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.
