Imagine that you are just turning 30 in a city in a part of the world defined as middle-income, so neither rich nor poor by global standards. Perhaps you live in a sprawling metropolis such as Istanbul, Sao Paulo or Bangkok, or perhaps in a regional centre: Khabarovsk or Durban, Oran or Chennai, Chongqing or Tijuana. Your grandparents were farmers but your parents did well, moving to the city and earning enough to secure a mortgage on a flat, obtain health insurance, go to the cinema or restaurants, support you through further education.
Yet today your parents are ageing and struggling to meet their debt payments. Your father was off work for months with Covid-19 so lost his income. And although you graduated almost a decade ago and earn what before the boom years would have been an excellent wage, you still live with your parents – a strain, especially during lockdowns. Prices have gone up and your job as an office clerk, industrial mechanic or teacher does not pay enough for you to move out. Your parents went up in the world, but you seem to be standing still or going backwards. Plenty of people in your city have got rich in recent years (as the luxury cars on the streets and the gated communities on the outskirts evince) but they always seem to be those with links to the government.
You resent the corruption and mismanagement. In the evenings you scroll social media, following others who share your frustration and even anger. A relatively small event serves as a final straw: perhaps a hike in the heating bill that threatens to push your parents’ fragile finances over the brink, or a friend falling foul of a local official and losing his job, or an increase in the cost of taking a cramped bus to work. But you snap. Enough. You join protest groups on a messaging app, perhaps WhatsApp or Telegram. You take part in a demonstration. You vote for an outsider or maverick politician who is promising change.
This, or at least the events leading up to that final moment, is a condensed, generalised account of the experience of millions of members of what might be called the new global middle class. And as recent years have shown, a growing minority is losing patience with the systems that no longer deliver the fast- improving living standards and expanding freedoms that they expect from them. They are taking to the streets to protest.
Consider the events of recent years. In 2019 there were demonstrations in Algeria, Chile, Ecuador, Georgia, Lebanon and Russia, usually over some combination of economic mismanagement, stagnant living standards, and corruption or other abuses of power. It was considered an exceptional “year of protests”. Then 2020 brought major protests in Belarus and Thailand against autocratic regimes, in Lebanon following the devastating Beirut port explosion on 4 August, and in countries such as Brazil, Iran and Mexico where the Covid pandemic was handled particularly poorly. In 2021 protests in Colombia, Nigeria, South Africa, Turkey and Russia caught the spotlight. Now, a few weeks into 2022, a wave of demonstrations has taken place in Kazakhstan. The closer one looks, the more it seems as if this wave of middle income anger could continue throughout the decade. The Global Squeezed Middle is in revolt.
The World Bank divides “middle-income” countries into two brackets. In its figures for 2021, lower-middle-income countries are those with a gross national income (GNI) per capita of between $1,036 and $4,045 while higher-middle-income countries have a GNI per capita of between $4,046 and $12,535. This is a broad definition, taking in countries such as Nicaragua and Nigeria at its lower end and the poorer parts of the EU (Romania and Bulgaria) at its upper one. It encompasses most of Latin America, North Africa, parts of the Middle East and eastern Europe and southern and eastern Asia, including India and China.
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Yet as big a grouping as it is, one can talk about certain common experiences applying to many or most middle-income countries. Most had a good 2000s, at least until the global financial crash in 2008. Market-driven globalisation, the growth in trade, and the commodities boom drove prosperity. The “global middle class” (often defined as those earning between $10 and $100 per person per day) grew rapidly.
A study by the Brookings Institution found this group had grown from one billion in 1985 to two billion in 2006 and 3.2 billion by 2017. This was accompanied by a growth in further education, and in mobile phone and internet use. Take Brazil for example, where between 2002 and 2012 the country’s middle class grew by 35 million and the proportion of school leavers who went on to university rose from 20.7 to 45.2 per cent. That shift changed the social make-ups of countries (for example, Brazil went from being 38 to 53 per cent middle class in that period) but also that of the entire global population.
