Is the middle class going extinct?

It's no secret that inequality is rising in countries around the world, but what does this mean for the future? What is the middle class, exactly -- and why do some people believe it's going extinct?

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Episode Transcript

Speaker 1 (00:01):
From UFOs two, ghosts and government cover ups. History is
riddled with unexplained events. You can turn back now or
learn the stuff they don't want you to now. Hello,
welcome back. My name is Matt and I am Ben,
and this is stuff they don't want you to know.

(00:21):
And today, Ben, we're tackling a topic that's gonna hit
home with you right away. And I can tell I know,
how can you tell me personally? Or everybody out there
listening with us, everybody listening, this is something we can
all identify with, well, not all of us, but we've
probably heard about it. Perhaps are robotic listeners who loved,
uh love that episode, by the way, perhaps they can't

(00:44):
identify with it now. Matt, I have to say that
a lot of people before we get started, a lot
of people don't know that you have some amazing voices
under your belt. Yes, in your throat. You get the
gist of what I'm saying. Yes, they exist mostly inside
my throat. Some of them are in my head. Um Ever,
every once in a while they coincide. So we did, uh,

(01:07):
we did the opening for this episode a couple of
times today because Matt, you were doing brilliant public radio
voice that sounds really good, and I was I was
just messing up in ira glass impression. So that's exactly
what it was. I was trying to picture what it was.
N Well, if it's a good impression, then you just know. Well, look,

(01:30):
I haven't been listening to as much this American life
as I probably should be. Well, we're big fans, but
we also want to tell you this, listeners, just so
that you know that maybe you can write to Matt
asking him to do some voices and uh maybe maybe
he will because I can't persuade you did do them. No,

(01:51):
you would be hard pressed to persuade me to do this.
The voices are usually things I do I don't know,
in the in the shower, in theater class in ninth grade,
in our office after six Yeah, that that's when they
really come. That's when they kick in. Yeah. I feel
like I can hear the voices in your head then too.
Uh So. One thing that I always think about when

(02:13):
I hear the phrase middle class, right, is I think
about the what we call in the United States, the
American dream. Yeah, man, I think about suburbia, two point
five kids, maybe a dog, sometimes cats. In my case,
it was cats. Okay, yeah, probably own a car, take

(02:36):
a vacation once in a while, at least making payments
on a car. Right, Yeah, What the heck is the
middle class? So many people in the West talked about it,
and there's always this big concern. You know, every every
few years, Uh, some pundit will come out on your
local radio or television say, the middle class is disappearing.

(02:56):
What does that mean? What does that mean? Well, let's
define our terms first of all, as we like to
do here. Well, the middle class is a financial label
above most other things, but it's also it kind of
talks about a lifestyle or refers to a lifestyle about
what a family of a family unit can afford. We're

(03:21):
again we're talking about home cars and you know, to
some extent, education and also even the ability to take vacations. Uh,
there are like budgeting and saving. It encompasses a lot
of different things, a little bit like investings. So what then,
it's not just physical goods the ability to buy physical

(03:44):
goods like what's that eighties song? Uh? Material World? Yeah,
do you want me to go into it? How did
it go? I don't know that I can legally in
this format, But it's Madonna and I'm yes, I'm checking. Um,
I'm throwing aside. I hear with our super producer Noel

(04:04):
Brown on the ones and twos because you guys, Matt
and Noel no uh darn near everything about music. They
know a lot of stuff, which is dabble. We dabb
you guys dabble for sure, which is why every so
often you'll hear some uh some amazing sounds on our
audio podcast, our video podcast. But I digressed so hard. Yes,

(04:28):
So it's not just that this households could buy material goods.
It's that there is this lifestyle. Um. Maybe they don't
have two homes and travel to Florida every winter or something,
but they do probably have a summer vacation when the
kids out of school, yes exactly, and things like that.

(04:49):
So the further we drill down into this definition of
what a middle class is, uh, the more that we
find there is not necess fairly one size fits all
rule because what means middle class depends on the country
in which you live, absolutely, and as we live in
the US, we're going to be focusing primarily on that. Um.

(05:14):
So so let's look at the money factor first of all.
So the average income in the United States was fifty
one thousand and seventeen dollars in two thousand and twelve.
So that's just the the um then is that mean?

