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Broke: Who Killed the Middle Classes?
If you thought being middle-class meant your own home, something set aside for the kids and a comfortable retirement – think again.
For the first time ever, today’s middle classes will struggle to enjoy the same privileges of security and comfort that their grandparents did. How did this situation come about? What can be done about it?
In this beautifully shaped inquiry, David Boyle questions why the middle classes are diminishing and how their status, independence and values are being eroded. From Thatcher’s boost of the mortgage market to Blair and Brown’s posturing over public services, ‘Broke’ examines the key moments in recent history that created ‘the squeezed middle’.
Can the middle classes be revived? Should they be? Although they were not innocent in their downfall, Boyle argues that a newly galvanised middle class could be the key to future economic stability. The middle class may be broke, but it is not beyond repair.
For the first time ever, today’s middle classes will struggle to enjoy the same privileges of security and comfort that their grandparents did. How did this situation come about? What can be done about it?
In this beautifully shaped inquiry, David Boyle questions why the middle classes are diminishing and how their status, independence and values are being eroded. From Thatcher’s boost of the mortgage market to Blair and Brown’s posturing over public services, ‘Broke’ examines the key moments in recent history that created ‘the squeezed middle’.
Can the middle classes be revived? Should they be? Although they were not innocent in their downfall, Boyle argues that a newly galvanised middle class could be the key to future economic stability. The middle class may be broke, but it is not beyond repair.
354 pages, Kindle Edition
First published April 21, 2013
About the author
David Boyle
235 books54 followersDavid Courtney Boyle was a British author and journalist who wrote mainly about history and new ideas in economics, money, business, and culture. He lived in Steyning in West Sussex.
He conducted an independent review for the Treasury and the Cabinet Office on public demand for choice in public services which reported in 2013. Boyle was a co-founder and policy director of Radix, which he characterized in 2017 as a radical centrist think tank. He was also co-director of the mutual think tank New Weather Institute.
He conducted an independent review for the Treasury and the Cabinet Office on public demand for choice in public services which reported in 2013. Boyle was a co-founder and policy director of Radix, which he characterized in 2017 as a radical centrist think tank. He was also co-director of the mutual think tank New Weather Institute.
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Displaying 1 - 5 of 5 reviews
November 11, 2016
The author is with no doubt middle class and he no doubt cares for the middle class. And he writes very well. Halfway through the first chapter I felt his anguish in my chest. I really felt for him. I don't think he does a particularly convincing job of explaining why the middle class is essential, but he's writing for an audience that is sold on that concept, myself included.
If this book had been written 10 years ago, I'd cut David Boyle some slack. But now the crisis of 2008 is behind us, he really should know better. He is so infuriatingly wrong about so many things, he makes me want to shout out loud.
In summary, the author
1. Laments that increasing house prices have priced the middle class out of the homes they were brought up in.
2. Laments that the building societies vanished and blames it on the Big Bang
3. Laments the corrosive explosion of finance.
4. Laments the end of unaffordable pensions
5. Is downright scared about getting his kids in the right school
The cornerstone of his lack in understanding is his attitude toward finance. The United Kingdom is part of a bigger thing these days called the European Union, which in turn is a major power in the world economy. The European Union is a free-trade economic area that additionally allows 400 million people, give or take, free movement of labor. It's even trying out its own currency these days, you know, though that's working out less well.
For better or for worse, and opinions between reasonable people can differ on this topic, various nations within the union have specialised in different areas. Italy is the main provider of luxury goods, Germany + Switzerland (not even part of the union, but the world's #1 per capita manufacturer) + northern Italy are the industrial heartland. Spain and Greece are where people go on vacation. Central London and the French Riviera is where the world's super-rich live. Oxfordshire is where racing cars are made, not only for Europe, but for the whole planet.
Oh, and London is the world's center for finance, ahead of New York.
