Embattled Middle

The New Class Conflict
by joel kotkin
telos, 230 pages, $29.95

About five years after we graduated from college a friend called me from Philadelphia. She had spent some time bouncing between San Francisco and New York working in finance and consulting, and had decided to start her own business and settle in the City of Brotherly Love. “You have to come see this place,” she announced breathlessly. “The houses are free.” Well, not quite, but the cost-of-living gap between those cities that are hubs for media, finance, and technology and those that are not is hard for any young person to ignore.

Indeed, the cities in America that are growing the fastest are not those that would seem the coolest to recent college grads. Houston, Dallas, Charlotte, Orlando—these are not the destinations to which the so-called creative class aspires, and yet these are the places where more jobs are created, where housing is affordable, and, not surprisingly—perhaps as a result—where people are happiest.

Ever since the 2000 election, we have talked about an America divided between red and blue. But in his new book, Joel Kotkin argues that we are experiencing more than a geographical divide. For the first time since its founding, he suggests, America is experiencing a potentially devastating class conflict—the kind of division between the elites and the rest of America that could all but break the country’s middle-class backbone.

It is striking that Kotkin, a regular contributor to the Wall Street Journal’s editorial pages, is making this claim. For years, the left has argued that class warfare is a fact of life in America, even encouraging class resentment to achieve its political aims. The free-marketers’ response has been three-fold. First, if you ask Americans, they don’t hate the wealthy. They aspire to be among their ranks soon. Second, while there may be a great income divide between the corporate CEO and the janitor, the janitor is getting wealthier thanks to the company’s success—the rising tide lifting all boats. And finally, the people who are poor today are not the same people who were poor ten years ago. As more people come here through immigration, for example, they too will have their shot at the American dream, and others will start at the bottom of the economic ladder to take their place.

Now all this presumes that America is still offering opportunity to those at the bottom. But Kotkin argues that a variety of forces, including public policies driven by a variety of special interests, have conspired to close off this opportunity.

Kotkin is at his best in describing the strange alliances that have formed in this new class war. On one side, he suggests, there are the bankers, the government bureaucrats, the clerisy (which includes the media and academics), and the tech sector. On the other is “the embattled yeomanry”—that is, small business owners—and the rapidly expanding lower classes who don’t even have a chance to make it into the yeomanry anymore.

Let’s start, though, with the tech sector because its presence on the list of forces working against the middle class might surprise readers most. The tech folks started out in the 1960s as a bunch of dorky engineers taking on projects for NASA and the Defense Department. There may have been people who were ­extraordinarily good at the work, but as economist John Kenneth Galbraith noted, “No individual genius arranged the flight to the moon.” When the industry moved from an organizational focus to an individual one and from producing hardware to software, the culture shifted too.

These new tech gurus were seen as more egalitarian, “with senior executives hobnobbing with janitors in an almost comradely fashion.” But it was more than simply being nice to the little guy, according to Kotkin. “Driven by the assumption of ever higher productivity through information technology . . . these executives were widely portrayed not as greedy capitalists but as ‘artists’ seeking ever greater perfection.” Indeed, Kotkin cites a survey showing that “over 72% of Americans had positive feelings about the computer industry as opposed to a mere 30% for banking and 20% for oil and gas.”

The tech moguls have managed to convince the American public that “they are not here just to make money but [to] ‘change the world.’” Which is usually where the trouble starts. Whatever lip service they may pay to supporting progressive causes, the truth of the matter is that the tech industry does not put its money where its mouth is. Silicon Valley doesn’t have organized labor, sends as much of their business offshore as possible, and doesn’t even measure up philanthropically to their peers in other industries, according to Kotkin. In addition to their hubris and disregard for the privacy of the typical user of their gadgets and software, the tech moguls have also spent unprecedented amounts of money in Washington. Facebook’s lobbying budget grew from $351,000 in 2010 to $2.45 million in the first quarter of 2013.

