Pelosi Street

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Message From Mark Zuckerberg

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The Global Middle Class Is Bigger Than We Thought: A new way of measuring prosperity has enormous implications for geopolitics and economics

Foreign Policy:

The swelling middle class in emerging economies is transforming the economic balance of power across the globe. Measuring it, however, is no easy task. There is no widely accepted definition of what constitutes the middle class, and the most common ways of measuring its growth — through looking at rises in income — suffer from a number of flaws.

 There’s an easier way. In the developing world, buying a car is virtually synonymous with entry into the middle class. In these countries, car ownership separates those with the ability to purchase many other non essentials from those within the wider population. Car statistics, moreover, are generally reliable and frequently updated, and they include data by automobile type that can be used to further segment the middle class. For this reason, the number of passenger cars in circulation serves as the most reliable gauge we have about the size of a country’s middle class.Applying this measure significantly alters our understanding of the middle class in the developing world. It shows that there are many more affluent people in developing countries than had previously been thought and that about 70 developing countries with a combined population of about 4 billion are near or above the point where car ownership rises very rapidly. This suggests that very large numbers of people will enter the middle class in the coming years, transforming the economies and political systems of the countries they inhabit.

Just What Is the Middle Class, Anyway?

The middle class in the developing world is rising. The only question is how high it will go and how fast it will get there. About 85 percent of the world’s people live in developing countries, yet they accounted for only 18 percent of global consumer spending just a decade ago; today, they account for nearly 30 percent. Consumer spending in developing countries has been increasing at about three times the rate in advanced countries, and we’re not just seeing a growing demand for necessities, but also for middle-class staples such as meat, toothpaste, cell phones, and air-conditioners.

Measuring the global middle class isn’t just an academic exercise — its growth carries real-world implications. Political scientists are interested in the topic because a large middle class is associated with greater political awareness, desire for more accountable and representative government, and even demand for free markets. Economists and market analysts are mainly interested in the size of the middle class as an indicator of a population’s ability to rise from poverty and purchase items that go beyond bare necessities.

But here’s the problem: The world has never agreed on a universally accepted definition of what constitutes “middle class.” The broadest classification is too low; it suggests the middle class is anyone who is not poor, which according to the World Bank means those who earn an income in excess of $2 a day after adjusting for purchasing power. That level has now been achieved by more than 4 billion of the world’s 7 billion people, but while many people earning $2 a day are able to afford a cell phone, their income is far too low to afford amenities such as a regular power supply or clean water.

The narrowest classification defines middle class as individuals with an income close to or above the median income in advanced countries — roughly $85 a day at U.S. prices. Only about 12 percent of the world’s population lives in countries whose average per capita income is higher than that threshold, and only a very tiny minority in developing countries would qualify. This level of income, moreover, exceeds by a factor of seven the income needed to buy a car (around $4,000), not to mention most other big-ticket consumer items, indicating that the definition is far too narrow and too high.

Many other measures have been proposed in between these extremes. The most widely used measure was proposed in 2002 by World Bank economist Branko Milanovic and Hebrew University professor Shlomo Yitzhaki, who counted people with daily incomes between roughly $10 and $50 a day, after adjusted for purchasing-power parity, as middle class. If one uses this definition, there are an estimated 369 million people in the developing G-20 economies — Argentina, Brazil, China, India, Indonesia, Mexico, Russia, South Africa, and Turkey — who qualify as “middle class.”

Such income-based measures of the middle class suffer from a number of deficiencies, however. First, they are based on infrequently conducted household surveys, which vary enormously in quality. Second, incomes, even when adequately measured, do not directly reflect private consumption. The share of government spending as a proportion of GDP varies greatly across countries, for example, and households in different countries and at different levels of income exhibit very different savings behavior. (Think of poor and high-savings China at one end and the United States, which is rich and has a low savings rate, at the other).