(05:35):
I guess it must be the average the middle number.
So counting all the people who made negligible and counting
all the people who made a lot, we end up
with a alarmingly deceptive number because you can't take an
average of that many people and that many uh in
that many environments, in different socioeconomic circumstances and expect it

(05:59):
to be very helpful. So, and there are two things
about that numbers that. First of all, it's pretty high. Yeah,
but it's not the highest. It's not like cutter or something,
right exactly, but it is globally pretty high. So let's
look at another place spend. Let's say the Democratic Republic
of Congo. The average income there is two hundred and

(06:24):
thirty six dollars. Wow. We should note, of course as well,
that that is one of the poorest countries in the
world by this metric. But it's weird, right, because they
also have a wealth of resources and suffer from what
is often called an international politics the resource curse. The

(06:45):
resource curse which is no, that's okay. That is just
another show and we will have to cover that again.
I think we mentioned that before. And another talking about
international banking we mentioned in resource extraction. You can check
out some of our We had an outdated video now,
but it still holds up pretty well called is China

(07:06):
Colonizing Africa? Which I would recommend to anybody who's interested
in stories of resource extraction or establishing slash fighting hedgemoney.
And if you don't want to look at our videos,
then just look up the current president of Bolivia so
you know how he's working with us. Uh. And remember

(07:27):
that we said Bolivia because that that will be interesting later.
So there's a standard. If we were to take a
standard definition from like a financial website, we would say, uh,
we will find a couple of different numbers. One that's
commonly found is that twenty five thousand to a hundred
thousand dollars of income a year is what most people
would consider a middle class income. Uh. This accounts for

(07:48):
a wide cost of living differential. So you know, it
costs more to live in New York City than it
does in um Fargo or Baring Forks. And so any
one who lives in San Francisco or New York will
tell you that twenty five thousand dollars a year is dirt, poor, dirty, poor,
um nothing. And that's because, uh, in that city, you

(08:12):
can't you can't make a long con you can't grow old,
support of family and retire and have a place to
sleep at night, right, right, dollars a year, I mean
you couldn't it. We'd be you'd be really hard pressed
to find a place to live. Yeah. Now there are
subsidies for fure and for residents, right, but this and

(08:38):
you know, of course we're not in any way detigrating
anybody who makes twenty five dollars and lives in a
very expensive city. Absolutely not. It's just the reality of living,
you know, cost of living in sety it's very different.
Like Atlanta, where we are based, has one of the
lowest costs of living for a city its size, and

(09:00):
only ever becomes apparent to me when I'm in another city. Yeah,
all right, So what we found is that this means
essentially there's no universally recognized definition of middle class, but
there is something different about the socioeconomic makeup of Western
countries over the last few decades. In many countries. The

(09:22):
Western middle class, however vaguely defined, isn't prospering at least
in the way that it once was back when we
had an economic boom with construction and industrialization in the US,
when we were making cars. Let's says, yeah, that's true.

(09:43):
There is a c change that is troubling to people,
and there's this it. We can't make any bones about it.
This is not a conspiracy theory, no matter how often
it may be presented. Is one. Uh, this is not
a It is true and hard numbers that inequality in
the United States is rising in some areas more than

(10:06):
other areas. So what does this mean for me? Would
be most people's question, right exactly, from the Koke Brothers
to uh, somebody making twenty one dollars and living just
outside of New York, the question would always be what
does this mean for me? Very different answers and exactly

(10:26):
so it First of all, it means a lot of
different things depending on where you are. Like we said
at the top, in developing, in emerging markets, we're actually
seeing a rise or in emerging middle class. So it's
not so much that the global middle class is dying
as it is that the middle class. What it means
b middle class is moving. Yeah, isn't that a weird idea.

(10:48):
It's just that that type of emerging wealth has just transferred,
it's just took a trip across the world other other
different places. That sort of lifestyle is become an increasing
popular in countries where it wasn't once upon a time. Exactly. So,
then we also see that rising inequality has dangerous effects

(11:09):
on the existing UH middle class of these of these
different countries. In October of two thousand fourteen, Interestingly enough,
the United Kingdom's wealthiest ten percent controlled fifty four point
one percent of the country's total wealth UM. If we
if we look at the math of that, you know,
it can be a deceptive thing. A lot of these

