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The dying of the middle-class dream

Millions of households have suffered a fall in living standards in these past few years. So when the politicians are seen to collude in what feels like a rip-off . . .

All of British politics since the end of the Second World War has been underpinned by a double promise. The first element is collective – every generation will live better than the one before it. The second component is individual – any citizen’s hard work will be rewarded with wealth and higher social status.

In the US, the equivalent offer is explicit in the idea of an “American dream”. In Britain, we are more reticent about expressing the belief that self-advancement should be a fundamental right and more pessimistic about whether it extends to us. That doesn’t mean the idea lacks currency, nor does it diminish the feeling of betrayal when the contract is broken.

It is breaking before our eyes. The financial crisis did not only disrupt the longest run of economic growth in living memory; it upset assumptions about who the economy was designed to serve. The perception that a super-wealthy elite was both responsible for the crash and insulated from its consequences is profoundly demoralising. It mocks the ambition of those who feel they are working harder than ever for diminishing returns.

For millions of British households the experience of the past few years has been creeping impoverishment. Wages have been frozen or have risen too slowly to keep up with the cost of living. According to data from the Office for National Statistics, the average weekly pay packet has fallen by about 8 per cent in real terms since the start of 2008 – the peak of the boom. In the same period, while GDP per head has contracted by 7 per cent, net national income per head has fallen by 13.2 per cent.

According to a recent study by researchers at Loughborough University, the cost of a basket of essential goods and services – including food, fuel and public transport – has risen by 43 per cent in the past decade. The average domestic energy bill has roughly doubled in real terms over the same period. For many, those pressures have cancelled out material gains accrued since the turn of the century. Necessary components of family life – childcare, running a car – have become punishingly expensive for anyone living on or below the median household income, currently about £26,500 per year.

Then there is the slow burn of Britain’s housing crisis. Surveys of mortgage lenders show the average age of a first-time buyer is now 35, up from 28 in the 2000s and 24 in the 1960s. The only reason hundreds of thousands of people who already own their property are able to stay in it is that interest rates are below the long-term trend. A sudden rise could tip them into arrears. Rents are inflating in the private sector, much of which is a wild west of cowboy landlords charging extortionate rates for hovels. As for social housing, in densely populated parts, anyone not destitute enough to qualify for emergency short-term accommodation can expect to sit on a waiting list for up to ten years.

Unemployment has not soared as much as many feared in the recession, but the official numbers are buoyed by increases in part-time work and by people declaring themselves self-employed, categories that conceal meagre incomes. Roughly 1.4 million people are forced to work fewer hours than they would like. There are still about 2.5 million people jobless. Youth unemployment is hovering just below the one million mark. A mass of research shows that future earnings and self-esteem will be dented irreversibly for those young people passing their formative years in a hopeless drift.

A YouGov survey conducted last month asked voters how worried they were that “people like you will not have enough money to live comfortably” over the next two to three years. Seventy-one per cent were fairly or very worried; 28 per cent were not worried. When asked about the fear of losing their job or finding work 64 per cent said they were worried and 32 per cent were not. Those proportions were broadly the same across social categories, political allegiance, age and region.

The fall in British prosperity and optimism is not just a function of the financial crisis and recession; nor will it necessarily be reversed as economic growth returns. Wages for those in the bottom half of the income scale have been stagnant since 2003. Research by the Resolution Foundation, the leading think tank looking at trends in living standards, has found that disposable incomes for low earners fell in every region of England outside London during the period 2003-2008 – the frothiest part of the boom, when the British economy as a whole expanded by 11 per cent.

***

Even in the good times, people were not as well off as they thought they were – or felt entitled to be. The state compensated for some of the shortfall with tax credits. Those are now being cut. Individuals also topped up their wages with credit cards and other private debts. That habit persists. A study by the consumer group Which? found that, this past September alone, 800,000 households took out emergency “payday loans”, often carrying extortionate interest rates. Last year, Wonga.com, a leading provider of such loans, more than trebled its profits on the previous year, up from £12.4m to £45.8m.

