For the first time since the dawn of civilization, half of the world is now middle class or wealthier, according to a new study from the Brookings Institution.
“For the first time ever, the poor and vulnerable will no longer be a majority in the world,” the report states. “Barring some unfortunate global economic setback, this marks the start of a new era of a middle-class majority.”
For its study, Brookings defines the middle class as having some discretionary income that can be used to buy consumer durables, go to the movies, or take a family vacation. That dollar figure varies around the globe, but the idea of families being able to overcome financial shock transcends currency.
“It is certainly true that living standards, almost all around the world, are going up progressively,” Nicholas Eberstadt, a scholar at the American Enterprise Institute, said by phone Oct. 15. “And if you look from one decade to the next, one generation to the next, it’s really been wonderful progress in so much of the world. It’s a very good story.”
Improvements and greater access to education and health care around the world have helped contribute to more people entering the middle class, Eberstadt said.
He noted the upward trend began following the collapse of the Soviet Union, which began in 1990. Part of the trend is due to lessons learned from that collapse by countries who have emerged in the past three decades, while another part was a triumph of the liberal international economic order. The third part, Eberstadt said, “we haven’t entirely explained.”
“We’ve got a good thing, and we can’t account for all of it, but we'll take it when we get it,” Eberstadt said.
The report is more than just a pat on the back for those who’ve helped combat poverty. It also shows the potential rise of new consumers on the world stage. Two-thirds of household consumption comes from the middle class, according to Brookings.
This means there are more people able to buy goods and services—and the number is only expected to rise. By 2020, the middle class is expected to encompass 4 billion people and is expected to jump to 5.3 billion by 2030.
Brookings said by 2030, middle-class markets in China and India will grow to $14.1 trillion and $12.3 trillion, respectively. Those numbers will come close to the U.S. middle class, which is expected to hit $15.9 trillion.
To ensure that the trend continues, “mainly what we should do is not wreck things,” Eberstadt said with a laugh.
On a more serious note, he added that it’s helpful to maintain the United States as an engine of economic growth, something the Trump administration has focused heavily on. Eberstadt also said it’s critical to maintain a world structure that encourages material advance and poverty reduction.
“We will escape from absolute poverty, as a species, if we don’t wreck it through politics or war,” Eberstadt said. “It’s in our hands.”
