Tuesday, October 2, 2018

The world is getting richer and better

From A global tipping point: Half the world is now middle class or wealthier by Homi Kharas and Kristofer Hamel.

While the mainstream media and others want to persuade us that democracy is dying in darkness and that disaster lurks on the horizon, everything is actually getting better.
Something of enormous global significance is happening almost without notice. For the first time since agriculture-based civilization began 10,000 years ago, the majority of humankind is no longer poor or vulnerable to falling into poverty. By our calculations, as of this month, just over 50 percent of the world’s population, or some 3.8 billion people, live in households with enough discretionary expenditure to be considered “middle class” or “rich.” About the same number of people are living in households that are poor or vulnerable to poverty. So September 2018 marks a global tipping point. After this, for the first time ever, the poor and vulnerable will no longer be a majority in the world. Barring some unfortunate global economic setback, this marks the start of a new era of a middle-class majority.

We make these claims based on a classification of households into those in extreme poverty (households spending below $1.90 per person per day) and those in the middle class (households spending $11-110 per day per person in 2011 purchasing power parity, or PPP). Two other groups round out our classification: vulnerable households fall between those in poverty and the middle class; and those who are at the top of the distribution who are classified as “rich.”
Of course there is plenty to dispute about exact definitions of poverty and middle-class but the trend line is obvious. The more we have representative democracies married with market economies, the more prosperous everyone becomes.

This comes close on the heals of circa 2009 when we crossed the threshold of the majority of the population now living in cities rather than in rural areas.

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