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America's middle class is in trouble. Here's what that fact means for the world's largest economy — and the rest of planet earth.
 

India: Emigres send more cash home than foreign investors

Indians living abroad pumped $66.13 billion into the economy last year, compared with only $46.84 billion in foreign direct investment
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An employee counts Indian rupee notes at a bank in Mumbai on May 16, 2012. (INDRANIL MUKHERJEE/AFP/Getty Images)

Immigrants play vital roles at 4 out of 10 Silicon Valley start-ups, and a third of those immigrants are Indians. But the US isn't the only one to gain, according to India's Hindustan Times

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Chinese magazine asks: ‘What does middle class mean’?

'If there is a lack of a consensus about what rich and poor are, then can a "middle class" or "middle income" really exist?'
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Rush hour in Beijing. (Frederic J. Brown/AFP/Getty Images)

HONG KONG — Caixin, a well-regarded magazine that could be thought of as a sort of Chinese Bloomberg BusinessWeek, just published a commentary that goes to the heart of a question at the center of our upcoming series.

When you’re talking about Asia — places like China, India, and the Philippines, where American middle-class jobs have been moving — what does “middle class” really mean? Obviously, the local understanding of what's middle class in Manila is different from what it is in Shanghai, or Bangalore — let alone New York.

As Betty Ng, the author of the commentary, writes, “In some countries, being middle class might mean owning a house and a car. In others, it may just represent having a roof over your head and a toilet.”

To find out what different places believe to be the middle, Ng reports that Fidelity Asia-Pacific asked hundreds of people in 10 Asian cities what the boundaries were for being high or low income.

The answer? Confusion.

The results of the survey were a surprise. None of the cities can define clearly what low, middle or high income is. All the investigated cities lack a definition that a majority of people would agree with.

For instance, in Beijing and Shanghai, the most common definition for a "low-income household" is to have a monthly income of 5,000 to 7,499 yuan, however, this represents opinions of 33 percent of all respondents. The answer that comes second, with 25 percent, is 2,500 to 4,999 yuan for a monthly household income. ...

If there is a lack of a consensus about what rich and poor are, then can a "middle class" or "middle income" really exist? Or do Asians somehow live in a classless society? These questions are worth thinking about.

According to our survey, people usually define levels of income in relation to their own household income. The more one household earns, the higher their definition of what a high income is.

Even in the US, it’s hard to get people to agree on exactly what “middle class” means, and where it begins or ends. The canonical example is $250,000 households in ultra-expensive New York City that feel firmly middle-class, while ranking in the top tier of income.

However you define the middle class, one thing everyone in America can agree on is it’s shrinking. 

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India: Gutting of India's cotton farmers

New US film blames Monsanto for rash of Indian farmer suicides
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Workers are pictured at a cotton factory on April 9, 2008 near the town of Yavatmal in the Vidarbha region of Maharashtra state, India. (Uriel Sinai/Getty Images)

The third film of San Francisco film-maker Micha X Peled's globalization trilogy blames US agribusiness giant Monsanto for a wave of farmer suicides that has claimed tens of thousands of lives across India's cotton belt.

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India: Want a job? Issue an immigrant visa.

Indian immigrants play key roles in Silicon Valley start-ups, says new study
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Immigrants are sworn in as citizens during a ceremony May 21, 2007 at George Washington?s Mount Vernon Estate and Gardens in Mount Vernon, Virginia. (Alex Wong/Getty Images)

Want a job? Issue an immigrant visa. 

That's the message suggested by a new study that found immigrants were founding members of nearly a quarter of US start-ups. And if you're issuing those visas, you'd better put the Indians at the top of the list. The same study found that Indians made up a full third of the immigrants playing integral roles at the new companies, according to Reuters.

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Cambodia: garment workers making US brands stitch 'til they faint

The enduring phenomenon of mass factory faintings
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A Cambodian man carries an unconscious woman from a factory in Phnom Penh on October 12, 2009. Cambodia's garment industry is the impoverished nation's largest source of income, providing 80 percent of its foreign exchange earnings and employing an estimated 350,000 people. (AFP/AFP/Getty Images)

BANGKOK — In Cambodia, poverty is endemic and its people, largely unskilled and deprived of quality education, will work for dirt-cheap wages.

In other words, it's an ideal location for outsourced garment factories.

Just ask Levi Strauss, H&M or The Gap.

Last year, a strange phenomenon -- wave after wave of mass faintings in garment factories -- briefly attracted the media's gaze towards the lives of Cambodians who stitch clothing for Western consumers. This trend was largely presented as a mystery. Time Magazine surmised that "mass hysteria" could be to blame. An executive blamed it on a "strange psychological phenomenon."

But less attention has been paid to recent efforts to understand the fainting spells. According to varied groups' research, it's largely owed to more obvious causes: underfed workers toiling in stifling hot factories.

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India: US firms push outsourcing companies to hire local

Promising to create jobs in the US, Indian firms face competition from American IT firms
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Graphic. (Kyle Kim/GlobalPost)

NEW DELHI — Having created nearly 300,000 US jobs over the past five years, India's IT industry is now using the promise of job creation to win outsourcing contracts from American firms, India's Mint newspaper reports.

