Insurrection of the middle classes?

Everywhere in Europe, the opposition parties seem to win the elections, until ... they join the government. Nowhere in Europe, the people seem satisfied with politics. Why is that?

The key is the middle class. Middle class can be independent merchants, small entrepreneurs, but also highly qualified employees in private or public service. The traditional paradigm of the middle class is that if you work hard, you improve your situation, you make money, you save, you invest and you make even more money, there may be risk but in the end you discover you end up far better than your parents. This is no longer the case. Why? Because the middle class is no longer in the middle.

Being in the middle means: have access to capital from the 'upper' class and have access to labour from the 'lower' class. Both are problematic today.

A first problem is the access to capital. The interest rates are close to zero but should be negative if they followed the free market. The extreme risk averse behaviour of the capital markets implies that risk capital is difficult to get. The upper class saves (and gets richer) but doesn't invest. The governments keep the banks alive but this costs tax money. The middle class has to pay this.

The second problem is the access to labour. Skilled labour has become rare and expensive. Unskilled labour lives from social allowances. This also costs tax money. The middle class has to pay again.

As a result, the middle class works but doesn't earn. No wonder its dissatisfaction becomes visible in its voting behaviour. The political class neither wants to touch the value of money nor the social allowances. Therefore, even blue governments aren't capable of reducing taxes: on the contrary: taxes will inevitably increase. The middle class will continue suffering. What we need is a systemic reset of the economy. See also the Economics of Good and Evil.

Picture from Shay Yacobinski / Shutterstock.com