A much-quoted study for the World Bank in 2013 found that most income gains between 1988 and 2008 had been around the middle (the 20th to 60th percentiles) and the very top (95th to 100th percentiles) of the global income distribution. Dubbed the “elephant curve” for its broad and high centre and trunk-like peak at one extreme, this chart told the story of globalisation: major gains for the new global middle class in mid-income countries and the educated, mobile upper class at the top, but stagnation for the poorest countries and the rich-world working class.
Life was not just good, high on the elephant’s back, but it looked to be getting better – as once-poor citizens rapidly accrued the trappings of rich-world lifestyles, from shopping malls to modern healthcare and pension provisions. Most parts of the middle-income world were growing much faster than the rich world (such as the US, Europe, Japan) and so the story was one of catch-up, of convergence.
Yet as the conservative theorist Samuel Huntington had argued long before in his 1968 book Political Order in Changing Societies, history suggests that rapid growths in prosperity and education are often followed by periods of unrest as expectations outpace the expansion of institutions (such as in politics, welfare and infrastructure). “The primary problem of politics,” he wrote, “is the lag in the development of political institutions behind social-economic change.”
The risk of this anticipatory overshoot was already present. But then came the global financial crash, which hit parts of the new global middle class hard. Consider Egypt, a lower-middle-income economy whose growth had exceeded 7 per cent in both 2007 and 2008; when foreign investment and tourism dried up, it fell to 1.8 per cent in 2011. The unemployment and low wages that resulted after that fall were a major force in the Tahrir Square protests of 2011.
At the time, many international news reports expressed surprise at how many of the protesters in Cairo and other Egyptian cities were middle-class. It would be a sign of things to come. The angry new middle class was a significant feature of the wider Arab Spring in 2011, of movements such as the Chilean student uprising of that year, as well as Istanbul’s Gezi Park protest in 2013.
Throughout the 2010s the global middle class continued to grow, but it would prove to be a more fraught decade. Many middle-income countries recovered but at a lower growth rate than they had before the 2008 crash. Some countries – such as Brazil and Egypt – experienced something similar to an economic hangover: a nagging dependency on certain sources of prosperity (commodities, foreign investment) and a large debt carried over from the good times.
There was much talk of the “middle-income trap” that was claiming many countries no longer poor enough to be competitive as low-cost manufacturing destinations, but not yet rich enough to possess the productivity-driving infrastructure and innovation of a high-income country. The risk, as the term suggests, was of such countries getting stuck at around the $10,000 GNI per capita mark.
Not only did growth slow in many mid-income economies in the 2010s, but some experienced democratic backsliding. The two phenomena are not unrelated. Democratically dubious regimes with access to the carrot of public spending increases may choose that over the stick of curbing freedoms (oil-producing Algeria, for example, largely avoided the Arab Spring by making welfare more generous).
Yet when growth slows and coffers are bare, authoritarians have fewer options and crackdowns on freedoms ensue (consider Turkey, where President Recep Tayyip Erdoğan has used nationalist theatrics at home and abroad to distract from the country’s worsening economy).
Then Covid-19 hit middle-income countries especially hard. Unlike the world’s poorest, agrarian economies, they are urban and wired into the global economy. The virus spread fast in India, Brazil and Mexico. Unlike the poorest countries, they were broadly not eligible for debt relief. Yet unlike the high-income world, these states lacked deep fiscal resources to keep businesses afloat, workers paid and school pupils educated remotely throughout lockdowns (schools in Latin America were closed for an average of 231 days to October 2021, more than in any other region of the globe). Unlike in much the rich world, welfare systems in the middle-income countries were too patchy to prevent many from falling through the gaps and stop inequality from soaring.
The long boom experienced by the global middle class, having faltered during the 2010s, has now gone into reverse. This is true in countries from Chile (technically high income since 2012) and Kazakhstan (previously expected to become a high-income country by 2029, where now only stagnation awaits) to Pakistan (just above the lower threshold for being a middle-income state). It is also true on an individual level. According to the Pew Research group, the global middle class lost 54 million members in 2020 alone. According to the World Bank: “The new poor are much more likely to reside in middle-income countries compared to the existing global poor.”
