Middle class people can take advantage of those investment returns as well. A more interesting question to me is “Why aren’t they?”. A typical middle class person can still achieve significant upward mobility for their children, and yet they often choose not to. Is part of the problem with student debt not just that many parents of the last generation or two wasted their money rather than saving it to put their children through college? I’ve known a few people whose parents wouldn’t even attempt to take out Plus loans for them. The lack of upwards mobility seems to be based more on some sort of social disease than just economics at this point.
> Middle class people can take advantage of those investment returns as well.
By definition of the classes in a capitalist society, those who can fully take advantage of investment (capital) returns are the capitalist class. The petit bourgeoisie, or middle class, makes some return from capital, but that's limited (in the traditional definition, they are the ones who apply their own labor to their capital, though those dependent on selling wage labor who also have separate capital holdings that are inadequate without labor income for personal support are similarly situated.)
But the usual American definition of “middle class” isn't the Petit bourgeoisie, but some group around middle income, which is almost entirely composed of what are essentially pure wage-laborers without meaningful capital stocks who cannot take advantage, in any significant way, of investment returns.
It isn't true that they cannot take advantage, that was the entire point of what I was saying. They typically don't, but it isn't because of a lack of income. They're just spending almost all of it.
> Middle class people can take advantage of those investment returns as well.
How exactly do you define "middle class"?
Because by the popular definition of middle class, these folks can not take any meaningful advantage of any sort of investment returns.
Generally speaking, middle class people barely have enough money to house and educate themselves (they must take out large barely-sustainable loans to cover either/both of those, at high risk to themselves). The wealthier of the middle class might have a basic retirement account of some sort, which might barely cover basic food+shelter+medical for their own person.
You're confusing what people can do with what they actually do. I've known people who make close to the median income and support 4 children, own a home, and still had enough savings to buy them all cars and pay for their college tuition. They have some amount of retirement savings as well, though I don't know how much. I've also known people who make nearly 6 figures and just spend all of their money. A more expensive apartment than they need, a more expensive car than they need, eating at restaurants all the time, buying a bunch of what are essentially toys for adults, etc.
Although this is in the midwest, the cost of living is much lower here. It's quite possible that you just can't do this on your typical "middle class" income in other places.
> I've known people who make close to the median income and support 4 children, own a home, and still had enough savings to buy them all cars and pay for their college tuition.
You just said, in effect, they had enough savings to spend them later to meet basic expenditures needed in raising children in their income level, which isn't really a sign of ability to accumulate excess capital after maintenance.
Ownership costs in Vancouver and Toronto are sitting well north of 75% of the median income for individuals in those areas.
This isn't a made up issue caused by young kids eschewing spendthrift habits and buying all them dang newfangled iPhones rather than investing in equity building houses. It is an issue with the ratio of home prices to local median incomes.
