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The Growing Global Middle Class and the Persistence of Poverty

The Growing Global Middle Class and the Persistence of Poverty

A woman collects garbages from a dump yard near a tannery at Hazaribagh along the polluted Buriganga river in Dhaka, Bangladesh, June 5, 2014. (Andrew Biraj/Reuters)

The Washington Post published a short piece highlighting the work of Homi Kharas, a scholar at the Brookings Institution best known for his work on the global middle class, which he defines as all those with incomes ranging between $11 and $110 per-person, per-day, or $4,000 to $40,000 per-person, per-year. If this range strikes you as rather wide, consider that it takes far more income to achieve middle-income status in the U.S. than in Indonesia, as the Post explains in its write-up.

Kharas’s work offers a lot of insight into social and political change in East and South Asia, the regions of the world that have experienced the biggest expansions in middle-income populations. Strikingly, the global middle class, as he defines it, now represents 48 percent of the population, while another 2.5 percent is even better off. Rising affluence in emerging economies is leading to rising expectations, which in turn is giving rise to business-model innovation and a hunger for reform.

One poignant example comes from Bangladesh, a densely populated, rapidly urbanizing South Asian country that has long been a byword for poverty. A traffic accident in late July in Dhaka, Bangladesh’s sprawling capital, sparked weeks of massive street protests. Over time, the protests attracted Bangladeshis with a wide variety of grievances, which went well beyond anger over poor traffic management. Nevertheless, I was struck by the fact that poor traffic management set off the conflagration.

At the start of the protests, students (some of whom were middle-schoolers, according to a report in NPR) took to the streets . . . to enforce traffic laws that are routinely violated and that have made Dhaka’s roads exceptionally deadly. This traffic vigilantism didn’t always go smoothly, and other protesters took actions that were less benign. But it’s worth reflecting on what was going on here, at least early on: The government had failed to fulfill its most basic obligation of keeping citizens safe, and so citizens decided to take matters into their own hands and to shame the government in the process.

The increasingly authoritarian government responded forcefully, with a violent crackdown, but also by acceding to some of the protesters’ demands by approving new traffic-safety legislation. The simplest explanation is that after years of decent but not spectacular economic growth, which has fostered upward mobility for some but not enough, millions of Bangladeshis are revolting against a government that sees life as cheap. As Bangladesh’s middle-income population grows, this is becoming untenable.

While the expansion of the global middle class is unambiguously good news, the prevalence of poverty remains an urgent challenge. Jason Hickel, a left-wing anthropologist who sees capitalism as the bane of the world’s poor, and Charles Kenny, a researcher at the Center for Global Development I’d describe as a cosmopolitan center-left meliorist liberal (and who is much friendlier to market economics), have co-authored a post sussing out where they agree on the question of global poverty. It offers a useful complement to Kharas’s (entirely justified) celebration of the rising global middle class.

Among other things, Hickel and Kenny both agree that the widely used $1.90 a day standard for measuring poverty is woefully inadequate, noting that some analysts have pegged $7.40 a day as “the minimum necessary to achieve good nutrition and normal life expectancy” while others have called for setting a bar twice as high. If we were to adopt $7.40 a day as our global poverty standard, we’d be confronted by the fact that a shockingly high proportion of the global population falls below it: “The absolute number of people living under $1.90/day has declined significantly, while the number of people living under $7.40/day has risen — from 3.19 billion in 1981 to 4.16 billion in 2013.” Some have argued that the $1.90 a day standard represents “the soft bigotry of low expectations,” or a bar set so low that it is designed more to elicit warm feelings than to reckon with the challenges ahead. I don’t disagree.

Reihan Salam

Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

Published at Tue, 28 Aug 2018 14:31:43 +0000