According to the Resolution Foundation’s analysis, even when heroic assumptions are made about a prompt bounce back to growth and rising employment, the benefits will accrue to those who, by any objective measure, are already rich. “There is a complacent view that a return to growth will be enough. That is unlikely to be the case,” says Gavin Kelly, the foundation’s director. “We know from recent history in the UK, and far longer experiences in other mature economies, that it is perfectly possible for steady growth to coincide with an era of stagnant living standards.”

This opens a new chapter in British politics. For the first time, swaths of middle-class voters, who for generations were given to understand that the system was fashioned for their benefit, feel it is rigged against them. In such a climate, the conventional messages – the appeal to aspiration and the promise to reward enterprise – ring hollow. Yet the current generation of party leaders doesn’t know any other kind of middle-class politics.

The American experience is instructive, although never wholly analogous. The US middle class has followed the same pattern of stagnant wages, shrinking opportunity and squeezed living standards but for even longer. The “Death of the Great American Middle Class” is a well-established trope in the US media, debated in newspaper op-ed pages and dissected by political scientists.

A new book by James Carville and Stan Green­berg, two veterans of Bill Clinton’s presidential campaigns, charts the phenomenon in depth. It’s the Middle Class, Stupid! argues that the mechanisms for delivering the American dream to the average citizen – access to quality education, affordable housing, jobs that pay decent wages – have broken down.

“There’s a presumption that you will do better and better, have more disposable income and more savings, and you’ll have a decent retirement, that your kids will get a college education and be able to do better than you,” says Greenberg. “If you look at the period 1945-80, that’s what happened in America. We now know, looking back from 1980 onwards, that it largely stopped – the story is now a myth.”

I met Greenberg, a pollster and strategist who is currently advising the Labour Party, on a recent trip of his to London. We sat in a central London coffee shop discussing the parallels between the American and British predicaments. One vital distinction, he observes, is that the “middle class” in the United States is a much broader category. Those who aspire to the status automatically expect to acquire it and so pre-emptively identify themselves with it. “In the US, working-class people who are clearly not middle class by the standards we’re talking about here [in Britain] consider themselves middle class, and they do so because they believe they will have rising incomes.”

When that expectation is disappointed the result is rage. It shows itself in the banners held aloft at this year’s Democratic National Convention saying “Middle Class First” (a slogan that would invite satirical sneers about easier access to organic vegetables in the UK). It is also a force driving the rise of the radical conservative Tea Party movement. Although the Republican fringe is better known in Britain for its Christian fundamentalism, it channels a sense of betrayal at the hollowing out of the American dream – the feeling that the Washington and Wall Street elite have stolen the country from the people.

As Greenberg sees it, the common belief is that America is “hard-wired” to furnish opportunity, so if it doesn’t happen, some conspiracy is to blame. “So we end up with a morality tale – who are the bad guys that are blocking the natural forces? It’s class conflict in the context of an assumption that we just need to take away the distortions that rig the rules.”

The suspicion that government is a malign influence is then inflamed by ultra-conservative media, weaving in reactionary religious fear that liberal policy degrades the moral fibre of the nation. Greenberg’s analysis is supported by Jacob S Hacker, a professor of political science at Yale University and an important intellectual influence among those in Ed Miliband’s inner circle. “The hallmark of contemporary public attitudes,” Hacker wrote in a recent paper, “is not public conservatism but public cynicism and distrust, fuelled by the economic trend of the last generation and a sense that government is out of touch.”

That, he argues, poses a particular challenge to politicians of the left, who must decontaminate state intervention of any kind before voters can trust them again to address structural imbalances and entrenched injustices in the economy. “To rebuild the middle class requires rebuilding a sense that government can make a positive difference.”

Thus, in the US at least, the mainstream politics of class resentment, historically imagined to be a resource of the left, has been appropriated by the anti-government right. A significant observation in It’s the Middle Class, Stupid! is that the raw evidence from opinion polls shows Democratic candidates do surprisingly well when they become unapologetic in demanding that wealth be shared more equitably. Yet they are often intimidated out of pressing the point home by a received wisdom – and a well-mobilised conservative commentariat – which says that such messages are divisive, signal a drift away from the centre, represent “class war” and alienate independent voters with a whiff of socialism.

