Transcription
The world we live in has outwardly become richer, but feels poorer. Shop windows are adorned with new gadgets, there are more cars on the streets, and salaries in numbers have become higher than 10 years ago. But here's the paradox. Most people feel not a rise, but stagnation. As if the more you earn, the less remains. It sounds absurd, but here is the reality. In Russia, over the past decades, salaries, taking inflation into account, have increased by 38%. And housing prices have literally flown into space, more than doubling by 113%. In Europe, the picture is similar: real wages have grown by only 20-30% in 10 years, and housing has become almost 60% more expensive. Do you see a pattern? In essence, incomes are growing at a snail's pace, while everything else is growing by leaps and bounds. Moreover, what is interesting is that usual amounts increasingly do not cover basic needs: food, rent, fuel, and so on. And behind all this lies a much deeper shift than it seems at first glance. The disappearance of the middle class, in essence, the very stratum that previously ensured economic stability, confidence in the future, and social progress. Somewhere, the rich have become even richer, and their assets grow on their own, while others work harder but do not advance. And, in fact, here is the main mystery of our time. How did it happen that some get rich simply by owning assets, while others run faster but remain in place? Why is this happening? What happened to an economy in which labor, in fact, ceased to mean prosperity? And is there a place in this new reality for that very middle class, which was once the foundation of stability and prosperity for entire generations? By the way, we regularly discuss even more fundamental questions on our new Telegram channel Falcon Finance. There we talk about economics, finance, and investments in simple language, without water and complex terms. If you want to understand how the modern economy works and why certain processes that affect our lives every day are happening, be sure to subscribe. The link will be in the description below this video. The QR code will be on the screen. And now let's figure out what the middle class actually is, where it came from, and whether it might soon disappear forever. Let's start with the fact that the middle class is, in fact, a true historical phenomenon. And for most of human history, it simply did not exist. Imagine society as a multi-story building. In antiquity and the Middle Ages, the structure was simple. At the bottom, a mass of slaves, at the top, a handful of rich people, and between them, practically emptiness. Only a couple of thin layers of artisans and merchants, too few to affect the stability of the entire structure. But everything changed in the 19th century. The Industrial Revolution created a mass of new professions. People appeared who earned more than peasants with their labor, but still less than aristocrats. This new social group needed a name, and in 1813, the Oxford Dictionary first recorded the term "middle class." The middle class was understood as those who occupied an intermediate position between the aristocracy and the working class. These were, as a rule, merchants, industrialists, artisans, doctors, lawyers, and teachers, middle-level officials. This formulation in those years already clearly reflected a socio-economic stratum that had a stable income, engaged in intellectual or skilled labor, did not live on income from land or capital, like the aristocracy, but was also not dependent on physical labor like workers. The real triumph of the middle class occurred after World War II. The period from 1945 to 1975 was called the Thirty Glorious Years by the French. A term used to denote an era of economic miracle in all developed countries. The numbers were indeed astonishing. In the USA, the average worker's salary doubled, and by 1970, 60% of American families belonged to the middle class. This is more than ever in human history. An ordinary teacher could buy a house in the suburbs, support a family of four, change cars every 2 years, and save for retirement. An engineer lived better than a 15th-century nobleman, and a simple General Motors worker earned more than a university professor of the twenties. This became possible not by itself. Several powerful factors worked at once. Strong trade unions could force corporations to share profits with workers. In 1955, a third of American workers were unionized. And this was real power. Just imagine that until 1979, there was an unwritten agreement. If a company became more profitable, workers automatically received a pay raise. If productivity grew, so did the incomes of those who created that productivity. Workers received about two-thirds of all wealth that the economy generated. For every dollar of corporate profit, there were 5-6 dollars in worker wages. Progressive taxes channeled money from the rich into the common pot. The maximum income tax rate in the US reached 91%. It sounds radical, but this money went to