And what are they lobbying for? It’s not just fewer regulations and better tax breaks. The “oligarchs” of the Bay Area, says Kotkin, are spending their personal fortunes pushing for greater investment in renewable energy while blocking middle-class job creators like the Keystone Pipeline. (The debate over fracking, he rightly notes, is really a class conflict between those who are willing to make small environmental tradeoffs in order to improve economic conditions and those who don’t need to because they already have money.)

The tech folks have helped to elect politicians who raise California tax rates to unsustainable levels for the middle class, and all the while they fly around in oil-guzzling private jets. “Increasingly, large sections of the Bay Area—with an economy as large as that of Switzerland—resemble a ‘gated’ community where those without the proper academic credentials, and without access to venture funding, are forced into a kind of marginal nether-existence. They live in ­crowded houses and even in their cars, or they commute huge distances to jobs that serve the Valley’s upper crust.”

But the oligarchs in New York and San Francisco would not be able to do what they do without the support of the media and the academy justifying these anti-growth policies in the name, again, of changing the world. Kotkin zeroes in on the anti-sprawl, “live-small” memes that give rise to micro-apartments and other vehicles for cramming poor people into the smallest spaces ­possible—all to be more environmentally correct.

Of course the most harmful messages of the academy and the media are those that concern family, faith, and community. Not only has the decline of marriage created a population of single-parent households unable to climb out of poverty, but Kotkin also suggests there are enormous implications for the “emancipation of individual family members from the family.” Many of the small businesses of previous eras started out as families, with members pooling their resources to bring about success. Now, says Kotkin, parents are “feeling a less keen sense of responsibility for their children.” And one might also add the reverse. Rather than contributing to the family income, teenagers are encouraged to spend it.

At the beginning of The New Class Conflict, Kotkin ­acknowledges encountering difficulty in finding a publisher for the book because it “did not fit neatly into either right or left perspectives.” But his efforts to be bipartisan in his mercilessness sometimes fall a little short. He makes little distinction between, say, the Kochs of the world and the tech oligarchs. Both are super-wealthy and both try to influence politics. But the Kochs have devoted their philanthropy and lobbying to try to encourage economic growth at all levels by lifting the taxes and regulations that are burdening too many Americans. And Kotkin criticizes “the outsized role” of the wealthy in politics, which he attributes to “weakened controls on campaign contributions.” But he largely leaves unmentioned the outsized role of public sector unions’ ­financial contributions to politics.

So is there any hope? Or, as ­Kotkin worries, are we doomed to be a society of the super-rich and a bunch of serfs who cater to their needs? Kotkin says that America’s best hopes lie in its history, particularly a decentralization of power. “The key to future effective government lies not so much in its radical downsizing, but in dispersing power to the local level.” Despite his best efforts to end on an optimistic note, Kotkin’s mustering of the evidence leaves the reader with the impression that in this new class war, there are few victories in sight for the little guy.

Indeed, even if there were some way to counter the entrenched interests that have aligned themselves against the yeomanry and change the economic policies that are keeping the middle class down, the social trends of the past half-century will be much harder to undo. The divorce revolution and the resulting atomization of the family have proven disastrous for children. The dramatic drop in the birth rate has also meant that young people have a significantly smaller network on which to draw for emotional and financial support.

While young people may be aware of some of the economic factors that have led to their status as part of the “screwed generation,” they don’t seem to fathom the effects that the decline of marriage has had. Which is why they continue to talk about marriage as “the cherry on top,” something to aim for after financial stability has been achieved, even after children have been born.

Those concerned with rebuilding the middle class, then, must do more than make the American economic climate friendly to small businesses, manufacturing, and cheap energy. They must also continue to wage a battle that is even less popular—the one over culture.  

Naomi Schaefer Riley is the author most recently of Got Religion? How Churches, Mosques, and Synagogues Can Bring Young People Back.