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America’s drastically shrinking middle-class

December 6, 2021 Leave a comment Go to comments

This graph shows how in the USA the share of total net worth held by the 50th to 90th wealth percentiles has decline drastically in the last two decades. Top 50%-90% share of wealth in USA, Q1 2021

https://www.trustnodes.com/2021/07/11/americas-middle-class-drastically-shrinks

  1. bruceolsen
    December 6, 2021 at 7:23 pm
    Reply

    Unfortunately, the post is using this data to promote cryptocurrency as one way to counter this shift in wealth ownership. They also draw other specious conclusions in the article.

    Maybe just posting the FRED data directly would be better than pushing crypto… ?

  2. mameerop
    December 7, 2021 at 1:51 am
    Reply

    The problem with this data is that two things happened at different times — first, as a result of the housing bubble, the net worth of the middle class “seemed” to go up —- then when the housing bubble led to lots of housing defaults, a lot of the wealth of the middle class disappeared. BUT — the period since the beginning of the recovery from the Great Recession might not indicate an ABSOLUTE decline in wealth by the middle class but a dramatic increase in the “fictitious” wealth of the very very rich — and much of that wealth is fictitious (stocks, particularly). What we would actually need is to have a look at the REAL VALUE of wealth held by those middle class folks rather than their SHARE of total wealth —

  3. nivtric
    December 7, 2021 at 6:42 am
    Reply

    Capital grows by interest. So, interest is to blame. But how can increasing wealth inequality coincide with lower interest rates?

    ‘As the capitalists get wealthier, their time preferences go down even further because they can’t spend all their wealth on consumption. As more and more people become indebted and can’t borrow more, interest rates are driven down until they are determined by the people with the lowest time preferences.’

    https://www.naturalmoney.org/endofusury.html#tpsc

  4. Craig
    December 7, 2021 at 5:46 pm
    Reply

    Cryptocurrencies are energy impossible and unsecured rabbit holes. Money and accounting are two of humanity’s greatest inventions and tools and there is no actual reason to reject them. The real problem is the monetary and financial paradigm which has always been alternatively monopolized by either the palace or the private banks. Make the money system serve humanity instead of humanity having to slavishly serve it by integating the new paradigm of Direct and Reciprocal Monetary Gifting into the solely debt based system…and many additional benefits not the least of which will be human and planetary survival will follow on.

  5. Ken Zimmerman
    December 20, 2021 at 6:19 am
    Reply

    But what is a middle class? Thomas Piketty notes,

    “To be clear, the designations “lower class” (defined as the bottom 50 percent), “middle class” (the middle 40 percent), and “upper class” (top 10 percent) that I use in Tables 7.1– 3 are quite obviously arbitrary and open to challenge. I introduce these terms purely for illustrative purposes, to pin down my ideas, but in fact they play virtually no role in the analysis, and I might just as well have called them “Class A,” “Class B,” and “Class C.” In political debate, however, such terminological issues are generally far from innocent. The way the population is divided up usually reflects an implicit or explicit position concerning the justice and legitimacy of the amount of income or wealth claimed by a particular group.

    For example, some people use the term “middle class” very broadly to encompass individuals who clearly fall within the upper decile (that is, the top 10 percent) of the social hierarchy and who may even be quite close to the upper centile (the top 1 percent). Generally, the purpose of such a broad definition of the middle class is to insist that even though such individuals dispose of resources considerably above the average for the society in question, they nevertheless retain a certain proximity to the average: in other words, the point is to say that such individuals are not privileged and fully deserve the indulgence of the government, particularly in regard to taxes.

    Other commentators reject any notion of “middle class” and prefer to describe the social structure as consisting of just two groups: “the people,” who constitute the vast [majority], and a tiny “elite” or “upper class.” Such a description may be accurate for some societies, or it may be applicable to certain political or historical contexts. For example, in France in 1789, it is generally estimated that the aristocracy represented 1– 2 percent of the population, the clergy less than 1 percent, and the “Third Estate,” meaning (under the political system of the Ancien Régime) all the rest, from peasantry to bourgeoisie, more than 97 percent.

    It is not my purpose to police dictionaries or linguistic usage. When it comes to designating social groups, everyone is right and wrong at the same time. Everyone has good reasons for using certain terms but is wrong to denigrate the terms used by others. My definition of “middle class” (as the “middle” 40 percent) is highly contestable, since the income (or wealth) of everyone in the group is, by construction, above the median for the society in question. One might equally well choose to divide society into three thirds and call the middle third the “middle class.” Still, the definition I have given seems to me to correspond more closely to common usage: the expression “middle class” is generally used to refer to people who are doing distinctly better than the bulk of the population yet still a long way from the true “elite.” Yet all such designations are open to challenge, and there is no need for me to take a position on this delicate issue, which is not just linguistic but also political.

    T h e truth is that any representation of inequality that relies on a small number of categories is doomed to be crudely schematic, since the underlying social reality is always a continuous distribution. At any given level of wealth or income there is always a certain number of flesh- and- blood individuals, and the number of such individuals varies slowly and gradually in accordance with the shape of the distribution in the society in question. There is never a discontinuous break between social classes or between “people” and “elite.” For that reason, my analysis is based entirely on statistical concepts such as deciles (top 10 percent, middle 40 percent, lower 50 percent, etc.), which are defined in exactly the same way in different societies. This allows me to make rigorous and objective comparisons across time and space without denying the intrinsic complexity of each particular society or the fundamentally continuous structure of social inequality.”
    “Capital in the Twenty- First Century.” 250-251

    Obviously, Piketty has done yeoman work in providing an historical, political, and cultural context for the current economic situations. But in the final sentence of the above quote Piketty seems to give credence to the wrong headed notion that he can grasp the “intrinsic complexity of each particular society [and] the fundamentally continuous structure of social inequality” and reach across all this uniqueness “to make rigorous and objective comparisons.” Seems impossible to me. And a wish that could lead to some very mistaken conclusions. We can study and sometimes understand other cultures ONLY BECAUSE we all live within a cultural framework. By seeking to make only rigorous and objective conclusions we damage or lose this potential.

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