roads, schools, hospitals, from which everyone in society benefited. A closed economy completed the picture. Factories could not flee to China because China was closed. Capital was tied to specific countries and was forced to share with local workers. A beautiful mechanism was created. Corporations grew, workers received more, and consequently, spent more, which in turn stimulated corporate growth. In general, everyone was happy. But in the eighties, this mechanism broke down, and since then, the middle class has only begun to shrink. According to the Pew Research Center, over the past 50 years, the share of the middle class in the US has fallen from 61% to 50%. In Russia, there was a short respite in the 2000s. The middle class even grew to a third of the population, from 29% to 34% by 2008. But then it began to shrink again. Now, about 8% of Russians can be considered middle class, and globally, the middle class constitutes only 17% of people. The rest are either very rich or barely making ends meet. Where did all these people go? A small portion rose to the upper category, but most slid down. But what, in fact, happened next? And the answer lies in a chain reaction of changes, each of which reinforced the previous one. [music] The first stage was the Quiet Revolution of the 1980s. Ronald Reagan and Margaret Thatcher proclaimed a new economic religion. The market knows best. And, in fact, the state should interfere less, and capital should flow freely where it is more profitable. It all sounded, as you understand, quite beautiful, but in reality, it turned out a little differently. It all started with a simple question. Why pay an American worker $7 an hour if a Chinese worker in 1985 earned less than a dollar for the same job? The difference is colossal. Factories began to move to Asia. The result was predictable. The mass exodus of production to China cost the US 3 million jobs. Detroit, Cleveland, Pittsburgh, the industrial pillars of America, experienced painful devastation. Factories closed, neighborhoods emptied, entire communities lost their meaning and livelihood. Perhaps the workers could have resisted, demanded, gone on strike, if they had the strength left. But it was precisely in those years that trade unions were methodically destroyed. In the fifties, a third of American workers were unionized. Today, in the private sector, it's only 6%. Without collective strength, an individual worker cannot bargain with a corporation. But that's not all. While workers lost jobs and influence, the rich received tax holidays. The maximum income tax rate fell from 70% to 37%, and the capital gains tax was radically reduced to 20% - the lowest level since 1929. As a result, many billionaires paid less tax than their own secretaries. Money that previously went into the country's common pot now settled in private pockets. And most importantly, the very philosophy of business changed. Previously, corporations considered themselves responsible to everyone: to shareholders, to employees, to society; now, only to shareholders. Just look at the numbers. Since 1980, labor productivity in the US has increased by 70%, and wages by 12%. Where did the remaining 58% go? They went to the owners of capital. Apple has increased its capitalization by more than 100 times in 20 years. How much of this wealth went to programmers and designers? Crumbs. The lion's share went to shareholders who create nothing, but simply own paper. Simultaneously, a technological revolution began, which completed the transformation of the economy. And if previously technologies created more jobs, now they destroyed them. When cars replaced horse-drawn carriages, new professions appeared. Drivers, auto mechanics, road workers. Computers replaced typists, but created an entire IT industry. Artificial intelligence works differently. There are far fewer new professions associated with it than disappearing ones. What used to take a lawyer a day, ChatGPT now does in seconds. In some studies, special AI models have shown cancer diagnosis with an accuracy of up to 98%. Machine learning-based architectural models design buildings faster and more efficiently than an entire bureau. Oxford scientists estimate that 47% of professions in the US could disappear in the next 20 years. Not only cashiers and drivers are at risk, but also accountants, lawyers, financial analysts. That very core of the middle class. What remains as a result? The economy grows, corporations get richer, and people's real incomes have been stagnating for 40 years. But this is not the end of the story. There is a mechanism that causes this inequality to grow on its own. [music] In the Gospel, there is an interesting parable: to him who has will be given, and from him who has not, even what he has will be taken away. And, in fact, economists have called this the Matthew effect. And it explains why our world has become so unfair. If you have money, you can make it work. If you don't have money, it means you work for someone else's money. The Walton family, owners of Walmart, have increased their fortune by $100 billion since 2007. They did nothing, just owned shares. 