The Optimist

The Myth of the Middle Class

The world's most pandered-to demographic is no more economically productive or civic-minded than anyone else.

A little more than 160 years ago, a powerful analysis of the role of the middle class in economic development was unleashed on the Victorian public. It described how monopolistic guilds had been "pushed on one side by the manufacturing middle class" which "developed [and] increased its capital" as it reformed economies and polities. The middle class had "created more massive and more colossal productive forces than have all preceding generations together," the text suggested.

A century and a half later, few subscribe to the political doctrines of that analysis, Karl Marx and Friedrich Engels's Communist Manifesto. Yet the idea of the middle class as central to economic growth and democratization is still very popular. Indeed, the view that "bourgeois" values -- seen by Marx as an important stepping stone on the way to revolution and utopia -- are a vital part of progress to the end of history  is almost universally held among middle-class historians and middle-class political scientists. Why did Britain lead the world in the 19th century? Because of "the great English middle class," answers Harvard University economic historian David Landes in his magisterial book, The Wealth and Poverty of Nations.

For the future, continuing worldwide growth through closer integration in the 21st century will "depend on what can be done for the great global middle," suggests U.S. President Barack Obama's former economic advisor Larry Summers. It is hard to think of any greater shibboleth in American politics; in January 2010 Obama convened a task force dedicated entirely to its needs. But this isn't just an American mania; it is worldwide. Indian Prime Minister Manmohan Singh, for example, has called for "thinking people … from enlightened middle classes" to play a larger role in public life.

But is there any evidence to support the argument that the middle class is so vital to prospects for stability and economic growth? In fact, the middle class exhibits little more of the entrepreneurship or social progressiveness that is typically ascribed to it than do poor people.

And who, exactly, is in the middle class? That is a matter of some confusion. In their paper, "What Is Middle Class About the Middle Classes Around the World?" MIT economists Abhijit Banerjee and Esther Duflo use a historical estimate based on the British middle class, which is often thought to be critical to Britain's rise as a world power. They suggest that income for a family living off the wages of a clerk in his 30s in Britain in 1825 would be about $10 per person per day in today's U.S. dollars. They define a middle class as people with incomes between that level and the global poverty line of $2 a day. Economist Homi Kharas at the Brookings Institution, meanwhile, uses a definition stretching the other direction from the $10 mark, between $10 and $100 a day. Nobody is middle class according to both definitions.

And that terminological inexactitude illustrates the fact that, regardless of where the line delineating the middle class is drawn, there is not much evidence of the politicians' well-worn claim that people on one side of it are more productive, creative, risk-taking, and public-spirited than those on the other side. Take the entrepreneurialism for which they are so often celebrated. Banerjee and Duflo suggest that the majority of enterprises owned by people earning between $2 and $10 a day worldwide are shops. Many of those shops sell the same small stock of goods as the ones just down the road: basic foodstuffs, sweets, soap, and a few other products. They make a few sales a day; in India, surveys suggest their average profit is somewhere around $133 a year. These are not enterprises that are going to become the next Infosys. The same lack of potential -- and ambition -- holds true in the United States. According to survey evidence from economists Erik Hurst and Ben Pugsley of the University of Chicago, "most small businesses have little desire to grow big or to innovate in any observable way." They just want to provide an existing service to an existing customer base.

What the worldwide evidence suggests is that becoming middle class doesn't suddenly turn you into an entrepreneur or an innovator. Indeed, quite the opposite is true: The reason that most in the middle classes are richer is because more of them have stable 9-to-5 jobs, with weekly or monthly paychecks. By contrast, poor people are more likely to work in casual labor, usually paid by the hour, often going stretches without employment. We may talk about every new graduate into the middle class as a potential next Bill Gates, but the fact is that most more realistically aspire to be the next Walmart associate.

Conversely, if an income below $10 a day condemned people to listless apathy, then nobody would be rich today. A hundred years ago, the great majority of people in even the richest countries earned less than that in current dollars. In fact, the World Bank's study Moving Out of Poverty, which interviewed 60,000 poor and near-poor people across 15 countries, demonstrates that the idea of a "culture of poverty" is considerably at odds with the activities and attitudes of most poor people themselves. They are confident about the future despite often having to run multiple microenterprises to get by.

