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Guest blog: Why I want to save the middle classes

(92 Posts)
KateMumsnet (MNHQ) Wed 24-Apr-13 11:50:24

In today's guest blog, David Boyle, whose book Broke: Who Killed the Middle Classes is published this week, argues that - whether they know it yet or not - the middle class faces extinction.

What do you think - is he right? And if so, is it something to worry about? Let us have your thoughts - and if you blog about it, don't forget to post your URLs here on the thread.

"A generation ago, when the financial journalist Patrick Hutber wrote a book called The Decline and Fall of the Middle Class, he said that no class in history had been quite so complicit in its own demise.

I wondered about that all the time I was writing my book Broke: Who Killed the Middle Classes?. We complain about current economic difficulties, and breathe the occasional sigh of relief that we have escaped the worst, but we don't always see the whole picture.

Yes, house prices seem likely to price out the next generation. Yes, our pensions are worth a fraction of our parents'. Yes, childcare costs are so high that it almost rules out working. Yes, our traditional jobs have disappeared and our professional pride has been stripped away by monitoring systems and targets.

But, no, we don't like to complain - especially when other people have it far worse.

So the middle classes don't see that, taken together, this may amount to the end of a way of life - a diverse and multi-faceted way of life, it is true, but also one where people can be that much less dependent on the whims of landlords and employers.

We are no longer aspiring for our children to be part of a burgeoning middle class. We are desperately struggling for them to be part of a shrinking global elite. No wonder choosing a school is stressful.

This is not quite as self-serving as it seems. The middle classes are absolutely vital for a healthy, civilized democracy and a successful economy. Their tolerance has made the UK one of the most liveable nations in the world. It matters if the possibility of a middle class life should slip through our fingers.

Yes, the middle classes still churn out civilized sportspeople, artists, musicians, scientists - because they are still allowed some space in their lives to be civilized. They are not yet precarious, not yet facing the limits - when they just paid enough to get by - that beset the poorer classes. But look at the trends.

The end of mortgage rationing in 1980 led to inflationary sums pouring into the UK property market from American banks. The way that Big Bang was organized create a new elite, whose annual bonuses also push up the price of homes. The ruling classes turned a blind eye to the demise of defined contribution final salary pensions.

Perhaps the middle classes were complicit too. They misunderstood the emerging financial services sector, assuming it was on their side - when, as it turned out, it wasn't.

The real question is whether the next generation, whatever class they are from, will be able to get a roof over their head - because this is not just about the present downturn. If house prices rise at the same rate as they did in the past 30 years for another three decades, the average UK house will be worth £1.2 million - and it seems pretty clear that salaries will not follow nearly as fast.

We are used to think that the housing market would never cut itself adrift from the need for people to come in on the bottom rung, but buy-to-let mortgages and foreign investors have shown otherwise. A typical London deposit is now £85,000. We used to assume that windfalls would help the next generation - but we will also need that money to plug pension gaps and pay for social care.

Already only half of London's homes are now owner-occupied, and our capital city is rapidly shifting from property-owning democracy to a city of supplicants to the whims of rental agents. UK home ownership is falling steadily, and is now lower than in Romania and Bulgaria.

I have two children, aged eight and six, but I can't see how they will be able to afford to buy - or to rent - in London, without seriously constraining their choice of career: a quarter of a century of indentured servitude in financial services, if they can get in, whether it suits them or not.

We all want the possibility of a middle-class life to stay open for our children - the economic possibility to have the safe space to dream, to create, to make music, to read, or just to sit on the grass, without being timed when you go to the loo (for call-centre employees), or having to hold down three jobs day and night to pay the rent."

David Boyle is the author of Broke: Who Killed the Middle Classes?, Fourth Estate.

Bonsoir Thu 25-Apr-13 13:18:08

Why the non-sequitur?

JustGiveMeFiveMinutes Thu 25-Apr-13 13:19:36

I didn't read Xenia's post that way Mini but it's an interesting take on it. I'm a lapsed Catholic but I see how people now worship money and celebrities and wonder if we have indeed lost our way.

JustGiveMeFiveMinutes Thu 25-Apr-13 13:27:07

Is that directed at me bonsoir? If so, how very typical of your class to resort to pomposity when trying to win an argument grin

MiniTheMinx Thu 25-Apr-13 13:27:24

The only time in the whole history of capitalism that we have seen social mobility with a growing middle class was under what is called "embedded liberalism" of the years 1945-1975. The same pattern in America. We created welfare, improved schools, we had grammar schools, we founded the NHS, the government brought rail and several industries into public ownership and we built social housing. One wage was often enough to keep a family, middle class or working class and wages rose at the same rate as productivity, with a greater share of the value created from labour being shared between workers and not going to CEOs and rich share holders.