2 million employees created this value with their labor, but the fruits went to those who held a stake in the company. This is not an accident, it is a system. Rich families create trusts and funds that protect their capital from taxes, lawsuits, and even their own heirs' foolishness. Money works for money, generation after generation. And what happens to ordinary people? Here's an illustrative example. In 2001, the average apartment in Russia cost about $12-17,000 with an average salary of $80. To save up for housing, it took 12-15 years. But there's a nuance. Even if you put money in the bank at 7% per annum, inflation devoured 20% per year. Your savings literally melted away, a real value decrease of 13% annually. Saving was practically pointless. Today, the situation for savings is better. In some banks, rates have risen to 31%, and inflation is now only 9%, but the game has changed. While you save for 15 years for an apartment, someone who bought real estate in 2001 has already multiplied their capital several times, simply by owning it. Understanding this logic, many people start looking for other ways to preserve and increase capital. One of them can be cryptocurrency. The cryptocurrency market offers opportunities that traditional assets do not, but there is its own problem here. Most people enter crypto, let's say, blindly, buy on emotions, lose money, and get disappointed. Therefore, if you want to approach this tool consciously, study it as a serious financial asset, I strongly advise you to join our crypto community. We already have over 12,000 people in our community, and we have built, in essence, a whole ecosystem. There is deep market analytics, relevant setups, real cases, trading strategies, educational materials, for both beginners and pros. And most importantly, there is constant community support. What is also very important is that it is all absolutely free. There is no spam, there are no attempts to sell you something. So, join, friends. The link will be in the description below this video. The QR code will be here on the screen. But we are returning to the Matthew effect. The longer this game continues, the greater the gap becomes. In 2018, 9.5% of the population controlled 84% of global wealth. This is a level of inequality comparable to the period before the Great Depression. But the most terrible thing is not the numbers, but that the system becomes hereditary. Previously, the talented son of a teacher could rise to the top through free education, government programs, social elevators. Today, this same guy graduates from university with a debt of half a million rubles, and his classmate from an affluent family already owns an apartment bought by his parents. By the age of thirty, one has an asset that is appreciating in value, the other has a loan that eats up income. Social mobility has stalled. If you are from the middle class, the path to the top becomes increasingly difficult. But sliding down is very easy. One illness, one crisis, and you are no longer middle class. In fact, 2020 became like this. The coronavirus pandemic became the very test that tested the strength of millions of families. [music] The world stopped. Central banks turned on the printing press at full power. The US, for example, poured $6 trillion into the economy, Europe more than 2 trillion euros. And it seemed, in fact, that everyone was saved, but the money flowed not where it should have. Small businesses went bankrupt while receiving subsidies. Large corporations got richer by receiving cheap loans. For example, Tesla grew 10 times, and Amazon 3 times. Their owners became hundreds of billions richer. And what did ordinary people get? Inflation, of course. By 2022, prices had soared so much that people stopped recognizing price tags in stores. But that's not all. The pandemic accelerated digitalization by a decade. In 2 years of remote work, companies realized why they need an office for 500 people if they can get by with fifty. Why hire cashiers if customers scan goods themselves? Why need call center operators if a chatbot answers 80% of questions? Mass layoffs began not because of a crisis, but for efficiency. For example, the well-known META laid off 21,000 employees. Twitter - 80% of staff, Amazon - 18,000 people. And this is just the beginning. But the cruelest blow fell on those who survived. After the pandemic, entire industries switched to contracts. Marketers, analysts, even middle managers, many became temporary. A permanent employee turned into a burden. They cannot be fired quickly. They need to be paid even in a crisis. The pandemic showed the full cost of these obligations. When 27 out of fifty of the largest American companies conducted mass layoffs, they had to pay an average of $40,000 in severance pay to each laid-off employee. For a large corporation, this is billions of dollars in losses. Here's a programmer from Google. Formally, he has benefits, but he receives them not from the