Until now it was one of the axioms of economic theory that high growth in a part of the world is good for growth elsewhere (the rising tide lift all boats). But maybe the middleclass in Europe and US is now not profiting from the rise of China, or profiting much less than the US did from the high growth in Europe after WWII.
Are trends in that direction already visible? The view on that is blurred by the credit crisis. Let us first think about the trend in the last years. In this first article I will concentrate on the US.
In the New York Times were a few articles as a kind of update for the American dream: how do the current children it compared to their parents in income and wealth. ( http://economix.blogs.nytimes.com/2012/07/11/only-half-of-americans-exceed-parents-wealth/ Only Half of Americans Exceed Parents’ Wealth by Catharine Rampell).
Her main conclusion based on the elaborate interviews by PEW Center since 1968 mainly based for parents on the 1984 wealth polls and for the children on three reports after 2000. Everything was corrected for age, in real terms etc. :
1. In almost all households in the US (84%) the children earned more money (in real terms) than their parents did at the same age.
2. About half of the households are now after inflation not richer than their parents were
3. When your parents didn’t earn much, the probability is quite low you will earn a lot (in the highest quintile) and the other way around: when your parents earned a lot the probability you will earn almost nothing (lowest quintile) is low.
4. The re is a lot of income mobility in the quintiles: the probability as a child to get a better income than your parents was considerable.
