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Is shrinking the middle class a good thing?

Why some conservatives reject concerns about economic inequality

December 24, 2015 2:00AM ET

A recent report from Pew Research, “The American Middle Class Is Losing Ground,” isn’t exactly conducive to holiday cheer for most of us. Middle-income households, defined as those earning $42,000 to $126,000 a year, are capturing a smaller share of the American pie; the middle class, after enjoying a great run as the country’s majority economic group for four decades, appears to have sputtered. In terms of income share, this group is now matched in size by the economic tiers above and below it.

But to many laissez-faire conservatives, this news is far from gloomy. Writer-provocateur and Adam Smith Institute fellow Tim Worstall, writing at Forbes, complains (after warning that people often read statistics to justify their political biases) that the report will send folks “bleating away about the death of the American middle class” and collapsing into “shrieks of egalitarian horror” when we should be cheering. He argues that the “bleaters” have got it wrong. The real story is not that the middle class is shrinking but that the upper middle class is expanding and, most important, the ranks of the poor are decreasing.

In Worstall’s mind, the poor appear to be “movin’ on up,” just like George Jefferson of sitcom fame, catapulting into higher echelons to join the rich. Hooray for unbridled capitalism! How could everyone have gotten the story wrong?

Actually, Worstall gets it almost all wrong. He admits, in a note appended to his column, that he misread the Pew chart, which shows quite clearly that the ranks of the poor are, in fact, growing rather than shrinking. The theme song of this chart not “Movin’ On Up” but “Slip-Slidin’ Away.”

The Pew numbers indicate that in 1971, 16 percent of Americans were in the lowest income tier and 9 percent were in the second-lowest tier (the two groups below the middle class). That’s 25 percent of us, or 1 in 4, living below the middle-income level. Fast-forward to 2015: Now we’ve got 20 percent in the lowest tier and 9 percent in the second lowest, for a total of 29 percent below the middle class. A bigger percentage of us is badly off.

The Pew report further states that the middle-income tier shrank during this period, from 61 percent of Americans in 1971 to 50 percent in 2015. Worstall grumpily acknowledges that he screwed up in claiming that “we’ve got fewer poor people” today and explains that he suffered from “brain spasms that had me reading the left hand side of the chart chronologically downwards and the right hand side upwards.”

Yet even after realizing his mistake, he asserts, quite unembarrassed, that the substance of his argument that the shrinking middle class is not a problem holds true. Why? Because, he says, more people have gotten richer than have gotten poorer, so even if the middle class is proportionally shrinking, things are still looking good.

It is a near-religious belief among free market fundamentalists that having more rich people is good for society; it’s the essence of trickle-down economics. Many insist that inequality itself is good for society because it drives people to succeed and, besides, the market should decide who makes it. Former Sen. Rick Santorum notably made this claim in 2012, saying, “There is income inequality in America. There always has been, and hopefully — and I do say that — there always will be.” 

There may be a few more people joining the ranks of the rich, but the real news is that those who are already rich are getting much, much richer.

To abandon such notions is to admit that policy choices in the last few decades have been detrimental to the American way of life, if by that you mean increased opportunity and mobility for the many rather than the few. Thus the brain spasms working their way through the conservative punditry in the wake of the Pew report: Over at The National Review, Scott Winship argues that too many analysts are “hung up on inequality,” that a “modest increase in polarization” of incomes is nothing to worry about and that, anyway, the Pew definition of middle income is arbitrary. He also trots out the familiar claim that the poor are better off than they used to be, a view shared by Rep. Darrell Issa, the wealthiest member of Congress, who has cited such amenities as coffeemakers and cable TV accessible to America’s poor, as opposed to those living in the developing world. No doubt Ebenezer Scrooge would agree.

Free market champions reading the Pew chart see percentages rise more sharply in the very richest category and jump to the conclusion that the chances of becoming rich are increasing. But the reason for that sharp rise is that there are fewer rich people than poor people in absolute numbers. There are about 46 million Americans living below the poverty line. In contrast, there are some 10 million folks in the U.S. living in millionaire households. 

According to Pew, there are 120.8 million adults living in middle-income households, compared with 121.3 million who are in upper- or lower-income households; 9 percent are in the highest quintile, and 20 percent are in the lowest. It’s clear from the Pew report that the people who have the biggest incomes have been pulling away from the pack in terms of their share of wealth — a trend that shows no sign of slowing.

“The share of U.S. aggregate household income held by upper-income households climbed sharply, from 29 percent in 1970 to 49 percent in 2014,” Pew states. “More recently, upper-income families, which had three times as much wealth as middle-income families in 1983, more than doubled the wealth gap; by 2013, they had seven times as much wealth as middle-income families.”

There may be a few more people joining the ranks of the rich, but the real news is that those who are already rich are getting much, much richer.

Worstall is right about one thing: Our political biases influence the story we attach to numbers. The laissez-faire defenders want so badly to erase the problem of inequality and reduced prosperity for the bulk of Americans that their brains fail to read simple charts and employ elementary logic.

They do not want to believe that more Americans are becoming worse off, because this development flies in the face of the big free market promises made by Milton Friedman and his followers — that unfettered capitalism will deliver the best outcomes to society. But if you take off the ideological blinders, it’s easy to read the plain numbers on the wall. A giant chunk of Americans is sinking economically, and we need to focus on policies that aid the drowning and make room for ordinary people among all the mega-yachts.

Lynn Stuart Parramore is a contributor to Al Jazeera America, Reuters, Huffington Post and other venues.

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera America's editorial policy.

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