The number of people who are middle class or higher has remained contant since 1970. Using Alan Krueger's definitions, all inequality has done is moved people from middle class to rich. Is that a bad thing?
Yes, if it leaves in its wake massive income inequality.
The middle class is the engine of wealth generation. It both spends high proportions of its income and has enough income to start new enterprises. A middle class drives an economy.
What you are asking is if it's OK for the middle class of merchants to shrink because many are now rich enough to be lords and kings. That may be, but it still leaves a society with no merchants: only the very poor and very rich.
It both spends high proportions of its income and has enough income to start new enterprises.
Why can't a middle class person who became "rich" (although most people don't consider >1.5x median to be rich) do the same thing?
Suppose my income dropped dramatically and I suddenly entered the "middle class" (by Alan Krueger's definition - I'm actually middle class by the definition of most people). How would this make it easier for me to start new enterprises?
Why can't a middle class person who became "rich" (although most people don't consider >1.5x median to be rich) do the same thing?
Starting new businesses: It's more a matter of "Don't" than "Can't." A middle-class person who became rich is either tending the business that got them there or has otherwise lost the impetus of need that drove them to start a business. If your income suddenly dropped dramatically, what would you do: adjust to your new income level and be happy, or strive immediately to retain your previous level?
Spending income: It's easy to spend 99% of a median income. It's almost impossible for the very wealthy to spend anything like what they make.
Additionally, there are only so many needs to be filled. It's more economically productive to have a very large number of people willing and able to buy modestly priced items than it is to have a very small number wanting to buy very highly priced items.
You clearly haven't read any of the articles cited in this thread. Alan Krueger defines middle class as more than $25k/year, but less than $75k/year (at contemporary income levels). Rich is presumably $75k or more. The middle class has shrank because people have moved from $65k to $85k.
This has absolutely nothing whatsoever to do with the very wealthy.
If you have evidence that people going from $50k to $80k is bad for the economy, go ahead and present it. You haven't yet. All you've presented are vague misconceptions and demonstrated you don't understand the numbers under discussion.
Sorry, if you want to turn this into a flame war, I'm out. I understand that it's difficult to see or admit flaws in a system and an industry that has personally benefitted you, but the flaws remain nonetheless.
In particular, you have not provided evidence for your contention that the middle class has shrunk solely because people have moved "from 65k to 85k", you have shown only that they have not dropped below 25k.
The facts -- income stagnation and wealth inequality -- are in direct opposition to your "the disappearance of the middle class is fine, they're just getting rich" fantasy. People have either gone to exceptionally above 85k, are stagnant, or are dropping towards the lower end.
What they are not doing is just edging into "rich". That's not a supportable claim.
And, ultimately, irrelevant. The problem is income inequality, the shrinking middle class is its symptom. If you have evidence that a society can survive this level of wealth inequality, please present that.
...you have not provided evidence for your contention that the middle class has shrunk solely because people have moved "from 65k to 85k", you have shown only that they have not dropped below 25k.
True - $65k -> 85k was an example. Let me be more precise: the middle class has only shrunk because people have moved from X to Y, where $25k < X < $75k and Y > $75k. I.e., no one became poorer, and some people became richer.
The facts -- income stagnation and wealth inequality -- are in direct opposition to your "the disappearance of the middle class is fine, they're just getting rich" fantasy. People have either gone to exceptionally above 85k, are stagnant, or are dropping towards the lower end.
No one is dropping towards the lower end. The number of people at the lower end (below $25k) is the same (about 25%). Since the number of people between $25k and $75k shrank, it must be because the number of people above $75k increased. That's just basic arithmetic.
You still have yet to show how people's income exceeding $75k causes any harm at all, short of vague hints that it's almost impossible for them to spend anything like what they make.
"Let me be more precise: the middle class has only shrunk because people have moved from X to Y, where $25k < X < $75k and Y > $75k. I.e., no one became poorer, and some people became richer."
Again, you haven't shown this, either. Many people could have gone from $65k to $35k while a few moved from $65k to $650k on the same set of facts. That nobody has dropped below the baseline of the middle class does not mean it is not shrinking or that nobody in it has gotten poorer.
"You still have yet to show how people's income exceeding $75k causes any harm at all"
This is not the point. The point is that massive wealth inequality causes the harm. A shrinking middle class is a symptom of that inequality.
Whether or not you continue to deny or justify the symptoms is not going to change the facts of the underlying disease. I'm not going to show you how dying causes cancer.
Go to figure 6.