The rise of the middle class: prospects and challenges.

Outline:

1. Introduction

Thesis Statement:

Middle class anywhere in the world is considered the backbone of society. In recent years the

middle class has begun to rise and it creates certain prospects while posing some challenges to

societies in numerous ways. Managing the rise of middle class is critical in this regard.

2. The rise of middle class: since 1820s to the present day.

3. Factors contributing to the rise of the middle class:

3.1) Industrialisation is a major reason behind the rise of the middle class.

3.2) Spread of new technologies results in rising middle class.

3.3) Wealth generation is also a factor that encourages rise of middle class.

3.4) Government policies help increase the ratio of rich people in society.

4. Prospects that the rise of the middle class carries:

4.1) The rise of the middle class enhances economic output of the country.

4.2) Expanding middle class shapes the political landscape of a society.

4.3) Rising middle class advocates action on more urgent and pressing issues.

4.4) Middle class helps achieve the universal goals of sustainable development.

4.5) Tolerance in society becomes a norm when middle class expands.

4.6) Increase in middle class contributes to the growth of new ideas.

5. Challenges that the rise of the middle class brings:

5.1) Rising middle class confronts elites which leads to instability.

5.2) More people in middle class is a factor causing consumerism.

5.2) Increase in middle class results in exploitation of natural resources.

5.3) Rising middle class is responsible for climate change and global warming.

5.4) Middle class in connivance with elite can preserve the status quo.

5.5) Middle class can favour and ultimately elect demagogues.

6. The way forward:

7. Conclusion:
 De nition:

The distinctive group of people who could aspire to the good life in a way that was not possible

for either the upper class or the working class.

$10-$100 per person per day.

OR

The middle class refers to a social and economic class that consists of individuals with moderate

income, education, and status, who are positioned between the working class and the upper

class.

Data/Ideas:

• The world has just passed a signi cant tipping point where, for the rst time in history, most of
the world’s population is now middle-class or richer.

• The politics of almost every government are primarily focused on delivering for the middle
class.

• There has been a rapid rise of the global middle class, a phenomenon that has reshaped socio-
economic landscapes worldwide. This group has not just expanded in size but has also

cemented its role as a major force in shaping political narratives and economic strategies.

• If you were to ask what is the likelihood of China and the U.S. collaborating to address global
warming, it’s not about a shared mission to “save the planet”. But they might join forces

because they think addressing climate change and improving local air quality aligns with the

desires of their respective middle classes.

• India: the biggest democracy in the world. In India the middle class is the largest and people in
this class have a ected the government policies. The BJP has come to capture this class and

remains in power with its support.

• In the US middle class has its in uence. It shapes US policy on climate change and demands
more action.
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 • Technology is an important factor which has created and expanded the middle class in the
world.

• The middle class really started in the early 19th century. To get 1 billion people into the middle
class, it probably took the world 150 years through the Industrial Revolution. The second billion

came in about 30 years, and the third and fourth billions have come in eight or nine years each,

really with the emergence of China and India driving those numbers.

• We’re at 4 billion plus people in the global middle class.

• Sometime before 2030 the fth billionth person will join the middle class
• We are adding 110 to 115 million people into the middle class each year, despite all the
di culties the global economy is presenting.

• The middle class is steering global capital markets toward sustainability. Global bond markets,
with a valuation of $133 trillion, drive the world’s economy. Although sustainable bond markets

are still quite small—$2 trillion or so—they are the fastest growing component of capital

markets. True, there are concerns about greenwashing and increased regulatory scrutiny in this

space, but bond holders have spoken. They want to see a larger share of their portfolios in

sustainability-themed nancial products. Thanks to the strong economics of new technologies,

these investor preferences can be met without any sacri ce in terms of nancial returns.

• The US middle class is the largest and the richest in the world. Over 40% of its people are in
middle class.

• In the past it was believed the Middle Class strengthens democracy. But it is not the case when
it comes to the countries with largest middle class such as China, Turkey, Iran etc.

• Pakistan’s middle class has fallen from 42% to 32% in last few years. That means 10% of the
population in middle class has become poor as compared to before.

