When relative inequality has absolute impacts

by | Apr 9, 2008 | Climate and resource scarcity, Economics and development, Global system

I’m a big fan of Foreign Policy editor Moises Naim – he was the first person to spot the potential for China’s Olympics to become a debacle, for instance – but I was left a bit cold by his LA Times article yesterday on the pressures that accompany the emergence of a truly global middle class.  As he observes, the global middle class is growing at an explosive rate:

Homi Kharas, a researcher at the Brookings Institution, estimates that by 2020, the world’s middle class will grow to include a staggering 52% of the total population, up from 30% now. The middle class will almost double in the poor countries where sustained economic growth is fast lifting people above the poverty line.

For Naim, the central question is, ‘can the world afford a middle class?’.  As he points out “the lifestyle of the existing middle class will probably have to drastically change as the new middle class emerges. The consumption patterns that an American, French or Swedish family took for granted will inevitably become more expensive…” This is above all because of the intensifying resource pressures that come with a growing middle class, especially on food (which Naim discusses at length) and energy.  Naim’s conclusion is that,

The debate about the Earth’s “limits to growth” is as old as Thomas Malthus’ alarm about a world in which the population outstrips its ability to feed itself. In the past, pessimists have been proved wrong. Higher prices and new technologies that boosted supplies, like the green revolution, always came to the rescue. That may happen again.

But the adjustment to a middle class greater than what the world has ever known is just beginning. As the Indonesian and Mexican protesters can attest, it won’t be cheap. And it won’t be quiet.

But what’s missing for me in Naim’s article is what the emergence of a global middle class means for the poor: the ‘billion at the bottom’ (who may be more like the two to three billion as we get closer to 2050).  Yes, there’s a question about how to increase supply (of food, energy and other key resources).  But there’s also a demand side – which is all about fair shares.

Take food prices as an illustration.  In his book Development as Freedom, Amartya Sen observes that in some cases, famines happen because of relative inequality rather than because of an absolute shortage of food:

“…[some people] who buy food may be ruined because the real purchasing power of their money incomes may have shrunk sharply. Such a famine may occur without any decline in food output, resulting as it does from a rise in competing demand rather than a fall in total supply…” 

So what happens if we start to see this globally – whereby a burgeoning global middle class inadvertently takes food beyond the purchasing power of the world’s poorest people? 

All of us can see the two megatrends of (a) the increasing tightness of food supply – likely to grow further as population, affluence and scarcity continue to rise – and (b) the growing gulf between the haves and the have-nots.  In combination, those trends have the potential to multiply each other’s impact as far as the poorest are concerned.  What we’re only just beginning to realise is this: in a world of limits, relative inequality can have absolute implications for the world’s poor.

Food riots: the new case for democracy promotion

by | Apr 9, 2008 | Climate and resource scarcity, Conflict and security, Economics and development

I normally leave  scarcity issues to the other, better-informed contributors to this blog, but this week’s food riots in Haiti have brought UN peacekeepers face-to-face with the effects of rising prices, so I can’t keep my head that deep in the sand.  UN officials can talk about little except food prices at the moment.  John Holmes, the UN humanitarian chief and increasingly cited as one of the Secretariat’s stars, set out the problem today:

Combined with the negative impact of climate change and soaring fuel prices, a “perfect storm” is brewing for much of the world’s population, said Holmes. “The security implications (of the food crisis) should also not be underestimated as food riots are already being reported across the globe.”

His comments came after two days of rioting in Egypt, where the prices for many staples has doubled in the past year. And violent food protests were continuing for a second day in the capital of Haiti. “Current food price trends are likely to increase sharply both the incidence and depth of food insecurity,” Holmes said, noting a 40-per-cent average rise in prices worldwide since the middle of last year.

What to do?  Well, not unreasonably, the UN is continuing to push for more food aid to the worst off:

John Powell, the deputy executive director of The United Nation’s World Food Program, emphasized the need for developed countries to help governments in the developing world. Developing countries experiencing unrest over high food prices need help in developing “social safety net programs,” he said.

“Riots today mean you need a solution tomorrow,” Powell said. Governments with no “policy space” and under pressure from organized discontent in urban centres “is not likely to be the best decision” in trying to solve the problem, he said.

So, governments facing serious rioting make bad decisions.  Hm.  Sometimes, the real problem is that bad governments face riots.  That isn’t about “policy space”, but about the fact that autocratic or incapable regimes tend to reinforce or manipulate food shortages to their own advantage.  The popular response: rioting. 

Throwing food at the problem might be a “solution tomorrow”, if there was food to be thrown.  But it seems there isn’t – and the essential response to food riots is creating more accountable (dare one say “democratic”?) governments that are politically motivated to respond to inequalities (rather than simply offer a “safety net”, although that may have to do for now).  My colleagues who think about such things will find this blindingly obvious, but there’s a risk that the current crisis will obscure the underlying political dimensions of the inequalities involved… 

PS: whatever the precise linkage between scarcity and urban violence, nobody should attempt to intervenc before reading Planet of Slums by Mike Davis.  It should be the book of the moment, and even makes UN statistic compelling.  If you don’t have time to read that, there’s an article-length version of the case online.