Let the Middle Class Grow

Foreign Policy Magazine is known for very pithy and well-argued pieces covering international affairs. In the current issue, its Editor in Chief, Moises Naim argues with himself by asking the question about whether the world can afford a mass middle class. With the benefit of hindsight and looking at the questions being asked about human contribution to resource depletion and global warming, to question whether human progress is sustainable in the future is not altogether surprising.

Having to contend with the fast growth rates of both India and China and the implications for consumption should they build decent sizes of a middle class is something that may cause worry to a large number of people. In my view though, to question the viability of an expanded global middle class points me to Malthusian theories and the assumption that physical resources are fixed in quantity. This assumption is incomplete because it fails to reckon with the fact the limits on physical resources do not apply to human ingenuity and technology. Naim hedges by stating that Malthusian theories have been proven incorrect in the past and thereby implies that the 21st Century society should not count on as much luck.

Looking at the dreadful history of human development and the squalor that was common to humanity until three centuries ago, I am convinced that the world can afford that middle class. Among the attributes of middle class living is that income expansion allows for a proportionately smaller part of income to be used in procuring food. So notwithstanding the rise in prices of commodities, it is precisely because of the growth of such incomes and an expanded middle class that the citizens of India and China will do well. It is also significant that increased demand will lead inevitably to increased supply with the effect that those prices will be substantially moderated. For these obvious reason, I would not be worried about the creation of a real middle class as they will be able to care for themselves and pay for the risks of their age.