@nzaman What needs? Could you elaborate?

So the manifesto of every consersvative political group on Earth then. :-)

The middle class are generally merchants. They are the ones who make money collecting the goods and distributing them to those who need the goods.

Might be ethnocentric but isn't the UAE kinda like this? Ridiculously rich minority and then impoverished majority

@tafiv: Food, clothing, shelter, medicine, plus the daily background services that nobody notices, like sewage, electricity, maintenance etc. You NEED people to work, and they NEED the necessities to survive

Isn't USA headed towards being like that?

You may want to have a look at the Gini coefficient

Please explain what you mean by "middle class". For example, one bullet on your list is "suppression of unions"; a person who is a member of a union is most definitely not middle class, although sometimes in some countries some politicians like to flatter such better paid proletarians.

@AlexP In my country at least (and elsewhere I am confident) there are middle class groups in unions. Once example might be the the Association of Higher Civil Servants. Airline pilots are unionized in many places as is teaching and banking.

Aren't you describing most of the Arab countries with oil wealth?

@AlexP plenty of middle class people are union members - for example the vast majority of doctors in the U.K.

How could you have both "Low taxes and little redistribution of income" and "Part of the population works very little [....] and lives off government handouts" ? There simply won't be sufficient money to go around. Also, at least 95% (educated guess) of people need to have something to lose to prevent revolutions. That means you need either a large chunk of population that does low-class labor and can live off it (most of our history worked like that) or you need to hand out benefits (which western countries do now.).

It's definitely possible to have a small middle class, but you need the opposite of the things you describe to do that. Communism has proven nearly 100% effective at eliminating the middle class, for example, as have nearly all other forms of command economies (the opposite of a free market economy.) Of course, this also has the long-term effect of making the country overall less wealthy, too, but you can still have niche reasons for a command economy to be wealthy without a middle class, such as in several nations with lots of oil wealth.

@Renan No, it isn't. According to OECD, the U.S. has the world's highest household disposable income by a pretty wide margin, even after adjusting for which costs are paid for individually vs. by the government and for purchasing power parity. The U.S. was \$ 47,800, followed by Luxembourg at \$ 44,446 and Australia at \$ 39,936. The EU as a whole is \$ 30,143 for comparison.

The utterly implausible miracle you're throwing in as an afterthought is that second to last point. A trim, streamlined governmental administration is a rare animal, especially in a non-democratic country. And what do you mean by a "professional army" which reduces the availability of public jobs? Foreign mercenaries? Petty nobility? Those kinds of things have sweeping consequences.

@reirab @ Renan But this article also cites the OECD and supports the idea that USA is/was trending toward shrinking middle class. marketwatch.com/story/…

@Xplodotron That's a consequence of their definition. They define "middle class" based on percentage of median rather than on an actual given standard of living. Specifically, they define it as 75%-200% of median income. Using the standard of living they count as the cut-off for "middle class" in the U.S., the median European wouldn't make the cut in the U.S. Basically, they're measuring equality of the distribution rather than actual standard of living for the purposes of that article.

@Xplodotron So, the reality is that "upper-middle class income is growing faster than lower-middle class income," but then they report that as "the middle class is shrinking." Of course, with the boom of the tech sector, it should come as no surprise that the income of the upper-middle class is rising faster than that of the lower-middle class, as productivity of the upper-middle class is rising faster than that of the lower-middle class.

@reirab Speaking globally, even the poorest Americans are upper class. But within the US we don't care about the median European, insofar as an American "middle" class is being split up or down relative to other Americans. Perhaps we can agree that both standard of living and disparity of wealth distribution are just some of many ways to look at a "middle class"?

@Xplodotron No, not really. Distribution of income (or of wealth) has little to do with anything other than jealousy. Do you really prefer a system in which everyone's standard of living is equal, but stagnant vs. one in which everyone's standard of living is growing, but some are growing faster than others? Because that's essentially the choice.

@reirab I don't see how that is the choice. That is, I don't understand where your dichotomy comes from or why those choices necessarily arise from my previous answer. Can you help me connect the dots, please?

@reirab Oh, now I see. That financial gains for the lower-middle class are modest compared to the upper-middle class.

@reirab I think I still disagree with you, but I will look into your assertion that distribution of income or wealth does not affect the size of the middle class but is really just a measure of societal jealousy.

@Xplodotron It just depends on how you define "middle class." I would define "middle class" more as a range of standards of living rather than as a percentage of median. Trying to equalize outcomes across the population necessarily reduces overall growth for everyone in the long run. It reduces the incentive to take the risks that are required to increase productivity of the economy as a whole.

Everyone ultimately benefits from increased productivity (in a normal market economy,) but those who are actually responsible for driving the increase benefit more and sooner, which increases inequality.

But the increased inequality doesn't mean that anyone's standard of living is actually dropping. Just that some are rising faster than others.

The article you linked compares to the 1950s and 60s. That comparison actually does a good job of demonstrating the problem with their definition. By today's standards of living, only a tiny portion of the boomer generation in their 20s would have been considered middle class. Yet, they suggest that the boomer generation was better off because their income distribution was less unequal, which is rather preposterous.

It's also worth noting that OECD doesn't apply regional adjustments to their numbers when they're talking about those distributions. Actual standards of living are much more equal across the U.S. than the gross income distribution would suggest. Some areas have higher average incomes, but they also tend to have much higher cost of living. European countries are typically too small to have much of this issue internally other than city vs. non-city.

For example, in pure GDP/capita, California ranks #5. In Regional Price Parity-adjusted personal income, it ranks #23, a bit under Iowa and a bit over Tennessee.

If OECD applied the proper regional adjustments to their numbers for U.S. incomes, I'm sure they'd find a much more equal distribution and, therefore, by their definition, a larger middle class.