A similar dynamic operates in Britain, though much moderated because we are less hysterical about the spectre of reds under the bed. The charge of sowing interclass strife is central to Tory rebuttals of Ed Miliband’s attempt, laid out in his speech to this year’s Labour conference in Manchester, to position himself as the leader of a “one-nation” party. Conservatives leapt on Miliband’s scorn for David Cameron’s quasi-aristocratic background, Eton education and cabinet staffed with millionaires as evidence that the call for national unity disguised a return to embittered socialism. Cameron addressed the point directly in his own autumn conference speech. “We don’t preach about one nation but practise class war,” he said. “We just get behind people who want to get on in life.” In parliamentary debate, Cameron routinely uses “left-wing” as a term of derision and a byword for unelectable incomprehension of mainstream British sensibilities.

Downing Street is under no illusions that politics for the foreseeable future will be shaped by the feeling in many households that the ground is giving way beneath their feet. Senior Tories also know that they will not long get away with blaming the nation’s misfortune on the legacy of the last government. “Answering the question ‘What are you going to do about this?’ will be the dominant theme in politics for the next 30 years,” says a No 10 strategist.

Cameron’s strategy for re-election rests on the hope of reviving his party’s appeal to those lower-middle-class and working-class voters who once flocked to Margaret Thatcher’s banner. They are often identified in the Conservative lexicon as the “strivers” – driven by the will to work their way up and deeply resentful of those perceived to be gaming the system, especially through “unearned” welfare payments.

The historically emblematic policy for winning the support of these voters was the “right to buy” council houses, which held out a mass invitation of enhanced status and asset wealth through property ownership. It is far from obvious what an equivalent offer today would look like. Besides, Thatcher, the daughter of a greengrocer, was intrinsically plausible as a champion of that target demographic. David Cameron is not.

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One Conservative who is sensitive to the needs of the “strivers” is Robert Halfon, the respected MP for Harlow in Essex. It is a bellwether seat, taken from Labour in the Thatcher landslide of 1983, reclaimed in the Blair stampede of 1997 and then surrendered again in 2010. Halfon has made a name for himself in parliament campaigning vigorously and with some success against rises in petrol duties, which, he says, are pummelling what he calls the “white van” voter. “The next election will be about the cost of living,” he tells me. “People in my constituency are getting up at 5am to drive to work. They are holding down two jobs. People are suffering but they still want to get on.”

Halfon doesn’t believe that the British middle class is responsive to political attacks based on the Prime Minister’s privileged family history, arguing that they see in these stories a sneer of envy. But he recognises that the Tories in general are in danger of looking as if they stand up for the wrong people. “Not one person on the doorstep has ever commented on Cameron’s background or [his education at] Eton,” Halfon says. “What people do care about, what is a large problem for us, is that we are seen as a party of the rich. Even people who agree with us and are inclined to vote for us are hesitant about it because they wonder if we are governing for the benefit of our rich friends.”

The distinction is vital. It is unreasonable to blame Cameron for the circumstances of his birth; it is fair to challenge him over the choices he makes in power. Labour has been stung in the past trying to depict Tories as cartoon toffs. In the 2008 by-election in Crewe and Nantwich, the Conservative candidate, Edward Timpson, a Cheshire barrister from a wealthy family, was trailed by Labour activists wearing “Lord Snooty” top hats and tails. The stunt backfired when the background of the Labour candidate, Tamsin Dunwoody, was shown to be no more proletarian. The seat was lost.

Since then the climate has changed. The imposition of painful economic policy has coincided with the appearance of a prime minister who is obviously unfamiliar with toil. Even many Tories admit to irritation with their leader’s haughty manner and encirclement by a gilded clique.

Stan Greenberg, who has a detailed knowledge of opinion-poll trends, believes the Prime Minister’s personal brand has been compromised by the impression that he moves in rarefied circles, is distant from the concerns of ordinary people and fails to put their interests first. The turning point was the phone-hacking scandal, which exposed Cameron’s seamless social integration with executives from Rupert Murdoch’s News Corp in a kind of rolling beau monde Cotswolds garden party.

“His identity is so fuelled by who he was hanging out with during that crisis – the horseback riding [with the News International executive Rebekah Brooks], the whole set of associations, Murdoch’s back-door entry to No 10. It resonated,” Greenberg says. “He’s part of the horsey set. He’s seen to be a typical Conservative who makes choices on policy, including cutting taxes for wealthy people, while also doing a granny tax. Combine that with who he was hanging out with, and things have come together in a way that is pretty indelible.”

