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The middle-class millions

November 02, 2010

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AN earlier article on these pages has led to a controversy among some who are paid by their think tanks to worry about Pakistan; where it is today and where it might go in the future.

In the article I suggested that there were tens of millions of people in Pakistan — mostly in the urban areas — who constituted the expanding middle class.

It was this conclusion that drew the attention of some academics and policy analysts in the West — in particular the US — to my estimates and to my argument. Those who objected were also those who believed that Pakistan was moving along a path from which it could not be rescued; that a takeover of the country by the extremists was inevitable; that Pakistan's arsenal of nuclear weapons would inevitably fall into the hands of terrorists and thus equipped, some people from Pakistan would attempt to create havoc in the West much worse than 9/11.

Some of my Pakistani colleagues who were present when my findings were discussed in some of these seminars suggested that I should buttress my argument by making clear the methodology I had used to derive the numbers I had presented in the article. I told my friends that my method was simple. I had assumed that one could separate the top 10 per cent of the population in terms of the income distribution as rich or well-to do and the bottom 60 per cent as poor or under great economic stress. The remaining 30 per cent of the population could be said to constitute the middle class. If Pakistan today has a population of 175 million people, then those in the middle class numbered 52.5 million. This was a simple enough calculation.

What made my estimates interesting was not the number of people belonging to this class but their average income. To calculate that I used the World Bank's income distribution data from its World Development Indicators tables. These tables tell us that the top 10 per cent of the population had a combined income of $43.2bn or a per capita income of $2,450 in 2008. This group accounted for 43.2 per cent of the national income.

The bottom 60 per cent of the population received only 22 per cent of the national income. This meant income per head of this group at only $340, or less than one-seventh that of the rich. The residual $83.75bn accrued to the middle class. This class had income per head of $1,600. Their share in the national income was 34.8 per cent and their per capita income was 72 per cent of the average for the country.

It is, of course, quite arbitrary to classify 30 per cent of the population as belonging to the middle class. If we assume that their proportion is 20 per cent of the population this would still give us 35 million people belonging to this category. This revised estimate would increase the per capita income of this segment of the population to $1,900 or their combined total to $66.5bn or 40.8 per cent of the total. If we say that a typical middle-class family has five members, it is safe to assume that seven to 10 million households belong to this category.

The point of this exercise is to indicate that Pakistan has a large number of people with a middle-class income and with a middle-class pattern of consumption. They spend a large amount of their total incomes on services such as education, health and entertainment. A significant proportion of the households in this category have their members living and working abroad.

According to one estimate, there are about 800,000 people of Pakistani origin in North America. This would suggest that some one-tenth of households in the upper income group — the rich, the well-to-do and the middle class — have some exposure to this part of the world. Notwithstanding the case of Faisal Shahzad, the US citizen of Pakistani origin who was recently sentenced by an American court to life imprisonment for attempting to set off a bomb in New York City, I can't imagine that the exposure of such a large number of households to North America would not have some liberalising influence.

That a large middle class has begun to flex its political muscle was shown by what has come to be called the lawyers movement that resulted in the restoration of judges fired by former president Pervez Musharraf. It is this social and economic class that is supplying both audience and talent to the electronic media that is displaying an extraordinary amount of independence in commenting on and analysing national and international affairs.

This class is committed to a representative form of government and would also like to see the policymakers deliver clean and effective governance. It is unlikely that it would countenance an attack on either of these goals from any quarter, from the establishment or from religious zealots. This is one reason why, in spite of all the misgivings expressed about Pakistan's political, economic and social future, I remain confident that we will see the country successfully muddle through the present sets of crises and continue to move towards a democratic form of government.