In any country, there are, economically speaking, three classes of people. The first class, which tends to be always the largest, is made up of those members of the population who receive the lowest incomes. The second class is made up of those who receive a country’s highest incomes and thus collectively own the largest chunk of its wealth. The third class, obviously, is the middle class, that is to say, the class standing between a nation’s richest and its poorest people.
How large a nation’s middle class is depends on how small its lowest class— those who collectively own the smallest slice of the national economic pie as a result of historical and sound-economic-policymaking reasons—the smaller is the lowest class. And the narrower is the middle class, the broader will be the lowest class.
The ultimate desideratum is the reasonably even distribution of a nation’s income. Less desirable, but not totally unacceptable, is a broad body of people characterizable as middle-class. The greatest desideratum of all is a lowest-class share of the national income that is smaller than the middle-class’ share.
In his State of the Union address to the US Congress last week, President Barrack Obama chose to dwell on what many commentators described as economics of the middle class, which historically has accounted for the largest share of America’s national income. Noting how the share of the richest one percent in America’s wealth had almost doubled during the last 20 years while the average annual take-home pay of Americans had barely risen, President Obama laid out a program intended to correct that inequity through the provision of more public facilities and greater opportunities for middle-class Americans to increase their incomes and raise their earning capabilities.
The proposals made by the US Chief Executive focused on formal education, job training and healthcare. Education and job training were the keys to enhanced access to higher incomes and better career opportunities, Obama told the US legislators, and they were the means for the strengthening of America’s ability to compete in the world marketplace. Ordinary Americans lacked the means to obtain more and better education, Obama said; they needed the helping hand of the government.
Like all government programs, President Obama’s middle-class-economics program will require funding from somewhere in the US national budget. He indicated where the funds could come from.
He intended, he said, to propose legislation intended to tax the rich more. One of the fiscal proposals would be an increase in the capital gains tax, which, because of the tendency of physical and financial assets to autonomously rise in value over time, had been one of the principal sources of the sustained rise in the incomes and wealth of America’s rich. Changes in the taxation of US corporations would also be proposed.
Predictably, the Republican Party said that Obama’s State of the Union Address provided further proof of the Democrats’ tax-and-spend predilection. But opinion surveys and media comment have indicated approval of the Obama program.
In this country the size of the middle class and the lowest class depends on where the statisticians—public (Neda and the National Statistical Coordination Board) and private —place the income demarcation line. This line is usually the income that a family of five earns in a year. The choice of any other line—for example, the amount of income that it would take for a family of five to live “comfortably” or “decently”—would surely provoke fierce professional controversy.
The Philippine middle class is a broad class of Filipinos, thanks in no small measure to the overseas Filipino worker phenomenon, which has enabled millions of Filipino families to experience significant improvements in their living standards.
But the lowest-class Filipinos likewise number in their millions. Indeed, they are probably more numerous than middle-class Filipinos. If Barrack Obama were delivering his annual report to the Congress of the Philippines, he would have had to devote it to the economics of the lowest – not the middle—class.
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