John Robb says that’s the real social and economic story now. The postwar creation of a broad middle class in America allowed for stability because it provided a broad base for prosperity and creativity. But that’s going away, he believes. Excerpt:

The social contract that enabled this success, particularly the post WW2 social contract that shared the increases in wealth generated by improvements in productivity with the more productive workers that enabled it, ended with the financialization of economic activity and globalization (and governments that facilitated and catalyzed the process). In sum, the increase in wealth the western middle class produced over the last three decades has been transfered to global financial elites (who misspent it) and mercantilist nations (China, Japan, Korea, Taiwan, etc.). We can see the result of this. It’s tangible: The median income (the best measure of the health of the middle class) of the western middle class today is less than it was in 1974, despite massive top line GDP and productivity growth (both global and national) during the same period.

What’s this going to mean for us? Robb predicts:

•Economic stagnation/depression. An ever increasing loss of vibrance. Shrinkage, across the board. Wealth destruction.
•Inevitable government bankruptcy. An ongoing and inexorable reduction in the bulk of the tax base that funds government activities. Government’s become slaves to global bond markets.
•Political instability. Increasingly fractious political discourse. Increasing violence. A rise in criminality and corruption.

Read the whole thing.