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Boom time for the global bourgeoisie

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by

mwkruse
in , , , , ,

Financial Times: Boom time for the global bourgeoisie

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.

As two of my colleagues, Dominic Wilson and Raluca Dragusanu, showed in a paper Goldman Sachs published last week (The Expanding Middle: The Exploding World Middle Class and Falling Global Inequality), about 70m people a year globally are entering this wealth group, as defined by those on incomes of between $6,000 and $30,000 (€3,800-€19,000, £3,900-£15,000), in purchasing power parity terms.

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….

Comments

5 responses to “Boom time for the global bourgeoisie”

  1. Ted Gossard Avatar
    Ted Gossard

    This ought to be expected in a global market and economy with “free trade”.
    But I’m not convinced that the world is doing all that well in reference to the poor. So much more surely needs to, and could be done.
    And, by the way, it is still potentially a troubling time worldwide economically, with the rise of oil prices and problems across the economic sector here in the U.S.
    Just my take from what I hear.

    Reply
  2. Ted Gossard Avatar
    Ted Gossard

    Of course the rise of the middle class itself is an answer to my scepticism, but I just don’t think it’s enough by itself to be so sanguine about the global situation with reference to the poor, especially the poorest of them, really.

    Reply
  3. Michael W. Kruse Avatar
    Michael W. Kruse

    Ted, imagine a football game where the home team’s offense has been utterly ineffective; three downs and punt every time. In the second half, the team receives the ball on their own 5 yard line. Finally, they get a first down out to the twenty. Then they get a couple of more first downs out to mid-field. Then a few plays later they are first and ten at the other teams twenty yard-line. Meanwhile, not a peep from the fans because there still isn’t a touchdown and they don’t think its right to be so sanguine about not having scored. 🙂
    We’re living through the most amazing expansion of global economic prosperity in the history of the world. It is something to cheer about.
    I don’t know of any society-wide change (much less global) where change happens evenly across the board to everyone. What we have now is a billion or so people living in advanced economies. We have another four billion or so that are somewhere between abject poverty and the wealthy. Then there are about a billion who are in abject poverty. Some are in nations like China and India where growth may improve their lot. Others are in sub-Saharan Africa where most economies seem to be worsening. There is far more work that needs to be done. We’ve found solutions for the easier cases and now we are getting to the hardest problems to solve.
    The pervasive popular opinion is that life in emerging nations is worsening. I think we need articles like this that give perspective.
    Yes, the oil and commodities problems are having and impact. However, because of economic growth, for billions of people, food costs are no longer the majority of their budget. While it is creating hardship it is not creating widespread famine and chaos as we would have had, say, thirty years ago.

    Reply
  4. Ted Gossard Avatar
    Ted Gossard

    Thanks, Michael. Does seem like a viable, good explanation. I guess this all takes time, and I know the global economy ends up helping many in the end.
    I guess I always see human greed as having to be factored in in a major way, when we consider the problems of this world in a global village. Human depravity or sin, another more basic way of putting it. So that while we see the good being done, there is like an excellent backfield, good at intercepting in the end zone, and great linebackers, in others words a solid red zone defense.

    Reply
  5. vanSkaamper Avatar
    vanSkaamper

    The best thing that can happen to the global village is for market economies being allowed to take root and flourish. Human nature is what it is, but market economies are able to leverage the human “greed” and enable broad based benefits, lifting large numbers of the poor out of poverty better than any government program.
    What’s happening in China and India right now is remarkable. The latter has more challenges due, in large part, to cultural issues that make it’s red zone defense particularly incorrigible.
    Sub-Shaharan Africa is an example of what happens when markets aren’t allowed to function, and corrupt despots impose their own cruel brands of centrally managed economies and dictatorships that make those societies impervious to even the generosity of those who make a point to share the wealth with them.

    Reply

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