How The Middle class Is Being Squeezed: Globalization And Financialization Of The Economy


By Darrell Dow

In 2016, Donald Trump announced his candidacy in a meandering speech which is widely remembered for his comments about Mexican immigration. Immigration was, of course, central to Trump’s 2016 success. But the theme with which he closed the speech animated his campaign and gave Trump’s candidacy its central expression.   

“Sadly, the American dream is dead,” Trump declared. He would “Make America Great Again!” The brash billionaire exploited underlying economic and cultural insecurities among the working and middle classes — a pervasive sense of American decline — and rode the wave to the White House.

Then again, the working and middle classes didn’t just “sense” a decline; they experienced it, as financial data about the income they earn, their savings, and their job prospects show. The middle class is disintegrating year by year. The obvious question is why, and Trump touched on it in his appeal to the white working class voters who put him in office. The incredibly imprudent policy of free trade that he emphasized is certainly part of it.

But more broadly, the problem is the globalization and financialization of the U.S. economy, and the erroneous notion that human beings exist to serve an economy rather than the opposite: that the economy exists to create a humane society that serves the best interests of human beings.

Scamdemic Billionaires

The middle class has been shrinking for decades, a worrisome trend that has accelerated since 2000. A 2014 study from Pew Research, America’s Shrinking Middle Class: A Close look at Changes Within Metropolitan Areas, analyzed 229 U.S. metro areas and divided American adults into three categories: Low, middle, and upper income. For a household of three, the study defined middle class as those with an income between $41,641 and $124,925.

Here are some takeaways: 

  • The middle class shrank in 203 of the 229 metro areas studied. 
  • The percentage of adults in low-income households grew in 160, or 70 percent, of the 229 metro areas.
  • The percentage of adults in high-income households grew in 172, or 75 percent, of the 229 metro areas. 
  • Median household income decreased 8 percent between 1999 and 2014.

In 2020, class stratification worsened as the China Virus lock-down and race-oriented politics of the Black Lives Matter riots strengthened the hand of the Ruling Class. As small businesses failed and shuttered, and the middle class continued shriveling, the oligarchs thrived: 573 new billionaires were created since the beginning of the scamdemic–or one every 30 hours. 

Their net worth soared by $3.8 trillion to $12.7 trillion. The world’s 10 richest men, who have greater wealth than the poorest 40 percent of humanity combined, doubled their wealth from $700 billion to $1.5 trillion, a rate of $15,000 per second. 

Yet as the rich grow richer, most Americans worry about the future.  In a  Monmouth University poll, 88 percent of U. S. adults said the nation is on the wrong track.  The number is a harbinger of electoral trouble for the Democrat Party. Yet the press is full of dire warnings about “White Supremacy” and “insurrection” rather than the decimation of America’s middle class. 

American Data

Counterintuitively, the American economy continues to generate untold wealth. Aggregate U.S. household net worth rocketed to a record in the fourth quarter of 2021. Between early 2000 and the end of 2021, the estimated net worth of American households and nonprofit institutions soared from $44 trillion to $150 trillion, which invites the question of what explains the economic (and hence political) polarization and sense of decline?

Answer: Before globalization, “prosperity” meant that an increasing gross domestic product (GDP) was paired with more productivity, more jobs, and higher wages. That is no longer the case.  

The richest 400 Americans now have more wealth than 185 million Americans combined. The average net worth of American households stands at an eye-popping $746,800.  But the median net worth is a more modest $121,000. 

According to the work of Raj Chetty, a kid graduating from high school in 1958 had a 90 percent chance of earning more money than his parents. But children born in the 1980s have just a 50 percent chance.  

So despite economic growth and significant wealth creation, structural changes have produced an economy with a much wealthier upper class, while incomes for roughly the bottom 60 percent are essentially stagnant and unchanged since the 1960s.

Aside from the wage stagnation, basic goods and services are increasingly costly.  Financialization along with the intervention of the federal government has led to increased prices for housing, health care, and higher education. With the federal government guaranteeing mortgages, handing out student loans, and grabbing ever larger shares of the healthcare sector, these industries have effectively become extensions of the state, managed and enforced like cartels. Thus, prices have exploded. 

Consider housing. In 1970, corrected for inflation, the median housing cost was $200,663. In 2021, it was $411,200. Rental costs, too, are rising four times faster than income. Meanwhile, as housing is out of reach for many Middle Americans, nearly 20 percent of American homes are purchased by investors, often institutional investors and even pension funds. In California, foreigners are purchasing about 14 percent of homes annually.  

