First Principles April 2007

The Phantom Menace

What war on the middle class?
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Englishmen are thought to be preoccupied with social class, and it pains me that I am about to conform (not for the first time) to stereotype. In fact the stereotype is out of date. You might think I’m protesting too much, but the truth is I gave hardly a thought to the issue for years—not until I came to live and work in the supposedly classless United States.

By the time I left England in 2005, class was no longer a very interesting subject. Of course you could still divide the country’s people according to sociologically pregnant signifiers such as manners and elocution. You can do that kind of dividing up almost anywhere, including here, since in this sense there is no such thing as a classless society. Politically speaking, however, class in England lost the last of its salience in the 1990s. Today you rarely, if ever, hear a British politician mention the subject.

You could not say the same of the United States, though, could you? In this country, voters and politicians seem to think and talk about little else, at least when it comes to domestic affairs.

The middle class of this country, our his­toric backbone and our best hope for a strong society in the future, is losing its place at the table. Our work­ers know this, through painful experience. Our white-collar professionals are beginning to understand it, as their jobs start disappearing also.

That was Senator James Webb, in the Democratic Party’s much-praised response to President Bush’s State of the Union address. He was even more outspoken last year in an article for The Wall Street Journal, aptly titled “Class Struggle”:

The most important—and unfortunately the least debated—issue in politics today is our society’s steady drift toward a class-based system, the likes of which we have not seen since the 19th century.

Webb was wrong to say the issue is not much debated. The middle class and its many burdens and grievances are the organizing idea for almost everything Democrats and Republicans alike have to say about the economy. And it’s not just politicians. Commentators are cheering them on. (Lou Dobbs’s new book defines this resurgent populist genre in its title: War on the Middle Class.)

How strange this American appeal to class interests is, at least to an Old Worlder like me. England used to have, in the European fashion, three classes: posh gentry, professional bourgeoisie, and manual-laboring working class. Middle-class was a term of disapprobation: To call somebody middle class was to say they were smug and complacent. Clever English progressives, whose political home was the pre-1994 Labour Party, spoke up for the working class; dull Tories, “the Stupid Party,” were the traditional representatives of the middle class. Then Margaret Thatcher broadened the base, and begat Tony Blair; and class largely disappeared from the parties’ calculations.

America’s class structure, judging by how often politicians refer to it, has increasing political weight. But the United States appears to lack a working class—the whole point, as Marx explained, of having classes in the first place. Instead it has rich people; a politically impotent underclass (for whom nobody speaks up); and a remarkably expansive, proud, and patriotic middle class, which both parties woo. The incomes of Americans identifying themselves as middle class might run from $25,000 (about half of median household earnings) to 20 or 30 times that. In America, it is scarcely exaggerating to say that if you aren’t actually poor, and if you have fewer than three homes and do not commute in a limousine or helicopter, you call yourself middle-class.

The vast width of this middle, some three-quarters of the population, has long been a great source of economic strength to the country. I am not the first to notice that America has exalted its bourgeois convictions on the importance of work, education, and self-reliance, or that those are the values that give strongest support to enterprise, innovation, and economic growth.

The heft of the country’s middle class has been a political asset, too. Since the poor don’t vote and the rich are too few to mention, the middle class chooses all by itself who runs the country. The electorate is divided, to be sure, but mainly by noneconomic values. The convergence of perceived economic interests means that the political parties in the U.S. are both far closer to a common economic center than their European counterparts are, and closer to each other than they themselves would like to admit. Policies are presented—and to some extent, at least, must be devised—in such a way as to appeal to this great, broad mass of middle-class Americans. And that is good. If you doubt it, study some European economic history.

However, when politicians and commentators talk about a “war” on the middle class, that is not so good. Invoking an enemy who is prospering at the expense of most (“decent, hard-working”) Americans is unconducive to wise policy. It casts the problem as an issue of distribution—a struggle for the spoils. But the prospects of the great mass of Americans, as a matter of arithmetic, cannot be much improved by mere redistribution. There are too few designated losers.

And who could this Other, this segment profiting at the expense of the mid­dle class, be? The poor? That hardly seems likely. So this leaves just the rich—that sliver of chauffeured plutocrats—and foreigners. Designating the rich as the enemy, though, is likely to be counterproductive. Thriving enterprise and magnificent rewards at the top tend to go together. So do a vibrant economy and liberal regimes for international trade and immigration. If you doubt it … well, I already said that.

Admittedly, America’s plutocrats have been pushing their luck recently. They were already doing fabulously well by any standard, even before the remarkable and somewhat mysterious surge in their pretax incomes that started in the mid-1990s; also before the tax cuts of 2001–2003, so brazenly skewed to their advantage. One wonders whether the administration has actually done the rich any favors, by piling it on that way. Most of the tax cuts (due to expire in any case in 2010) are likely to be reversed by the new Congress. For the good of the broader economy—for the good, that is, of the middle class—the backlash probably ought to stop there, but who knows? If it goes further, the plutocracy will have Bush to thank. Foreign trade and immigration are different cases, and more straightforward. Assaulting those particular enemies (foreign businesses and immigrants) will be instantly self-defeating. Any kind of new restriction is going to hurt the middle class by slowing growth or raising prices.

Is the American middle class really as beleaguered as it appears to think? That’s debatable, at least. The stagnation of real incomes—that much-cited statistic—seems belied by a steadily improving quality of life. Capturing improvements in the range and quality of products, so that meaningful comparisons of incomes can be made over time, is a difficult statistical problem, and the statistics must be taken with a grain of salt. Who really believes that ordinary Americans are barely any better off in material terms than they were in the early 1970s? There were no cell phones back then, no video games; few homes had microwave ovens. There were no iPods, if you can imagine. Life was hard.

The claim that job insecurity has worsened in recent years also seems exaggerated: Overall measures of job tenure and job displacement show no marked change. The idea that the middle class is burdened by unprecedented amounts of debt—that people are having to borrow to make ends meet—is overstated. Most personal debt is mortgage debt, generously subsidized by taxpayers, and backed (for the moment, at least) by highly appreciated holdings of property. Delinquency is rising, especially for “sub-prime” borrowers (those with weak credit histories), but the proportion of households getting behind in their debts is still very small. You may be surprised to know that more than 40 percent of middle-income households carry no credit-card debt at all.

America’s middle class does, however, have some tough choices to make. The public retirement-savings system is broken and will require a lot of taxpayers’ money—or extra years of work before retirement, or both—to fix. Large parts of the public-school system are failing, and the cost of a college education keeps rising faster than incomes. The country’s health-care system is unsustainable in three ways: Demographic pressures are rapidly making Medicare unaffordable; per-patient costs are rising out of control; and companies are using improving technology (the ability to predict who is going to fall ill with what) to declare uninsurable some of the people who are likely to need health insurance the most. These are real issues. The middle class has grounds for anxiety, all right.

But addressing these challenges is not something that can be done at others’ expense. That is the drawback of having a middle class that includes nearly everyone. Clawing back the plutocrats’ tax windfall of the past few years is fine, and it will feel good, but it won’t come close to paying for solutions to those problems. If America’s broad middle class is going to have to pay—and it is—hard questions will follow about how to share the burden between the struggling middle, the comfortable middle, and the luxurious middle. The middle will need to be unpacked a little, and the politics might get messy.

Clive Crook is an Atlantic senior editor.
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Clive Crook is a senior editor of The Atlantic and a columnist for Bloomberg View. He was the Washington columnist for the Financial Times, and before that worked at The Economist for more than 20 years, including 11 years as deputy editor. Crook writes about the intersection of politics and economics. More

Crook writes about the intersection of politics and economics.

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