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What is happening to the middle class
Published on August 24th, 2013
Posted by Jacob in Early Retirement, Finance, Strategy, Work Tip
14 Comments
Inspired by the forum discussion on the middle class lifestyle, I wanted to give my 50,000? Century long view of where we are and where I think we’re heading based on past human behavior.
Now, it seems that civilization swings between a class based society and a democratization. Ancient Greece and the Roman Empire were somewhat democratic. Feudalism was not. The 18th, 19th, and 20th century saw a revival of democratic principles. The 21st and 22nd centuries will see their decays. Hence, after a brief interlude of the latter, we’re returning to a society with land-owners and indentured.
This time it won’t be in terms of noble titles and who your parents are, but in terms of how many assets you control. Corporations will become the new fiefdoms and the nation states will lose more power probably to the point where they are taken about as seriously as the church is today; they’ll exist but they won’t be a dominating force.
For some perspective, the church was the government peaking about 500 years ago. The primary church tax was tithing and some still do that today, talk about legacy power! It’s voluntarily though, because the church has no enforcement power. I think nations are heading the same way. You can already see that their powers are getting watered out by global trade agreements like NAFTA, WTO, and the EU.
Will the people in the middle class prosper or fade away? Insofar that they are useful to the “asset-class”?, yes. After all, some people in the asset class (equity lords?) are incapable of doing simple things like frying an egg or changing a flat tire(*) However, if you’re pressing a button on a machine that could be pressed less expensively offshore, or ditto, you are filing papers or analyzing data, the answer is no.
(*) I’m not making this up. I have examples, but I want to protect the innocent :-)
The middle class will be differentiated into those producing needs and those producing wants. The “wants”? producers will be out of a job because they can’t remain competitive on a global basis, and because wants can no longer be afforded locally because the balance of trade—the sweet deal where we important tangible goods and commodities in exchange for paper notes—is shifting the other way.
My advice:
•Under no circumstances get yourself indebted. If you have debt, you are owned by someone. If you are owned by someone, you are the new under-class.
•Try to align yourself and your interests with the asset-class as much as possible. They will mainly be looking out for their own through lobbying and behind the curtain deals. Make sure those deals are at least working somewhat in your favor. Don’t join the middle class, the wealthy will inherit the earth.
•If you work for a living or plan to work for a living, work on things that can not be transported in any way whatsoever. Your finished product should not be transmittable in electronic form or via a shipping container without massive costs. Consider, for instance, that EMT services can not be outsourced because the problem is right here and now. However, brain surgery can be outsourced via robotic interfaces.
•This post has a list of more things to do.
You can expect a full transformation to happen over a period of 100-150 years. This is too secular in duration for most people to notice and they will blame other things. Anyone paying attention would have noticed a lot of this in the bank bailout, for instance, though.
Why is this happening? Why is there a cycle? Well, it’s pretty simple. It’s the same reason that there is a business cycle. In the beginning there is little productivity/though/desire for freedom. As productivity/etc. increases, quality of life increase. Eventually, this productivity/rights/freedom is taken for granted—this happens when people start thinking of perma-growth to the point that they don’t even think about alternatives. At this point, people are willing to invest in low return assets (McMansions and big cars) because “they can afford it”?. They will give up the rights that their great grand parents fought and thought hard about for expedient “low freedom”? concepts like safety and comfort. This undermines the previous productivity much like a foundation breaks down if it’s supporting too much weight. This begets the decline. Easy-peasy, no?