Survey the landscape. Stagnant growth, recent and now disappointed memories of an economic golden age, rising inequality and authoritarian crackdowns. New urban, university-educated and technology-savvy populations. And a pandemic that has accelerated many prior trends. It all adds up to a recipe for protests.
In many cases, a relatively specific and sometimes small event triggered the unrest and demonstrations. In Lebanon in 2019, it was a 2-percentage-point increase in VAT and a proposed charge on internet phone calls. In Chile that same year, it was a 30 peso (2p) rise in metro fares. In the Thai protests of 2020, the grievances raised by the pro-democracy movement included mistreatment in the country’s militarist schools.
In South Africa in 2021 the spark was the imprisonment of the former president Jacob Zuma. In Kazakhstan in January this year it was an increase in energy prices. In almost every case, the cited grievance is a proxy for much broader anger rooted in a combination of democratic abuse and a cost of living crisis.
Will these dynamics come to the most significant middle-income country of all – China? The rising superpower will probably pass the World Bank’s threshold between middle-income and high-income status ($12,535 GNI/per capita) next year. China’s middle class is half-a-billion strong and its behaviour and consumption have been the biggest contributor to the growth of the Global Middle.
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Yet even in China, there are signs of a squeeze. Like other middle-income countries, it has a debt problem: about one third of its GDP is tied up in an extremely indebted property sector now in a severe crisis. Also like other middle-income countries, China risks “getting old before it gets rich”; its working-age population is shrinking and its death rate may exceed its birth rate this year for the first time. The middle-income trap terrifies Chinese leaders, and rightly so. China has not yet experienced mass protests – its hyper-paranoid digital surveillance networks have made sure of that – but its latest Covid lockdowns have already sparked rare expressions of dissent on social media.
There are strong reasons to believe that this crisis of the Global Squeezed Middle, this crisis of the middle-income world, will continue. “[T]he recovery prospects for the global middle class are not good,” says an analysis from Spain’s Real Instituto Elcano think tank (an authority on Latin America). Oil and gas prices are in long-term decline. Rich-world firms spooked by the vulnerability of long supply chains are seeking to “reshore” or “near-shore” production that they have long “offshored” to distant low-cost economies. Most major international bodies predict continued lower growth for middle-income countries for the foreseeable future.
Should we get used to the protests? Lower growth in mid-income countries will mean lower growth in the rich countries (especially Britain) that provide them with services. It will cause further political upheavals: both Peru and Chile elected outsider left-wing leaders in 2021, both products of protest movements. Colombia and Brazil may both tip to the left this year after widespread protests against right-of-centre or populist incumbents. Lebanon’s protest movements are putting up candidates in the election due this spring – its first since the protests began in 2019.
Elsewhere, the question is how far strongmen leaders will go to quash unrest, and what economic and geopolitical changes that will entail. Will President Erdoğan’s propensity to use foreign adventurism to distract from domestic trouble in Turkey become more extreme as economic protests grow? Will India’s Narendra Modi seek to shore up support among struggling middle-class Hindus by further stirring up anti-Muslim feeling? Will Iran’s new government under the hardliner Ebrahim Raisi compromise its nuclear talks with the US and EU in the face of new protests? And will the protests in Belarus and Kazakhstan prompt Vladimir Putin to tighten his grip yet further on Russia’s near abroad?
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And then there is China. Here the chances of protests swaying politics are low. But it is also here that any such turbulence would have the greatest global implications. The Chinese Communist Party (CCP) has recognised its vulnerabilities with a “Common Prosperity” agenda aimed at reducing inequalities and reining in the excesses of the country’s boom years. But with China’s property sector in crisis (many Chinese people paid for their new flats upfront) and the CCP’s crucial 20th congress looming in the autumn, it is hard to avoid the question: what if China too is susceptible to the struggles of the Global Squeezed Middle?
Should the squeeze really take hold in China, and should people there react as other disaffected members of the global new middle class have, then we will enter a new era of crisis indeed.
This article appears in the 12 Jan 2022 issue of the New Statesman, The age of economic rage