Story:

The story of the middle class begins around the 1820s when there were 1.1 billion people. 90% of

them were living in extreme poverty. Their lives were solitary, poor, nasty, short and brutish as

Thomas Hobbes put it. Less than 1% of the people, around 8 million, could be considered middle

class or rich. This group of people, who aspired to enjoy good life, started to gather in Europe

around 1800s. This spread to North America, Oceania, Japan and is now growing in Asia. Now in
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2024, the middle class is growing around the world. The world has passed the tipping point-

where half the population is middle class or rich. From now on the rate of increase will decline as

more people have joined the middle class. By 2030, over 5 billion people be part of the middle

class. In just two centuries, the middle class has grown from a group with absolutely no political

power to one that has come to dominate today’s politics around the world.

The great success of the West called the Great Divergence resulted in a global middle class that

was concentrated in Europe. This was replaced, in the 1980s, by Great Convergence in which

developing countries, of Asia, began to catch up to the living standards of the advanced

economies.

The World’s Growing Middle Class (2020–2030)

The middle class is already the largest spending group in the world, driving increased
consumption of goods and materials.
50 years ago, this group of global consumers lived almost exclusively in Western countries. Today,
they are increasingly spread around the world, representing 45% of the global population.
In this graphic based on data from Brookings Institution, we highlight the global middle class’
impact on the global economy and how this population is expected to grow in the next decade.

Who is Considered Middle Class?

Though there are many di erent de nitions of middle class, many de ne the group as those
earning between $10 and $100 per person per day.
For the Brookings’ projection, the global middle class is divided by the lower middle class
(earning $11–$50 per day in 2011 PPP) and the upper middle class (earning $51–$110 per day in
2011 PPP).
In general, middle class families also tend to own their own home through a mortgage, own a car,
and have enough savings to a ord to dine out and take vacations.

Consumer Group # of People (2020) # of People (2030P)

Upper Middle Class 0.6 billion 1.0 billion
Lower Middle Class 2.9 billion 3.8 billion
Rest of World 4.2 billion 3.6 billion
Since 2003, when the number of poor and vulnerable people in the world reached a historic peak
of 4.4 billion people, the middle class has been growing fast, especially in Asia.
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By 2030, another 700 million people are expected to join the global middle class, making it more
than half of the world’s total population.

Middle Class Spending

Over the last few decades, the middle class has grown into one of the primary forces sustaining
the global economy.
In 2020, the global middle class spent $44 trillion, or 68% of the world’s consumer spending. By
2030, middle class households are expected to spend even more, an estimated $62 trillion or
50% more than in 2020.
Per capita, the upper middle class and wealthy elite will lead in consumption, but the largest
overall spenders will be the 3.8 billion people in the lower middle class:

Total Spending Total Spending

Consumer Group
(2020) (2030P)
Upper Middle Class $18T $27T
Lower Middle Class $26T $35T
Upper Class + Poor/ $20T $29T
Vulnerable
Though many will move up into the lower middle class, the amount of people in the poor and
vulnerable segment will remain large. However, it will only account for $5 trillion, or about 6%, of
total spending globally.

A Richer World

History has shown that as science and technology advance, the world becomes richer.
Although inequality between countries persists and takes a long time to overcome, middle-
income countries increasingly catch up to high-income countries and create this swelling
population of middle class households.
With more than half of the world’s population projected to be in the middle class by 2030, what
will material consumption in the next decade look like?
Quotes:

1. The good life is the end purpose of the city-state. (Aristotle)

2. Upper classes are a nation's past; the middle class is its future. (Ayn Rand)

3. As long as poverty, injustice, and gross inequality persist in our world, none of us can truly

rest. (Nelson Mandela)

Books:

1. The Rise of the Global Middle Class: How the Search for the Good Life Can Change the

World, by Homi Kharas

2. The Class Structure of Pakistan, by Taimur Rahman.

3. The New Middle Class, by Steve Gunderson.

Further Sources:

1. https://time.com/6320690/global-middle-class-net-zero/

2. https://www.nasdaq.com/articles/world-reimagined%3A-the-rise-of-the-global-middle-

class-2021-07-09

3. https://elements.visualcapitalist.com/the-worlds-growing-middle-class-2020-2030/

#:~:text=Since%202003%2C%20when%20the%20number,of%20the%20world%27s%20tot

al%20population.

4. https://www.pewresearch.org/global/2021/03/18/the-pandemic-stalls-growth-in-the-global-

middle-class-pushes-poverty-up-sharply/

5. https://www.studysmarter.co.uk/explanations/history/us-history/rise-of-the-middle-class/

#:~:text=With%20industrialization%20and%20the%20expansion,made%20lasting%20impact

s%20on%20society.