So, myth number four, the middle class is disappearing. The fact is, it is. It's joining the upper class. And the poor classes are disappearing, as well.
There might be a few inconsistencies with the reasoning that leads to Davies' conclusion: 'the middle class is disappearing. The fact is, it is. It's joining the upper class. And the poor classes are disappearing, as well'.
First, even if you use the data provided by Antony Davies (we'll see further down that those data might not be very reliable), you can see by pausing the video at 12:38, that between 2000 and 2013 (the three vertical bars on the right: purple, light blue and orange), that actually the proportion of people in the 'poor' category increases while the proportion of people in the 'middle class' and the 'rich' category decreases. That is just the opposite of Davies observation (over the 1970-2013 period).
Second, and more importantly, the earning brackets are, as mentioned by Davies 'inflation adjusted'. That is 1000 dollars in 1970 is equivalent, let's say, to 2000 dollars in 2013 in terms of purchase power. The whole reasoning is valid only if the inflation figures are true (or better if they are overestimated). Unfortunately, many experts point out that inflation is grossly underestimated.
Here are a few articles explaining how and why the inflation is underestimated:
http://www.shadowstats.com/alternate_data/inflation-charts
http://www.zerohedge.com/news/2014-11-11/how-much-does-cpi-understate-inflation
http://www.shadowstats.com/article/no-438-public-comment-on-inflation-measurement
http://inflationmatters.com/much-cpi-underestimates-inflation/
https://arxiv.org/ftp/arxiv/papers/1206/1206.0450.pdf
In a nutshell, the governments benefits from underestimated inflation because this way it pays less pensions (which are inflation adjusted) and cashes in more income tax (tax brackets being inflation adjusted).
The underestimating of the inflation takes several forms:
- some major (and overall inflationary) expenses like housing are excluded from the inflation basket
- the basket is not fixed but 'quality adjusted' (also known as 'hedonic process'), for example if an anti-pollution additive is added to oil by law, the price of this additive won't be included in inflation calculations. However, the consumer does pay more for oil with additive wether he wants the additive or not.
- while the price of goods is decreased because an alleged quality improvement, the price of goods whose quality dropped remains unchanged. For example, there has been no pricing adjustment to the 'air travel for the destruction of travel convenience with the advent of the TSA, or from the downward spiral in U.S. air traveler comfort and convenience resulting from the effects of mergers and acquisitions, and from increasing flight delays due to economizing on aircraft maintenance'.
In summary, based on real inflation figures, the middle class does disappears and it's not moving upwards but downwards into poverty. As a result, today, there are
47 million Americans (15% of the population) below the poverty level and this figures is on the rise since 2000. Moreover, keep in mind that those figures are the excessively optimistic official ones based on a underestimated inflation.
Last but not least, Davies focuses his statistical analysis on the US which is in a unique and very favorable position. The power of the US empire creates an artificial domestic wealth based, among other factors, on the forced purchase and therefore funding of the US debt by the rest of the world (petrodollars and dominant position of Wall Street). As a consequence, the disappearance of the middle class is even more pronounced in other developed countries (Southern Europe for example) that don't benefit from imperial advantages.
As a side note, notice also how easily can statistics be used and twisted to back up any kind of claim. The arbitrary choice of category is one of the tools statisticians use to convey the desired result. This practice is very common in clinical trials in order to hide side effects within a specific population category (age, gender, race, etc.)
We find such a trick in the graph mentioned above (12:38 in the Davies video), the 'poor' proportion increased while 'middle class' and even the 'rich' proportion decreased. More poor people, less middle class and rich people? So where does the money go? Allegedly, the GDP is growing so if there are more poor people, there should be more rich people too, right? (growing inequality in income).
That's where the statistician trick comes into play: notice that the upper income bracket is '200.000 and above'. So from 2000 to 2013, the proportion of individuals within this bracket decreased. But if the upper bracket had been chosen to be '1 million and above', the proportion of individuals in the upper bracket would have shown a sharp increase (instead of a decline)
From the above it seems that, at least since the beginning of the 90's, there's been a major transfer of wealth from the middle class and moderately upper class to the millionaires and above.