This means a bunch of things. In no particular order:
1. Finance is not an elite. Government statistics put finance at 6% of UK GDP, but that is misguided. Similarly narrow statistics will tell you that the movie industry is 8% of GDP in Los Angeles. Finance is the business of the UK. All other business was crippled by the unions and finished off by Thatcher. If you are an accountant in the UK, chances are you work for the City. If you are a doctor / teacher / yoga instructor in London, chances are you cater to the people who work in the City and their families. If you are a lawyer in the UK, you are a finance lawyer. Did you notice, Mr Boyle, that all Greek debt has been converted into English Law debt? Why do you think that is?
2. Finance being the main business of the UK, and London in particular, it stands to reason that FINANCE IS THE MIDDLE CLASS in the UK today. Yes, the author descends from a family with a military background, but operation Sealion and the Battle of Britain, the last time the UK was engaged in a defensive war, was in 1940. Yes, the vicar in the church he describes had to double as the organist, the choir and the altar boy, but the role of the church has diminished, because (i) the state has stepped in to provide many of the support functions we once looked to the church to provide and (ii) there's now a bunch of faiths in the UK, again for better or for worse. The author seems rather atheist to me, incidentally, so I think he's protesting for no reason. And the shopkeepers I know are not closing down their shops because of Tesco. My local liquor store sells Crystal to the super-rich at 200 quid a bottle. But the shopkeeper's sons both have university degrees and, you guessed it, they'd rather work in IT or finance. Can you blame them?
3. There being a limited number of homes in London, these homes have gone to the people who have been doing the business of the UK. And the business of the UK is finance. So the guys who work in finance have pushed out of London the guys who work in advertising, publishing, entertainment, education and these days even medicine. I don't much like it, but it's what it is. And the mechanism for this to happen, of course, is PRICE. This conversion was 100% complete around 1995, incidentally.
4. Additionally, one of the many functions of finance in London over the past twenty years has been to provide a platform for local insiders from around continental and peripheral Europe (chiefly politically-appointed managers of quasi-government businesses, pension plans or local government) to raid anything in their home land that looks like a pool of money. Greek pension funds, Italian and French municipalities, the German Mittelstand. With the help of schemes hatched in London, sixty years of post-war savings have been pocketed across Europe by their custodians, with a healthy commission going to the finance industry in London. Entire graduating classes from Bocconi the Ecole Polytechnique etc. have taken residence in London to help their (mainly American, but also British and German) employers tap these opportunities. In 2005, the head of fixed income sales at CSFB was called Yiannis. At Goldman, Antigone. At Merrill Lynch, Dimitris. At JP Morgan, Antonio. At Lehman, Riccardo. Their partners come from across Europe, their kids are mostly English, and their families, very middle class families, mostly reside in SW3, SW5 and SW7, though they do move up to the NWs for school. Some 200,000 professionals from across Europe have been practicing finance out of London. They need places to live. And they are not evil people, 99% of them are merely making a living. A middle class living. The author wonders how come Waitrose has a clientele for good cheese. It's them! Thanks to them, the natives are also now developing a taste for the stuff, and it turns out they rather like it.
But here's the funny thing. Finance as we know it went bust in 2008. Kaput. And please somebody tell David Boyle.
In no particular order, this means that:
1. Except for the amazingly exclusive addresses where the steel magnates, Formula 1 entrepreneurs, former soviet republic potentates, IKEA and Tetrapak moguls, North African former dictators and Saudi prices live, real estate prices cannot but come down. The children of the middle class will have absolutely no problem getting on the property ladder. I would not waste one millisecond worrying about them. It's all coming to them.
2. The big banks will be broken up, and sooner rather than later. The process will start in the US. It will make no difference to local business, though. My neighbour's kids will still want to do something more exciting than stand behind the counter and sell liquor and magazines. And returns to scale for business come from so many angles it's not even funny. Bigger companies will always be able to negotiate better IT contracts, better healthcare plans, better pension plans, better lending terms etc. In rougher parts of the land they will be better equipped to fend off local bullies. They will be better able to accommodate issues like pregnancy leave or sabbaticals. Simple as that. And the aim of small business will always remain to become big business one day. It's the nature of the beast.
