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The Rise and Fall of Latin America’s Middle Class and Its Implications for China

Fecha:2012/06/27 Autor:Written by Gao Qingbo, Translated by Guo Cunhai

  On June 21st, the Department of Social and Cultural Studies at ILAS held the second seminar of its series of “Reading Group Discussion Programs”. Dr. Guo Cunhai made a kenote presentation “The Rise and Fall of Latin America’s Middle Class and Its Implications for China”. The seminar was mediated by Dr. Fang Lianquan, associate researcher and sub-director of the Department.

  Dr. Guo started his speech from the functional paradox of middle class by illstrating its theory and practice around the globe. Then,based on the definitions of middle class, he made a deep investigation of the long evolution of Latin American middle class and examined the vulnerabilities facing this social group and their policy-based roots. Finally, Dr. Guo analyzed the reemergence of Latin American middle class since 2000s and the motives behind this new trend. Based on the examination and analysis mentioned above, he concluded with some suggestions and implications for china.

  Dr. Guo pointed out there were four opinions of middle class dominating the academic field. The argument of market-democracy holds that middle class is the underpinning of market economy and social democracy in the most developed society; the argument of economic growth holds that a greater size of middle class promotes higher economic growth; the argument of social stability holds that middle class acts as the stabilizer of social structure, as well as the moderator of social conflict and the indicator of social behavior; while the argument of social cohesion holds that the growth and development of middle class is the key to promote governability and consolidation of social cohesion.

  However, the functional paradox happened to the middle class around the world. The “Occupy Wall Street” (OWS) in the U.S., anxiety symptoms of the middle class across the Europe, the alliance of middle class with lower class in the Arab Spring, and “the discontents of progress” in the Latin America, all above witness a strong dissatisfaction with the current society. In the context of such dynamics, “squeezed middle” was listed at the top of 2011 Word of the Year. With the purpose of analysis of this phenomenon, Dr. Guo suggested his own definition of the middle class in Latin America. He classified the middle class of Latin America into two types according to the occupation, i.e. petty bourgeoisie skilled proprietariat.  The former refers to small employers and independent professionals while the latter includes public employees, employed professionals and technicians, managers and office clerks.

  In the second part, Dr. Guo reviewed the evolution of Latin American middle class. He argued that the developmental process of middle class in the region could be classified into three stages, i.e. the initial stage (1870~1930), the preliminary formation (1930~1960) and the development and consolidation (1960~1980). In his opinion, five drivers contributed to the growth of Latin American middle class, which are industrialization, urbanization, public education, expansion of public sector, and international immigration. With the result of the interaction of these drivers, the size of the middle class in the region accounted for about 30% of the regional population in the early 1980s.

  After 1982, Latin America’s middle class suffered from several challenges, for example,  new poverty expanded increasingly; both middle and lower-income groups fell victim to the neoliberal reform; more employment were informalized and the informal employment toped the rest around the world; youth unemployment remained high and were as two times high as regional unemployment in the late 1990s. Anyway, the middle class around the region has suffered from the vulnerabilities from the early 1980s to the late 1990s. As a result, a mass of emigration occurred in Latin America in the latter 1980s and throughout 1990s, which was characterized by skilled emigration. Such phenomenon derived from two factors, i.e., push factor home and pull factor aboard. The former referred to lower economic growth, higher unemployment, greater income inequality and worse public security, while the latter referred to higher salary, better welfare and looser immigration policy. Those factors contributed a lot to the acceleration of emigration aboard around the region.

  Dr. Guo argued that the vulnerabilities of middle class across the region lied in the serious policy deficit. Firstly, unequal distribution of education resources didn’t weaken but strengthen the unfair social structure, hence limiting social mobility. Secondly, the unequal distribution in the region was characterized mostly by the excessive inequality between the top income decile and the rest. Finally, such worse situation was attributed to the combination of three factors, i.e. worker’s lower share of the national income, dysfunctional redistribution of tax system, and ineffective redistribution of social policies.

  Since the beginning of 21 century, the middle class in Latin America reemerged and revived.Dr. Guo attributed the reemergence to the governing consensus of both left and right governments in the region, i.e., laying more emphasis on poverty-reduction, alleviation of unequal income distribution and the state’s intervention in the market.

  In conclusion, Dr. Guo proposed some policy implications for China from the rise and fall of Latin American middle class. He pointed out, the sense of identification and belonging of China’s middle class has been falling in the recent years, upward mobility and the retaining of middle class status were getting much harder because of higher housing price, higher consumer price, higher schooling fee and lower income growth, lower income equality. The deficit or failure of social security system intensified this perception of challenges and consequently, ignited the anxiety symptom of this emerging community. In addition, the less fluidity of upward mobility and even worse, the more appearance of downward mobility in today’s China, brought forth a new trend: confluence of middle and lower class which is an extremely dangerous sign. 

  The experiences and lessons from Latin America reveal that function of middle class stabilizer depends on the guarantee of their basic benefits against violation, of convenient access to high-quality public services and infrastructure and regular channels for delivering their benefit, and of greater fluidity of upward mobility. The four factors above are the conditionality of effective function of middle class as a kind of stabilizer. Once the survival risks facing the middle class increases, the middle class could collect and unite with the lower class co-acting as the drivers of reform, only to not act as a stabilizer but a destabilizer of society. The social protests and unrests in the late 1990s in most Latin American countries offers a full and live evidence of this argument, so does at the beginning of 2000s in Argentina.

  To sum up, Dr. Guo suggested Chines decision-makers dedicate themselves to developing a model of “inclusive middle-class growth”, avoiding the middle class’s falling into policy vacuum. Further, he proposed more detail measures, such as: based on sustainable economic growth, to build a rights-based social security system, reduce income inequality and unfair distribution of resources, widen the channels for social mobility and increase their fluidity, and especially, lay special emphasis on importance of education acting as a hinge in resolving all these problems. The last but not least, it is greatly important no to limit but release orderly, then further expand the social and political participation of middle and lower class.

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