globalization and middle class

Darwin, Trump, Globalization and the Shrinking Middle Class

This is a repost of an article I posted in January 2012. Donald Trump was recently elected U.S. President largely by working class Americans in the rustbelt states of Pennsylvania, Michigan, Ohio and Wisconsin (which were previously carried by Barack Obama in the 2012 elections).

The mainstream media was in a state of shock – they clearly expected a Clinton win and were seemingly oblivious to the anger and desperation of working class voters across the United States. Here were some mainstream media predictions on the eve of the election:

New York Times


Los Angeles Times


Associated Press


Perhaps if the mainstream media read this article prior to the election, they would have been in a better position to anticipate a Trump victory.

Income Inequality

When reading or watching today’s news about the ongoing financial crises in the United States and Europe, one can spot a recurring theme in many of these news stories:

  • Within each country, a very small minority has accumulated a large majority of the wealth;
  • For the past thirty odd years, average middle class wages have been declining in real terms (i.e., after adjusting for inflation) as middle class jobs have been replaced by technology or outsourced to the developing world; and
  • As a result of the above, the middle class is being wiped out. We in the West are transitioning into a two-tier society of the well off and the poor.

To a casual observer, this would seem like an alarming state of affairs which must be rectified by government intervention. After all, without a middle class, who will purchase goods and services? Who will pay the income taxes necessary to finance the operation of government and government programs? What about the concept of social justice?

Is Income Inequality Natural?

But here is a provocative and controversial question: what if the current decline of the Western working class is actually a natural occurrence in our evolutionary history?

Does Darwin’s Theory of Evolution (“Darwin’s Theory”) have any application to what we’re seeing today? Is the decline of the middle and working classes a real time occurrence of “the survival of the fittest”?

An overview of “On The Origin of Species”

To analyze this issue, we should review a summary of Darwin’s Theory, which he explained in his book “On The Origin of Species”:

  • The possibility of infinite growth of population sizes is checked by the limits of geography and natural resources, which will not allow an infinite number of beings to survive.
  • As a result of limited food, water, shelter, and so on, species must engage in a “struggle for existence,” creating competition for survival.
  • “Natural selection” decides which species will survive and which will become extinct. Darwin argues that organisms exhibiting advantageous variations—variations that will allow them to adapt to their environment better than other organisms do—will be more likely to survive.
  • Through heredity, these advantageous variations will be passed on to the organisms’ offspring. Eventually, natural selection will allow those species best adapted to their environments to survive and prosper, while species without these advantageous adaptations will lose the struggle for existence and become extinct.

So in reference to human organisms, what are the “advantageous variations” that certain people possess that enable them to prosper in today’s economic environment driven by rapid technological change? How are they acquired?

In today’s world, to “prosper” is to attain financial success and independence.  And since the most prosperous members of every modern human society are its entrepreneurs, it would be useful to review what “advantageous variations” entrepreneurs have and how they are acquired.

Is Financial Success Genetic?

All successful entrepreneurs share the following traits: (1) they have the ability to work very, very hard; (2) they are able to analyze, calculate and take risks; and (3) they see opportunities that others don’t.

According to research conducted at the Department of Twin Research and Genetic Epidemiology at Kings College in London, England, 37 percent to 48 percent of the tendency to be an entrepreneur may be genetic. Here is a summary of findings by one of the researchers,  Scott Shane:

  • The tendency to be an entrepreneur is heritable.  We found these heritabilities were substantive regardless of what indications of entrepreneurship we measured: owning or operating a business, the number of businesses owned and operated, starting a business, the number of businesses started, having engaged in a start-up effort, the number of start-up efforts, being self-employed, or the number of years spent self-employed.
  • The tendency to identify new business opportunities is also heritable. Plus, the tendency to identify business opportunities and the tendency to start new businesses have a common genetic source. This pattern suggests that genetic factors might influence the odds of people becoming entrepreneurs by affecting their ability to identify new business opportunities.
  • Self-employment income is heritable, which suggests genetics affects not just the tendency to engage in entrepreneurship but also the ability to perform it.
  • The tendency to be an entrepreneur and personality traits of extraversion, openness to experience, and sensation-seeking have a common genetic component, as does the recognition of business opportunities and the personality trait of openness to experience. These patterns suggest that our genes might affect our tendency to be entrepreneurs by influencing the types of personalities that we develop.