CEOs were paid on average 10-50 times what front line staff earned but after Neo-liberalism was set lose here by Maggie and in the States by Reagan, CEOs now earn on average 300-500x what front line staff earn.

Neo-liberalism is your problem if you aren't willing to concede that capitalism has inherent tendencies towards the centralisation of capital/property/money into fewer hands.

Great chart here to look at before you go shopping i.imgur.com/pnMMj.jpg which spells out very clearly how competition creates imperialism. Many of these companies are avoiding tax in almost all the countries in which they trade.

People can be happy on less, go tell the rich this same message and see how far you get Xenia.

PigletJohn Thu 25-Apr-13 13:27:42

When the poor were taught that greed and envy and vanity were sins, it was to keep them quiet. If they thought they'd get their reward in heaven it was supposed to stop them wanting justice on earth.

It's always been rare for a prosperous person to believe so sincerely that wealth doesn't bring happiness, that they follow Luke 18:22.

I wonder if Xenia and Bonsoir will ever do it?

Bonsoir Thu 25-Apr-13 13:31:27

It wasn't "embedded liberalism" that created the wealth that enabled so many to move into the MC. The wealth creation was the result of massive, rapid technological improvements that led to gains in productivity.

MiniTheMinx Thu 25-Apr-13 13:31:51

I agree, great point, under feudalism you had poverty and religion, under capitalism you have poverty and media propaganda telling people that money doesn't make you happy.

Well if money doesn't make you happy I think Soros et al must be near suicidal. Poor lambs.

MiniTheMinx Thu 25-Apr-13 13:36:11

I agree bonsoir that was part of the picture, always has been under capitalism. Its the greatest system so far in terms of productivity.

However where do you think GE and some of other corporations looked to make money after 1980? it didn't involve investing in the productive forces and creating employment............it was switching investment into financial markets, rather than increasing wages and hiring they set up HP companies offering "debt" as a substitute to real growth. Keeping demand in the market with fictitious capital and debt.

PigletJohn Thu 25-Apr-13 13:40:14

Bonsoir the wealth that enabled so many to move into the MC

Wealth doesn't move people into the middle classes if it is concentrates in the hands of a superrich elite.

You've seen Versailles.

Are you ever going to try to justify your allegation that earning a lot of money, and paying tax on it it, is "not necessarily" better than the alternative? It will be especially useful to hear from your personal experience of living in poverty.

Bonsoir Thu 25-Apr-13 13:46:16

I was referring to the boom in the MC that you described, in the post-war period up until the mid-1970s.

Indeed, when the productivity gains of improved technology started to tail off, companies looked for other ways to make money. Some gains in productivity have severe negative externalities - look at the food industry and obesity. Maybe reducing those negative externalities is one area where improvements in living standards could be made.

Bonsoir Thu 25-Apr-13 13:47:19

When your outgoings from working (tax plus other costs of working) are greater than your income, earning a lot of money is not better than not doing so.

Xenia Thu 25-Apr-13 13:52:18

I did say religions but also any ethical code. People seem to think these days that it is fine to be jealous of others and that looking in mirrors worrying about how you look is a great way to spend a life. This has nothing to do with religion. It is about what makes you happy in life. Greed, envy and vanity are not the route to personal happiness.

"Xenia thinks the answer is to pray with empty bellies. That to me sounds a little like feudalism and look what happened to that." I didn't say empty, although intermittent fasting amazingly may well b e the key to solving the health problems of the poor, 60% + of whom are fat in the UK. It is amazing how having little and moving around walking for miles and labouring in the sun are the things which raise the beta endorphin and seratonin levels in people.

Tortington Thu 25-Apr-13 13:53:13

Dear Author/

1) Firstly and perhaps most importantly money does not class make.

2) You mentioned LONDON far too much for my liking - I have therefore gone off you completely

3) your underlying thesis should perhaps consider the recent drivel of the new 7 classes

4) I can't help but play the smallest violin just for the middle classes who can't afford a home ...especially in London

PigletJohn Thu 25-Apr-13 13:54:07

I don't believe you're referring there to the differrence between earning a lot of money, and paying tax on it it, and the alternative"

I believe you're referring to the difference between "earning a lot of money" and "earning a different lot of money" at the point where the incremental difference is not to your advantage

That is not at all what I meant.

