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13 May, 2017

The explosive mixture of middle-class shrinking and dual economy in the West

The Pew Research Center, released a new study on the size of the middle class in the U.S. and in ten European countries. The study found that the middle class shrank significantly in the U.S. in the last two decades from 1991 to 2010. While it also shrank in several other Western European countries, it shrank far more in the U.S. than anywhere else. Meanwhile, another study also released last week, and published in the journal Science, shows that class mobility in the U.S. declined dramatically in the 1980s, relative to the generation before that. A book released last March by MIT economist Peter Temin argues that the U.S. is increasingly becoming what economists call a dual economy; that is, where there are two economies in effect, and one of the populations lives in an economy that is prosperous and secure, and the other part of the population lives in an economy that resembles those of some third world countries.


MIT Economist Peter Temin spoke to Gregory Wilpert and the The Real News network.

As Temin states, among other things:

The middle class is shrinking in the United States and this is an effect of both the advance of technology and American policies. That is shown dramatically in the new study, because the United States is compared with many European countries. In some of them, the middle class is expanding in the last two decades, and in others it's decreasing. And while technology crosses national borders, national policies affect things within the country.

In the United States, our policies have divided us into two groups. Above the median income - above the middle class - is what I call the FTE sector, Finance, Technology and Electronics sector - of people who are doing well, and whose incomes are rising as our national product is growing. The middle class and below are losing shares of income, and their incomes are shrinking as the Pew studies, both of them, show.

The model shows that the FTE sector makes policy for itself, and really does not consider how well the low wage sector is doing. In fact, it wants to keep wages and earnings low in the low wage sector, to provide cheap labour for the industrial employment.


This model is similar to that pursued in eurozone through the Greek experiment. Yet, the establishment's decision centers still need the consent of the citizens to proceed. They got it in France with the election of their man to do the job, Emmanuel Macron.

As already described, the middle-class, which has not collapsed yet in France, still has the characteristics that fit to the neoliberal regime. However, it is obvious that this tank of voters has shrunk significantly, and the establishment is struggling to keep them inside the desirable 'status quo' with tricks like the supposedly 'fresh', apolitical image of Emmanuel Macron, the threat of Le Pen's 'evil' figure that comes from the Far-Right, or, the illusion that they have the right to participate equally to almost every economic activity.

For example, even in Greece, where the middle class suffered an unprecedented reduction because of Troika's (ECB, IMF, European Commission) policies, the last seven years, the propaganda of the establishment attempts to make young people believe that they can equally participate in innovative economic projects. The media promotes examples of young businessmen who have succeed to survive economically through start-up companies, yet, they avoid to tell that it is totally unrealistic to expect from most of the Greek youth to become innovative entrepreneurs. So, this illusion is promoted by the media because technology is automating production and factories need less and less workers, even in the public sector, which, moreover, is violently forced towards privatization.

As mentioned in previous article, the target of the middle class extinction in the West is to restrict the level of wages in developing economies and prevent current model to be expanded in those countries. The global economic elite is aiming now to create a more simple model which will be consisted basically of three main levels.

The 1% holding the biggest part of the global wealth, will lie, as always, at the top of the pyramid. In the current phase, frequent and successive economic crises, not only assist on the destruction of social state and uncontrolled massive privatizations, but also, on the elimination of the big competitors.

In the middle of the pyramid, a restructured class will serve and secure the domination of the top. Corporate executives, big journalists, scientific elites, suppression forces. It is characteristic that academic research is directed on the basis of the profits of big corporations. Funding is directed increasingly to practical applications in areas that can bring huge profits, like for example, the higher automation of production and therefore, the profit increase through the restriction of jobs.

The base of the pyramid will be consisted by the majority of workers in global level, with restricted wages, zero labor rights, and nearly zero opportunities for activities other than consumption.

This type of dual economy with the rapid extinction of middle class may bring dangerous instability because of the vast vacuum created between the elites and the masses. That's why the experiment is implemented in Greece, so that the new conditions to be tested. The last seven years, almost every practice was tested: psychological warfare, uninterrupted propaganda, financial coups, permanent threat for a sudden death of the economy, suppression measures, in order to keep the masses subservient, accepting the new conditions.

The establishment exploits the fact that the younger generations have no collective memories of big struggles. Their rights were taken for granted and now they accept that these must be taken away for the sake of the investors who will come to create jobs. These generations were built and raised according to the standards of the neoliberal regime 'Matrix'.

Yet, it is still not certain that people will accept this Dystopia so easily. The first signs can be seen already as recently, French workers seized factory and threatened to blow it up in protest over possible closure. Macron may discover soon that it will be very difficult to find the right balance in order to finish the job for the elites. And then, neither Brussels nor Berlin will be able to prevent the oncoming chaos in Europe and the West.

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