Wednesday 06 Oct 2021 | 21:52 | SYDNEY
Wednesday 06 Oct 2021 | 21:52 | SYDNEY

Life in the middle (1): Decline and fall?


Mark Thirlwell

8 June 2012 08:45

One close relation to the current debate over inclusive growth and inequality that I highlighted in a previous post is a parallel discussion regarding the fate of the middle class. A particularly noteworthy feature of this second debate is that perspectives on the issue are highly conditional on just which middle class is under discussion.

Thus, in significant parts of the developed world, the story is about a middle class under sustained pressure. This applies to Europe, where life has become much tougher in recent years, even for the relatively affluent. But it's a view of the world that has gained particular traction in the US, where the post-GFC period has  brought much angst regarding the supposed hollowing out of the  American middle class:

(Source: Reuters.)

Several analysts have worried about the potential negative consequences of this trend. For example, back at the start of this year, Francis Fukuyama had an essay in Foreign Affairs wondering whether liberal democracy could survive the decline of the middle class. Fukuyama has joined a growing number of pundits in arguing that a combination of technological change and globalisation had served to undermine middle class incomes in the developed world.

As well as this negative story about life in the middle, however, there is also a much more positive story to be told. That's the subject of my next post.