What Happens When there is No Longer a Middle Class By Dr. OREN M. LEVIN-WALDMAN, Ph.D.

eHezi Finance, Governance, History, International, People, Politics, Scarsdale, NY, Technology, Westchester County, NY 2 Comments

Prof. Oren M. Levin-Waldman will discuss his article: “What Happens When there is No Longer a Middle Class <br> By Dr. OREN M. LEVIN-WALDMAN, Ph.D.”, on Wednesday, August 30, 2017th at 10am DST on the Westchester On the Level radio broadcast. Listen “Live” or “On Demand”. Use the following hyperlink … http://tobtr.com/s/10221099.

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What Happens When there is No Longer a Middle Class

By Dr. OREN M. LEVIN-WALDMAN, Ph.D.

Oren M. Levin-Waldman, Ph.D., Professor at the Graduate School for Public Affairs and Administration at Metropolitan College of New York, Research Scholar at the Binzagr Institute for Sustainable Prosperity, as well as faculty member in the Milano School for International Affairs, Management, and Urban Policy at the New School. Direct email to:
olevin-waldman@mcny.edu

As troubling as the events of Charlottesville have been, there are issues that go beyond marching White Supremacists and Neo-Nazis, as repulsive as they are. In response to the first group there were counter-protests from some on the left who were also violent. There is absolutely no excuse for hate groups carrying torches reminiscent of the Klu Klux Klan in the South. But there is also no excuse for violent responses. And yet, we are likely to see more such clashes in the months and maybe years to come.

Some will argue that two extremes on either side is a symptom of the absence of a viable political center where it is clear that there are shared core values. In the U.S. those values are liberty, freedom, democracy, free expression and assembly, rule of law, peaceful transfer of power, and equal opportunity. This last value specifically speaks to the ability to achieve upward socioeconomic mobility. Although these are indeed core American values shared across the political spectrum, there are nonetheless sharp divisions over how to bring these values to fruition.

And yet, it isn’t so much that the political center has fallen out as it is that middle class has, and that the greatest challenge the new global economy poses is that of opportunity. If anybody wants to be reminded of history, there is no question that the roots of Anti-Semitism were deeply rooted in Weimar Germany following World War I. But the principal reason for Hitler’s rise was the runaway inflation brought about by the imposition of oppressive reparations by the victorious powers. Moreover, this coupled with the humiliation of Germany being forced to accept full blame for the war.

Obviously the travails of the middle class in the U.S. don’t really compare to the circumstances of Germany following World War I. But most models of democracy are united in one basic theme, which is that in the absence of a middle class, in which case there are two extremes in wealth and income, the circumstances are ripe for social strife, violence, and even revolution. Moreover, we have to assume that world leaders following World War II, not wanting to repeat the mistakes of the post World War I aftermath, understood this all too well.

The U.S. Marshall Plan to rebuild war torn Europe, including Germany and Japan, rested on an assumption that there had to be economic opportunity and prosperity if another war was to be avoided. These were understood to be essential ingredients if democracy, especially in those countries where there had been no tradition of it, was to flourish.

A broad middle class has long been deemed essential to the maintenance of democracy. When there are extremes in wealth and income, the political process often becomes skewed to representing the interests of the more affluent and wealthy. The system becomes less responsive, and ultimately non-responsive, to those at the bottom of the income distribution. Democracy, however, requires the representation of all on an equal basis.

Extremes in wealth and income in the U.S. have only resulted in a polarization in American politics. This polarization has enabled those at the top of the income distribution to be able to devote more time and resources to supporting political parties and/or candidates who are strongly opposed to redistribution, which includes any types of policies that might benefit the poor, the blue collar working class, and even the middle class.

Econometric models of democracy maintain that democracy prevails when there is less inequality. Why? Because economic equality effectively reduces the pressure for redistribution, which could occur as a byproduct of mass revolution and the subsequent creation of an authoritarian regime. Authoritarianism, on the other hand, tends to be prevalent in those countries where inequality is high. The redistributive demands of the worse-off citizens on the wealthy are particularly intense in highly unequal societies.

The assumption is that through redistribution public officials can avoid strife and head off potential violence. This is based on the further assumption that unrest is often a consequence of inequality. Arguably these models assume authoritarian regimes, which are more likely to democratize in response to great inequality. Democratization is likely to occur in order to prevent a revolution which is considered to be a credible threat when society is considered to be sufficiently unequal.

Of course, in a democratic society, or at least a nominally democratic one, the next logical response to inequality would be redistribution. In An Economic Theory of Democracy Anthony Downs argues that public officials pursue policies that benefit themselves. They are more likely to be responsive to the wealthy because they will contribute to their campaigns. Because the poor may become restless, public officials then purchase their quiescence with programs that enhance their money utility. By purchasing the quiescence of the poor, they are free to pursue those policies of greater benefit to the wealthy.

Downs’s logic would imply redistribution, but what happens when public officials simply respond to the wealthy and ignore those at the bottom? After all, a global economy where capital is mobile requires that business climates be favorable to investment. That means lower taxes. Redistribution, however, only fuels the perception that the business climate is unfavorable to investment.

The reality is that there has not been greater redistribution in response to growing inequality. Rather we have seen greater polarization. It is because of the lack of response to the plight of the middle class that we have such polarization in American politics. If the models are correct, it is only a foregone conclusion that there will be more violence. The violence may not begin as a traditional revolution, but as fringe groups protesting and counter-protesting one another.

It does not help when the concerns of the working class are dismissed or deflected by identity politics, or simply a politics of “resistance.” On the contrary, those who feel that their concerns are being ignored are more likely to join fringe groups, if for no other reason that it gives them a sense of identity. If we need any more evidence for why more needs to be done to restore the middle class, we need look no further than the events of the last few weeks.

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Just published:

Read the review of the just published “Wage Policy, Income Distribution, and Democratic Policy By Oren M. Levin-Waldman. http://www.routledge.com/books/details/9780415779715/#reviews

Wage Policy, Income Distribution, and Democratic Theory

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Dr. Oren M. Levin-Waldman, Ph.D., Professor at the Graduate School for Public Affairs and Administration at Metropolitan College of New York, Research Scholar at the Binzagr Institute for Sustainable Prosperity, as well as faculty member in the Milano School for International Affairs, Management, and Urban Policy at the New School. Direct email to:
olevin-waldman@mcny.edu

 

 

eHeziWhat Happens When there is No Longer a Middle Class By Dr. OREN M. LEVIN-WALDMAN, Ph.D.

Comments 2

  1. “Redistribution, however, only fuels the perception that the business climate is unfavorable to investment”.
    Is this an assumption that is logical? Who will have this perception? A business climate that is unfavourabe to investment might imply that taxes are not attractive or that there is civil or political unrest. if redistribution is ongoing then it may be the result of of a period of unrest, that is, it its aftermath or the result of government policy to reduce inequality . This is so even where there might be no middle class.

  2. The Professor has rendered a seriously thought provoking opinion. Without a vibrant middle class a Capitalist economy will cease to exist IMHO. Without socioeconomic mobility we are doomed for unrest as a nation. We are in danger of becoming a nation of have and have not’s. That is one have for ten have not’s. As a result of being transformed from a manufacturing economy into a service economy we are creating nothing but minimum wage jobs. Good unions jobs which provided fair wages, quality health care and pensions will soon be considered benefits from a bye gone era. If wages and upward mobility continue to stagnate then I fear that our nation is headed for turbulent water of the likes that we have not seen.

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