company, but from a contractor. His salary is a third less than a permanent colleague, a red badge instead of a white one, and a six-month contract with no guarantee of extension. And when the pandemic came, Google revoked offers from 2,000 such temporary employees in one day. Permanent employees were laid off selectively, but contract workers were fired en masse. It turned into a paradise for capital. All responsibility was shifted to agencies, all flexibility was taken by themselves. The middle class turned into an army of freelancers who don't know if they will even have their contract extended tomorrow. This is not a temporary crisis - this is a new reality in which the middle class is gradually evaporating. But where exactly? Most people are simply drowning in debt. According to the Central Bank of Russia, 54% of citizens have no savings in case of income loss. More than half of the adult population lives from paycheck to paycheck. At the same time, the average household debt has increased by 40% in 5 years. And this is a global problem. Worldwide, 57% of workers would not last without their next paycheck. In Switzerland, people owe more than the entire country earns in a year. A whole 130% of GDP. And this is one of the richest countries in the world. But here's another interesting statistic. In 1990, people in rich countries owed half of what their economy produced. Now it's already 3/4. The mechanism is simple. Your expenses grow faster than your income. Rent, utilities, food, gasoline, insurance. Everything is getting more expensive every month. Plus, new expense items appear: streaming subscriptions, food delivery, taxis, marketplaces under your windows. Individually, it seems like trifles, but all together it adds up to a significant amount. First, you spend your savings, then you imperceptibly take out a loan for a vacation and a new phone, then you refinance loans, and then you live in debt. And formally, you are still middle class, you have a job, a car, an apartment, but in fact, you are already heavily dependent on the banking system. Those who avoid the debt trap face a different fate. They join the ranks of the precariat. This term, in fact, was introduced by French sociologists in the eighties to denote the class of precariously employed. Today, the precariat includes freelancers, self-employed, and temporary contract workers. They can earn decently, but have no real guarantees. In Russia, more than 20% of workers are employed unofficially. In the US, the gig economy is growing. People combine several jobs to make ends meet. According to the International Labour Organization, worldwide, the gig economy covers up to 12% of the entire labor market. And this is hundreds of millions of people. Another powerful funnel is drawing people into digital slavery. A huge number of people work for algorithms. Taxi drivers depend on ratings, marketplace sellers on search engines, bloggers on the whims of social networks. Even if you manage to keep a stable job, you can get caught in a geographical trap. Good jobs are often concentrated in megacities, but the cost of living there is also sky-high. London and San Francisco are among the most expensive cities in the world for housing rentals. But in London, a teacher cannot afford to rent an apartment in the area where they work. And in San Francisco, the situation is so critical that city authorities have spent $105 million on building affordable housing for teachers. But even it costs an average of $1500 for a studio, which is almost half of the salary. For those who try to solve the problem through education, another trap awaits. The diploma has been devalued, but it is still being paid for. In the US, 45% of graduates work outside their specialty 10 years later. In Russia, every third, and in the world, only 46% of graduates work in their field of education. 4 years at university, debts for the diploma, and in the end, a job they were not trained for, but the only one available. It does not disappear anywhere. It dissolves into instability, debt, temporary employment, and, in fact, geographical traps. People work more, earn formally, not badly, but lose the main thing - confidence in the future. And on the ruins of the old system, something completely new is forming. A new caste system. We are living at the turn of epochs. The old world of social mobility is dying, and the new one has not yet been born. And what is forming instead of it makes us think about the future more and more often. At the top of the new pyramid, the techno-aristocracy is establishing itself, those very owners of IT giants. They control not just capital, but the very digital reality of our lives. Google knows what you are looking for. Meta knows who you are communicating with. Amazon what you are buying. They create the rules of the game for everyone else. Alongside them, the financial elite thrives, managing trusts, funds, and family capitals. The next level is occupied by a growing army of tech specialists, programmers, engineers, data analysts. They service the