Finally, comparing incomes across countries at different levels of development represents an enormous challenge. For example, one obviously cannot even afford the most basic food and shelter in the United States at $2 a day, the World Bank’s definition of non-poor. The United States places its poverty line at $13 a day, more than six times higher than the World Bank measure.

There’s a Better Way to Measure the Middle Class

It is obvious, then, that we need a better way of measuring the middle class. Here’s where the passenger cars come in. Cars are big-ticket items that indicate the ability and willingness to purchase many other nonessential goods. Indeed, while the vast majority of households own a car in advanced countries, in developing countries owning a car symbolizes relative affluence. While one can define the middle class in many ways, car ownership is an unambiguous indication of the ability to purchase other luxury goods.

Critics may contend that measuring car ownership excludes households that can afford, say, a computer, TV set, or air-conditioner, but not a car. However, because cars in circulation in the developing world are often of very old vintage — for example, the average passenger car in India is 20 years old, compared with 11 years in the United States — this supposed omission is not nearly as large as it seems. In the United States, for example, one can buy a 20-year-old Ford Taurus for about $500, about the price of a new computer or TV set. The older cars in circulation in developing countries can be bought for even less. So even for the purpose of assessing potential demand for many less expensive consumer products, the ability to buy a 20-year-old or a 30-year-old car provides a pretty good benchmark…

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Saved From Prohibition by Holy Wine: In downtown Los Angeles, a 95-year-old winery weathered hard times by making wine for church

Smithsonian:

St. Anthony of Padua is not the patron saint of winemakers—that distinction goes to St. Vincent or St. Martin of Tours or, if you happen to be in Bulgaria, St. Trifon the Pruner—but perhaps he should be, at least in Southern California. Because when Santo Cambianica came to Los Angeles from Lombardy and founded the San Antonio Winery, it was his devotion to that saint and his church that would save the business.

Like most of his compatriots, Cambianica was a Catholic, a very devout Catholic by all accounts, and thus he named his winery after St. Anthony, the patron saint not of winemakers but of lost things, of travelers, of the poor. If Cambianica was a traveler, he did not remain so. Nor did he end up poor and lost, as so many of his fellow winemakers did, when in 1920 Prohibition slammed the wine industry like a heavy jug thudding down on a dining table.

Cambianica immigrated to downtown Los Angeles in 1914, making his home and starting his winery on half an acre of land in what was then Little Italy, a thriving network of thousands of Western European immigrants. It was then one of the largest pockets of Italian-Americans west of the Mississippi. The Italians settled in Lincoln Heights and in what is now Chinatown, coming here because of a thriving agricultural industry and because of the Southern Pacific Railroad. It was a good location for a winery, as there were vineyards in the nearby valleys, a railroad to transport the product—the Red Car Line ran just outside the doors of the winery—and plenty of wine-accustomed immigrants to drink it.

Prohibition changed the burgeoning California wine business into an industry in sudden crisis, patched together with string and wire and oak barrel slats—and loopholes. The Volstead Act, which enforced the 18th Amendment, exempted alcohol that was used for medicinal or cosmetic purposes, such as hair tonics and toilet waters and elixirs, and for religious purposes, specifically sacramental wine.

When San Antonio Winery was founded in 1917, three years before Prohibition, it was one of about 90 wineries in Los Angeles; when Prohibition was repealed, in 1933, it was one of about a half dozen. Santo Cambianica literally saved his winery in much the same way that the Catholic Church metaphorically saved its parishioners: by transforming ordinary table wine into something sacred, into the altar wine used in Mass.

That the winery had been named for a Catholic saint and that Cambianica had strong ties to the church made the transition logical from both sides, and thus the winery struck a deal to continue to make sacramental wine during Prohibition. (Many wineries already made wine to sell to churches and synagogues; during Prohibition that practice went into overdrive.)

“Most of the other brands were not spiritual; they had names like Sunny Side or Sunny Slope,” points out Steve Riboli, Cambianica’s great-nephew and now the vice president of San Antonio Winery. San Antonio “was a faith-based company,” says Riboli. “Literally.”