3. The "democratization" of finance is not what was to blame, funnily enough. The author ought to know, because he went through the Lloyds experience. Insurance is not NECESSARILY a bent industry. The fees every layer paid in a Lloyd's syndicate killed the author. Not hurricane Andrew. He was already dead before any natural disaster took place. Finance is not corrupt by construction either. It was the terms of the loans that killed the borrowers, not the loans themselves. How can somebody who borrows 125% of the value of his house feel hard done by? And look what's happening now. The government has set its base rate at 0.5% and everybody who was fortunate or foolish to have borrowed twice his future earnings against a house gets to convert to "interest only" (40% of homes and 60% by value already have done) and essentially default on that amount 100% legally. Not too shabby. Disastrous for the lenders (oh, are they evil) but fantastic if you are sitting on the mortgage, paying a quarter of what you would normally be paying in rent.
4. Pensions are unfortunately never going back to what they were, for the simple reason that they were predicated on two premises of which one was unjust (the dependence on early leavers) and one was doomed from the start (demographics). Nice one for those who got them. They got a great deal. Don't grudge them, but don't expect the same deal. Have some kids. If everybody does, it will be fine. Oh, and crisis was EXTREMELY KIND to the pensions of UK residents. Go ask what happened to Greek or Spanish or Portuguese pensions over the course of the past few years.
5. All those school spots will become available again. Why? Because 150,000 people who work in finance have already left the industry. It will be gradual, and the last thing they will cut is their children's education. Education was good to them, after all. It landed them the job at Goldman. But in time the bottom half of the people engaged in finance will have to give it up and their London residence and school spots with it.
And where does that leave us? In the long run, better balanced. Finance has existed for 400 years, give or take. From Shakespeare to Bismarck to David Boyle (how's that for anti-climax?) it's been reviled and misunderstood, but it is unlikely at this stage that another city makes a lunge for what is very much London's and New York's business.
So the middle classes of the UK will suffer for the next decade, because finance will. And when the business of finance has been fixed, the fortunes of the UK middle classes will also turn. Finance will pay less than it did, because it will extract fewer rents. But the finance crowd will be more than happy to welcome the doctors and authors and the creatives to Central London. And the schools will open their arms to their children. Their parents might not like us, but we sorely miss them and genuinely wish we could all live side by side.
If this book had been written 10 years ago, I'd cut David Boyle some slack. But now the crisis of 2008 is behind us, he really should know better. He is so infuriatingly wrong about so many things, he makes me want to shout out loud.
In summary, the author
1. Laments that increasing house prices have priced the middle class out of the homes they were brought up in.
2. Laments that the building societies vanished and blames it on the Big Bang
3. Laments the corrosive explosion of finance.
4. Laments the end of unaffordable pensions
5. Is downright scared about getting his kids in the right school
The cornerstone of his lack in understanding is his attitude toward finance. The United Kingdom is part of a bigger thing these days called the European Union, which in turn is a major power in the world economy. The European Union is a free-trade economic area that additionally allows 400 million people, give or take, free movement of labor. It's even trying out its own currency these days, you know, though that's working out less well.
For better or for worse, and opinions between reasonable people can differ on this topic, various nations within the union have specialised in different areas. Italy is the main provider of luxury goods, Germany + Switzerland (not even part of the union, but the world's #1 per capita manufacturer) + northern Italy are the industrial heartland. Spain and Greece are where people go on vacation. Central London and the French Riviera is where the world's super-rich live. Oxfordshire is where racing cars are made, not only for Europe, but for the whole planet.
Oh, and London is the world's center for finance, ahead of New York.
