The Uprising of the Global Middle Class

The Uprising of the Global Middle Class

By: Moisés Naim

Taken from: The Atlantic

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 class within 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 study that 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.

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.

These countries are already showing fissures similar to those in the U.S. and Europe. In Chile, whose economic success has long made it a model for other poor countries and which is one of the most stable societies in Latin America, there have been violent protests, mass voter abstention, and even the storming of Congress as citizens vent their frustrations at a government they feel has failed them.

In China, scholars have tracked a dramatic decline in middle-class citizens’ trust in legal institutions, government, and the police between 2002 and 2011—even though this was a period of strong economic growth and improved social programs. The Chinese government is clearly worried. In fact, many see China’s breakneck economic growth as a crucial pillar of Beijing’s strategy for placating the middle class—perhaps on the logic that if the government isn’t going to give you constitutional democracy, freedom of speech, and universal human rights, then it will at least make you better off, perhaps even rich. The flip side, however, is that any prolonged economic downturn in China could fuel the political turmoil that Beijing’s leaders clearly fear.

The reasons for discontent around the world—even in the face of improving living standards—are many, but certainly easy access to information is key. People who are educated and well-informed are more difficult to control. What’s more, when billions of people can get on their smart phone and see just how well everyone else is doing, they are more likely to be dissatisfied with their own situation. They are likely to think, I work just as hard as they do, I deserve that, too—whether “that” is higher wages, cheaper healthcare, equality, better public services, or freedom of speech. But cheap and widespread connectivity and the information revolution are not the only two relevant forces. Urbanization, migration, growing inequality, and even changing cultural expectations regarding corruption, authority, and hierarchies all contribute.

What’s in store for the future? It is clear that we will continue to see dramatic, and, at times, radical change being pushed by members of the middle class. In rich countries, where income levels have been declining, middle-class citizens will demand from their governments the results that maintain their historical standards of living. At the same time, members of the middle class in emerging countries will fight to ensure that their upward progress continues and that their governments provide better public services.

The changes will not always be smooth and they will not always be nonviolent. There will be flashpoints of rage and repression; in fact, it is not clear how democracies are going to perform under these enormous pressures. Donald Trump and Brexit were only two visible manifestations spurred in part by the revolt of the middle classes in rich countries, and the furies of middle class in poor and middle-income countries are also boiling, with unpredictable consequences.