The Middle Class Is the Backbone of a Nation, Yet Continues to Shrink

It is critical for the middle class to be solid and prosperous. The strong middle class base with more equitable income distribution will make a society civil and fair without participating in bribery and corruption. That is what the U.S. used to enjoy with its free enterprise system.

The middle class drives consumption, which will put economy back on track.

And yet, Korea seems to be migrating toward a two-tiered society, as has been the case of the U.S. The middle class has been taking the biggest hits, as they get squeezed from the top and the bottom.

Korea’s deindustrialization process started in the late 1980s…Several factors have covered up the effect of deindustrialization…This process has profound impact on the Korean middle class...

The Korean middle class has been put into a consumption game by the internal and external forces… The middle class has been drowning in debt. The recent developments like the minuscule returns on fixed incomes and high inflation in essentials like food will stifle buying power of the middle class.

Moreover, the U.S. Fed’s policy and Korea’s monetary policy are giving SMEs an unfair disadvantage by making them get the margin squeezed out of them. They are the engine of hiring. The continuous rise in running business will crush purchasing power of the middle class as well.

Those developments would lead to a tearing of the social fabric, with the middle class consolidating into the poorer ones.

One of the ways to preserve the middle class is to overhaul the broken system including the financial system and chaebol-centered skewed industrial structure…

There seem to be no big productive jobs producers on the horizon.

The Korean power elite has to look out for their own people, preserving the wealth of the Korean people. They should be mindful of the damage the demise of the middle class does to broader society.

Again, policy choice should be closely aligned with the nature of the society it wishes to encourage.

(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)