(11:31):
statistics can sound scary, and some of them were constructed
not by us, but constructed or framed to sound frightening.
We know that inequality is on the rise in the
United Kingdom, it's on the rise in UH the United States.
Maybe not for the same reasons, but there have been
some pretty smart people making some pretty good studies about

(11:54):
this right. The authors of the new study, Emmanuel Says
and Gabriel Zokman, highlight that the wealth inequality was high
in the beginning of the twentieth century, decreased steadily from
nineteen twenty nine to nineteen seventy eight, but was continuously
increased ever since then. Moreover, the increase in wealth inequality
is almost completely due to the increase in the top

(12:16):
point one percent wealth share from seven percent in nineteen
seventy nine to two percent in two thousand twelve, nearly
as high as in nineteen twenty nine. The study also
showed that the wealth share of the bottom wealth edged
up until the mid nineteen eighties and has been declining
steadily ever since. And today, Uh, huge majority of Americans

(12:40):
acknowledge the growing gap between the rich and the poor,
and a lot of people say, hey, I think that
is going to be a problem if it isn't already.
But there's little, uh, there's little agreement on the causes
of this rise in inequality or how to address sit.
You know what I mean, sure, Ben, So that question

(13:03):
is hugely complex, and you'll hear people like Russell Brand
talking about it on talk shows, even wrote a book
about it recently, UM and lots of other people just
trying to figure out a way to help stop this
inequality from increasing. And then there are people who say
that it's part of the system, so it should exist
in some way in a capitalist society sort of inherently

(13:26):
demands inequality. And then on the far side you have
people on the far far other side, you might have
people who say, uh, something like iron Rand was right
with her opinion and I do mean opinion about objectivism.
And then you have people on the other end of
the spectrum who will say, you know, why do we

(13:46):
need to have any sort of system. Let's just let
people do what they want because people are inherently good.
What's the worst that could happen? Right, Yeah, and then
we'll all be equal. Uh. However, we have some uh
compelling physiological evidence that human beings are not capable of

(14:07):
considering the rest of the human race as a peer,
as a as a group of people. We crap out
around a hundred and fifty. That's all our brain can
uh close or friends brain stuff on that. Yeah, Dunbar's number. Yeah, um,
And now we can go ahead. We set the stage

(14:30):
right the extinction of middle class, the definitions, uh, the
exploration and some of the assumptions, and now it's almost
time for the really crazy stuff. But first the word
from our sponsor. You know, usually we have our sponsor,

(15:03):
Illumination Global Unlimited coming in. Yeah, but they're not here
this week. I'm not sure. Maybe they'll come back sometime. Yeah.
It all depends really if the stars are in the
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that Illumination Global Unlimited takes into account. Yeah. Um, and oh,
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(15:26):
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of Illumination Global products. But anyway, just little ps a there. Uh,
here's the crazy stuff. Here's where it gets crazy. I
love it. Is there an oligarchy that is developed in
the United States? That's the big question. We all know

(15:47):
what an oligarchy is. It's a small group of interest
or whatever running a larger group. Sure, so do you
want my personal answer or my objective research answer. Uh,
let's see first the objective research and then your personal take. Well,

(16:07):
whether or not this has developed inside the United States
is a matter of debate. There are a lot of
different opinions. But there's something even more surprising about this subject.
When you look at the research across the world. The
globe as a whole, inequality has actually decreased, at least

(16:29):
for a time leading up to the recent economic disaster,
so to two thousand seven, and then some of the
other stuff that's been going on. So the things we're
getting better for a little while. But you have to
be really careful when you look at the stats. All Right,
we've got a great report via the Guardian the richest
one percent of the world's population are getting wealthier, if

(16:49):
not healthier, which almost said owning more than forty eight
percent of global wealth. This was according to the Credit
Suits Global Wealth Report, which you can find online. And uh,
here we go, though, when we say the richest one
percent of the entire world, that's such a bigger number
in both directions. So what what What are the numbers meant? Well,

(17:12):
a person only needs three thousand, six hundred and fifty
dollars including the value or equity in your home to
be among the wealthiest half of the world citizens. Wow, okay,
and then uh, to be a member of the top
ten percent of global wealthholders, you need more than seventies
seven thousand dollars. And that isn't a no like how

(17:36):
much money you make every year. That's how much worthy exactly,
there's something. And then, uh, last, but not least, can
we get a drum roll, No, you need seven hundred
and nine thousand dollars to belong in the top one percent. Now,
that's smaller. That's a smaller amount than I thought. But

