We seem to really enjoy contemplating the money and lifestyles of the top 0.01 percent. The wealthiest Americans garner immense mind-share in the imaginations of the rest of the populace. We incessantly track the incomes of hedge-fund managers and other finance stars, the heirs to the Wal-Mart fortune and other $100 billion families. Don’t forget the Bloomberg Billionaires Index and the Forbes 400 and the wealthiest New Yorkers.
We are in short fascinated with other people’s wealth.
What about the rest of the income strata? As it turns out, there is a fascinating story there as well. It may not be as glitzy and luxe as the Billionaires Index, but it is a tale of gradual improvement. So says a recent data analysis on the global middle class by the Pew Research Center.
The good news is that during the first decade of the 21st century, about 700 million people were lifted out of poverty. That is a 14 percent reduction in poverty. The bad news is that moving into, and staying within, the global middle class is a significant challenge.
The study found that 71 percent of the global population is either poor (15 percent) or low-income (56 percent). The middle class is only 13 percent of the total population. To put some hard numbers on those percentages, with a world population of 7.2 billion humans, about 936 million are middle-class. A little more than a billion (1.08) are impoverished, and more than half the world’s population, a giant 4.03 billion people, are low-income.
The Pew report contains some astonishing data points: 84 percent of the world’s population, including those defined as middle-class, live on less than $20 a day. Surviving on the maximum in the U.S. or Europe would be difficult for an individual — about $7,300 a year…
Think of it another way. More than fourth-fifths of world’s population live on less than $20 a day. In other words, how well this vast swath of humanity is doing will have important implications for industry, from health care and finance to agriculture and energy.
Income growth in these groups in both the developing and developed world will alter the economic and political landscape.
Not to be too optimistic, but the economic state of world is getting better. As more people move into the global middle class, they are able to buy more consumer goods, save and invest. That creates a long-term self-interest in political stability and, one can hope, democratic institutions.
Barry Ritholtz is justified in his positive outlook for the global population – even if the “we” in the industrial western civilization aren’t doing as well. The United States, Canada and Western Europe – with conservative governments very often – have a declining middle class. So, we feel the squeeze of Republican-style economics.
It’s your choice, folks. In my view as someone who’s a citizen of the planet Earth, I’m pleased the struggles of so many people around this globe are moving forward towards better opportunities for themselves, their children. The ennui of ignorant North Americans, of Europeans who have stepped into the bipolar trap of two-party politics continues to drag down what always has been the most dynamic and creative segment of our economy.
You can keep on with the obvious foolishness of believing you alone can make it – while the fat cats at the top stack the deck – or you can fight for independent thought and action and try for change that starts with education, healthcare, social security – and, did I say, education.