Can you give us some facts to establish that the middle class is in fact shrinking? It seems to me that more than anything globalization is freeing up domestic labor to do more productive things i.e. for a greater wage. It's possible though that it provided such a shock to the system in countries like the U.S. that it may take a while to fill that void of jobs again, but once that happens we'll be stronger for it.

And most importantly you can't ignore what a great effect this is happening on the world as a whole. The countries that get outsourced to are being rapidly pulled out of poverty.