You keep hearing something over and over again and you start to believe it. Evidence becomes unimportant. We as a nation have a fondness for stories, for the anecdotal. Evidence-based research is not something we go to sleep with.
The Koreans owe their growth to our five year plan. Bhutto said 'udhar tum idhar hum'. Nationalization was an unmitigated disaster. Dar's management of the economy is the cause of our current mess...... This is the stuff dogma is made off: play with facts, play to emotions, and you have an unshakeable belief.
The role of middle class, the driving force for sustainable development and a catalyst for political and social change, is uncontested. How you estimate its size is hotly contested. Indeed, its very definition is vigorously debated by various schools of political and economic philosophy.
Do we have a sizeable middle class? The answer is an unambiguously ambiguous one. Is it growing? That too begs the same answer. It really depends on who you are asking and if you mean middle class in an economic sense (income, expenditure, wealth) ora social anthropological one (cultural behaviour).
Estimations of middle class in economic terms are derived from PSLM (Pakistan Social and Living Standards Measurement)/HIES (Household Integrated Economic Survey) that our Bureau of Statistics carries out on a regular basis. The last available one is HIES 2016 that surveyed 20,000 households, randomly selected across provinces and rural/urban areas.
There are two credible research papers estimating the size of middle class (Dur-e-Nayyab, 2011) and its growth over four decades (Jawaid Ghani 2014). In 2017 the latter supplemented his findings to demonstrate the enormous growth (between 2001 and 2014) in middle class ownership of durable goods (motorcycles, refrigerators, washing machines, TVs).
Nayyab estimated 39% of the population to belong to the middle class. Ghani's number for 2014 was 49%. More remarkably, Ghani's workings show an impressive growth in social mobility, with the middle class growing, quite incredibly, five-fold since 2002.
The trouble starts when we start segmenting it - middle lower, lower middle, upper middle - to get to 'middle-middle', aka hard core middle class, where the middle class cohort plummets to only 4.3% of population (calculated from PSLM 2007/08 by Finance Training).
Then there is the wealth band, not income range, which Credit Suisse used in its Global Wealth Report 2015. Defining middle class as having wealth between $50,000 and $500,000 (on Purchasing Power Parity basis) it calculates the size of our middle class at only 5.7% of the population.
On how fast the middle class is growing Dr. Hafiz Pasha analysed the HIES 2016 to show the declining trend - from 43% in 2001/02 to 38% in 2015/06 (Business Recorder, Oct 2017). Incidentally, he also highlighted the wide inter-provincial differentials in the size of middle class: Punjab 59%, Sindh 22%, KPK 15%, and Balochistan 4%.
In a stimulating piece The Economist (February 2009) characterized middle class as having a reasonable amount of discretionary income - when people have roughly a third of their income left, after paying for food and shelter, for discretionary spending (on consumer goods, better health care and children's education).
If we use discretionary income, post-food and shelter, we suspect we will be left with a miniscule middle class, regardless of the household income that is typically used to measure middle class.
A maid who works two homes, and her husband who is a construction worker, pull in 60,000 rupees a month between the two of them. They have four kids, have a refrigerator and TV, but have no 'discretionary income' left after they have paid for house rent, utilities, food and transport. Would this household be classified as middle class?
Nayyab and Ghani would probably say yes - their income is above the PPP equivalent of more than $ 4 a day, and they own a refrigerator and a TV. You and I might think differently, not just when the maid touches us for a 'loan' that is not really a loan, to go to Multan for a bereavement in the family.
The various analyses available also do not take into sufficient account the vulnerabilities of the economic middle class - how one shock, say a medical issue of the main bread-earner, can slide them back into near destitution.
Ownership of durables and having a predictable income are of course important for purposes of classification. But if the idea is to gauge 'market size' we cannot be blindsided by these factors alone. Ownership of cell phones (87% of households), for instance, is clouded by internet availability (6%). Motorcycles and refrigerators are more like necessities now, but reduce discretionary income. Plus, informal sector-dependent incomes are notoriously fickle.
Middle class size is a lot more than about markets and investment decisions. It is the sternum of a society that protects the heart and major arteries. There is a linear correlation between growth of middle class and the state of development. It is the bulwark against elite capture of state resources. It has to be nurtured.
The thrust of government's economic policies is towards 'wealth creation'. If these policies succeed we may see greater investments, which will be greatly welcomed. The worry is the time-lag factor, even if one is coerced into trusting, against all evidence, the 'trickle down' theory.
How does the government propose to bridge the interregnum - before the 'tsunami' of investments triggers job creation and a bigger, more sustained, middle class? The current indications don't augur too well. One hears of people, mostly belonging to middle class, being laid off. All bets are on growth slowing down.
There is also the greater fear of 'wealth creation' breeding greater inequalities.
The whole point of a middle class is to trim the two extremities of poverty and wealth; having fewer at both ends. Our worst fear is of seeing both ends grow. Welfare state will be a forgotten promise if middle class falters.
Perhaps the missing point in all the research is the role of public sector - the extent to which it has contributed, directly and indirectly, to social mobility; and of course, it will be sacrilegious to suggest 'corruption' had a role too.
Imran's constituency is the middle class. They voted for him. They believe in him. His success or failure hinges on the growth and well-being of the middle class.
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