Moisés Naím: The Uprising of the Global Middle Class
By Moisés Naím
What might a farmer in Iowa, a graphic designer in Chile, a pensioner in the U.K., and an assembly-line worker in China have in common? They are members of a socioeconomic class that includes people whose supposed frustrations have helped fuel dramatic political events in some places—whether it’s the election of Donald Trump, violent protests, or Brexit—and could well do the same even in closed societies like China.
The conventional wisdom is that, in many places across the developed world, members of the middle class are railing against a stagnation or even decline in their standards of living. According to this view, a toxic mix of globalization, immigration, automation, inequality, nationalism, and racism can fuel the frustrations that encourage voters to punish “establishment” ideas and politicians. The “middle class” is, of course, a category encompassing billions of people worldwide, many of whom do not consider themselves frustrated or aggrieved. Some poor and rich voters alike voted for Donald Trump in the U.S. and for Brexit in the U.K., and middle-class people voted in large numbers against both. But it’s also clear that in rich countries, and especially in the United States, middle-income earners constitute the largest constituency of voters that is hurting economically.
Moreover, given street protests involving the middle classes in Brazil, Turkey, China, or Chile, it might look like the same kinds of anxieties that gnaw at the American and Western European middle classes are also pushing their peers in poor countries into to the streets.
But while members of the middle class in some Western European countries and the United States may be fighting to preserve their economic, social, and political positions in their own societies, in parts of the rest of the world they have recently made a dramatic emergence. Surprisingly, however, economic progress and more prosperity do not always buy more political stability. Even though things are improving for hundreds of millions of people in Asia, Latin America, and Africa, that doesn’t mean the people there are content.
Researchers and institutions such as the World Bank define the middle classwithin a large income range anywhere between $11 and $110 a day. And the convulsions within this income bracket are not new. Back in 2011 I wrote that “The main cause of coming conflicts will not be clashes between civilizations, but the anger generated by the unfulfilled expectations of a middle class, which is declining in rich countries and booming in poor countries.”
My argument was that the middle classes in the United States and other higher-income countries would see their standard of living decline, while in China, Turkey, Colombia, and other emerging countries, the economic situation of the poorest would improve. I warned that both the decrease and the increase in income might fuel social and political instability. In other words, the rising incomes of people in poor countries might actually make them less content.
“Inevitably,” I wrote, “some politicians in developed countries are blaming the economic decline on the rise of other nations.” And I concluded that the international consequences were not yet obvious.
Unfortunately, in some cases, they are now.
Many people have been able to leave the ranks of the poor over the past three decades or so. But the size and speed of the growth of the middle classes in poor countries has been truly dramatic.
Homi Kharas, an expert on the global middle class, estimated in a recent studythat 3.2 billion people, or 42 percent of the total world population, are now in the global middle class. The group’s size increases by 160 million people a year, and assuming current rates of growth, in a few years most of humanity will live, for the first time in history, in middle-class homes or better.
But the middle class has grown at different rates in different places. While in the United States, Europe, Japan, and other advanced economies, the middle-class market grows at a meager 0.5 percent each year, in China and India that market expands annually at 6 percent. Although the middle class is now bigger than ever in countries like Nigeria, Senegal, Peru, and Chile, its expansion is primarily an Asian phenomenon. According to Kharas, the overwhelming majority (88 percent!) of the 1 billion people who will join the middle class in the next few years will live in Asia.
The economic impact of all this is enormous. In developing countries, consumption is growing at rates of around 6 to 10 percent per year and is already equivalent to a third of the global economy.
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The political consequences may be just as important. In some European countries and the United States, they are already visible in elections and referenda—in France, the Netherlands, the United Kingdom, Hungary, and Poland—with the proliferation of improbable candidates and agendas. As Bill Emmott, The Economist’s former editor, recently noted: “We live in a politically turbulent age. Parties barely a year old have recently swept to power in France and in the huge metropolitan area of Tokyo. A party less than five years old is leading opinion polls in Italy. A political neophyte is sitting in the White House, to the profound discomfort of establishment Republicans and Democrats.”
Political turbulence is also rocking low and middle-income countries whose economies have been growing at a fast pace. And where the middle class has been expanding, its expectations and demands have also grown. New, more technologically connected social players, who have more purchasing power, more education, more information, and more awareness of their rights, are a source of immense pressure on their respective governments, which often lack the resources and the institutional capacity to meet those expectations.