Summary of Is a growing middle class good for the poor?

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Extreme poverty remains one of the most vexing problems of our time. In this intricate study, academics Raj Desai and Homi Kharas tackle the little-understood relationship between the rise of the middle class and the plight of the poor. In Europe, they report, the emergence of the middle class led to the creation of social safety nets for the poor. But in today’s developing world, such a development seems unlikely, Desai and Kharas indicate. getAbstract recommends this report to experts rather than laymen.

In this summary, you will learn

  • How “red-white” coalitions improved the plight of the poor,
  • Why there are limits to the rising middle class’s effect on helping the poor and
  • Why modern-day developing nations differ from Europe of old.
 

About the Authors

Raj M. Desai is a visiting fellow at the Brookings Institution and associate professor of international development at Georgetown University. Homi Kharas is a senior fellow at the Brookings Institution.

 

Summary

In the late 1800s, the emerging middle classes in Europe helped drive antipoverty programs. A “red-white” coalition developed between the poor and the white-collar professionals, and this alliance pushed for safety nets that benefited the poorest members of society in Europe throughout the late 19th and 20th centuries. That bit of history raises a question today: What role does the middle class play in alleviating poverty in Latin America, Africa and Asia? While economic elites in developing nations value low taxes and cheap labor, the working classes and the poor prefer a system with some protection from economic shocks. In general, as workers rise into the middle class, they use their newfound political clout to push for social insurance and income transfers. At first, this rising tide lifts all boats. However, as middle-class voters gain clout, they begin to demand a growing share of the pie, and public spending on the poorest tends to decline.


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