in poverty, those kids repeat the cycle, and the problem multiplies.

    Would it have been better for those women to stay married? No.

    What?s better is for girls to learn not to depend a ?knight in shining armor? to make things right. Then maybe they would stay away from boys longer. And yes, men need to take more responsibility for their offspring. But both women and men need better educations to understand the impact of having kids.

    1. There are only two reasons to divorce: adultery and desertion. There are no reasons for promiscuity.

       I understand that many men are jerks, and should not be married, but that is something to evaluate in advance, with counsel from all those that know him. Few women do that, though, because of “romance.”

       Get the cold hard facts from those that know him/(her). What is he/she really like? Don’t copulate with anyone you don’t know well enough to want to be with for the rest of your life.

       Look, I favor that all should be more careful in marriage, and avoid sex outside of marriage. Yes, there are boorish men who abuse women in marriage, and they are to be deplored, publicly if possible.

       But marriage offer huge advantages to the stability of society if it is pursued with vigor. As for me, my wife and I just had our Silver Anniversary.

       1. If a woman is being physically abused by her husband, divorce may be the only possible solution that saves her life and the lives of her children if she is living in a jurisdiction that doens’t take spousal abuse seriously.

          Not everybody is as committed to doing the right thing as are you and your spouse. There are conditions out there that you possibly have never seen or imagined, which might dissuade you from your absolute opinions regarding divorce. I have found it serves me well to leave myself open to doubt whenever I am considering anything within the moral realm.

          1. I don’t think I ever said anything about abuse. Of course, separation at minimum is what I would counsel regarding abuse. But abuse may happen more frequently in relationships outside of marriage… at least, I think that’s how the stats go…

             1. My response was triggered by your assertion that only adultery or desertion should result in divorce, so I am comforted if you aknowledge that abuse is also a valid reason.

             2. Along with Calvin, I would view physical abuse as a reason for separation, and notification of the civil government and church elders.

                The actions of the authorities would then deal with the abusive husband, who might be taken away (or beaten depending on the era), or repent.

                My views are those of Jesus Christ and the Apostle Paul. I don’t have any other sources to rely on here.

16. A truly despicable post.

    Which shows you completely misunderstand the energy and spirit behind the Occupy movement.

    No one in Occupy is opposed to fair pay for fair contribution to society.

    Occupy is opposed to theft of resources by your class through systemic and uneconomic means.

    It astonishes me that you don’t understand this.

    I’m a member of the 1% myself. But the hatred I feel toward you who simply dismiss an entire swath of society as “freaks” is beyond my ability to believe. I would gladly lose my life if I could take yours with it.

    1. I’m not part of the 1% — on an income basis, I’m in the lowest quintile.

       Also, I did not call them “freaks.” I called them part of the freak show. From me, that means something different in America, we’re all one step away from being part of the freak show. There are so many differences, and few similarities — as a culture, if we have a culture, we accept the greatest degree of nonconformity.

       Occupy doesn’t stand for anything. If they stood for something, they would organize formally, and become an interest group, or better still, a political party. That’s been my leading criticism of Occupy from the beginning. It is lazy to protest. Politics is hard work. There have been all manner of movements that accomplished change in the US, but almost every one created formal organizations, and even political parties to do so. That’s why Occupy is a zilde.

       Now, I have probably written more against bailouts and aspects of crony capitalism than all but 20 writers on the web. I have interacted with politicians, academics & regulators to try to affect matters, speaking on the radio as well. Formal processes for change are more powerful than disorganized protest.

       “I would gladly lose my life if I could take yours with it.”

       Well, congratulations, you’re the first person I’ve ever known that wants me dead, but I seriously doubt you would sacrifice your own life to do it. Do you really mean that?

    2. That is beyond out of line, You are nuts talking about taking lives over a blog post. Get a grip, and go see a psychiatrist.

17. David, I admire you for responding with such equanimity to that post. I thought we can only pray for someone like RN. S/he doesn’t know the hell s/he is living in.

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