In the 20th century, the American dream of a middle-class life inspired the world. Now, in the 21st century, we are moving at high speed toward a world based on a new geography of growth, with millions of people in the east and the south moving out of extreme poverty to become potentially powerful middle-class consumers. Whether the dreams of this new global middle-class are realized or turn into a nightmare depends on several factors.
In today’s shifting world, with GDP in about 80 developing economies rising at twice the rate of per capita growth in the Organisation for Economic Co-operation and Development (OECD), the club of the world’s richest countries, middle-class citizens paradoxically complain and protest regardless of whether fortunes improve or decline.
Former Venezuelan minister of trade and industry Moises Naim even warns of a possible “emerging global war of the middle classes.”
While anger over pay cuts and unemployment make sense, it is harder to understand the current protests in fast-growing countries like Thailand and Chile, where standards of living are improving. What is going on?
High growth in Asian and southern countries has meant greater export earnings and rents from natural resources. Unfortunately, this blessing can turn into a curse. In China, former Chinese leader Deng Xiaoping’s (鄧小平) vision — “let some people get rich first” — has led to impressive economic growth and poverty reduction, but it has also undermined the self-proclaimed “harmonious society,” as recent protests and labor conflicts indicate.
Indeed, it is telling that, in the spring of last year, Beijing’s municipal authorities banned all outdoor luxury-goods advertisements on the grounds that they might contribute to a “politically unhealthy environment.”
Rising inequality, lack of civic participation, political apathy and a dearth of good jobs, particularly for the young, comprise the Achilles heel of emerging-market countries’ current development model. A Gallup poll on subjective well-being in Tunisia and Thailand shows that, while income levels and social conditions in both countries improved between 2006 and 2010, life satisfaction dropped.
Homi Kharas, a senior fellow at the Brookings Institution in Washington, defines today’s global middle class as households with daily expenditures of between US$10 and US$100 per person (at purchasing power parity). This represents approximately 2 billion people, split almost evenly between developed and emerging economies. In its Perspectives on Global Development 2012 — Social Cohesion in a Shifting World, the OECD forecasts that, by 2030, the global middle class could total 4.9 billion. Of these, between 3.2 billion and 3.9 billion will probably live in emerging economies, representing 65 to 80 percent of the global population.
These people will demand more and better services, a fairer division of growth’s benefits and more responsive political institutions. The current wave of protests could be just the beginning of this trend.
So, what should be done?
First, more extensive social protections must be instituted. Most of the emerging middle class is one income shock from being pushed back into poverty. To counter this risk, social-security programs should be gradually extended beyond social assistance. India’s Employment Guarantee Scheme, Ghana’s national health-insurance program and Lesotho’s tax-financed pension plan, which covers more than 90 percent of its population, are all instructive social-protection models for the emerging middle classes.
Second, more (and better) jobs are desperately needed. The global labor force is 3 billion, of which two-thirds are informally employed. Indeed, in countries like India, the number of jobs without social protection has increased, despite sustained growth. In Tunisia, the probability of unemployment actually rises with higher levels of education, reaching nearly 30 percent among the highest-qualified individuals, compared with only 8 percent among the least skilled. Education in the developing world must be reformed to cater to the demand for skills.
Third, a social contract — one that entails better services and greater government accountability — is essential to improving fiscal policy and mobilizing domestic resources. In countries whose populations are genuinely enfranchised, and where they benefit from good-quality public services, social trust rises and citizens are more willing to pay taxes. Opinion polls show that in countries where individuals do not trust one another, more than one-third of the population finds tax evasion acceptable. This number drops to one-tenth in countries where people trust each other most.
Finally, as the Arab Spring demonstrates, any state that does not give its citizens adequate space to exercise their voice, and thereby strengthen loyalty, is ultimately unsustainable. Governments must accept pluralism, and social media such as Facebook and Twitter should be permitted to facilitate citizens’ exchange of opinions. Kenya’s Ushahidi Platform, which allows Internet users to quickly access information about human-rights abuses such as human trafficking, is a sophisticated example of how technological resources can provide citizens with powerful tools to monitor their governments’ behavior.
The rise of the global middle class will transform the world’s social, political and economic landscape. Fostering cohesive societies — in which people feel protected, citizens trust one another and efforts are rewarded — is the key to realizing its members’ dreams.
Johannes Jutting is head of poverty reduction at the OECD Development Center in Paris. He writes in his personal capacity.
Copyright: Project Syndicate
Because much of what former US president Donald Trump says is unhinged and histrionic, it is tempting to dismiss all of it as bunk. Yet the potential future president has a populist knack for sounding alarums that resonate with the zeitgeist — for example, with growing anxiety about World War III and nuclear Armageddon. “We’re a failing nation,” Trump ranted during his US presidential debate against US Vice President Kamala Harris in one particularly meandering answer (the one that also recycled urban myths about immigrants eating cats). “And what, what’s going on here, you’re going to end up in World War
Earlier this month in Newsweek, President William Lai (賴清德) challenged the People’s Republic of China (PRC) to retake the territories lost to Russia in the 19th century rather than invade Taiwan. He stated: “If it is for the sake of territorial integrity, why doesn’t [the PRC] take back the lands occupied by Russia that were signed over in the treaty of Aigun?” This was a brilliant political move to finally state openly what many Chinese in both China and Taiwan have long been thinking about the lost territories in the Russian far east: The Russian far east should be “theirs.” Granted, Lai issued
On Tuesday, President William Lai (賴清德) met with a delegation from the Hoover Institution, a think tank based at Stanford University in California, to discuss strengthening US-Taiwan relations and enhancing peace and stability in the region. The delegation was led by James Ellis Jr, co-chair of the institution’s Taiwan in the Indo-Pacific Region project and former commander of the US Strategic Command. It also included former Australian minister for foreign affairs Marise Payne, influential US academics and other former policymakers. Think tank diplomacy is an important component of Taiwan’s efforts to maintain high-level dialogue with other nations with which it does
On Sept. 2, Elbridge Colby, former deputy assistant secretary of defense for strategy and force development, wrote an article for the Wall Street Journal called “The US and Taiwan Must Change Course” that defends his position that the US and Taiwan are not doing enough to deter the People’s Republic of China (PRC) from taking Taiwan. Colby is correct, of course: the US and Taiwan need to do a lot more or the PRC will invade Taiwan like Russia did against Ukraine. The US and Taiwan have failed to prepare properly to deter war. The blame must fall on politicians and policymakers