Home ›› 10 Nov 2022 ›› Editorial
Researchers and economists believe that the middle class also plays a major role in establishing better governance. Because, compared to the poor, they can demand better government services and more accountability and transparency from government officials. They also support policies that promote growth. It is the middle class that makes the domestic market bigger. Before the Covid pandemic, the the number of poorest people living in Africa was nearly 500 million. In South Asia the number was 104 million. And the largest middle class was based in East Asia with 680 million people.
There is no clear definition of who the middle class is. However, in terms of income, the people of the world are generally divided into five groups. These are--poor, low-income, middle-income, upper-middle-income, and high-income people. Those who earn less than $2 a day are globally recognized as poor. Suppose the income is between $2.01 and $10 per day. In that case, they are low-income people, people with income between $10.01 and $20 are middle-income, people with income from $20.01 to $50 are upper-middle income, and people with income above $50 per day are classified as middle-income. However, this definition varies from country to country.
According to researchers, the world's super-rich and middle class are the two biggest winners in terms of income over the next 20 years. Incomes rose mainly among the middle class in China in East Asia, India in South Asia, and parts of sub-Saharan Africa. And the super-rich lives in Europe and North America. Incomes of the world's wealthiest 1 percent rose by 60 percent, while the world's middle class rose by 70 to 80 percent. The graph of income and inequality is known as the Elephant Curve. Economists have worked based on this. Although this data has been used since 2008, it was last used in 2016. However, in 2021, many calculations are changing.
China's economic progress began in 1978 after economic reforms began. Over the next four decades, China became the world's leading economic power. Even in 1991, 40 per cent of China's total population was poor. China now has the largest middle class in the world. Researchers say that China's middle class has a big role in this progress. There are several studies on the role of the middle class in China's development. Experts say China's growing middle class will determine the country's future. Entrepreneurs generally come from the middle class. They increase productivity and create employment in society, middle-class values emphasize the acquisition and accumulation of human capital, which is the main instrument of economic development, and the middle class enjoys more than the poor and is willing to spend a little more to get a slightly higher quality product or service. Through this, the demand created by the middle class helps increase investment.
Researchers and economists believe that the middle class also supports policies that increase growth. It is the middle class that makes the domestic market bigger. The working people, including workers, farmers, and the middle class, could not cope with the Covid pandemic. The Ukraine-Russia war started without this wound drying up. In such a difficult time, the increase in commodity prices is like a blow to the wall.
In the present world, a miserable and terrible situation is going on. Prices of almost all consumer goods, including rice, pulses, onions, sugar, and edible oil, are increasing. The value of human labor has decreased. The salary, which declined during Covid is still the same. However, the prices of commodities are increasing every day. The groans of the middle class are growing. People are running behind TCB's truck.
Gas, electricity, transport, and house rent have increased. From the lower class to the lower middle class, no one in the middle class is better off; but the middle class is the worst hit. So, what is the way or what to do? Questions are being raised about it from various quarters. According to the Bangladesh Bureau of Statistics calculations, the rate of inflation in the four years from 2017 to 2021 is 28.7 percent, which means that in 2017, the product that could be bought for 100 taka in 2022 will cost about 135 takas. What stands in this is that the product price does not match the government's calculations.
Research shows that prices of all commodities have increased by more than 50 percent in the last five years. The cost of goods increased; the life of the middle class became miserable! But the economy of the middle class deteriorated. It cannot be matched in any equation. There are many other factors involved in economics. When there is a problem in the economy, there are many problems in everything. A faint line of light can be seen for the severe hostility of the overall situation and climate of the country and abroad. But the authorities should ensure this much, at least try to keep the market situation stable at any cost. But unfortunately, even there, the administration cannot show the ability to take timely action. Instead, the market situation is so critical that it is not worth mentioning.
Suppose the size of the middle class continues to decline at the current rate. However, there will be many adverse reactions in society. The middle class is a major social force in every country. Covid and other calamities have hit the country's economy, with the middle class being hit the hardest. In this context, the rate of the middle class is decreasing alarmingly. Given this, a recession is expected in a market economy. As the purchasing power of the middle-class decreases, the buying and selling of goods are inevitable. Small and medium business people have been severely affected. Recession comes to the economy.
Especially due to the impact of this war, the dollar crisis in Bangladesh, high fuel prices, inflation, fear of food shortage, climate change, war, and the Covid situation are putting the country and people in trouble. It will also affect Bangladesh. Instead, the war situation is gradually intensifying. Due to high inflation, the country's people are already consuming less food. The United States, China, and the United Kingdom experienced the world's hottest year ever as carbon emissions increased due to climate change. At the same time, the United Nations fears that the world is facing terrible losses due to the Russia-Ukraine war.
In this situation, prudence should be shown in economic management. Inflation has indeed become a cause of concern all over the world. The country's inflation is tolerable - the government is saying this. In this situation, the steps being taken to deal with the situation, whether timely or practical, should be careful. The country's economy has previously overcome various natural and political disasters. The hardworking people of the country have kept the wheels of the economy moving by working hard to survive. Besides, with the bold and visionary steps of Prime Minister Sheikh Hasina, it has been possible to keep the wheels of people's lives and livelihoods running from the pressure of the Covid pandemic. The government needs to identify the problems more accurately and take steps to deal with them; otherwise, it will be challenging to overcome the crisis.
Besides, it is badly needed to formulate a new consumption basket to curb inflation, strengthen the Competition Commission, reduce duties and taxes on the import of daily commodities, curb the import of luxury goods and foreign fruits, and control monopoly business in the market. To resolve the existing energy crisis, emphasis should be placed on increasing the use of renewable energy and extracting gas from various wells, besides being frugal in using electricity and fuel and preventing wastage. The food list contains 19 essential products. To keep these products affordable, OMS activities should be increased at the same time. Cash assistance should be given to poor and very poor people. Lowering fuel prices, taxes to raise money, and raising GDP needs to be considered.
Prime Minister Sheikh Hasina has recently called on the countrymen to be maintained austerity at every level. Besides, she urged everyone to ensure that even an inch of land in the country is not left empty to increase food production. Again, she gave detailed guidelines and necessary instructions to overcome the current global crisis in a closed-door meeting with top government officials. However, several steps have been taken including load shedding of electricity to reduce pressure on reserves. Then the people of the country will get rid of the global economic recession to some extent.
The writer is a columnist and researcher. He can be contacted at hiren.bnnrc@gmail.com
