Thursday, July 17, 2008

The Global Explosion of the Middle Class and the Significant Decline in Global Inequality

In the midst of the current widespread gloom and doom in the west, it is important not to lose sight of the true structural themes shaping our era.

Linked to the current mood, commentators often depict an embattled and shrinking middle class, with sharply rising financial inequality. However, globally, this is simply not true. One of the most startlingly positive phenomena for many generations continues to unfold around the world. We are in the middle of an explosion of the world’s middle class - about 70m people a year globally are entering this wealth group.

The phenomenon may continue for the next 20 years, with this global middle accelerating to 90m a year by 2030. If this happens, an astonishing 2bn people will have joined the ranks of the middle class. This demonstrates that, contrary to widespread opinion, global inequality is declining significantly, not increasing.

It is important for everyone in the so-called developed world to be constantly aware that these powerful shifts in global wealth are good not only for the developing world, but for them too. If you take a look at a chart of recent US export growth, you may well think you are looking at the wrong data series. But you are not. US exports are indeed growing at close to 20 per cent and it is this that is stopping the housing and credit crunch from driving the US into a deep recession. Aspects of the same phenomenon can be seen in Japan, Germany and even the UK.

The new middle-class explosion is going to remain the market opportunity for us all, or certainly for those of us who are prepared to respond to the new realities.

FT.com article "Boom Time for the Global Bourgeoisie"

5 Comments:

At 7/17/2008 5:34 PM, Blogger Matt S said...

That's great that people outside the US are joining the middle class. The problem at home is that we are worried that the middle class is shrinking in the US, which is bad for democracy should we become a nation of hyper-rich and hyper-poor. We're not quite there yet obviously, but many are concerned that when the middle class shrinks, the rich obviously have the advantage, and history is littered with the legacies of oligarchies.
However, I'm hopeful for the future.

 
At 7/17/2008 5:52 PM, Anonymous Norman said...

The emotion inducing term 'income gap' is really an education gap.

In the early 1970s those with college educations were 10% of the population and earned about 15% more than those with just a high school education.

Currently 25% have college educations and because of the increasing complexity of our society they are now rewarded relatively much higher at +60% of the high schoolers.

As an added implication since Obama and the rest of the Dems want to raise taxes its obvious that the only group they'll find with any cash are those that fought their way through colleges, mostly with loans. So, the tax burden will come to those who sacrificed the most. Sounds great, doesn't it?

 
At 7/17/2008 7:02 PM, Blogger Jacob the Syrian Hamster said...

...and yet there are some in Syria who have yet to enjoy the benefits of globalization. When will the UN finally begin donating sunflower seeds to the poor?

 
At 7/18/2008 12:40 PM, Blogger bobble said...

matt makes an excellent point:"the middle class is shrinking in the US, which is bad for democracy should we become a nation of hyper-rich and hyper-poor"

bobble:if you ever wondered how "the NEW DEAL" happened, there's your answer. do you really want THAT to happen again? if not, figure out a way that EVERYBODY can prosper from globalization.

norman: cites the standard line that education is the answer to middle class prosperity, but the facts don't back this up:The Declining Value
Of Your College Degree - WSJ

"A four-year college degree, seen for generations as a ticket to a better life, is no longer enough to guarantee a steadily rising paycheck."

bobble: many jobs that previously went to the college educated are being offshored and/or filled by cheap, educated, labor brought in on H1B visa. in either case it pushes the wages down and reduces job openings for college grads.

 
At 7/18/2008 4:06 PM, Blogger juandos said...

matt s says: "The problem at home is that we are worried that the middle class is shrinking in the US, which is bad for democracy should we become a nation of hyper-rich and hyper-poor".....

Who says the middle class is shrinking? MSNBC? CNN? ABC? Got ANY reputable sources?

bobble says: "matt makes an excellent point"...

Hmmm, I think not...

I note the WSJ article you point to is a rehash of what was said in the sixties, the seventies, the eighties, and the ninties...

What's new?

Megan McArdle writting in the Atlantic (notabley not a hot bed of right wing ideologues):

The Death of the Middle Class, Myth #1: No one can afford to save any more

The Death of the Middle Class, Myth #2: Drowning in Debt

 

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