Thursday, January 05, 2006

What of the great middle class?

In America, "the middle class" encompasses everyone. Ask around. Most of the rich and almost all of the poor call themselves, at best, upper and lower-middle class. No one here ever really admits to being rich or poor. Neither do we admit, even to ourselves, that wealth is a fairly fixed thing in our society, that the vast majority of those who are born poor or wealthy will never leave that state.

And yet, I suspect a new wave of social mobility is in the works, one that rivals the Veblens development of the middle class - the move of the middle class into the realm of the poor (comparatively - if we're being honest with ourselves, all Americans, poor or rich, are so astonishingly wealthy compared to most of the rest of the world that we can't even imagine, but then again, context is everything), all without anyone in the middle class noticing.

The first step has been the refusal of the government to contain the costs of health care in any sane way - meaning that the poor, and even middle class in our society have something in common with the poor of the third world - they can't afford the medical treatment they need. As more companies decline to provide insurance, or demand huge payments from their employees, and health care costs rise, parents, the elderly and anyone with a medical problem gets poorer.

Next, note that while we all were so pleased to see that the GDP was rising, that rise provided absolutely no benefit to the middle or lower classes - nada. The country got richer, but only really rich people actually experienced a net benefit. In fact, adjusted for inflation, the rest of us were worse off.

Now watch the way that rising energy prices (yep, they are still rising!) are affecting consumers - as more of their income goes to keep warm and get to work, they can afford less. The poorest percentages are already making choices - food or heat? Medicine or gas? Our local fuel assistance programs are totally overwhelmed.

How long before the pattern drags the "middle class" down with them. Don't get me wrong, no one will ever stop calling themselves middle class, but we'll start to notice that the things that have been the hallmark of that class are gone - home ownership, health insurance, travel, leisure, entertainment - and the fact that people can no longer indulge in the above is likely to hurt the economy further.

It may be that someday, everyone is still calling themselves middle class here, despite the fact that we've moved to a perfect, two class society - the poor and the rich - eliminating 500 years of economic progress.