Growth and the Middle Class
First Principles: Arguing the Economy
While the connection between upbringing and environment and a person’s economic productivity can be taken too far, there is no doubt that some behaviors, achievements, and attitudes that promote economic growth come directly from a middle-class environment. Conversely, these positive orientations can be undone by extreme levels of economic inequality, as, for example, David Callahan emphasizes in The Cheating Culture, which explains how the rise in white-collar crime and ethical misconduct (for example, expense account fraud) among employees on the lower tiers of the business world has been fueled by rising economic inequality, which has broken down social norms and made cheating more rewarding.
Members of the middle class set goals and strive to achieve them. A 2010 Department of Commerce report on what it means to be middle class in America today finds, “One characteristic that stands out in the literature on the middle class is that middle-class families emphasize their expectations about the future: this means they work hard, plan ahead, and expect to save in order to attain those goals.”
Students—whether poor or middle class—who go to schools where the majority are middle class have much better outcomes. They score better on tests, graduate high school and complete college at higher rates, and have more successful careers. Researchers find that this is not only because of the direct involvement of middle-class parents who, for example, make sure teachers are good and schools have adequate resources, but also because middle-class kids have positive attitudes toward achievement and engage in productive behaviors such as regularly attending class and doing homework. And in middle-class schools, these attitudes and behaviors dominate.
People who are raised middle class are also much more likely to become entrepreneurs. A Kauffman Foundation report finds that 72 percent of entrepreneurs come from middle-class backgrounds—a vast overrepresentation given that only 44 percent of the public meet their measure of middle class. In short, a healthy middle class is a necessary precondition for the propagation of a healthy capitalism.
Crafting a Progressive Economic Argument
Because of trickle-down’s dominance, progressives are still on the defensive about the tax and social policies essential to our economic vision: progressive taxation, the minimum wage, strong unions, and family leave, to name just a few. The usual progressive argument goes: These policies do not kill jobs. But progressives need to make a stronger case and argue: These policies are essential to creating and sustaining the middle class and thus fueling future growth.
For one theory to supplant another, progressives need to be not just loud and clear about the flaws in the old theory, but to advance vigorously a compelling alternative. The reality is that during the roughly 30-year period of trickle-down’s ascendance, the economy enjoyed only relatively weak growth, followed by the most disastrous economic crisis since the Great Depression. People are beginning to question whether the constant cutting of taxes and regulations really does produce unrivaled growth. But this is not a sign of victory for progressives, merely an opportunity to push an alternative theory.
Progressives need to seize this opportunity by putting forward their own theory: that a strong middle class is the key to economic growth. Leaders in academia, government, and policy-making circles need to take up this charge. Political standard-bearers have to synthesize the message of middle-class-led growth and popularize it, just as Roosevelt did with Keynesian economics and Reagan did with trickle-down. For progressives to win arguments about the economy, Americans need to understand that a strong middle class leads to economic growth, and not the other way around.
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