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“the wealth of our middle class has been ripped from their homes”
“people in the middle class today are trying desperately to survive”
“America’s middle class is being hollowed out”
“Joe Biden announced today a new front in his ongoing war against america’s middle-class.”
“he's trying to tell us he cares about the middle class? give me a break! that's a bunch
of malarkey!”
Pop quiz, cornpop. Are you middle class? Well that depends, obviously. So many variables
to take into account, where to even begin? Ok, for starters, are you a millionaire? Oh…good!
Well, most millionaires are middle class according to millionaires, so welcome to the club I
guess. Millionaires are the wealthiest 8% of the country, but sure, they can be part
of the middle class. Plenty of room in the middle class for everybody, come on in, the
water’s fine. It’s not too hot and not too cold. It’s right in the middle.
Look, don’t get mad, everybody’s middle class anyway. All the way from the lowest
income bracket to the highest in this gallup poll [show graph “social class identification
by household income”, arrows pointing at the middle and upper-middle class bars] you’ll
find people who call themselves middle class, or, if they’re really brave, upper-middle
class. But very rarely just “upper class,” with no middle. This is just how it is, and
it’s been this way forever. Back in the late 30’s, nearly 90% of Americans told
the New York Times they were middle class and only a measly six percent bravely donned
the “upper class” label. Don’t worry, we’ll be putting all that to rest with a
better definition of class later in this video.
But you’d be forgiven for getting confused. What are millionaires doing in the same middle
class that people making less than $20k a year say they’re a part of? If being middle
class is all about how much money you make and yet this is how people self-identify,
does the phrase “middle class” even mean anything at all? Is it an actually useful
phrase with any sort of analytical purpose or just a cheap way to score easy political
points, like supporting wildly unpopular policies or shooting beer bottles some intern wrote
“socialism” on?
No. Of course "middle class" means something. It’s definitely, 100% a real thing. Come
on, if it didn’t mean anything, who would care? Why would politicians spend so much
time comforting the middle class and telling them they’re going to be safe with them,
or if they don’t vote right, that the other guy is going to screw them over. Why would
the media regularly panic about the “death” of the middle class or it getting “hollowed
out” if it wasn’t definitely real and also very important?
Listen up, bucko, the middle class is vital, ok? It’s the American dream! Look, right
here in this Vox article about the middle class getting hollowed out: “Forty years
ago, the term “middle class” referred to Americans who had successfully obtained
a version of the American dream: a steady income from one or two earners, a home, and
security for the future. Now, it mostly means the ability to put your bills on autopay and
service debt. The stability that once characterized the middle class, that made it such a coveted
and aspirational echelon of American existence, has been hollowed out.” There, not only
is the middle class a real thing, a house with a white picket fence, a dog, and 2.5
kids, all of that is not only real, it’s under threat. We know this because the American
dream isn’t attainable anymore, and the only way to really experience it if you’re
not ludicrously wealthy is by getting into debt.
Mortgages, credit cards, student loan debt, needing to rent instead of owning your home
for more of your twenties and thirties. 6 of 10 Americans can’t afford a surprise
$500 expense, average student loan debt is somewhere north of $35,000, inflation is pushing
consumer prices sky high. The American dream is functionally over, ergo, you can kiss the
middle class goodbye. It makes sense. Or, alternatively, if you’re an economist or
something, the middle class isn’t going anywhere. Like a guy at a Phish concert, the
middle class goes with the flow.
Finding the middle class is as easy as cutting up the population into five chunks and calling
the middle three the “middle class,” or multiplying the median household income by,
let’s say ⅔ and 2 and all the numbers you get in between, well that’s the middle
class. See, it’s not going anywhere. Mathematically there’s always going to be a middle class,
or rather a bunch of wildly different middle classes depending on who you ask.
But what if the middle class never even existed in the first place? After all, we have so
much trouble pinpointing exactly what it is and who belongs in it. When we do give a definition
of the middle class it’s about vague things like the American dream or some arbitrary
number we got by multiplying income by this or that fraction. And what about things like
where you live? 50k a year is a very different amount in San Francisco than it is in rural
America. And is 50k really the same if you make it by working 8 hours a day or just collecting
returns on your investments, say if you’re a landlord? Are two people with the same amount
going into their bank accounts but living wildly different lives really part of the
same class? It really seems like our current definition of class isn’t doing a very good
job, and is mostly just muddying the waters.
