The Birth Of The Lower Middle Class

Maybe I just missed it prior to the beginning of the Thatcher era (1979), but I don't recall there being a pursuit of wealth and possession before the Conservatives came to power. Perhaps there was and it just didn't manifest itself as fully as it did during the "grab what you can" times of the early 1980s.

The phrase "Greed Is Good" as spoken by Gordon Gecko in "Wall Street" was - in my mind at least - supposed to be a damning indictment of the wealth at all costs approach. Unfortunately (from my point of view) the drive of the City to make more money at the expense of everyone else seems to have seeped out and infiltrated every day life to the point where it became expected by everyone that they too would be millionaires.

In a post in 2006, I mentioned about the way in which City Centre regeneration had been kick-started by gentrification, rather than a grass roots approach. I didn't suggest then that the problem was caused by Councils not having sufficient funding, but this is a very real possibility due to the decreased amounts of rent they were receiving from the reduced amount of Council tenants.

I can still remember people being happy to live in a Council house that they rented and would never own. Of course that changed when the Conservatives allowed the purchase of Council houses by tenants. The tenants bought the house - thus removing it from the social housing pool - and then, often, sold it on at a small profit shortly afterwards. Whole housing estates suddenly went from being all social housing to being entirely privately owned in a matter of years.

And it was encouraged, no, it was expected that if you were able to, you would buy your own council house: then you would have an asset. You clambered onto the mortgage ladder and your working life went toward paying for your castle. Repairs and maintenance that had previously been undertaken by the Local Authority became your own responsibility. Bonus for the LA as they no longer had to have hundreds of workmen to do these jobs. And in the short term (a phrase that I may well be using a lot) the LAs also benefited from receiving the sale price of the house.

Unfortunately, this short-termism was just that. In the longer term, the LAs received less money from tenants - as there were less tenants - and those there were were usually in dire financial straits and the Council were effectively paying for them to be housed (in the form of Housing Benefit and Council Tax rebates). True council housing now has become mainly a ghetto of the elderly, the extremely poor and the migrant. These "sink estates" as they have become known, can have up to 80% of the houses with no-one in full time employment living in them.

Mostly gone from council housing were people in full time employment who took little from the system, but gave a lot back. These people were to become the new order, the lower middle class. Not wealthy enough to be deemed truly middle class, they're taxed harder as a percentage of their earnings and receive less financial support from the Government than those both above and below them. Created by the drive towards home ownership for all, the lower middle class are essentially stuck in an endless fight against losing it all, and trying to reduce the gap to the true middle class.

And I shall return to how this lower middle class fight has affected the financial markets worldwide in a later post. Mark one thing though, things need to change; there needs to be a revolution.