The resignation last month of the Conservative chief whip Andrew Mitchell over allegations that he told police officers to “know their place” and called them “plebs” can hardly help redeem the party’s snobbish image. Downing Street claims the episode has caused much more of a stir in Westminster than anywhere else – that it has not “cut through” to a wider audience. It is hard to find an MP from any party who believes that.

While Cameron might struggle to reassure anxious voters that he is on their side, it is not obvious that Ed Miliband will be embraced as their more authentic champion. The opposition leader’s background is rarefied, too, only in a different way. He may have gone to the local comprehensive but his cultural schooling and political apprenticeship, in the north London intelligentsia and as a young adviser to Gordon Brown, respectively, do not resemble anything like the experience of the voters he wants to woo. For most people who take little interest in what happens at Westminster, he is another well-spoken, Oxford-educated politician who has never struggled to pay the rent.

To his credit, Miliband was the first party leader to identify what he characterised as the struggles of the “squeezed middle” – the long-term, downward pressure on living standards for people on or below average incomes. He has spoken about restoring what he calls “the promise of Britain”, a deliberate emulation of “the American dream”. The phrase has not caught on.

The focus on US trends is still the right one. It isn’t just the way real incomes have fallen while growth has risen. The UK is following an American labour-market pattern in which the kinds of jobs that pay well enough to sustain a high standard of living are becoming rarer – even as overall unemployment is falling. It has been called the “hourglass effect”. In other words, there is pool of poorly paid, low-skilled jobs at the bottom, a bulge of well-paid, high-end jobs at the top and a dwindling number of semi-skilled, white-collar, clerical or managerial posts in the middle. Those are the jobs that underpin mass participation in the middle class, as a lifestyle and an identity.

In another recent book charting the decline of the US middle class, Time to Start Thinking: America in the Age of Descent, the author, the Financial Times journalist Edward Luce, quotes Lawrence Katz of Harvard University, one of America’s leading labour economists, on the social consequences of polarisation between luxuriant and servile wages: “We are on track to becoming a country where the top tier remains wealthy beyond imagination, and the remainder, in one way or another, are working in jobs that help make the lives of the elites more comfortable . . . They will be taking care of them in old age, fixing their home wifi, or their air-conditioning, teaching or helping with their kids and serving them their food.”

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It is conceivable that Britain will end up in a similar place. Politics in the aftermath of the financial crisis is unlike the recovery phase from previous recessions. In the past it was easy to imagine that the country was experiencing a period of temporary turbulence. Politicians just needed to advertise their credentials to navigate through it. This time is different for two reasons. First, restoring growth alone does not solve the structural flaws that disconnect the middle class from realistic attainment of its members’ ambitions. Second, the very capacity of politics to provide solutions is in question. None of the present generation of party leaders has any experience of governing at a time when the entire economic system is perceived to be a con. They all hail from a political elite that is seen as having devised the scam or, at best, colluded in it.

Hacker has identified a paradox that applies as well to the British challenge as the American one: “Progressive reform will require using a broken political system to fix a broken political system,” he writes. “The main obstacle to change and the main vehicle for change are one and the same.”

For generations, much of the British electorate has not been highly politicised. Suspicion of ideology and wariness of campaigning exuberance are features of genteel, middle-class identity. The most successful election candidates in recent decades have been those who persuaded middle-class voters – or those who aspire to be middle class – that backing their party is the predictable, respectable thing to do. Both Margaret Thatcher and Tony Blair achieved a cultural monopoly over the non-political mainstream. They made voting for the opposition look somehow more conspicuously opinionated, a tilt towards the fringe, and therefore socially almost eccentric.

There is no candidate in British politics who can pull off that trick today. The financial crisis has ended the idea that the pursuit of a comfortable family life – “normal”, middle-class aspiration – can be automatic and politically neutral, as if decoupled from ideological choice. Already too much of a struggle for that to be the case, it is likely to become more of one and, by extension, increasingly politicised.