(17:57):
I guess that's because it's a much bigger one percent. Sure,
So that is a lot more money than this guy
will ever see in his lifetime. Um, but you know
it's something to shoot for. Ben Uh. The American dream
as where we started in the beginning, So let's go
straight to some of the more conspiratorial stuff. One thing

(18:20):
that I thought was interesting that comes to us from
UH political spheres, right, is the idea that concerns over
inequality are some sort of noise or propaganda made by
socialist and communists seeking to overthrow capitalism. So I guess
the argument there would be that the nature of inequality

(18:43):
itself is being vilified and that it's not bad for
a few people to control as much wealth. Yeah, in
in the eyes of someone UH talking about this, I
would say they see it as more villainizing the rich,
and at least that in my head, that's what I see.

(19:04):
And I would you know, I would argue that perhaps
those arguments come from the wealthy a lot of the times, right,
and that would that would make sense because opponents of
that argument would say that there is a group of
wealthy elites actively working to disempower the populations of various countries,

(19:24):
which is not I'm it's gonna I'm gonna be honest.
It's totally been proven that that's happened in the past.
We know that that has happened in the past, um,
during times of imperialism or colonialism. And no, I'm not
just talking about European expansions. I'm talking about the history

(19:44):
of tribute states, the history of vassals and peasants and
servants and lifelong slavery, which still exists. I think Mauritaniah
still has quite a large slave population. Yeah. And also
if you look at the power of money in politics now,
especially in the US, um, you need a certain amount

(20:07):
of money to make any kind of waves in the
political sphere here, and you know, if you're increasing that
that wealth gap, then perhaps that's one of the goals.
I don't know. I'm just a guy man. Yeah, me too.
There's also there was all you remember. This might be
a little bit before some of our listeners time, uh,

(20:27):
but you remember growing up and hearing about the the
idea of trickle down economics, um, which I I still
probably have a child's understanding of that, because I didn't
really get it when I was a kid, and I
haven't looked into it too much. But I just want
to present these counter arguments. Oh sure, yeah, trickle down economics.
So the idea that when the ultra wealthy have a

(20:51):
lot of money, they spend a lot of money, and
then it trickles down throughout the economy because they're spending
money here and there and here and there, yase everybody else.
That's my understand Inherently, I don't understand how that would work,
because that is the dispersion of wealth, not the accumulation
of wealth. And also because of Swiss bank accounts and

(21:11):
or Australian incorporation, wouldn't you be more likely to try
to save money? I don't know, I I don't know.
But there's another point here, and this is the one
that I think has the most sand that the relationships
between governments and businesses are empowering wealthy actors, and by
that we mean companies as well as individuals at the

(21:32):
expense of the poor. Yeah, and again look at the
representation and governments where especially in places where money makes
the politician. Right. Yeah, So we we've talked about this,
you and I extensively when we've done any a series
on financial shenanigans. There's this, there's this argument. A lot
of people here in the States are very cynical about

(21:55):
the relationship between financial institutions and the regulatory bodies set
to watch those financial institutions. I can't air quote hard
enough UH on regulatory or watch. But but there and
you know, the idea, there is something that we lampooned
in an earlier podcast that these UH groups can't really

(22:20):
watch each other or have the kind of authoritative relationship
they need to have because they end up work the
individuals end up working for the same companies. But to
be fair, the counter argument is that this field is
so rarefied and complex that they're the only people qualified
to work in it. Sure, it makes my eyes my

(22:40):
eyes that I saw that I saw that they're rolling
hard they're still rolling. Uh So, without me personally commenting
on it, I just want to present that argument and
counter argument. It's true though, that governments have in the
eyes of the public, not just in the United States
but also in the United them uh that governments have

(23:03):
been seen as not stopping crimes by large financial institutions,
and typically that scene as further proof that the middle
class is somehow being squeezed out of a judicial process,
a legislative process, things like that. Um. But another thing
that you and I have run into quite often is

(23:25):
that the laws. It's it's very important to figure out
who gets to write laws, you know what I mean.
And the concerns that we have read about with the
idea of a disappearing middle class is that, first, it's
so very vaguely defined in the United States. If you
ask people to pull the majority of people in the

