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What is happening to the middle class? -

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MARK COLVIN: Saturday's election may have had its flaws, such as donkey voting and dodgy preference swaps, but it was still a genuine democratic process.

And as Churchill remarked, democracy is the worst form of government except all the others that have been tried.

But for a number of reasons, democracy may be coming under threat.

The historian and thinker Francis Fukuyama suggests that democracy only thrives in societies that have a thriving middle class. And all over the developed world, he says, the middle class is under threat.

In China, on the other hand, a rising middle class may eventually provide the pressure that leads to greater democracy.

Francis Fukuyama has been in Australia as a guest of the Centre for Independent Studies, and he spoke to me about the past and future of democracy.

FRANCIS FUKUYAMA: Well, you know, it was funny because Karl Marx predicted that in capitalist societies there'd be this progressive immiseration of the proletariat, everybody would get poorer and poorer and then there'd be a revolution.

And what happened in the 19th Century and the late, the early 20th Century is exactly the opposite, that the working class actually got richer and richer and turned into the middle class where they could, you know, own a car and a house and raise a family, and so forth.

And I think the worry right now is that maybe Marx's prediction is going to come true, it's just 150 years later.

MARK COLVIN: In America?

FRANCIS FUKUYAMA: Well in America, and in Europe I think, where there's been a pretty steady erosion of middle class jobs as a result of deindustrialisation, which in turn is driven by some combination of technological change and globalisation.

MARK COLVIN: So what can be done about that? Those forces themselves are fairly inexorable aren't they?

FRANCIS FUKUYAMA: They are, although I think if you look across the developed world there have been some countries, like the United States and Britain, that have raced to embrace this new world, and others that have been a little bit more cautious like Germany, where, you know they have accepted globalisation but they thought that it was important to keep a manufacturing base, to keep up the skills of workers and kind of lower people in the lower job categories.

So I think that there are things that can be done to mitigate.

You know the most important thing is education because you constantly are going to have someone nipping at your heels, coming up from below in the developing world. So unless you can push your workers into higher skill levels, I think you're going to lose that race. And so part of the prize is going to go the country that can actually do that educational job the most effectively.

MARK COLVIN: And when people look at America now, one of the things they see is an increasingly ill-educated class, which probably used to be the middle class. Is that where America's going wrong?

FRANCIS FUKUYAMA: I think that the United States, you know it's a very competitive and, you know, in a sense elitist country because we have a higher education system that's really second to none. So all of the MITs (Massachusetts Institute of Technology) and Stanfords and Harvards really are completely world class.

I think where America does a lot worse is in educating kind of the second and third and fourth tier students that are going to state universities, or some that may not actually be going to university at all but should be in a community college or in a vocational program.

MARK COLVIN: So the education system becomes a microcosm of what you're talking about overall.

FRANCIS FUKUYAMA: Yeah, I think it reproduces...

MARK COLVIN: You've got very, very privileged people at ivy league universities and much less privileged people who may not go to university and may drag along the bottom economically.

FRANCIS FUKUYAMA: Well I think that's it, that the education system actually reflects and creates, you know, the distribution of income in the job market. And in the United States, you know, we worry about the top end but probably not enough about the lower parts of it.

MARK COLVIN: People talk about this as a hollowing out don't they? Is that happening right across the developed world now?

FRANCIS FUKUYAMA: Hollowing is actually a good term for it, because if you look at where new jobs are, you've got all of these very high skilled jobs for financial wizards and geneticists and software engineers, and this sort of thing; and then you've got another big group of jobs where people like home health care workers, that's one of the fastest growing job categories, because, you know, you can't outsource a home health care worker to a poor country.

But then you've got this big saddle in the middle where jobs that used to be middle class jobs, being accountants or clerks or doing call centre activities...

MARK COLVIN: An amazing amount of legal clerical work is being done in…

FRANCIS FUKUYAMA: In India now or in the Philippines or other places, because it turns out there's a lot of other people around the world that can do these. So that's where the hollowing out has been.

And so a lot of people that were in the middle class either are going to have to get into those high skill categories or they're going to fall back into being, you know, home health care workers, janitors, that sort of thing.

MARK COLVIN: What about a country like China with a burgeoning middle class? Will that bring more democracy?

FRANCIS FUKUYAMA: Well I think right now no because the middle class in China, and there's probably 400 million of them out of a population of 1.3 billion, right now I think they're pretty satisfied because they've been the main beneficiaries of all this economic growth that's happened in China.

And I think, my sense is that very few of them want to rock the boat particularly by turning against the regime or against the system as a whole.

MARK COLVIN: If the growth stalls though?

FRANCIS FUKUYAMA: Well that's, so that's the really big question. And it is going to stall, I mean there's...

MARK COLVIN: There's already signs it's stalling. How much does it have to stall by?

FRANCIS FUKUYAMA: Well you can't really put an exact number on it, but I think that the experience of every other country that's tried to go from where China is today to where it wants to be in another 20 years, that is to be a fully developed high income country, is really difficult.

And your growth rate is going to fall from 7, 8 per cent currently, probably to 3, 4, 5 per cent. And in that case, you're just not going to generate this big flow of jobs that's going to keep the Chinese middle class employed.

And that's the politically dangerous point I think for China, because they're, you know, every year they produce 6, 7 million college graduates, and getting jobs for those people I think is going to be an enormous challenge.

MARK COLVIN: Francis Fukuyama, author of The Origins of Political Order.