The Hollowing of the Middle Class

IS THE GREAT WHITE MIDDLE CLASS endangered in Australia? If it is, does it matter greatly? Michael Pusey answers ‘Yes’ on both counts. He argues that we are seeing a ‘hollowing out of the middle’. If he is right, this hollowing out has significant consequences. Both major political parties have spent decades courting the wannabe middle class — from Robert Menzies’ ‘forgotten people’ to Gough Whitlam’s outer suburbanites, and from Mark Latham’s ‘aspirational’ voters to the recipients of John Howard’s tax welfare and handouts for private schools. A significant contraction of this constituency would create political shock waves. In addition, the decline of the middle class would throw an interesting light on our current prime minister who, more than anyone since Menzies, has represented middle-class values and aspirations while championing the radical economic restructuring that Pusey sees as leading to the decline of the middle class. But is Pusey right? This often baffling and occasionally enlightening book is based on surveys and interviews with ‘middle Australians’, but it is poorly organised and sometimes produces evidence that seems flatly to contradict the conclusions Pusey wants to draw. Perhaps it is this unevenness that causes CUP to keep puffing the book as being from the pen of the ‘best-selling’ author of the ‘ground-breaking’ Economic Rationalism in Canberra (1991). Noam Chomsky proclaims on the front cover that it ‘should become a central component of public debate’, while a veritable A-list cast fills the opening page with ‘advance praise’: Robert Manne and Bob Brown are amongst those answering the call; so too are Elizabeth Evatt and Will Hutton. Publishers are entitled, even obliged, to do the best they can to push a book into the public domain, but all this huffing and puffing seems to be protesting too much. Pusey argues three things. The first is that the middle class is being hollowed out and knows it, and that its experience of constraint shapes its dissatisfied and resentful views about politics, about others and about economic reform. The second is that this decline has been caused by the process of economic reform — the economic rationalism that Pusey described in his earlier book. His third argument is that the middle class largely opposes this economic reform agenda, is deeply suspicious of big business and economic rationalism, and remains committed both to ideas of fairness, equity and public purpose, and to the idea that governments have a responsibility to achieve these things. Indeed, the most cheering aspect of the book is its argument that the middle class is morally committed to justice and the common good, though this begs the question as to whether it would vote for it if ever presented with the option. All this makes for a compelling story, as a moral allegory about what Pusey calls ‘the dark side of economic reform’, but compelling is not the same as convincing. The first of these arguments is the foundation stone of the book, but it is a rather wobbly one. Pusey argues that middle incomes have contracted, so that ‘the inclusive broad middle class of the Menzies era ... [is] “hung and drawn” between the rich and the poor’. The problem is that this decline is not easy to show. Pusey quickly reviews some of the studies of income distribution in Australia. These invariably show that the rich are getting richer. That much is widely accepted, but are the poor getting poorer? By the time the Howard government came to power in 1996, there was some evidence that the poorest were at least treading water, as a result of tightly targeted welfare payments. But there are increasing numbers of working poor, and since 1996 — as the wages of the weakest have been driven further down, as unions have been further weakened and as the poor have been subjected to relentless badgering to get them off welfare — life at the bottom is worse. And when we recall that 850,000 Australian children live in 435,000 families without any work, the trials of the middle class — who speak loudly through this book about their disappointments and stresses — start sounding a little hollow. In any case, the middle tends to keep slipping from view. Pusey quotes Ann Harding, one of Australia’s most expert commentators in the field of income inequality, to show that during the 1990s inequality had increased. The bottom ten per cent were poorer, while the top ten per cent had accumulated more. There may ‘to a lesser extent’ have been a decline in income for the middle twenty per cent. Note, though, that this is about income, not wealth such as home-ownership. Pusey then, rightly, complicates the picture by recognising two important points: that ‘governments on both sides of politics have provided large tax breaks to families’; and that ‘twoincome families have been winners, while single-income, twoparent families with children are the losers’. But he proceeds to ignore these qualifications about tax breaks and about property. This is getting confusing, and hardly establishes that the ‘middle Australians’ Pusey interviewed were doing it tough. We would need to know how many of his interviewees were ‘winners’ in two-income families, and how many were receiving generous family tax breaks. Two-thirds lived in Sydney — a fact that is referred to, with exquisite delicacy, as Sydney being ‘somewhat over-represented’. So we need to know how many are accumulating equity in expensive property. Home-ownership has always been a central value for middle-class people, and it was one of the rocks upon which was built their influence in our political culture. For the P O L I T I C S