This means a bunch of things. In no particular order:
1. Finance is not an elite. Government statistics put finance at 6% of UK GDP, but that is misguided. Similarly narrow statistics will tell you that the movie industry is 8% of GDP in Los Angeles. Finance is the business of the UK. All other business was crippled by the unions and finished off by Thatcher. If you are an accountant in the UK, chances are you work for the City. If you are a doctor / teacher / yoga instructor in London, chances are you cater to the people who work in the City and their families. If you are a lawyer in the UK, you are a finance lawyer. Did you notice, Mr Boyle, that all Greek debt has been converted into English Law debt? Why do you think that is?
2. Finance being the main business of the UK, and London in particular, it stands to reason that FINANCE IS THE MIDDLE CLASS in the UK today. Yes, the author descends from a family with a military background, but operation Sealion and the Battle of Britain, the last time the UK was engaged in a defensive war, was in 1940. Yes, the vicar in the church he describes had to double as the organist, the choir and the altar boy, but the role of the church has diminished, because (i) the state has stepped in to provide many of the support functions we once looked to the church to provide and (ii) there's now a bunch of faiths in the UK, again for better or for worse. The author seems rather atheist to me, incidentally, so I think he's protesting for no reason. And the shopkeepers I know are not closing down their shops because of Tesco. My local liquor store sells Crystal to the super-rich at 200 quid a bottle. But the shopkeeper's sons both have university degrees and, you guessed it, they'd rather work in IT or finance. Can you blame them?
3. There being a limited number of homes in London, these homes have gone to the people who have been doing the business of the UK. And the business of the UK is finance. So the guys who work in finance have pushed out of London the guys who work in advertising, publishing, entertainment, education and these days even medicine. I don't much like it, but it's what it is. And the mechanism for this to happen, of course, is PRICE. This conversion was 100% complete around 1995, incidentally.
4. Additionally, one of the many functions of finance in London over the past twenty years has been to provide a platform for local insiders from around continental and peripheral Europe (chiefly politically-appointed managers of quasi-government businesses, pension plans or local government) to raid anything in their home land that looks like a pool of money. Greek pension funds, Italian and French municipalities, the German Mittelstand. With the help of schemes hatched in London, sixty years of post-war savings have been pocketed across Europe by their custodians, with a healthy commission going to the finance industry in London. Entire graduating classes from Bocconi the Ecole Polytechnique etc. have taken residence in London to help their (mainly American, but also British and German) employers tap these opportunities. In 2005, the head of fixed income sales at CSFB was called Yiannis. At Goldman, Antigone. At Merrill Lynch, Dimitris. At JP Morgan, Antonio. At Lehman, Riccardo. Their partners come from across Europe, their kids are mostly English, and their families, very middle class families, mostly reside in SW3, SW5 and SW7, though they do move up to the NWs for school. Some 200,000 professionals from across Europe have been practicing finance out of London. They need places to live. And they are not evil people, 99% of them are merely making a living. A middle class living. The author wonders how come Waitrose has a clientele for good cheese. It's them! Thanks to them, the natives are also now developing a taste for the stuff, and it turns out they rather like it.
But here's the funny thing. Finance as we know it went bust in 2008. Kaput. And please somebody tell David Boyle.
In no particular order, this means that:
1. Except for the amazingly exclusive addresses where the steel magnates, Formula 1 entrepreneurs, former soviet republic potentates, IKEA and Tetrapak moguls, North African former dictators and Saudi prices live, real estate prices cannot but come down. The children of the middle class will have absolutely no problem getting on the property ladder. I would not waste one millisecond worrying about them. It's all coming to them.
2. The big banks will be broken up, and sooner rather than later. The process will start in the US. It will make no difference to local business, though. My neighbour's kids will still want to do something more exciting than stand behind the counter and sell liquor and magazines. And returns to scale for business come from so many angles it's not even funny. Bigger companies will always be able to negotiate better IT contracts, better healthcare plans, better pension plans, better lending terms etc. In rougher parts of the land they will be better equipped to fend off local bullies. They will be better able to accommodate issues like pregnancy leave or sabbaticals. Simple as that. And the aim of small business will always remain to become big business one day. It's the nature of the beast.