digital infrastructure of the modern world, receive decent pay, but remain completely dependent on the decisions of the techno-aristocracy. Further down is the traditional service class, i.e., those without whom no society can function: teachers, doctors, social workers. Ideally, they are the backbone of the state. But in practice, in many countries, they face overload, low salaries, and lack of resources. Their work is still important, but there is a growing sense of less support and increasing fatigue. The situation is better in some places, worse in others, but the general feeling is that the system gives them less and less in return each year. A rapidly growing and increasingly noticeable group is the precariat, people with unstable employment. This is the world of the gig economy, where instead of permanent employment, people perform individual tasks: drive taxis through an app, deliver food, take one-off projects on freelance. In essence, they trade flexibility for stability. Such is the unwritten contract of this level. And finally, at the very bottom are the digital outsiders, those whom algorithms and market mechanisms have pushed out of active economic life. These are people who find it difficult to adapt to the digital reality due to age, limited resources, or health problems. The main paradox of modernity is that all this is happening against the backdrop of unprecedented technological progress. Humanity has never been so rich, but this wealth is concentrated in the hands of a narrow group, and everyone else gets the leftovers. The middle class is turning from a mass phenomenon into a rarity. Work has ceased to guarantee stability, and education - a career. Money has begun to make money faster than people can earn it through their labor. The fact remains. But what is there to do at all in such a situation? And can it be changed somehow? Globally, probably not. One person cannot reverse trends that have been forming for decades. But a very important understanding of how the system works gives a certain advantage to those who are ready to adapt. Most importantly, you have time to prepare. If you feel that your industry is under threat, do not panic. Look at what is happening around you. New opportunities are born every day. Cybersecurity specialists are needed everywhere: from banks to hospitals. The world is becoming increasingly digital, and therefore, increasingly vulnerable. Psychologists and coaches are in demand as never before. After all, the faster reality changes, the more a person needs support. And an ordinary plumber who has learned to service smart homes earns three times more than his colleagues because he understood a simple truth: you don't need to fight technology, you need to learn to use it. If you understand that one salary is no longer enough, it's time to reconsider your savings strategy. Some buy small shares through crowdfunding, as it no longer requires a million. Some learn to invest in stocks, starting with literally 1,000 rubles a month. And you don't have to become a millionaire tomorrow. It's enough to simply understand a simple difference. There are things that eat your money, and there are things that bring it. And the sooner you, in fact, start shifting the balance towards the latter, the calmer you will sleep. Previously, only the rich could invest in real estate. Now you can buy a share in an office building through an app on your phone. Every crisis in history has given birth to new professions. When some areas became unnecessary, dozens of other directions appeared, about which no one had heard before. The same is happening right now. Yes, artificial intelligence works harder than previous technologies, but even in these conditions, niches appear where a person is irreplaceable. Where empathy, creativity are needed, or where one has to work with their hands and solve non-standard problems. The main thing, I think, is not to wait for changes to come to you. Start with simple curiosity. If something interests you, dig deeper. If someone mentions a new field, well, figure it out, immerse yourself, learn more. And even if the old rules no longer work, a diploma, for example, does not guarantee a career, a stable job can disappear literally tomorrow, in a day. But again, in return, new opportunities have appeared that, for example, our parents could not even dream of. Well, friends, such an interesting and ambiguous topic turned out. The world is changing rapidly, but those who are ready to change with it have great opportunities and more chances than ever before in history. Write in the comments whether you consider yourself middle class and whether you think it will soon disappear forever. And most importantly, share how you are currently managing to adapt to the modern world? Are you trying to learn something new or just going with the flow? Don't forget, your likes and activity help us create increasingly interesting and important content. And yes, all the most useful links are, of course, in the description below this video. See you soon. Bye-bye.