Raise your hand if you have the richest middle class in the world. Not so fast, United States!
David Leonhardt and Kevin Quealy, writing for the New York Times, report that the U.S. no longer has the wealthiest middle class in the world. But, rest easy dear reader, the wealthiest Americans are still the richest rich people in the world. So we have that going for us.
So, what happened? Did our middle class stop being as productive, in relative terms, than our wealthiest citizens? Or did the upper class gain more leverage over the years with which to appropriate the wealth produced for themselves?
The report begins:
The American middle class, long the most affluent in the world, has lost that distinction.
While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades.
After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans.
The economic growth in the U.S. continues to be as strong as in many other countries; our middle class just isn’t benefiting terribly much. The poor have it worse. The usual response from those who don’t regard increasing income and wealth gaps as a problem is some variant of our middle class – and especially our poor – of being lazy and stupid. The economy is a morality play and the only way you fail or succeed is if you deserve to. Market don’t lie.
The report attributes the loss of ground by our middle class to three factors: 1) Our educational attainment – literacy, numeracy, and technical skill – is less than other countries; 2) Our top execs and management take a bigger piece of the productivity pie for themselves, minimum wage is lower, and unions are weaker; and 3) our government isn’t nearly as aggressive in redistributing income to raise the take home pay of lower and middle income households.
But socialism kills productivity, right? Not necessarily:
Even with a large welfare state in Sweden, per capita G.D.P. there has grown more quickly than in the United States over almost any extended recent period — a decade, 20 years, 30 years. Sharp increases in the number of college graduates in Sweden, allowing for the growth of high-skill jobs, has played an important role.
And of course, the poor in the U.S. have been doing worse for longer. But, we don’t care about them because they deserve what they get — on account of their laziness, lack of mental acuity, and poor life choices. But, those in the 95th percentile are doing much better than their counterparts in Canada, Britain, and the Netherlands. Which is as it should be on account of their pluck and ingenuity.