Flat White

World, welcome to the middle-classes

2 October 2018

5:06 PM

2 October 2018

5:06 PM

While the media has been obsessing about Judge Kavanaugh, whatever President Trump’s latest rude tweet was and the ramblings of various ex-prime ministers, Brookings has reported on an epoch-making event we’ve all missed:

Something of enormous global significance is happening almost without notice. For the first time since agriculture-based civilization began 10,000 years ago, the majority of humankind is no longer poor or vulnerable to falling into poverty. By our calculations, as of this month, just over 50 percent of the world’s population, or some 3.8 billion people, live in households with enough discretionary expenditure to be considered “middle class” or “rich.” About the same number of people are living in households that are poor or vulnerable to poverty. So September 2018 marks a global tipping point. After this, for the first time ever, the poor and vulnerable will no longer be a majority in the world. Barring some unfortunate global economic setback, this marks the start of a new era of a middle-class majority.

We make these claims based on a classification of households into those in extreme poverty (households spending below $1.90 per person per day) and those in the middle class (households spending $11-110 per day per person in 2011 purchasing power parity, or PPP). Two other groups round out our classification: vulnerable households fall between those in poverty and the middle class; and those who are at the top of the distribution who are classified as “rich.”

Middle class can be notoriously difficult to define, particularly in the global sense. Home Kharas and Kristofer Hamel write:

Those in the middle class have some discretionary income that can be used to buy consumer durables like motorcycles, refrigerators, or washing machines. They can afford to go to movies or indulge in other forms of entertainment. They may take vacations. And they are reasonably confident that they and their family can weather an economic shock—like illness or a spell of unemployment—without falling back into extreme poverty.

Different countries have different standards of living and the same amount of money can buy different things in different places. Middle class in India or Nigeria looks different than in the United States or Japan – certainly poorer in both absolute and relative terms – but the rich world cannot be the golden standard, and fortunately doesn’t have to be. It’s good to live in the suburbs of Dallas, many do and many want to, but you don’t need to live there in order to live well in your neck of the woods.

The twenty-first century will be the century of the middle class, with the authors predicting an overwhelming bourgeoisation in the next twelve years:

All of this, of course, due to free markets and free trade, not socialism, collectivism, social democracy or the welfare state.

One could call it the greatest miracle in history – except there is nothing supernatural about the process and we are well able to explain the causes; it is certainly the greatest achievement in the history of humanity and one carried out in the shortest of time frames.

Consider that for thousands of years an overwhelming majority of people across all continents and societies were dirt-poor peasants living precariously on the edge of disaster, and consider that this was the case for most of the last century too, as true in our lifetime as that of Julius Caesar.

The fact that in a space of a few decades, a blink of an eye in terms of history, a great majority of people have progressed to live better than their ancestors and a majority significantly better it’s something to celebrate – much more widely and proudly than it is.

Arthur Chrenkoff blogs at The Daily Chrenk, where this piece also appears.

Tables: Brookings Institution.

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