College degrees, long considered one stepping-stone to the middle class, are also more expensive. The average annual tuition and fees in constant dollars at a state college was $2,440 in 1970 and $9,349 in 2020.

With college costs spiraling, many students resort to loans. The current average federal student loan debt balance is $37,113. The average student loan debt at graduation has increased 2,807 percent since 1970; adjusted for inflation, the figure is 317 percent.

Federal Reserve data show that “the median college-educated millennial with student debt is only earning slightly more than a baby boomer without a degree did in 1989.”  Upwards of 40 percent of recent college graduates have jobs that don’t require a degree. In 2018, half of all college grads earned under $30,000 annually, and another recent study suggests that most underemployed graduates remain that way for the long term.

And as everyone knows, health care costs have also exploded. Health spending totaled $74.1 billion in 1970. By 2020, that figure was $4.1 trillion. Per capita health spending in real dollars increased from $1,875 in 1970 to $12,531 in 2020. That’s more than 568 percent.

In 2016 in The American Conservative, Charles Hugh Smith argued that a standard of living common in the 1960s is out of reach for most Americans. Smith proposed a dozen financial conditions and assets that were widely considered an attainable norm in the 1960s (access to health care, reliable vehicles, significant equity in a home, etc.). He  estimated that an income of $120,000 is necessary to meet the 12 thresholds of membership in the middle class.

Writing in 2020, Oren Cass proposed a “Cost-of-Thriving Index (COTI) that consists of the largest expenditures a middle-class family of four might face: a car, rent for a three-bedroom house, a health insurance premium, and a semester of public college tuition. Cass compared the cost of these goods to median weekly earnings for men working full-time, yielding the number of weeks required to cover these costs.

In 1985, the median male worker needed 30 weeks of income to afford it all. By 2018, he needed 53 weeks; i.e., a full-time job was insufficient to afford the items needed to thrive.  

The costs of goods and services that were once affordable have skyrocketed while incomes have by and large not kept pace. American families are struggling to keep up.  What is to be done?

Economic Nationalism

Again, the decline of the American middle class is a consequence of globalism and economic financialization. For local communities to thrive, businesses must be tied to specific places. An economy based on digital and financial services will continue to hollow out middle-class communities. The antidote is economic nationalism that industrializes the heartland. Our nation needs an economic program that puts our families, neighbors, and people first–not its Ruling Class.

“America First” immigration and economic policies must recognize that social life is arranged around our duties to family and fellow citizens. Restrictions on immigration or curbs on trade and technology transfers must be framed in terms of national identity and interests.

Economic nationalism benefits the nation and sustains the culture and people that define it. It accounts for different regions and balances the needs of rural and urban, capital and labor, farmers, manufacturers, and small businesses. It is a facet of national identity, not a mere expression of material interests. 

An economy exists to provide for families and perpetuate the culture of a people; people do not exist for the economy. “Finally, a nation should not regard the progress of industries from a purely economic point of view,” wrote Friedrich List in The Natural System of Political Economy. “Manufactures become a very important part of the nation‘s political and cultural heritage.”

What would a skeletal program of economic nationalism entail?

First, immigration control, including the following, is a must:

Second, American manufacturing must be restored with a reinvigorated industrial policy. Tariffs and subsidies designed to reshore key industries should be central to American economic policy.

The rise of China as an economic and national security threat should precipitate a debate about the desirability and efficacy of industrial policy, not to curb private enterprise, but to spur it in directions vital to national interests, which markets alone might not achieve. A 2018 White House report documented more than 280 major supply chain vulnerabilities because of dependence on foreign nations, not least, China.

Granted, industrial policy has its pitfalls, including regulatory capture and de facto corporate welfare. But these problems exist now and are less a product of government intervention than a failure to produce a strategy that embraces economic and national security realities.

And third, the tax code must be restructured. American jobs have disappeared to China because corporations have off-shored manufacturing in pursuit of higher profits. Taxing corporations based on the geographic location where the value was added might restore domestic production.

The key to all this is rethinking economics. Nationalists must reject the modern conception that the dismal science is distinct from cultural, social and religious life. The purpose of economic life is not merely the production and consumption of material goods, but the support of families as the fundamental units of social life and human action, from which broader social institutions and identities evolve. Our economic policies must buttress social traditionalism, rebuild the middle class necessary for self-government, and regard piety as a higher value than mere wealth creation. 

A regular contributor to American Remnant, Darrell Dow is the author, with Thomas Achord, of Who Is My Neighbor: An Anthology In Natural RelationsHis work has appeared in CrossPolitic, Chronicles,, and American Greatness.

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