How Rising Inequality Harm Middle Class? Essay (Critical Writing)

Social Status

The main argument in the article is an explanation of happiness and prosperity among the middle-income families. Frank states that happiness in the twenty-first century comes through comparison of wealth and status within and outside the country.¹ Many middle-income earners spend most of their income toward buying expensive automobiles, residential houses, and household appliances.^{1 (p.3)}

The middle-class communities concentrate on fulfilling the basic needs of their families due to increase in expenditure rate. The fact that families cannot afford quality education for their children does not mean that inequality is on the rise. The middle-class people are worth reading this article in order to achieve tips of maintaining the economic-social status without constraining the available resources.^{1 (p.3)}

Middle-class families are the most vulnerable toward extravagant spending of income. ^{1 (p.5)} Additionally, the families compare the social status of their neighbors and imitate their deeds. The author values the social status of individuals through the quality of education the families give to their children. The article reveals the difficulties middle-class families have toward saving for quality education of their children.

Frank differentiates the budgetary needs of the family into positional goods and non-positional goods. The major challenge is identification of goods that belong to both. The article employs the reasoning of comparison between the developed countries and developing nations. The author sends a warning sign to the middle-class people that a positional want of the families in developed countries may be a non-positional want to the families in developing nations. ^{1 (p.7)}

Survival Tactics

Frank explains the survival fitness through Darwin’s theory. For example, middle-class individuals possess beneficial traits that enable them to have a harmonious life. The article considers the wealthiest people in the society being influential, hence creating an imitation on non-positional goods.²

Some external economic factors influence high expenditure on the visible goods, such as real estate, resulting in inequalities. Frank’s argument on survival tactics of the middle-class families offers the basis of providing quality education for the children. The saving technique is purchasing only the positional goods. Inequality in the society emerges due to differences in income and variations in preferences.^{2 (p.4)}

The author considers housing as a contributing factor toward the rise of inequality in the world.^{2 (p.9)} An example is the housing bubble between 2000 and 2006 where only rich could afford stable rents in residential real estates.^{2 (p.12)} Housing as a measure of wealth creates conflict among the middle-class families.

Frank argues that investing in non-observable commodities reduces the inequality misery among the middle-class. The measure of wealth varies among countries. Wealthy countries are unsuitable for middle-class earners due to variations in positional goods, unlike developing countries where middle-class people are contented with basic amenities.^{2 (p.17)}

Preferences

The article describes the effects of economic transactions toward the increase of value of a commodity. A transaction cost should be affordable to more than fifty percent of the human population in the community.³ Affordability of the cost minimizes the preference of a transaction and inequality. Bargaining aspect, according to the article, results in high cost of transactions.

The majority of the middle classes in the twenty-first century in developing countries under-utilized the aspect of bargaining. Bargaining is a preference which differentiates the wealthy and middle-class families. Developing nations are facing a problem of middle-class families changing their taste and preferences in order to match with the wealthiest people in the society. The author gives an example of interest in housing associations as a change in preference among the middle-class earners.^{3 (p.105)}

The housing association restricts some individuals due to inability to pay a subscription fee. According to Frank, it is worth banning such organizations and associations in order to reduce the level of inequality, especially among the middle-class families.^{3 (p.110)} Preferences bring the conflict in the economic world since it denies individuals the freedom of intellectual expression.

Freedom of intellectual expression reduces the harm of inequality among the middle-class people. Development of a country has its basis on the freedom of idea expressions. For example, development of real estate, castles, and cities occurs due to preference of outcomes of efficiency in knowledge expression.^{3 (p.114)}

Happiness

Happiness in the economic world emerges from the urge of owning more than others. Frank says that happiness has a rhetorical advantage since it creates unjust inequality. ^{1 (p.7)} Additionally, economists measure happiness on how to live well. Individuals that have the ability to live optimally are happier than those with minimal happiness. ⁴ Individuals have the ability to obtain optimal happiness from the available resources.

The article’s argument on job positions creates an element of happiness. The job positions individuals hold in the companies may create happiness through addition of responsibilities that are likely to raise the social-status of the employee. Frank embraces the strategies in an organization that reduce disruption in the job description in order to embrace social integrity.^{4 (p.12)}

Happiness emerges the moment an individual saves enough to support the comfortable life of their siblings through provision of quality education.^{4 (p.34)} It is essential for individuals to identify positional goods and non-positional goods in order to have happiness in their social-economic standards.

People should identify the reference frame shift of the income ladder for correct positioning of happiness. Happiness gets measured by the size of the house and the school a child attends for quality education. Growth in the economy occurs through realization of the appropriate mechanism of obtaining happiness.^{4 (p.42)}

References

1. Frank R. Falling Behind: How Rising Inequality Harms The Middle Class. 4th ed. California, CA: University of California Press; 2013.
2. Chiappori PA, Ekeland I. The Micro Economics Of Group Behavior: General Characterization. Journal of Economic Theory. 2006; 130(1): 1-26. doi: 10.1016/j.jet.2005.01.007.
3. Kalai G. Learnability and Rationality Of Choice. Journal of Economic Theory. 2003; 113(1): 104-117. doi: 10.1016/S0022-0531(03)00083-8.
4. Hirsch F. Social Limits To Growth. London: Routledge; 2005.