I have been doing a strange piece of arithmetic every time I drive past the new towers coming up along highway opposite Uttarayon across railway tracks, which is to take the price of a two bedroom flat in one of those glass buildings and divide it by what a young engineer in my office takes home in a year. And the number that comes back is usually somewhere between fifteen and twenty five before tax and before rent and before the money that goes home to a village every month, which means the first rung of the ladder that I climbed without thinking about it has quietly been sawed off for the people walking behind me. Its so sad to see.

A society moves forward when a large number of its people sit in the middle band, above the line where every rupee is spoken for by survival and below the line where money earns money while its owner sleeps, because that band is where surplus turns into investment in children and houses and small businesses, and it is also the band that buys what the economy produces. The United States ran this experiment first and the machinery was boring policy which nobody would call visionary today. A soldier’s tuition under the GI Bill, a thirty year mortgage with a small down payment, and unions which made a factory wage enough for one man to buy a house and raise three children on one income, and between 1947 and 1973 the median American family’s income roughly doubled in real terms while productivity and pay grew together, which is the part that matters because the ladder was walkable.

Then 1973 arrives and pay stops tracking productivity, and the American middle class slowly turns from a wealth building machine into a debt maintaining one. And a middle class that has stopped climbing turns angry and starts looking for someone to blame, which is now the main product of that country’s public life.

China ran a compressed version of the same experiment and now holds the largest middle class on earth, with roughly four hundred million people in the official middle income bracket, urbanization going from under a fifth of the country in 1978 to about two thirds today, and something close to eight hundred million people pulled out of poverty inside a single generation. The catch is what that middle class put its money into, which is property, and around seventy percent of household wealth there sits inside apartments whose prices only made sense while a hundred million new families were arriving in the cities every decade. And when those prices started falling from 2021 the balance sheet of the entire middle class cracked, and youth unemployment went past twenty percent, so the machine that built the biggest middle class in the world is now the machine that is squeezing it.

I have been trying to understand why the middle band works so much harder than the two bands around it, and the answer has mostly to do with distance and with fear. Someone in the middle can see the next step and it is close enough to reach with a few years of effort, so effort has a visible payoff and the payoff becomes a habit, and they also live with the fear of sliding back down, which is a stronger fuel than greed because losing what you have hurts more than gaining what you want, and every Indian who has signed a home loan knows the feeling. The upper class has the opposite problem, because after a certain number of crores another crore changes nothing about how the day feels, and their children inherit the money along with the insulation, so the hunger that built the fortune usually dies in the second generation. The lower class is fighting a different battle altogether, and Mullainathan and Shafir showed that scarcity behaves more like a tax on bandwidth which eats planning itself, so a man who has to find five hundred rupees by tonight has the same mind the rest of us use for planning and tonight has already claimed all of it, and the way out of poverty needs exactly the patience and the slack that poverty destroys.

The middle class is also the only class with a structural reason to demand that institutions work, since the rich buy their way around a broken court and the poor are in no position to demand quality, and when that class thins out nobody is left in the room who cares whether any of it functions.

India grew its middle class after 1991 on a narrow ladder, which was engineering and English and software and the back office work of richer countries, and by the 2010s there were a few hundred million people with branded aspirations, a car on a loan, a flat on an EMI and a plan to send one child to a private college. And I grew up inside that story so I know how good it felt when the arithmetic still worked, which is also why counting that class is so hard, since everyone wants to be inside it and the line moves in whichever direction suits the person drawing it, with the government widening it to include more beneficiaries and the marketing industry narrowing it to find more customers. I am no expert so please take this with a bag of salt, but I have been there, done that, from rentacoder gigs to remote teams.

What has changed in the last decade is that our politics has reorganised itself around the two ends of the income distribution, which worries me more than any single policy. In a country of a hundred and forty crore people, more than eighty crore now receive free food grain, which is more than the population of the United States and the European Union put together, and every party has learned that a scheme is the cheapest way to buy a vote. In plain English; the bottom half is fed by the state and the top half is comfortable with the tax code and the invoice lands on the household that has neither a ration card nor a lobbyist. The salaried Indian is the most reliable payer in the system, maybe a crore and a half of us who actually pay income tax, and our money leaves before we see it and then eighteen percent GST sits on almost everything we buy, while the top one percent quietly owns over forty percent of the country’s wealth, and on paper the fortune of one of the richest families would pay for the entire free grain programme for about four years.

Then there is property, which I keep coming back to, because a house in India carries more than an asset’s weight, since it is the collateral for the business loan, the address that decides which school the children get into, and the thing that carries a household through old age. Prices in the big cities have run so far ahead of salaries that the entry ticket is priced like a luxury good, and every rupee of appreciation is money that the next entrant pays to the person who got in earlier, so the market has slowly turned the middle class into a club with a membership fee that only inheritors can afford, and a young man whose father bought a flat in 2008 is middle class in a way that his equally hardworking colleague whose father did not is not, which is a cruel way to sort a generation. The bottom of the pyramid cannot even reach the ticket counter, so the step that used to move a family from a rented room to an owned one has been removed, and when the first step is gone the whole staircase becomes decorative, so the gap is filled with credit instead, since household debt has climbed to around forty percent of GDP and the monthly payment on the car and the phone has become the new landlord.

The top of the ladder is narrowing at the same time as the bottom is being pulled away, because the sector that carried the Indian middle class, which is information technology, has gone quiet on hiring, with fresher intake falling by about half from its peak. And that has less to do with a bad quarter than with the first three years of a junior developer’s job being exactly the kind of work the current models do well (I am not sure if prompt engineering fixes this or hollows it further). And meanwhile nearly half the workforce still sits in agriculture producing about a sixth of the output, and nine out of ten workers are in the informal economy with no contract and no pension, so the country is growing without hiring the people who need to be hired, which is a strange kind of growth to celebrate.

Brazil and Mexico are the two countries I keep looking at, because both of them built a middle class and then watched it stall. Brazil had its miracle in the late sixties, then a debt crisis and a lost decade in the eighties, and a middle class that swelled through the commodity boom of the two thousands and shrank by millions when it ended, and today it hands one of the largest cash transfer programmes on earth to its poor while its tax code spares the dividends of the rich, which is the shape of our own budget. Mexico is the more painful story, because in 1980 its income per person was many times China’s and today China’s is higher, and it has spent forty years growing at about one percent a year with a middle class that keeps sliding back into the informal economy, and economists have a name for the shape both countries settled into, the middle income trap, which is what happens when the cheap labour phase ends and the innovation phase never starts and the class that was supposed to carry the country across the gap dies somewhere in the middle of the bridge.

I do not know where this leaves India, and I notice that I have started asking the question the way I ask questions about the weather, with no expectation of an answer. There are a hundred and forty crore of us and half of us are under thirty, and it is entirely possible that all of that hard work wins anyway and the middle class grows into a plateau no party can afford to ignore, which is the version I want to be true. The other version is that we settle into the shape Brazil and Mexico settled into, with a thin layer at the top that owns the country’s assets, a vast layer at the bottom that receives a ration and a promise every five years, and a middle that rents forever and pays for both ends, and when the ladder disappears the middle class has two answers available to it, which are to stop climbing and to leave, and I can see both happening in the emigration numbers and the falling birth rate of the very people who were supposed to build the plateau.

Maybe the plateau is coming, and maybe we will discover that a country can grow for thirty years without ever growing its middle, which is the strangest kind of growth there is. Its time we start building ladders instead of schemes!

Tell me whether the first rung is still within reach in your city. Find me on Twitter, I am @troysk704.