It is true that middle class people do have somewhat different attitudes than poorer people. A Pew Research Center study of the attitudes of the global middle class -- there defined as people who had incomes greater than $4,268 per year -- found them less likely to prioritize freedom from poverty on a list of freedoms that also included freedom from crime and violence and freedom of speech and religion. No surprise there -- you're surely less likely to care about the problem of poverty if you aren't poor.

But the values traditionally thought of as "middle class" -- the value of investing in education or of political rights, for example -- are widely held by people who are out of that class by whatever definition you chose. Everyone values education, enough so that primary-school enrollments are reaching universal levels in even the world's poorest countries. If 80 percent of the majority-poor population of Africa thinks that democracy is the best system of government, then it isn't a middle-class value in any traditional sense of the word. The democracy protests of the Arab Spring, meanwhile, were set off by a Tunisian man forced into life as a harried street vendor for lack of other opportunities. It was sustained by a reserve army of the young unemployed -- not by middle-class Tunisians safely ensconced in the few large government-favored firms.

If, rather than looking at the confused economic literature on the subject, you just ask people what class they are, then large proportions everywhere plump for the middle. Ninety-one percent of Americans self-identify as upper-middle, middle, or lower-middle class. And even in much poorer India, 48 percent of people self-identify as middle class according to the World Values Survey -- a proportion about 10 times higher than that suggested by a definition based on an income of $10 a day or more.

Given that so many people consider themselves middle class even in the world's poorer countries, politicians worldwide are surely wise to praise the wonders of middle-class values as a result. But the rest of us should know better. Instead, let's celebrate the fact that people are not waiting to reach an income of $10 or even $2 a day before they play a role in upholding democratic values, ensuring their children go to school, or helping to sustain economic development -- which helps to explain why political rights, education, and growth are spreading even to the world's poorest countries and communities.

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The Optimist

Got Cheap Milk?

Why ditching your fancy, organic, locavore lifestyle is good for the world's poor.

As the U.S. government starts planning budget reductions that will slash everything from defense spending to health care to bridge repair, potential cuts worth around 0.00025 percent of the value of the deficit reduction agreed on in the recent $2 trillion deal appear to have garnered outsized attention: support to farmers' markets. Those $5 million of subsidies are likely to disappear as part of cuts in the 2012 farm bill, and that is provoking much concern. The Farmers Market Coalition says the program is "a unique success story in America's agricultural policy." Perhaps it is no surprise: With supermarket chains from Whole Foods to Safeway trumpeting their healthy produce from farmers just down the road, buying local and eating non-genetically modified organic food is surely the best thing for you and the planet. And that's something government should get behind, right?

Actually, no -- these First-World food fetishes are positively terrible for the world's poorest people. If you want to do the right thing, give up on locavorism and organics über alles and become a globally conscious grocery buyer. This should be the age of the "cosmovore" -- cosmopolitan consumers of the world's food.

Let's start with genetic modification (GM) -- where genes from one organism are spliced into those of another by scientists in a lab. Poland's agriculture minister, Marek Sawicki, recently called for an EU-wide ban on the growth or import of GM produce. But why new crops labeled GM should be more of a risk than new crops bred in the "traditional" manner -- which often involves bombarding seeds with radiation to promote mutations -- is a little unclear. It shouldn't come as a surprise that when the European Commission Research Directorate-General released a survey in 2001 of 81 studies on GM, human health, and environmental impact, not one of the studies found any evidence of harm. The World Health Organization recently confirmed that "no effects on human health have been shown" from eating GM foods.

Worries remain, though, in no small part due to the lack of major, rigorous analyses and the unwillingness of seed producers to share data. Of course, many GM crops have failed to deliver as advertised, and even in the best of cases they are certainly no panacea.

But there have also been successes -- involving significant, positive impacts on environmental and financial outcomes. For example, economists Graham Brookes and Peter Barfoot of Britain's PG Economics estimated that countries that adopted GM insect-resistant cotton saw a 13.3 percent increase in the value of their 2005 cotton crop, as well as a 95 percent reduction in the use of insecticides. There is every reason to do more research and testing on both the threats and potential benefits of GM, but there's no reason to demonize it.

