Gerry's News Digest 66: The squeezed middle, company loss, pre-nups and a thief (November 26, 2010)

Hi, this is Gerry and welcome to my News Digest for Friday, 26th November, 2010. On today's show I'm going to talk first about the "squeezed [1] middle". I wonder if you feel part of this group. Then, we're going to look at what toilets can tell us about the society we live in. After that we're going to find out why London is the divorce capital of the world: that's to say why lawyers are doing well out of big money divorces here. And finally, a cautionary tale [2] about a minor criminal.


The "squeezed middle" is a new political catchphrase [3] over here. I don't know if there's an equivalent expression in other languages. The term refers to the middle classes. Now middle class is a difficult term to define. In America it's typically used to describe anybody who's not rich. The term working class has tended to disappear along with the jobs that used to be defined as working class - manual jobs [4] in factories and so on. In Britain, people like David Cameron, our Prime Minister, like to call themselves middle class. For them it means the social class of salary earners that manages the country.

Average earnings in Britain are only about £2,000 a month, with middle-managers and other professional people earning £3-4,000. The Prime Minister on the other hand earns about £12,000 a month. Then when we move on to city bankers and top company managers, that's another league [5] completely. So where's the middle class?

The trend in recent years has been for the gap between the richest and the poorest in Western countries, but particularly the United States and Britain, to grow and grow. We now have a gap that's as big as it was in the 1920s. In America in 1980, I read, the top 8% of the population received 16% of national income. Now just the top 1% of the population receives 16% of the national income, and the top 20% take more than half the total national income. And in the UK we have a similar trend, perhaps not quite so extreme. So the rich get richer.

At the same time the poor seem to be getting poorer. We have rising levels of unemployment. We have all these people who depend on the state to live: the people getting benefits [6] that I talked about on a recent show. And a lot of the new jobs that are being produced are low paid, precarious (no job security) and often part-time.

So, the squeezed middle are the people between the super-rich and the people who can't live without some kind of support from the state. And this middle class is being squeezed in different ways. These people feel that they are paying for the poor through their taxes. Tax tends to be rising at the moment because of the financial crisis. They also feel that they are the ones who've had to bail out [7] rich bankers as well. Alongside all the tax, they also feel that their standard of living is falling. They can't afford to buy housing like they could before. The cost of healthcare (in the States in particular) is rising, and the standard doesn't seem to be improving. And so on and so on.

So what are the consequences? In the States we've seen the rise of the Tea Party movement. These are angry and frustrated people. It's not in the American tradition to look to the government to solve social problems, so there the protest is against government in general. Get rid of unnecessary government is their message. In France, it seems to be the opposite. Their tradition is to look to the government to provide help. And the people stop working and take to the streets if they're unhappy. In Britain, the people have been quite quiet and accepting of the deteriorating [8] situation, but we've just seen what could be the first signs of unrest. There was a big demonstration last week by students over plans to raise university fees, which means that students will have to take out large loans to complete their studies. And who are students on the whole? The majority, of course, are from the middle class - this middle class that's being squeezed.

***

There's a new column in the weekend edition of the Financial Times. It's written by a journalist called Gillian Tett, who wrote one of best books, it seems, on the origins of the banking crisis in New York. A week ago she wrote her column about another aspect of business life in New York, namely the corporate toilet or, as they would say, restroom. The article started with her explaining how she was visiting an office in central New York and she asked the receptionist if she could use the toilet facilities [9]. She was handed in her words "a vast [10] key on a wooden board that might have been a prop [11] from a prison drama." And the receptionist warned her to make sure that the door was properly locked after use. This journalist knows New York well, and she reports that this is standard practice there. Americans keep their toilets locked and you have to have a key to use them. It's to keep them clean and safe, they say.

She contrasts the situation with Tokyo where the toilet facilities are always immaculate, but these toilets are always, also, freely available. In London too they're open, even if the comfort is not up to the Japanese standard.

Ms Tett, the journalist, who I found out has a doctorate in anthropology, thinks that toilet access policy has a lot to do with the level of social trust and cohesion in the local society. Japan is famously homogenous - it's pretty monocultural. It's also very conformist so that there's a general sense that everybody knows how to behave. So while this can make for a rather oppressive social atmosphere - everybody's under pressure to conform - it does mean that the doors to the loos remain unlocked. There's also a high degree of respect for public and common infrastructure, compared with private property. New York on the other hand has far lower levels of trust and informal control.

