How Wealthy Elites Squeeze Out the Middle Class

For decades, the middle class was the backbone of economic stability. It represented upward mobility, financial security, and shared prosperity. But with the onset of trickle-down economics, this group has been squeezed from all sides – stagnant real wages, rising costs of basic needs, and financial policies that favor asset holders over workers.

Government responses to economic calamities have accelerated this trend, starting with the Long-Term Capital Management bailout in 1998. Every major systemic risk over the past 30 years has been papered over by bailouts and quantitative easing (QE), which disproportionately benefit those who already own assets.

QE, introduced during the 2008 financial crisis, was meant to stimulate the economy by injecting liquidity into financial markets. The theory was that this would encourage investment and job creation, but in practice, it primarily inflated asset prices – stocks, real estate, and bonds – benefiting those who already owned them.

From 2009 to 2021, the stock market saw one of the longest bull runs in history, yet real wage growth remained weak. The top 1% of Americans own over 50% of all stock market assets, while the bottom 50% own less than 1%. When central banks pump trillions into the system, stock prices rise, making the rich richer while the majority see little benefit.

At the same time, low interest rates encouraged corporations to engage in massive stock buybacks rather than reinvesting in workers. CEOs and executives reaped the rewards while wages stagnated. The result has been an economy where wealth accumulation is increasingly tied to asset ownership rather than labor.

Bailouts and QE create a moral hazard by socializing losses and privatizing gains, encouraging even riskier investment decisions and economic policies. Consequently, wealth inequality has reached historic levels, with the top 0.1% now controlling more wealth than half the US population.

Housing, Education, and Healthcare

The ultra-wealthy, with their financial safety nets, have used their excess capital to drive up the cost of essentials – housing, education, and healthcare. With greater disposable income and an expanding asset base, the rich are willing to pay more, pushing up prices for everyone.

Housing has become one of the biggest barriers to middle-class stability. Ultra-wealthy investors, foreign buyers, and institutional landlords have driven up real estate prices beyond what most families can afford. In major cities like New York, London, and Toronto, high-income buyers pay massive premiums for desirable locations, encouraging developers to cater to luxury demand rather than build affordable housing. Families that could have once afforded homes are now priced out, forced to rent indefinitely or relocate to less desirable areas. Institutions like BlackRock have only accelerated this trend, turning housing into an investment vehicle instead of a fundamental need.

Education is another sector where the wealthy have distorted pricing. Families with unlimited resources can pay astronomical tuition fees for elite universities, allowing schools to continue raising prices. Public universities, which once offered an affordable path to upward mobility, have also become prohibitively expensive due to funding cuts and rising administrative costs. The result is a student debt crisis that leaves middle-class graduates burdened for decades, while the children of the elite graduate debt-free and with better connections.

Healthcare has followed a similar pattern. The wealthy can afford private care, giving them better access to top doctors and faster treatment. Meanwhile, middle-class and lower-income families face longer wait times and declining healthcare quality as public systems struggle with underfunding. In countries like the U.S., concierge medicine has made this disparity even worse. Those who can pay for exclusive healthcare services receive premium treatment, while the rest are left with overburdened hospitals and insurance nightmares.

Generally, when the supply of a good or service is constrained, the marginal buyer willing to pay more resets the bar for everyone. Suppliers will cater to that marginal buyer, driving up prices industry-wide.