Middle class: In US, a shrinking reality and in India, an illusion

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The term middle class evokes strange reactions in India. For us Indians, we all, most of us who’d probably know this term, qualify as middle class. For us, there also exist terms such as lower middle class and upper middle class, used to justify many behaviours and ideologies as per our convenience: when it comes to spending, we choose to range ourselves next to lower middle class, when it comes to our expectations as regards services, we cross over to the upper middle class. And, when it comes to laughing at high-class snobbery, we recall Maya Sarabhai of the (Sarabhai vs Sarabhai fame) who had a distinct dislike for the “middle class”.

It’s a very interesting thing, this middle class. Because in India, you also see the middle class ‘mentality’, always spoken about in disparaging terms. That’s another one of Indian contradictions – everyone wants to identify as middle class, and everyone wants to look down upon middle class mentality. Probably because it’s narrow, conservative, restrictive of freedoms identified with the ‘high’ income group & lifestyle.

I’m really not kidding. Read this article by scroll.in on Pew Research Center’s report on how everyone in India thinks they are ‘middle class’ and almost no one actually is with only 2 per cent of Indians actually living in this bracket. Let the number sink in. The great Indian middle class is just 2 per cent of Indians. India is home to more than a billion people.

AND, get a load of this: nearly 49 per cent of Indian people (sample size 2/3rds urban and 1/3rd rural) self-identifies with the Indian middle class. This finding is as per a survey cited in one of the most prestigious newspapers of the country, the Hindu, link here on ‘being middle class in India’ and how people identifying with the middle class experience a psychological effect of being upbeat about their status in life as well as their prospects about the future.

Also, considering a Credit Suisse assessment of the Indian middle class (read article here – Business Standard), the latter is a select club of nearly only 24 million people, and not 264 million people; Credit Suisse arrived at the new figure by taking into account their wealth and not income as others had before.

And yet, to reiterate, the same report also talks about the lack of a clear definition of the middle class in India. Also, for an Indian to qualify as middle class, he/she needs to have nearly Rs.700,000 in the bank and or income of Rs. 61,000 every month. However, whether here or there even by a decent margin, our middle class seems to have arrived.

This means, most Indians are far removed from reality and it’s doing them good. No Doubt. They’re voting in droves, they’re voting “right-wing” as they call it…

Now, on the other hand, the same middle class – although it can never be the same; Americans can afford a much higher standard of living – is disappearing in the US. Again a study done by the same Pew Research Centre which says the middle class is dying… which statement Richard Eskow has aptly questioned in this blog Vox Populi link here and suggested in its stead a new one: ‘The middle class is being killed’. Actual report from Pew Research Centre here: America’s Shrinking Middle Class.

The American middle class, unlike the Indian middle class, is not a figment of the mass’ imagination. It’s a well-researched, well-studied case and Pew says that families today can be in the “middle” in terms of income and yet still not make enough to live on – the median income for middle-class households fell by nearly 5 per cent between 2000 and 2014. Their median wealth (assets minus debt) declined by 28 per cent after the housing market crisis and subsequent Great Recession.

So, where did all the money go is the big question. The answer, according to Eskow is, the wealthiest among us. The people on top. The creamy layer only got thicker. Economist Emanuel Saez found that the top 1 percent of Americans captured more than half of the total income growth from 1993 to 2014, the last year covered by the Pew report, says the blog.

You almost want to cheer them on!

Inequality, in one word.

Anyway, why am I discussing all this? Because, India’s middle class is its backbone. As we have already seen, it’s more a SENTIMENT than a real thing for most people. The signs are ominous, however, in the face of all that’s going on. A sluggish global economy, competition in the domestic markets, a demand scenario that looks bleak in case market falls…

The real issue is, the Indian public from lower income group, before it even figures out how to make it to the hallowed middle class, will find the carpet snatched from under their feet if the policymakers do not hurry up on the economic reforms. And in this sense, we have something in common with America, after democracy. Corruption and political short-sightedness and opportunism.

Because in India, an MBA degree is now available a dime a dozen and yet, there’s no guarantee that an MBA will be able to write a decent formal email; there are engineers who’ve never been near a live electrical circuit… These middle class Indians, for they have been able to afford formal and professional education, will need something to lean on. And if India continues to go the American way, even this illusion of being ‘middle class’ will shatter.

 

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