I wonder how things are in Switzerland these days. Switzerland was after all, like Japan, a country with great social cohesion and informal control, but it's changed a lot in recent years. Check out your corporate toilet facilities: they may tell you a lot about where the country's heading.

***

Divorce has been in the news here recently. The new British Supreme Court ruled in an appeal [12] concerning a divorce case between the German heiress Katrin Radmacher and the Frenchman Nicolas Granatino. The divorce had been brought before the courts in Britain because the husband was demanding an equal share of his wife's fortune, although the couple had signed a pre-nuptial agreement whereby he wouldn't get this. A pre-nuptial agreement, known as a pre-nup, is a legal contract that a couple signs before they get married. The purpose of this agreement is to decide in advance what will happen, for example, to the property that they're both bringing into the marriage in the event of a later divorce. In this case, the pre-nup made it clear that the husband was not going to get his hands on the lady's money. And the reason why the ex-husband came to London to fight this case is because the British courts have refused to accept pre-nups up until now. But the Supreme Court decided in favour of Ms Radmacher, and has thus appeared to recognise the validity of the pre-nup.

The reason why the British courts have so far refused to accept pre-nups is because they wished to retain the right to judge cases more broadly. In other words, were the terms of a pre-nup that had been drawn up [13] some years previously still fair to both parties [14]? So anybody who thinks that their pre-nup is now unfair has been trying to get the case brought before a British court. At considerable cost to the British state, we may point out.

Opinions are divided about whether this latest judgement is going to change things dramatically. There are arguments in favour of pre-nups, of course. In some ways, it's always a good thing to keep love and money handled separately. On the other hand, young women, in particular, may be putting themselves at a severe disadvantage by signing something when they're young and hopeful that their marriage will last for ever. Family law cases often turn very nasty, particularly when there's a lot of money at stake [15].

***

To finish with today, a funny crime story. I found this on the BBC news website. A man who robbed a pizza take-away driver was caught after his mother let the victim into their house to call the police. Charles McManus was the robber and Muhammad Zar was the victim in the robbery that took place in Glasgow. Mr McManus had a nasty surprise when he came home after the robbery to find Mr Zar in his front room. What had happened was that Mr Zar was making a delivery for Domino's Pizza at about 10 o'clock at night when he was approached by McManus and another man. McManus took the pizzas as well as Mr Zar's mobile phone and some money. The other man took Mr Zar's car keys and his car. So Mr Zar was stranded [16]. McManus then told him to walk to the end of the road and turn right but Mr Zar thought that it might be another trap [17] and so he turned left instead. He went to the first house with lights on that he could see. He rang the bell and asked the woman who came to the door if he could use her phone to call the police. She let him in. Mr Zar was on the phone to the operator when he was very surprised to see McManus come into the house. The house turned out to be McManus's own home where he lived with his mother. McManus ran off when Mr Zar recognised him but was arrested by the police when he returned home later.

I think this young man hadn't been listening to what our government has been telling us. The government's been saying that unemployed people should be ready to travel in order to find work. So if our young criminal had got on a bus before looking for somebody to rob, he might have got away with it. And on that cautionary note, I'll leave you for today. This is Gerry saying thanks for listening, and until the next time, take care!

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[1] squeeze: to press, e. g. squeeze an orange so that the juice comes out
[2] cautionary tale: a story with a moral message
[3] catchphrase: slogan, a memorable thing that people repeat (Many comedians have a catchphrase that they are famous for saying every time they appear.)
[4] manual jobs: work that you do with your hands (i.e. physical work)
[5] another league: here: a higher level (like in sport: Champions League)
[6] benefits: here: social welfare payments and other kinds of help
[7] bail out: here: help with financial support (i.e. the emergency payments to the banks by the government)
[8] deteriorating: getting worse
[9] toilet facilities: the toilet services and infrastructure provided for people
[10] vast: very big, enormous
[11] prop: a thing such as a piece of furniture, a gun or a cup and saucer that is used in a play in a theatre. (Prop is short for property. The props manager is responsible for making sure that all the props for the play are in the right place at the right time.)
[12] appeal: when one side in a case takes the case to the next highest court to try to get a decision by a lower court changed in some way
[13] draw up (a contract): prepare and write, formulate
[14] parties (to a contract): the people mentioned (in a contract), the active participants
[15] at stake: at risk (when you place a bet, the money you risk is your stake)
[16] stranded: when a boat is stranded it is left on land after the tide (sea) has gone out so it can't continue on its way
[17] trap: here: a trick to catch a person