(23:47):
United States would say that they are the middle class. Um.
And politicians have wildly differing ideas about this. But are
these people being shut out of legislation? That's a question, right,
It's a really good question, and I think it should
be addressed by people who know more than us, right,
which might be you listeners. Hopefully Uh, so we wanted

(24:11):
to know if the if you think that the middle
class is disappearing, And let's keep in mind also that
over the great span of human existence, the middle class
is a very recent phenomena. Yeah, sure, absolutely, Um. And
also here's another question. Is it necessary that inequality exists

(24:31):
for let's save the entire system to run correctly. That's yeah,
that's a really good question. Is there a conscious drive
by someone or some group to accelerate inequality? Then I
was reading this thing right before we came in here. Um,
you can look this up. It was about restaurants in

(24:52):
the that aim for the middle class that our middle
of the road like, and it mentioned specifically places like
Red Lobster Um out Back. Yeah, and just talking about
how those being in owning a restaurant in that level
right now is really dangerous because restaurants are starting to shift. Um,

(25:16):
at least the ones that are prospering right now are
either the really ritzy, high priced places with locally sourced
food that's just prepared by you know, chef genius in
the back, and then to the fast food this is
as cheap as it can possibly get. And the people
in the middle are finding that they're just losing money
week after week. So if middle class families aren't disappearing,

(25:41):
middle class restaurants are, well, people aren't going out. The
idea is that the people who find themselves and identify
in the middle class are trying to save every bit
of money that they possibly can because they're feeling squeeze,
you know, perhaps not getting that small raise for cost
living every year, or not getting just what all the

(26:03):
different reason, medical emergency, anything that could pop up. So
I think that's really interesting to me, and it made
me think about my past growing up, and we my
family just says a little anecdote. I want to see
if anybody identifies with this. When it was a special occasion.
After I got two, about ten, red lobster was like

(26:24):
my jam So if it was a special occasion, I
was like, Mom, Dad, please can we go get some
of those garlic? Yeah? Um, that's all I wanted. I
don't care about the lobster. I didn't care about any
other stuff. I just wanted those biscuits. But yeah, we
could only afford to go there. Maybe you know a
couple of times a year, dude, But it just makes me, uh,

(26:48):
I see what you're saying because it now in retrospect,
you're thinking, yeah, this is not a place we would
go every week exactly because we couldn't afford to, at
least at the time. Um. But yeah, it makes me.
It just makes me wonder what effect that has on
the wider scale, just if you're just looking at restaurants, Like,

(27:09):
what what else is starting to disappear? Sure, and that's
a really good question, like are there certain types of
cars that people aren't buying? Um? What about home home purchases? Right? Uh, vacations,
all the stuff we named in the beginning essentially, and
you know you can track that to the skyrocketing costs

(27:29):
of some of these things as well as wage stagnation.
And everybody, big hand to know for editing that thing.
I was trying to say that sentence like four times
in a row. Yeah, big up. Everything you like about
this show is probably null. All right, Well, we've got
to get out of here, everybody. I'm so sorry, Matt.

(27:50):
I have one piece of listener mail for you. Fine,
Pope Ge writes to us and says, I really enjoy
listening to your podcast. While listening to the show today,
I'm stuck. I'm wanting to know if Matt Frederick is Canadian.
He sounds like he is. That's all they said. Really,

(28:12):
that's that's what he wants to know. Wow. Hey, Uh no, sir,
I I am not Canadian. I was born in Alpharetta, Georgia,
and I have lived less than fifty miles from there
my whole life. So wow, as far as we know.

(28:34):
And on that note, ladies and gentlemen, I apologize for
interrupting you, Matt. I thought it was a great question
and we should get it out there in case other
people believe that you're Canadian. Not that there's anything wrong.
It's quite all right, ben. So, Uh, everybody find us
on Facebook A and uh, go ahead and hit us
up on Twitter. We're at conspiracy stuff there. Also on
Facebook conspiracy stuff. Go to our website. Stuff they don't

(28:56):
want you to know. For everything we've ever done, it
all exists there, and it's all wondrous. Uh. The U
r L maybe a little long, but hey you can
you can figure it out, uh the last, but not
at least. If you don't want to do any of
that stuff, just send us an email. We are conspiracy
at how stuff works dot com. From more on this topic,

(29:19):
another unexplained phenomenon. Visit test tube dot com slash conspiracy stuff.
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