Well that’s on purpose. The reality is that class isn’t about how much money you make,
it’s about how you make your money. Do you make money by working for someone else, or
by profiting off the work of others? Don’t worry I’ll explain exactly what I mean by
that in two minutes and twenty two seconds. Regardless of how you feel after hearing this
definition of class divided into two, maybe for the first time, you have to recognize
that it’s just more useful than the current definition we hear our politicians use. Our
current, dominant definition sucks. You’re telling me the best we can do is define class
into 3-ish groups of unknown size, with undefined cut-offs, and everyone has a different idea
of what the cutoffs should be based on some random math, a fantasy from the 1950s, or
the whims of a pollster? It sucks. Cutting up society in this crude, vague way isn’t
just impractical, it also ultimately tells us very little about society and gives us
very little help in figuring out what we want it to look like. Are we okay with the lower
class making 500x less than the upper class? I don’t know. Maybe. Is 500 a lot or a little?
Are we multiplying from the top of the lower class, the bottom, the very top of the upper
class, or the middle of the middle class? Do we even objectively know what those numbers
are in the first place, or does it all depend on how big we make each group and where we
draw the lines?
The truth is we don’t have a clue. It’s all random choices and opinions when you define
class by income. And at the end of the day, it’s what allows one politician to say they’re
helping the middle class while another says they’re actually hurting it. They can be
looking at the same numbers, but because we don’t have any universal frame of reference
for what the middle class is, they can technically both be right. One guy can say “this is
what’s happening to the middle class,” the other guy can say “malarkey” and then…
nothing. We don’t have a good way to even start agreeing on the facts and therefore
our politics go nowhere. Things don’t change. And politicians know this.
So what if we actually made an effort and used that second definition of class I talked
about earlier? The advantage of dividing class along the lines of how you make your money
instead of how much you make is that, not only does it still give you an idea of the
“how much?” question anyway, on top of that, you get a great insight into how the
economy works, what your interests are, and therefore which politicians it actually makes
sense to support, instead of hearing both sides tell you they’re the ones who really
fight for the middle class and assuming whichever one you don’t like is just lying.
You will benefit from seeing class in this more practical way, because right now, politicians
and the people who finance their campaigns are the ones benefiting from the vague definition
that keeps things the way they are, in their interest. And just so we’re clear about
how I’m defining class, here it is: Society is divided into two classes, not three, not
four, not five. On the one hand, there are those who need to work to live, and on the
other, those who have the privilege to make other people work so they don’t have to.
So long as you exchange your mental or physical energy for a salary, you are part of the working
class. The class of people that works. A term which I know is confusing because to most
people “working class” just means “poor,” but here it literally means what it says,
regardless of whether the work you do is white-collar or blue-collar. The remaining few who make
most if not the entirety of their money through rents, speculation, or profit, mainly by owning
things like companies or housing, not through their own work, are called the capitalist
class, or the owner class.
But what’s the point of all this? Let’s start with the advantage politicians get by
pretending class is about how much you make, not how you make it.
As we’ve already seen, the first advantage of the vague definition is that it makes things,
well, vague. We don’t really know what’s going on and it’s basically impossible to
assess what politicians say objectively. But there’s more. The vague definition is constantly
used to throw the middle class into competition with the so-called “lower class.” In other
words, according to our better definition, two people who are both part of the working
class are pitted against each other. Politicians constantly invoke “the middle class” because
you’ll always be able to find someone with more money than you and someone with less
so it’ll always feel like they’re talking to you. And in that process, warning you against
the people below you in the hierarchy. The lower class are the people who make less money
than you, and therefore that you are told are out there gunning for your job, or taking
your tax dollars for welfare and whatnot. You are constantly pitted against people who
are worse off than you,
and if that feels weird it’s because at the end of the day you actually share the
same interests. You’re both trying to get by and live a decent life. Just like there’s
no middle class, there’s no such thing as the lower class, you’re on the same team.
The only thing that sets you apart is how precarious your situation is right this second,
not the incentives you’re responding to and where you could be if the circumstances
were slightly different. As a member of the so-called middle class you’re always told
to fear if not outright despise the lower class. But they’re not a threat to your
guarantee of a decent life. It’s the capitalists above you who enjoy a net benefit from working
class infighting. Infighting not only pushes things like wages down, therefore increasing
their profits, it also distracts from the fact they are profiting in the first place,
meaning their position at the top of society doesn’t get challenged.
This can get confusing, like wandering into a Phish concert. Oftentimes, people get a
bit confused with all this because they won’t feel like they exactly fit into the definitions
I’ve given so far. Usually it’s because calling yourself “working class” feels
wrong after years of being told it means “poor,” especially if you now live a comfortable life
working a white-collar job. But most often the confusion arises among small business
owners, people who don’t seem to fit in because they ostensibly own a company but
still have to work to get by and live a comfortable life. What side of the divide do you end up
on if this is you? It’s easy to imagine a day where your company will grow and you’ll
need to employ more people and eventually you won’t need to work anymore, that you’ll
become a capitalist and will be able to earn a living even after you stop working. It’s
the vision of success the American dream is built on. If this is you, it’s easy to see
how you’ll start identifying with the capitalist class that you hope to join one day rather
than the working class you share a lot more in common with today. It’s that famous Steinbeck
misquote that “the poor see themselves not as an exploited proletariat, but as temporarily
embarrassed millionaires.”
