• Choose a category
• All
• Classic-Fiction

By Root 1585 0

a vast fiscal miscalculation. In the aftermath of the 1980s, when countries opened to markets, many adopted exceedingly tight spending policies—sometimes because these were required by international lending agencies as conditions for bailout loans, in many more cases because the countries were opening themselves to international capital markets for the first time and wanted to demonstrate their macroeconomic discipline. In either case, the result was that a large part of the world was failing to invest in the development of its middle class (and the functioning of its rise from poverty through arrival cities). They would pay the price well into the twenty-first century.

“These societies ignored a couple key dimensions of middle-class development,” says Sherle Schwenninger, the U.S. economist who co-authored a major study in 2007 that found that the global middle class had stagnated.14 “They’d been slow to develop home mortgage markets that would have helped develop middle entrepreneurial industries; they have ignored state spending on infrastructure,” he told me. “Too much of the economy was ignored, partly under the pressures to pay attention to public finances.”

The parts of the economy that were being ignored by these governments were precisely those that had their locus in the arrival city. In analysis after analysis, the site of failed mobility turned out to be the institutions and functions that are most needed to make the arrival city work.

Janice Perlman, whose work with South American rural–urban migrants in the early 1970s was the first to recognize the economically central and dynamic nature of the arrival city, returned to revisit her subjects and their children. “The move from an illiterate rural life in agriculture (or fishing) to a literate urban life in manual labor was a great leap in socio-economic mobility for the original interviewees or their parents,” she concluded, and “there have been major improvements in collective consumption of urban services and in individual consumption of household goods over 35 years.” But, while “significant gains were made in education by the children of the original interviewees … these gains are not fully reflected in better jobs.” Notably, she found “a striking lower rate of return to educational investment” for those living in arrival cities: Paying to send your kid to a private secondary school or college, as the Magalhães family are doing in São Paulo, does not guarantee that they will enter the middle class. Perlman did find that large numbers of children of Brazilian rural migrants are becoming middle class, but only by leaving the arrival city behind. Of the original migrants, 34 percent are now living outside the arrival city in “legal” homeowner neighborhoods that would qualify as middle-class, and 44 percent of their children and 51 percent of their grandchildren are. In order to break out of the types of jobs their parents held, though, they needed university educations, and few were able to get them.15

Another large-scale study, directed by the U.S.-based Council on Foreign Relations, found that those developing countries that experienced middle-class growth had done so because they had stable currencies and had attracted long-term capital flows, but also because they had cultivated a number of things directly aimed at the arrival city: financial institutions capable of supporting small businesses plus “access to reasonably priced, long-term credit” for poor consumers to finance home ownership, post-secondary education, and infrastructure development.16

Even more significantly, a United Nations study of earnings in the developing world, which examined the factors behind failed middle-class growth in this century’s first decade, found that developing countries are investing in post-secondary education at the expense of primary and secondary schools for the poor, causing educational benefits to be biased toward the existing middle class, thereby cutting off migrant families and reducing social mobility. And it found that the primary and secondary schools