Bonsoir Thu 25-Apr-13 13:56:36

No I'm not. I'll give you an example. Someone I know was talking about her childcare costs last week. They are EUR 4,000 per month (and she pays part of that cash in hand because she cannot possibly make it work any other way). There is no way she can reduce that bill because she travels for work and needs 24/7 cover, sometimes for weeks at a time. When your childcare bill is that huge, it eats massively into your income.

MiniTheMinx Thu 25-Apr-13 13:58:19

One of the major problems though with technology creating greater productivity is "the falling rate of profit"

This is because the only "real value" in a commodity is the labour value, the time that people spend in making something. As machines take over more and more of the work it has two effects: 1)lower production costs means more competition to drive costs even lower 2) more unemployment and therefore subsequent pressure for lower wages

What this means is lower profits are realised, investors pack up and go home. This was already starting to take effect by the late 60s. The unions were still fighting to keep wages on a par with profit/productivity which makes for very unhappy business owners.

But now........things have gone too far in the other direction, falling rate of profit in manufacturing, subsequent outsourcing, tax avoidance, stagnating wages, rising public and private debt.

We need a government to start cycling in the opposite direction rebalancing the scales in favour of workers but that can't happen because of globalisation.

So I guess we sit it out and watch the middle class slide down the slippery pole. I wonder how long it will take for them to get very angry. wink

PigletJohn Thu 25-Apr-13 14:01:31

Bonsoir

You are not addressing my point then.

So you don't deny that it is better to be in the top 5% of household income (prosperity) that to be in the bottom 5% (poverty)?

Xenia Thu 25-Apr-13 14:06:17

The UK did pretty well from the industrial revolution onwards. It was never going to last. How many empires rule much of the planet forever? Never. If people in China are prepared to work harder (and be more Tiger motherish with their children) then that is where "growth" will come. It may not matter as you don't need growth and Starbucks outings and Boden clothes to be happy of course.

MiniTheMinx Thu 25-Apr-13 14:17:34

The Chinese need us to have enough money after paying for: housing, fuel, food, council tax, childcare, utilities, and in the not too distant future health and eduction, to be able to buy their cheap widgets.

Although I agree with your main point Xenia. 14:06:17

Because of the imperialist tendency I can see Eon and Npower fighting for the £5 pounds left after housing costs. Unless peoples income starts to rise then I can't see how even these non- negotiable things will be paid for in the future.

SinisterSal Thu 25-Apr-13 14:59:57

Has much changed really though? 150 years ago the village middle class had a vast army of underlings, gardeners, seamstresses and the like to enable theur standard of living. So do we , except they are invisible to us, being sweatshop workers in China etc. We keep hearing about the rise if the global middle class, so who,ll be the new working class of the global village.
If labour costs even out globally it may encourage a redistribution of manufacturing, they will seek to locate near the raw materials. As we can see China in particular has been investing (or 'investing', not sure which) in commodity rich African countries. That's one benefit of not bothering with pesky 4 or 5 year electing cycles - you can take he long view.
There's a lot to criticize in America but if rather live in a world dominated by their values than any other, I think.

Phineyj Thu 25-Apr-13 15:58:14

I thought the OP's point that musicians, sportspeople etc come from the middle class was odd, as even the most casual analysis will show that the creative arts and competitive sport are now dominated by the global elite who can afford the kind of schools where the tuition and resources are provided.

PigletJohn Thu 25-Apr-13 16:08:42

Bonsoir

Looking at your example of Someone I know was talking about her childcare costs last week. They are EUR 4,000 per month (and she pays part of that cash in hand because she cannot possibly make it work any other way

Leaving aside the fact that you say she is a criminal participating in an tax-evasion scam, she is spending more in childcare per week, than the lowest-income earn per month.

Are you expecting us to feel sorry for her because she is so frightfully hard up? Is her life harder than the mum on minimum wage who has to put in extra shifts at the herring-pickling factory to pay for her childcare?

JustGiveMeFiveMinutes Thu 25-Apr-13 16:19:31

Bonsoir

Why should anybody feel sorry for your friend? The middle classes are always the first to say that the 'poor' shouldn't have children they can't afford.

Bonsoir Thu 25-Apr-13 16:38:14

Maybe because she cannot afford to eat!

PigletJohn Thu 25-Apr-13 16:41:05

Is her life harder than the mum on minimum wage who has to put in extra shifts at the herring-pickling factory to pay for her childcare?

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