But if you’re a small business owner, some part of you intuitively knows what side will
actually defend your interests, even though it’s not always obvious. You know it’s
not the capitalists, deep in your heart. You’ll have heard of stores like Wal-Mart coming
into cities and towns like yours and driving people who do the same things as you out of
business. Big businesses always end up cannibalizing the small ones. If you’re a small business
entrepreneur in tech, this kind of stuff might even be built into your business plan, getting
bought out by a bigger company like Facebook or Google, even though you know that it’s
ultimately bad for society to have monopolies like this. But you still do it because it’s
just the rules of the game, and if you don’t sell out early you’ll probably just get
driven out eventually.
Nobody really stands up to the giants, at least not for long. Small business owners
constantly have to hold competing narratives in their heads: 1) that they’re going to
be taken over or driven out of competition by a bigger company and 2) that they will
be one of the lucky few that becomes the bigger company. There is no alternative.
There is no situation in a capitalist economy where businesses of all sizes cohabitate and
don’t try to encroach on each other's territory. The goal is always growth, and those who don’t
subscribe to that mentality don’t make it very long. 20% of small businesses fail after
a year. Half are gone after 5. And only 30% make it past a decade. Say what you want about
the reasons why these businesses fail, the ultimate truth is that the system is not built
for small businesses. To continue to identify with the people who it is built for is to
bet a lot on the system that will happily chew you up and spit you out.
In other words, the real threat is not from below, it’s from above. So if you’re a
small business owner and you make the majority of your money through your own work, you’re
not a temporarily embarrassed millionaire, you are a member of the working class. That’s
it. This system is not built for you and the odds you make it to the upper strata of society
for whom it is built are insanely low.
The capitalist class, by virtue of the incentives it’s responding to, the main one being profitability,
will always, inevitably consolidate into monopolies at the expense of everyone else. While this
model may temporarily give us cheaper products, once a few companies have become a cartel
or an outright monopoly, like we see in our media, consumer goods, and food and beverage
markets [you know the tree-diagram graphics I’m talking about here with like 4 companies
in the middle], even that positive outcome gets thrown out the window. Just look at Uber
and Lyft raising their rates now that they’ve completely taken over the market, or at the
individual level, how mega-billionaires have consolidated more wealth than the many billions
of people on earth. The problem is that if you’re constantly focused on protecting
yourself from the so-called lower class, it’s easy to ignore this going on in the background.
By naming terms directly, and stating things as they are, not as we imagine them to be,
it’s easy to see that we all have an interest in stopping this from happening. But so long
as there is rampant working class infighting, that won’t be possible. Stop calling yourself
middle class, it clearly doesn’t mean anything and it’s not doing anything except hurting
you in the long run. The good thing is that now that you have a stronger, more useful
definition of class, you can understand politicians a lot better. When you hear a politician tell
you their policies are going to help “the middle class” and they give you numbers
on like how many jobs are going to be created, or how much more money you’ll save on taxes
or whatever, look past the carefully written speeches and think to yourself “does this
policy help me as a worker, or is it going to end up giving more power to my boss?”
Put yourself in your boss's shoes and if this seems like something he’d be into, you know
it’s something you’re not gonna enjoy. If you’re a worker, someone waiting for
employment, or someone who depends on worker’s wage (like if you’re not of working age
or are a stay-at-home spouse for example), in other words: working class, I guarantee
this is going to make politics not only more digestible but a lot more transparent. Stop
believing these white picket fence lies.
This is one of those topics that’s super important, but rarely gets explained all that
well. I try my best to learn and understand as much as I can so I can share with others,
and one way I like to do that is by listening to audiobooks. I travel a lot for work, so
I have plenty of time to sit on planes and listen to fascinating audiobooks on Audible.
One great one that I recently listened to is Capital In The 21st Century by Thomas Piketty.
Where many books fail to grapple with the actual economic base that supports modern
capitalism, Piketty’s work actually explains the origins of skyrocketing inequality and
capitalist crisis. If you’re looking for a book to help you understand the reality
of class divisions, this is your one stop shop. If you like to learn as much as I do,
getting to pick a free audiobook every month is pretty nice. I don’t think I can accurately
convey how much I love Audible. I struggle to sit down and read a book, but with Audible
I can get through all the titles I’ve wanted to, all while running errands or commuting
or traveling for work. It’s completely changed how I learn. If you enjoyed this week’s
video, I highly, highly recommend you check out Capital In The 21st Century on Audible.
It’s a fantastic listen. So, if you want to help support my channel so I can produce
more content like this, visit audible.com/secondthought or text secondthought, one word, to 500-500.
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