The Working Class Extinction

Claremont Institute has an article called “The Looming Extinction of the Working Class.”

It begins with this paragraph: “You can’t have a democracy—at least outside of a one-party “people’s” version—without a middle class. Much of the last half millennia is the story of the bumpy rise of an expanding middle class, which successfully replaced ancient aristocratic structures, creating a remarkably innovative economic culture and a vital democratic society. But over the last four decades, this class—which includes artisans, small business people, and skilled workers—has been declining, largely as the result of economic forces but also because of political decisions to adopt policies inimical to those groups’ needs.”

I think the statement is about right – I came to the decision in early adulthood that small business ownership – particularly retail – was no place for me.  I never went so far as to describe the reason as “political decisions to adopt policies inimical to those groups’ needs” – but I won’t argue with the statement.

The article describes the influence of the Netherlands in developing the bourgeois class and the republican form of government:

“Across Europe, the old medieval order was undermined by a diminishing threat of invasion, more efficient agricultural practices, a demographic rebound, and the revival of commerce and urban culture, particularly around the Mediterranean and the Baltic.[11]

But it was in the Netherlands where the bourgeois class flourished most. At a time when property ownership was limited to a few, Netherlanders expanded their territory by draining swamps and building dikes, establishing new farms and businesses. Improvements in agricultural methods led to an early commercialization of the countryside and fueled a wider economic boom. As the economic historian Jan de Vries observed, “capitalism grew out of the soil in Holland.”[12]

After expelling their Spanish Habsburg rulers in the seventeenth century, the Dutch built the world’s most powerful maritime empire, with a fleet larger than all the rest of Europe’s combined. Amsterdam’s large port bustled with a rich trade in foodstuffs, hemp, hops, and dye plants. The opportunistic Dutch expanded their commercial activity in part by pioneering technological changes decades ahead of their competitors.[13]

But arguably their greatest achievement lay in creating a republic free from aristocratic or clerical domination.[14] The growing ranks of proprietors set down “the geographical roots of republican liberty,” notes historian Simon Schama.[15] Dutch culture was family-centered, inventive, sober, frugal, and tolerant.[16] Although it was majority Calvinist, the country boasted large colonies of Catholics, Jews, and other outsiders, including Muslims; indeed, roughly one-third of Amsterdam’s population in 1650 was foreign-born, though European.”

Further in, the article goes into our more recent history: “Between 1940 and 1950, the incomes of the bottom 40 percent of American workers surged by roughly 40 percent, while the gains in the top quintile were a modest 8 percent and the top 5 percent saw their incomes drop slightly.[33] Between 2005 and 2014, the percentage of families with flat or decreasing real incomes rose to over 60 percent in the twenty-five most advanced economies.”

Under the heading “Why the Middle Class Declined we find: “these remarkable achievments of liberal capitalism are now distinctly threatened. This is likely not a “conspiracy” but the collective result of private actions driven by rational decision-making.

Until the 1990s, fields that were growing and promised higher profits invited newcomers, as one would expect.[36] Since then, there has been a marked decrease in the percentage of all small firms in both the United States and Europe as larger firms continue to increase their share of the pie.[37] Technology has played a critical role by facilitating global commerce and, increasingly, driving business from the Main Streets and local companies to massive firms with the ability to adjust to changing conditions.[38] . . . Roughly one hundred and ten thousand restaurants have shut down during the lockdowns, and some two hundred thousand more businesses overall have simply shut down.[40] It is no surprise that barely 16 percent of small business owners, according to one recent survey, think the federal government is performing well for them.[41] As executive compensation reached the stratosphere at the big tech and finance firms, the Harvard Business Review notes that small businesses—the bulwark of the yeoman class—face “an existential threat” to their existence.[42] The pandemic shift clearly favored big companies, who could deploy far greater resources make the necessary transition to the new reality. Big Pharma companies have reined in lucrative profits with vaccine revenue.[43] CEO compensation reached record levels this year; investment bankers on Wall Street enjoyed record bonuses; and the giant tech firms now boast a market capitalization greater than the bloated federal budget.[44] The biggest tech firms achieved new record valuations and ever-increasing domination. As millions struggle to fill their gas tanks and pay their rent, sales of business jets to the rising ranks of billionaires have soared to new heights.[45]

As the article move on to the effects of “the clerisy” – the group the author identifies as responsible for the end of the working class – we note that author Joel Kotkin doesn’t feel that the extinction of the middle class is inevitable – but he looks at it as a social trend – not a conspiracy theory.  It’s worth reading.

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