But how, and by whom? Not in recent memory have we seen politics in this country with a middle class radicalised by the brazen theft of its future. We may be about to find out what that looks like.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

This article first appeared in the 05 November 2012 issue of the New Statesman, What if Romney wins?

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The secret anti-capitalist history of McDonald’s

As a new film focuses on the real founder of McDonald’s, his grandson reveals the unlikely story behind his family’s long-lost restaurant.

One afternoon in about the year 1988, an 11-year-old boy was eating at McDonald’s with his family in the city of Manchester, New Hampshire. During the meal, he noticed a plaque on the wall bearing a man’s face and declaring him the founder of McDonald’s. These plaques were prevalent in McDonald’s restaurants across the US at the time. The face – gleaming with pride – belonged to Ray Kroc, a businessman and former travelling salesman long hailed as the creator of the fast food franchise.

Flickr/Phillip Pessar

But this wasn’t the man the young boy munching on fries expected to see. That man was in the restaurant alongside him. “I looked at my grandfather and said, ‘But I thought you were the founder?’” he recalls. “And that’s when, in the late Eighties, early Nineties, my grandfather went back on the [McDonald’s] Corporation to set the history straight.”

Jason McDonald French, now a 40-year-old registered nurse with four children, is the grandson of Dick McDonald – the real founder of McDonald’s. When he turned to his grandfather as a confused child all those years ago, he spurred him on to correct decades of misinformation about the mysterious McDonald’s history. A story now being brought to mainstream attention by a new film, The Founder.


Jason McDonald French

“They [McDonald’s Corporation] seemed to forget where the name actually did come from,” says McDonald French, speaking on the phone from his home just outside Springfield, Massachusetts.

His grandfather Dick was one half of the McDonald brothers, an entrepreneurial duo of restaurateurs who started out with a standard drive-in hotdog stand in California, 1937.

Dick's father, an Irish immigrant, worked in a shoe factory in New Hampshire. He and his brother made their success from scratch. They founded a unique burger restaurant in San Bernardino, around 50 miles east of where they had been flogging hotdogs. It would become the first McDonald’s restaurant.

Most takeout restaurants back then were drive-ins, where you would park, order food from your car, and wait for a “carhop” server to bring you your meal on a plate, with cutlery. The McDonald brothers noticed that this was a slow, disorganised process with pointless costly overheads.

So they invented fast food.

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In 1948, they built what came to be known as the “speedy system” for a fast food kitchen from scratch. Dick was the inventor out of the two brothers - as well as the bespoke kitchen design, he came up with both the iconic giant yellow “M” and its nickname, the “Golden Arches”.

“My grandfather was an innovator, a man ahead of his time,” McDonald French tells me. “For someone who was [only] high school-educated to come up with the ideas and have the foresight to see where the food service business was going, is pretty remarkable.”


The McDonald brothers with a milkshake machine.

McDonald French is still amazed at his grandfather’s contraptions. “He was inventing machines to do this automated system, just off-the-cuff,” he recalls. “They were using heat lamps to keep food warm beforehand, before anyone had ever thought of such a thing. They customised their grills to whip the grease away to cook the burgers more efficiently. It was six-feet-long, which was just unheard of.”

Dick even custom-made ketchup and mustard dispensers – like metal fireplace bellows – to speed up the process of garnishing each burger. The brothers’ system, which also cut out waiting staff and the cost of buying and washing crockery and cutlery, brought customers hamburgers from grill to counter in 30 seconds.


The McDonald brothers as depicted in The Founder. Photo: The Founder

McDonald French recounts a story of the McDonald brothers working late into the night, drafting and redrafting a blueprint for the perfect speedy kitchen in chalk on their tennis court for hours. By 3am, when they finally had it all mapped out, they went to bed – deciding to put it all to paper the next day. The dry, desert climate of San Bernardino meant it hadn’t rained in months.

 “And, of course, it rained that night in San Bernardino – washed it all away. And they had to redo it all over again,” chuckles McDonald French.

In another hiccup when starting out, a swarm of flies attracted by the light descended on an evening event they put on to drum up interest in their restaurant, driving customers away.


