Is the U.S. Middle Class at a Turning Point?

The first dimension of American life that may have to be reconsidered pertains to energy use patterns. Judging a country in a middle class context, one of the primary questions is whether the correct incentive structures are in place to promote energy efficiency — without unnecessarily restricting freedom of mobility.

Even though "energy independence" has long been used as a tantalizing political mantra, little has actually been done in the United States to incentivize behavior in order to reduce energy consumption.

Some U.S. cities, including Washington, D.C., are taking baby steps to make headway — for example, by offering rebates to consumers buying the most energy-efficient household appliances, such as washing machines. And California, with its mix of energy policies, has rightfully been called more of an integral part of the European Union than of the United States.

The most significant difference between the United States on the one hand and Europe and Japan on the other is that in the latter two, energy efficiency is deemed a core ingredient of a modern lifestyle.

Clear-cut price signals, such as high gasoline taxes and expensive electricity, have reinforced this. In the United States, however, the predominant attitude — promoted by various industry lobbies — is one of laxness. Energy conservation is viewed as much ado about nothing — remarkable considering that this is the 21st century.

The second aspect of American life that needs to be reconsidered is the spatial dimension of community. The American Dream, such as it stands today, is to live in one's own home, preferably with at least an acre of land around it. Over the last couple of decades, that has been a leitmotif both of the homebuilders' and construction industry associations, as well as the Republican Party and evangelical churches.

The latter two supported this trend because they believed, quite correctly, that the more people move away from cities, the more conservative they become.

"Exurbs" have their charms. But in the age of globalization, they also lead to increases in energy consumption — particularly to cover longer driving distances from the home to the workplace.

At the same time, public transportation continues to get short shrift — and any advocacy of denser urban living is still deemed un-American. As the mantra goes, Europeans and Japanese live in tight quarters, packed almost “like sardines,” because they do not have the “space” that America has.

What is particularly interesting is to examine what these living patterns foreshadow with regard to a nation's ability to cope with globalization pressures. The general assumption is that a society with more space to offer individuals is better able to cope.

And yet, centuries of living in very close quarters in most of Europe and Japan have conditioned these societies to develop spatially close-knit social networks that allow for sympathy, coping and, if need be, commiseration.

In contrast, the prevalent pattern of coping in the United States has been to seek distance from others. While that seems advantageous in terms of escaping pressures, the open question is what it does in terms of actually dealing with those pressures.

To be sure, in Europe and Japan, income inequality is also trending — albeit slightly — in the same direction as in the United States, meaning that the rich are getting richer.

But there is an increasingly vehement public debate underway in both Japan and Europe about the implications of these trends. Vast differences remain in the degree of imbalance in income distribution in both Europe and Japan as compared to that in the United States.

Where this matters in a very real-life sense is that the elites in Europe and Japan do not feel nearly as removed from the fate and plight of the middle class as is the case in the United States.

If anything, it seems that the United States is undergoing its fin de siècle period, much like Vienna and St. Petersburg a century ago.

Unfortunately, judging by the state of play in the U.S. capital, elites do not seem to be concerned about what is going on elsewhere in the world. It seems there is a blind faith in adhering to traditional mindsets — without making any preparations for a backlash or significant slowdown.

The third dimension of American life that needs to be re-examined is the acceptance of public policy as a mutual self-restraint mechanism. Today's Washington and New York suffer from an almost royalist sense of propriety. Certain subjects are simply deemed improper topics for polite conversation. These matters include questions of a long-term strategy for society, social fairness — and the very purpose, and need for, public policymaking.

The same is true for key matters of national security and foreign policy alliances. All too quickly and all too often, engaging in such topics is deemed inappropriate, perhaps because it might lead to dissonance or opposing viewpoints.

But a society whose elites are not just losing, but consciously abdicating, their sense of the need for self-examination and critical review is in for a hard time. The ability to have meaningful conversations around the twin capital cities' formal (not family) dining tables, as well as on the cable TV talk shows, is always an indicator of a society's preparedness — or the lack thereof — to cope with future challenges.

This is why the United States has particular reason to be concerned about its own future amidst the global examination of the developed world's middle classes in the age of globalization.

Editor’s Note: This analysis first appeared on April 7, 2008, as part of The Globalist's Executive Edition.