3. The "democratization" of finance is not what was to blame, funnily enough. The author ought to know, because he went through the Lloyds experience. Insurance is not NECESSARILY a bent industry. The fees every layer paid in a Lloyd's syndicate killed the author. Not hurricane Andrew. He was already dead before any natural disaster took place. Finance is not corrupt by construction either. It was the terms of the loans that killed the borrowers, not the loans themselves. How can somebody who borrows 125% of the value of his house feel hard done by? And look what's happening now. The government has set its base rate at 0.5% and everybody who was fortunate or foolish to have borrowed twice his future earnings against a house gets to convert to "interest only" (40% of homes and 60% by value already have done) and essentially default on that amount 100% legally. Not too shabby. Disastrous for the lenders (oh, are they evil) but fantastic if you are sitting on the mortgage, paying a quarter of what you would normally be paying in rent.
4. Pensions are unfortunately never going back to what they were, for the simple reason that they were predicated on two premises of which one was unjust (the dependence on early leavers) and one was doomed from the start (demographics). Nice one for those who got them. They got a great deal. Don't grudge them, but don't expect the same deal. Have some kids. If everybody does, it will be fine. Oh, and crisis was EXTREMELY KIND to the pensions of UK residents. Go ask what happened to Greek or Spanish or Portuguese pensions over the course of the past few years.
5. All those school spots will become available again. Why? Because 150,000 people who work in finance have already left the industry. It will be gradual, and the last thing they will cut is their children's education. Education was good to them, after all. It landed them the job at Goldman. But in time the bottom half of the people engaged in finance will have to give it up and their London residence and school spots with it.
And where does that leave us? In the long run, better balanced. Finance has existed for 400 years, give or take. From Shakespeare to Bismarck to David Boyle (how's that for anti-climax?) it's been reviled and misunderstood, but it is unlikely at this stage that another city makes a lunge for what is very much London's and New York's business.
So the middle classes of the UK will suffer for the next decade, because finance will. And when the business of finance has been fixed, the fortunes of the UK middle classes will also turn. Finance will pay less than it did, because it will extract fewer rents. But the finance crowd will be more than happy to welcome the doctors and authors and the creatives to Central London. And the schools will open their arms to their children. Their parents might not like us, but we sorely miss them and genuinely wish we could all live side by side.
February 8, 2020
Fascinating exploration of how the finance sector and misguided politicians have eroded middle class life as society tilts in favour of a small monied elite. An emotional call for independence and local action to restore dignity and purpose to life.
July 31, 2014
An interesting polemic on the decline of the middle class and why their loss might be important. I think the author did a good job of explaining the different factors that have contributed to the decline of the middle class, but he does struggle more when trying to put across why they are essential. I got a bit bogged down with some of the financial descriptions (particularly the mortgage industry in the 80s), but other chapters such as those on education were very well done and laugh out loud funny. The author is obviously passionate about this subject and has done his homework, but I think he could have been more insightful in trying to come up with solutions for the future to get the UK middle classes out of the financial and identity crisis that they are currently suffering from.
August 27, 2014
Finally got to the end of this long, long lament though the last chapter was pretty good.
This is a story about a generation which resonates today. Caught up in a mad rush since the start of Thatcherism. Its about growing up in suburbia since the 80s in England. Its stylised non-fiction.
I personally can't relate to it but I see the issues raised, some much more informative than others. Its more for the Daily Mail/Guardian reader. The basic gist is that we can't live like we used to.
This is a story about a generation which resonates today. Caught up in a mad rush since the start of Thatcherism. Its about growing up in suburbia since the 80s in England. Its stylised non-fiction.
I personally can't relate to it but I see the issues raised, some much more informative than others. Its more for the Daily Mail/Guardian reader. The basic gist is that we can't live like we used to.
June 17, 2015
middle class is done ... it will be missed
Displaying 1 - 5 of 5 reviews