An original McDonald's restaurant, as depicted in The Founder. Photo: The Founder

***

These turned out to be the least of their setbacks. As depicted in painful detail in John Lee Hancock’s film, Ray Kroc – then a milkshake machine salesman – took interest in their restaurant after they purchased six of his “multi-mixers”. It was then that the three men drew up a fateful contract. This signed Kroc as the franchising agent for McDonald’s, who was tasked with rolling out other McDonald’s restaurants (the McDonalds already had a handful of restaurants in their franchise). 

Kroc soon became frustrated at having little influence. He was bound by the McDonalds’ inflexibility and stubborn standards (they wouldn’t allow him to cut costs by purchasing powdered milkshake, for example). The film also suggests he was fed up with the lack of money he was making from the deal. In the end, he wriggled his way around the contract by setting up the property company “McDonald’s Corporation” and buying up the land on which the franchises were built.


Ray Kroc, as depicted in The Founder. Photo: The Founder

Kroc ended up buying McDonald’s in 1961, for $2.7m. He gave the brothers $1m each and agreeing to an annual royalty of half a per cent, which the McDonald family says they never received.

“My father told us about the handshake deal [for a stake in the company] and how Kroc had gone back on his word. That was very upsetting to my grandfather, and he never publicly spoke about it,” McDonald French says. “It’s probably billions of dollars. But if my grandfather was never upset about it enough to go after the Corporation, why would we?”

They lost the rights to their own name, and had to rebrand their original restaurant “The Big M”. It was soon put out of business by a McDonald’s that sprang up close by.


An original McDonald restaurant in Arizona. Photo: Flickr/George

Soon after that meal when the 11-year-old Jason saw Kroc smiling down from the plaque for the first time, he learned the true story of what had happened to his grandfather. “It’s upsetting to hear that your family member was kind of duped,” he says. “But my grandfather always had a great respect for the McDonald’s Corporation as a whole. He never badmouthed the Corporation publicly, because he just wasn’t that type of man.”

Today, McDonalds' corporate website acknowledges the McDonalds brothers as the founders of the original restaurant, and credits Kroc with expanding the franchise. The McDonald’s Corporation was not involved with the making of The Founder, which outlines this story. I have contacted it for a response to this story, but it does not wish to comment.

***

Dick McDonald’s principles jar with the modern connotations of McDonald’s – now a garish symbol of global capitalism. The film shows Dick’s attention to the quality of the food, and commitment to ethics. In one scene, he refuses a lucrative deal to advertise Coca Cola in stores. “It’s a concept that goes beyond our core beliefs,” he rants. “It’s distasteful . . . crass commercialism.”

Kroc, enraged, curses going into business with “a beatnik”.


Photo: The Founder

Dick’s grandson agrees that McDonald’s has strayed from his family’s values. He talks of his grandfather’s generosity and desire to share his wealth – the McDonald brothers gave their restaurant to its employees, and when Dick returned to New Hampshire after the sale, he used some of the money to buy new Cadillacs with air conditioning for his old friends back home.

“[McDonald’s] is definitely a symbol of capitalism, and it definitely sometimes has a negative connotation in society,” McDonald French says. “If it was still under what my grandfather had started, I imagine it would be more like In'N'Out Burger [a fast food chain in the US known for its ethical standards] is now, where they pay their employees very well, where they stick to the simple menu and the quality.”

He adds: “I don’t think it would’ve ever blossomed into this, doing salads and everything else. It would’ve stayed simple, had quality products that were great all the time.

“I believe that he [my grandfather] wasn’t too unhappy that he wasn’t involved with it anymore.”


The McDonald’s Museum, Ray Kroc’s first franchised restaurant in the chain. Photo: Wikimedia Commons

Despite his history, Dick still took his children and grandchildren to eat at McDonald’s together – “all the time” – as does Jason McDonald French with his own children now. He’s a cheeseburger enthusiast, while his seven-year-old youngest child loves the chicken nuggets. But there was always a supersize elephant in the room.

“My grandfather never really spoke of Ray Kroc,” he says. “That was always kind of a touchy subject. It wasn’t until years later that my father told us about how Kroc was not a very nice man. And it was the only one time I ever remember my grandfather talking about Kroc, when he said: ‘Boy, that guy really got me.’”

The Founder is in UK cinemas from today.

Anoosh Chakelian is senior writer at the New Statesman.