The danger in a declining middle class
By David Ignatius,
It’s a sign of these unsettled times that the analyst who famously announced “the end of history” in 1989, when the Soviet empire was crumbling and liberal, free-market democracy seemed inevitable, has published a new essay with the provocative title “The Future of History.”
Francis Fukuyama’s article in the January edition of Foreign Affairs offers a good introduction to what may be the biggest political issue of 2012 — the decline of the middle class in the United States and around the world. Without this middle class, Fukuyama argues, liberal democracy loses its anchor.
“Protect the middle class” is a rote slogan for both parties in this presidential election year. But Fukuyama argues that the danger comes not from particular tax or spending policies of either party but from the very dynamic of the modern, global economy. This new world may be flat, but it’s also tilted — with the benefits flowing disproportionately toward the elites.
“Inequality has always existed, as a result of natural differences in talent and character,” writes Fukuyama. “But today’s technological world vastly magnifies those differences.” The fortunate few “can become financial wizards or software engineers and take home ever-larger proportions of the national wealth.”
Fukuyama is a useful bellwether. “The End of History” was widely cited as the apogee of post-Cold War optimism and then derided after Sept. 11, 2001, when history seemed to have returned with a vengeance.
Fukuyama isn’t revising his enthusiasm for liberal democracy, which he still sees as “the default ideology around much of the world today.” Instead, he’s questioning whether the global market may be the enemy of liberal democracy, rather than its handmaiden. In 1989, he saw the technology-driven global marketplace — and its ever-spreading wealth — as a crucial reason for “the end of history” and the universal embrace of democratic values. Now, he worries that globalization is eroding the middle class that is, historically, the bulwark of a liberal political order.
“What if the further development of technology and globalization undermines the middle class and makes it impossible for more than a minority of citizens in an advanced society to achieve middle-class status?” asks Fukuyama.
He notes that this process is already beginning in the United States, where real median incomes have been flat since the 1970s. And he cautions: “The kind of work done by the old middle class in the developed world can now be performed much more cheaply elsewhere.”
Fukuyama sees rising anger among middle-class Americans toward Wall Street. But he notes the paradox that the chief beneficiary has been the Tea Party movement that endorses the corporate status quo, rather than the Occupy Wall Street protesters who challenge it. That dynamic is apparent in Europe as well, where, Fukuyama says, “the left is anemic and right-wing populist parties are on the move.”
This critique is well displayed by Foreign Affairs, as a centerpiece of its 90th anniversary issue. As part of this package, the editors include excerpts from articles since the magazine’s founding — including many that discussed the rise of communism and fascism in response to the economic crisis of the 1930s.
It makes for disturbing reading, as in this 1932 article that sought to explain Adolf Hitler’s growing appeal in Germany: “Fundamentally it is a question of the hard times which have settled over Germany. . . . As regards the middle classes, which used to be Germany’s backbone, the standard of living is far below the pre-war level.”
As Campaign 2012 begins for real this week, the core question is the economy. The public is angry at Wall Street elites who seem to be gaming the system, but it’s a testimony to the health of American politics that neither President Obama nor his leading Republican opponents are demagoguing this issue. Every candidate has a multitiered plan for economic renewal. What’s missing is a formula for breaking the national political deadlock so that any such program can be enacted.
In a passage that is eerily similar to some of what appeared in Foreign Affairs in the 1930s, Fukuyama notes: “Many people currently admire the Chinese system not just for its economic record but also because it can make large, complex decisions quickly, compared with the agonizing policy paralysis that has struck both the United States and Europe in the past few years.”
That’s a warning sign — when people look to a totalitarian state for a system that works.