What about "local"? Perhaps locally grown produce tastes better to some people. And perhaps it is psychologically better to have close contact with the people who grow your food. But that doesn't make it good for the environment. For example, it is twice as energy efficient for people in Britain to eat dairy products from New Zealand than from domestic producers. It is four times more energy efficient for them to eat lamb shipped from the other side of the world than it is to eat British lamb. That's because transporting the final product accounts for only a small part of the energy consumed in the production and delivery of food. It's far better to eat foods from places where production itself is more efficient. For example, New Zealand cattle eat clover from the fields while British livestock tend to rely on feed -- which itself is often imported.

And why shouldn't developing countries strive to be the world's breadbasket? Again, there may be transport costs in flying fresh produce from southern Africa to Europe or the United States, but you save all of the heating, lighting, and construction costs associated with hothouse produce grown in the gloom of a European or North American winter. It is good news that Gambia managed to increase its fruit and vegetable exports to the European Union by 25 percent over the past 10 years -- to 123,000 tons. We shouldn't be kicking the legs out from under such efforts in a misguided attempt to build an Arcadia under glass.

And the environmental benefits of organic in terms of lower energy costs and less pollution? Norman Borlaug, father of the Green Revolution, estimated that we would need 5 billion to 6 billion additional cows to produce enough natural fertilizer to sustain our current crop production -- which, of course, would increase the demand for forage crops and thus the need for agricultural land. Meanwhile, weed-killing herbicides allow for no-till farming. When you don't plough, you don't erode topsoil nearly as much -- so it doesn't end up being washed into rivers, leaving behind a dust bowl.

Whether organic is as efficient as conventional farming -- in terms of land yield, energy, or labor productivity -- depends on the place and the crop. But even organic sympathizers report that the average land yield in the industrial world is about 8 percent lower on organic farms than on conventional ones. And it only takes a trip to the local supermarket to understand there's a considerable price premium to be paid. Organic milk costs as much as twice the regular kind, for example. The practices of industrial-scale U.S. producers like Stonyfield Farm, which dries organic milk from those energy-efficient New Zealand producers into powder in order to ship it to its plant in Londonderry, New Hampshire, where it's turned into yogurt, keep organic dairy prices climbing even higher.

That lower agricultural efficiency really matters. Because what we definitely know is that, compared with the unsubstantiated health risks of GM or the illusive health benefits of organic crops, there are undoubtedly health risks to not having enough -- or enough variety -- to eat. There are still as many as 1 billion people worldwide who are malnourished; and many are living on around a dollar a day. The best way to help poor people eat well is to make healthy food cost less. But the more agricultural land we divert into lower-efficiency organic production, the higher the price of all food will climb. On test farms, organic production has been shown to be at least as efficient as conventional farming -- and considerably more productive than the average efficiency seen on farms in the developing world. But until that's widely replicated outside agricultural research stations, organic is no friend to the world's poorest consumers.

And all this misguided, parochial Luddism is having a real effect on the ability of producers in low-income countries to climb out of poverty in an environmentally sustainable manner. Most of the world's poorest people are farmers. Many live in water-stressed environments on fragile land. Herbicides and GM crops may be an important part of the story when it comes to raising their productivity. But 15 years after GM crops were first planted commercially, Kenya, South Africa, and Burkina Faso are the only sub-Saharan African countries that have authorized the planting of any GM crops. That's partly because European aid agencies have funded consultants to design regulatory systems based on the restrictive model adopted in Europe. And European NGOs have also threatened African governments that their agricultural exports to Europe would suffer from significantly reduced demand if they were planted even in the vicinity of GM crops.

So how should you eat as a responsible global citizen? Consume less meat and oppose Western farm-subsidy programs -- especially if they focus on livestock. Campaign against U.S. biofuel programs, which divert corn into grossly inefficient energy production. Embrace further testing and analysis of GM crops. Encourage public funding of research and intellectual property laws that ensure that poor farmers are not priced out of the potential benefits of GM seeds. Spend only on organic food that is as energy- and land-efficient as conventional production. And be a smart consumer: Local produce grown out of season and meat raised on imported feed isn't friendly to you, the environment, or the developing world.

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