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Which countries have strong middle classes?

Marketplace Staff Oct 20, 2011

Which countries have strong middle classes?

Marketplace Staff Oct 20, 2011

Jeremy Hobson: Perhaps one of the reasons the Occupy Wall Street protests have picked up so much steam is that the middle class is being squeezed in this country. So is there a country that’s doing a good job when it comes to building a strong middle class?

We asked Marketplace economics correspondent Chris Farrell to look into that, and he joins us now.
Good morning.

Chris Farrell: Good morning Jeremy.

Hobson: So is anybody getting it right when it comes to fostering a strong middle class?

Farrell: Oh I think there are a number of countries that are truly getting it right. The northern European countries — Denmark, Sweden, Switzerland, Germany — they’re doing it right, have a healthy middle class. And then there’s Canada, Australia, New Zealand — they also have a much more vibrant middle class compared to the U.S.

Hobson: And what is it that they’re doing to get that vibrant middle class?

Farrell: These are all liberal economies, these are all capitalist economies, but they have a much stronger social safety net. Big difference, for example — every citizen has health care. Another thing that they have is, essentially, they’re fiscally conservative.

I mean, I know if you look up past over their history, there have been moments where they haven’t been, at least essentially, fiscally conservative societies that pay as they go. They tend to have strong unions. So in strong unions, low income folks tend to be paid better; middle managers tend to be paid less.

Hobson: But how can you have that where you have a strong safety net and also a fiscally conservative government?

Farrell: Very simple: If you look in U.S. history, Walter Mondale was a fiscal conservative. He lost to Ronald Reagan, but what he argued for is if we’re going to have Social Security, if we’re going to have Medicare, if we’re going to have these social programs — we pay for them. That’s what being socially conservative or fiscally conservative means.

Hobson: But aren’t we different, Chris? I mean, we’re so much bigger here in the U.S. than, say, Switzerland or Norway. Doesn’t that make a difference when it comes to trying to have a strong middle class?

Farrell: It does. But we’re not that different. Look, we’re not going to have strong private sector unions in the U.S. That’s what our history tells us. But what we can do is focus government policies, and learn from these countries about focusing government policies to boosting the low income folks in this country. For example: helping out families and health care.

Hobson: Marketplace economics correspondent Chris Farrell. Chris, thanks so much.

Farrell: Thanks a lot.

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