"India’s outsourcing firms are battling tightened work permit regulations and a backlash in the US, their largest market, against the movement of technology jobs offshore, and this push by customers to hire more American engineers is beginning to play a role in some outsourcing decisions," Mint's Pankaj Mishra writes from Bangalore.

That means Indian IT firms like Infosys and HCL are now creating jobs for Americans in Michigan and Wisconsin to win contracts from companies like Michigan's Consumers Energy and Milwaukee-based Harley Davidson, the paper said.

HCL won a contract to manage Consumers Energy’s information technology (IT) infrastructure earlier this year. As part of the transaction, it opened a software development center in Michigan with plans to hire 500 engineers over the next few years.

Meanwhile, Infosys, India’s second biggest software firm, won an outsourcing contract from Harley-Davidson in July that will require it to open an operations center in Milwaukee, Wisconsin, for the motorcycle maker.

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Who Stole the American Dream?

A new "detective story" by Pulitzer Prize-winning journalist Hedrick Smith digs into the collapse of the American middle class.
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Graphic. (Kyle Kim/GlobalPost)

BOSTON — There's been no shortage of coverage lately on the American middle class.

President Barack Obama and his GOP challenger Mitt Romney have made it the centerpiece of their respective campaigns, a fact that came up repeatedly in Wednesday night's debate in Denver.

But the plight of the middle class is also moving far beyond the day-to-day chatter of the news cycle.

Case in point: a new book by Hedrick Smith, called Who Stole the American Dream, which is resonating in literary and economic circles around the country.

Smith is a Pulitzer Prize-winning veteran journalist, and he attacks his topic with gusto.

Here's the big idea: the decline of the middle class did not happen by accident.

Instead, Smith argues, in the late 1970s a group of powerful corporate and government interests came together to influence policies that ultimately hurt millions of Americans.

He calls it "wedge economics."

This phenomenon was a "change in the business ethos," Smith says. And it really took off in the 1980s when many CEOs moved from a shared system of taking care of all of their stakeholders (investors and workers), to one where equity-based inequality became the norm (big money for the bosses).

Here's a taste of Smith's argument:

"Americans, more than people in other countries, accept some inequality as part of our way of life, as inevitable and even desirable -- a reward for talent and hard work, an incentive to produce and excel," Smith says. "But wealth begets wealth, especially when reinforced through the influence of money in politics. Then the hyper-concentration of wealth aggravates the political cleavages in our society."

And here's a video of how Smith explained the idea recently — in great detail — to the New America Foundation:

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India: New towns equal a new middle class

India's new "census towns" are adding an entirely new demography to the consuming class, writes Mint's Cordelia Jenkins
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Graphic. (Kyle Kim/GlobalPost)

If you're a committed India watcher, you should be reading Mint -- which in many ways is setting the standard for business journalism here.

Case in point: Cordelia Jenkins' new series on the growth of so-called "census towns" on the outskirts of India's larger cities -- and their role in shaping the identity of India's new middle class.

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India: Everybody loves the Middle Class

Politicians of every stripe are fighting for India's "middle class." But who are they, anyway?
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Locals shop on April 14, 2008 in Bangalore, India. India's new middle class is more than 300 million, and growing. (Uriel Sinai/AFP/Getty Images)

America's not the only country with a middle class problem. But where America's middle may be shrinking, India's is growing by leaps and bounds, even as politicians wrangle over the different ways they may or may not be getting squeezed.

The big political questions in India these days are a price hike for diesel fuel and a decision to open up the retail sector to foreign giants like Walmart.

Some economists, including the prime minister, argue that the fuel price hike is needed to reduce the budget deficit -- because the government makes up the difference between the market price for oil and the fixed price for gas and diesel in the form of a subsidy. Meanwhile, most everybody acknowledges that higher fuel costs will add to inflation, which is already biting Indian consumers pretty hard -- especially in the form of escalating food prices.

When it comes to foreign investment in retail, proponents say allowing Walmart and others to own 51 percent of domestic retail outlets will bring in billions of dollars in much-needed foreign exchange, helping to shore up the rupee. They believe that infrastructure investments by these firms will create an efficient, refrigerated supply chain, so that the 40 percent of Indian produce that now rots in transit will be able to hit the market. And they say the new stores and associated businesses (trucking, canneries, etc) will generate some 10 million quality jobs -- meaning formal sector jobs that pay the mandated minimum wage, at least.

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India: Competitor, or source of future American growth?

Asian immigrants could fuel US growth this century.
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Graphic. (Kyle Kim/GlobalPost)

Americans are used to looking at Asians as competitors, though Indian outsourcing companies have created nearly 300,000 US jobs over the past five years and Indian firms like Tata Motors are beginning to rescue western failures like Jaguar / Rover.  But as the Atlantic points out, apart from Asia-based companies, Asians themselves may well fuel the next century of American economic growth -- if the US acts fast enough to woo them to American shores.

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