Nancy Birdsall discusses the necessity of middle-class societies

Nancy Birdsall, founding president of the Center for Global Development, talked about the importance of building middle-class societies at a lecture entitled "Development in this Century: Building Middle Class Societies" at 51 Winthrop St. last night, as a part of the 2016 Birger Lecture series, sponsored by the economics department.

Professor of Economics Jeffrey Zabel introduced Birdsall, noting that she has been speaking about the idea that globalization has caused distribution stress for the middle class since at least the year of 2000, an idea he said has been popular in the current election season.

Birdsall opened her discussion with a reference to Mohamed Bouazizi, a Tunisian street vendor who set himself on fire in 2010 after police destroyed his vegetable cart when he failed to pay a licensing fee.Bouazizi, she said, was a part of the class of "strugglers" that is growing in the developing world.

Most people in the developing world are "strugglers," she added, and will be until 2030.

According to Birdsall, strugglers in the developing world are not poor, but are far from the middle class. Strugglers make about four to eight dollars a day, she said, in comparison to the middle class, who make 10 to 50 dollars a day, and the poor, who make less than four dollars a day.

Birdsall explained there are two views of development: people and systems. While she said that people are discussed more than systems, she noted that she is trying to transition the narrative into the world of systems, speaking on the importance of a middle class in an effective, democratic society.

"The middle class has the...ability and the willingness to pay taxes [and] to finance public goods," she said.

Birdsall also said that, from a political point of view, the middle class shows civic engagement, and its presence also decreases the likelihood of ethnic rivalries.

The developing world, however, will have a projected growth of strugglers and decline in the poor population by 2030, according to Birdsall. In 2030, the biggest proportion of the population in the developing world will be the strugglers.

"There will still be a lot of people in the situation of Mouazizi," Birdsall said. "It will still be a very poor world out there."

Birdsall also discussed the relationship of strugglers in the state, who fall well below the poverty line. Although strugglers pay taxes, developing states lose money on their payments, she said. A heavy reliance on consumption taxes in the developing world has led to a push for countries to raise their own resources.

"There's a fundamental problem there that if [the state doesn't]...move to other forms of taxation ... they're going to be hitting the strugglers pretty hard," Birdsall said.

Furthermore, Birdsall said, public services provide little benefit to the strugglers and the poor. She cited the fact that strugglers and the middle class will pay to send their children to private schools in the developing world, as an example of this.

"If you think about it, at least in Latin America, there's a lot of problems of the middle class opting out of public services ... They even opt out of police and security services," she said.

According to Birdsall, today's development challenge is to build middle-class societies, which surrounds jobs and manufacturing.

"There has to be a shift to a narrative that's more positive and more focused on the system...[to] make it much easier for the strugglers to move into the middle class," she said.