Will The 99 Percent Become Extinct?

If the conclusion of the inheritability of entrepreneurial traits is correct, it may have significant consequences on our society for the following reasons:

  • Those who are not genetically disposed to be entrepreneurs will have to work as employees in order to earn a living. As we’ve indicated at the beginning of this article, jobs in the Western world are being eliminated en masse due to globalization and technology;
  • Those few jobs remaining will be low paying service jobs which will be insufficient to sustain a “normal” existence (i.e.,  raise a family and pay for shelter, food and clothing for that family). Those occupying such jobs will be members of the working poor;
  • In the long run, those who aren’t working will no longer have access to government programs such as employment insurance, social assistance, and old age pensions. As we’ve seen in the United States and Europe,  governments throughout the Western world, having spent trillions of dollars on bailing out banks and implementing economic stimulus packages, have become so indebted that they can no longer afford to pay for such programs. Entire nations are insolvent and on the verge of bankruptcy.

The consequence is this: with insufficient income from what few jobs  remain and the elimination of entitlement programs by indebted governments,  it may be likely that members of the “99 percent” will choose not to have children simply because they cannot afford to.

There is already anecdotal evidence that this is happening:

  • The Daily Mail reports that in the United States, women living in states hardest hit by the recession are having fewer children. Arizona, Nevada, Idaho, Mississippi, California and Georgia all saw fertility rates drop by at least five per cent between 2007 and 2009;

“There’s an odd phenomenon being reported in tony enclaves across the country: highly educated, highly compensated couples popping out four or more children — happily and by choice.” A lengthy article along the same lines in The Boston Globe Magazine quotes a pediatrician in affluent Wellesley, Mass., saying, “having four kids has become the new status symbol, like having a luxury SUV. It says you can afford it; you can have a nanny to help you out.” In the Observer, Molly Jong-Fast blames the uptick in part on in-vitro fertilization, which the rich can easily afford and which often leads to multiple births.

  • Higher fertility among the rich isn’t just an American phenomenon. The Associated Press reported on how a wealthy Chinese couple flouted China’s one child policy by paying a million yuan fine ($160,000) to have eight children and illegally enlisted two surrogate mothers to help them have the four boys and four girls.

To emphasize the application of Darwin’s Theory on the current global economic transition, I repeat the last point of its summary above by integrating what we’ve covered so far:

Natural selection will allow those species (the 1 percent) best adapted (by possessing entrepreneurial traits) to their environments (globalization and rapid technological change) to survive and prosper (accumulate wealth and have offspring), while species without these advantageous adaptations (the 99 percent) will lose the struggle for existence and become extinct (lose their economic standing and stop having  offspring due to lack of means).

So, five hundred years from now, will the surnames of Smith, Jones and Brown become extinct in the United States and be replaced with the surnames of Gates, Jobs, and Zuckerberg? Only time will tell….


Applying Darwin’s Theory to the current global economic transition is a very disturbing view of why so few people seem to be prospering in this environment and why so many more are not.

There are many more employees than there are entrepreneurs, and at the current rate of technological change and outsourcing, there will be very few good jobs left in the Western world. Moreover, of those entrepreneurs who attempt to build a business, nine out of ten of them fail within the first five years. Therefore, taking this application of Darwin’s Theory to its logical conclusion implies that a select few are genetically programmed to succeed while many more will not.

Although the Kings College study concluded that 37 to 48 percent of entrepreneurial traits are genetic, this conclusion appears to leave room for the possibility that the other 63 to 52 percent can be nurtured through education or the creation of an entrepreneurial environment.

I am therefore hopeful that public education systems throughout the Western world will reform themselves to teach entrepreneurial skills to our children so that they can create a better future for themselves and the societies in which they reside.

 © Copyright Victor Fong, 2012.

Victor is the President of Fong and Partners Inc. He is a Licensed Insolvency Trustee and Chartered Professional Accountant. With over 20 years of experience in the insolvency field, Victor has been involved in both corporate and consumer insolvency engagements. Previously with a large national firm, Victor founded Fong and Partners Inc. in 2007 so that he could dedicate his professional life to help people from all walks of life to deal with their debt.