Support 100 years of independent journalism.

  1. Long reads
21 May 2007

Revolt of the middle classes

Peter Wilby on why inequality will top the agenda

By Peter Wilby

Consider this headline from the Daily Telegraph business section: “The backlash has started against income inequality.” Or this, from the Daily Mail leader page: “I deplore the billionaires who contribute so little to Britain.” Or this, from the Washington Post: “Free trade’s great, but offshoring rattles me.” That last one doesn’t seem so startling until you know that the article beneath it is written by Alan Blinder, a Princeton economics professor and former vice-chairman of the Federal Reserve. A rough equivalent would be: “God’s great, but the Resurrection rattles me.” By a Vatican cardinal.

These three articles, along with much other evidence, suggest we are on the brink of a great political transformation, comparable to the worldwide shifts to welfarism in the 1940s and to neoliberalism in the 1980s. I do not think the assumptions that are now shared by just about every government in the developed world – particularly new Labour and now, following Nicolas Sarkozy’s election, even the French – can survive another decade. Inequality is about to move back to the top of the political agenda. It will be put there, not by the working classes or by the socially excluded, whom we usually regard as poor, but by the middle classes.

They are about to suffer what hit the working classes 20 years ago: the effects of globalisation. As Blinder puts it: “We used to think, roughly, that an item was tradable only if it could be put in a box and shipped. That’s no longer true. Nowadays, a growing list of services can be zapped across international borders electronically.”

So far, this has involved mainly low-skill jobs such as telemarketing. But computer programming and accounting are already moving offshore. Architects’ services, engineering design, radiology and some legal business (drawing up contracts, for example) could follow.

So could teaching and even journalism. For example, British GCSE and A-level students can use an online tutoring service from India this summer, while Reuters news agency has a thousand staff in Bangalore, including a hundred writing financial news stories. A California news website is recruiting Indian reporters to cover local council meetings through a live internet feed.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. A weekly newsletter helping you fit together the pieces of the global economic slowdown. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s weekly environment email on the politics, business and culture of the climate and nature crises - in your inbox every Thursday. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A newsletter showcasing the finest writing from the ideas section and the NS archive, covering political ideas, philosophy, criticism and intellectual history - sent every Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.

All this, says conventional economics, is for the best. The costs of services will fall, as the costs of goods have done, and productivity will rise. Western resources will be released for new industries, new products, new jobs. We’ll be richer, and so will India and China. But think of the programmers and accountants who got themselves educated and trained as they were told to do, and now find their skills don’t make them any more employable than assembly-line operatives.

Content from our partners
How to create a responsible form of “buy now, pay later”
“Unions are helping improve conditions for drivers like me”
Transport is the core of levelling up

Blinder reckons 30 to 40 million American jobs – between a quarter and a fifth of the total – are potentially offshorable. Not all will go, but the threat will send a shiver down the spine of Middle America and, Blinder predicts, transform its attitudes to social safety nets.

Combine that with the rise of the super-rich. This is another effect of globalisation: capital can ignore international barriers and drive down taxation by setting one country against another. Under new Labour, Britain has become a tax haven for the very wealthy and, as we are slowly realising, the distorting effect on the London-area housing market is profound. A generation of middle-class youth is moving into its thirties without the smallest prospect of owning a home.

That is what lies behind those headlines in the Mail and Telegraph, which might have been taken from the New Statesman. The Mail writer notes that “under new Labour, the worth of the 1,000 richest people in the country has soared by 263 per cent” and that many of them are foreigners. The Telegraph columnist complains: “The politically influential middle classes are missing out most. They pay proportionately more in taxes and are failing to benefit from the massive increase in salaries enjoyed by the super-rich.” Something is stirring in the political undergrowth and Gordon Brown’s chances of winning the next election depend, I suspect, on understanding what it is.

Globalisation and the super-rich: for ten years it has been heresy in new Labour’s eyes to resist either. But these issues will shape the next decade, and Brown cannot escape them.