Cambianica quickly adapted his business to fit the situation, in itself a kind of transformative process that became emblematic for the company. Before Prohibition, San Antonio was a small winery, making about 5,000 cases of red wine, the kind of wine that was sold “family-size,” or in jug form, to local immigrants and five area churches. By the time Prohibition ended, it was producing 20,000 cases. Today, San Antonio Winery is the largest supplier of sacramental wine in the country…

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Welcome to the Multiverse: The latest developments in cosmology point toward the possibility that our universe is merely one of billions.

The Daily Beast:

“What really interests me is whether God had any choice in creating the world.” 

That’s how Albert Einstein, in his characteristically poetic way, asked whether our universe is the only possible universe.

The reference to God is easily misread, as Einstein’s question wasn’t theological. Instead, Einstein wanted to know whether the laws of physics necessarily yield a unique universe—ours—filled with galaxies, stars, and planets. Or instead, like each year’s assortment of new cars on the dealer’s lot, could the laws allow for universes with a wide range of different features? And if so, is the majestic reality we’ve come to know—through powerful telescopes and mammoth particle colliders—the product of some random process, a cosmic roll of the dice that selected our features from a menu of possibilities? Or is there a deeper explanation for why things are the way they are?

In Einstein’s day, the possibility that our universe could have turned out differently was a mind-bender that physicists might have bandied about long after the day’s more serious research was done. But recently, the question has shifted from the outskirts of physics to the mainstream. And rather than merely imagining that our universe might have had different properties, proponents of three independent developments now suggest that there are other universes, separate from ours, most made from different kinds of particles and governed by different forces, populating an astoundingly vast cosmos.

The multiverse, as this vast cosmos is called, is one of the most polarizing concepts to have emerged from physics in decades, inspiring heated arguments between those who propose that it is the next phase in our understanding of reality, and those who claim that it is utter nonsense, a travesty born of theoreticians letting their imaginations run wild.

So which is it? And why should we care? Grasping the answer requires that we first come to grips with the big bang.

In Search of the Bang

In 1915, Einstein published the most important of all his works, the general theory of relativity, which was the culmination of a 10-year search to understand the force of gravity. The theory was a marvel of mathematical beauty, providing equations that could explain everything from the motion of planets to the trajectory of starlight with stupendous accuracy.

Within a few short years, additional mathematical analyses concluded that space itself is expanding, dragging each galaxy away from every other. Though Einstein at first strongly resisted this startling implication of his own theory, observations of deep space made by the great American astronomer Edwin Hubble in 1929 confirmed it. And before long, scientists reasoned that if space is now expanding, then at ever earlier times the universe must have been ever smaller. At some moment in the distant past, everything we now see—the ingredients responsible for every planet, every star, every galaxy, even space itself—must have been compressed to an infinitesimal speck that then swelled outward, evolving into the universe as we know it.

Direct evidence for the multiverse might come from a collision between our expanding universe and its neighbors. (Mehau Kulyk / Photo Researchers, Inc.)

The big-bang theory was born. During the decades that followed, the theory would receive overwhelming observational support. Yet scientists were aware that the big-bang theory suffered from a significant shortcoming. Of all things, it leaves out the bang. Einstein’s equations do a wonderful job of describing how the universe evolved from a split second after the bang, but the equations break down (similar to the error message returned by a calculator when you try to divide 1 by 0?) when applied to the extreme environment of the universe’s earliest moment. The big bang thus provides no insight into what might have powered the bang itself.

Fuel for the Fire

In the 1980s, physicist Alan Guth offered an enhanced version of the big-bang theory, called inflationary cosmology, which promised to fill this critical gap. The centerpiece of the proposal is a hypothetical cosmic fuel that, if concentrated in a tiny region, would drive a brief but stupendous outward rush of space—a bang, and a big one at that. In fact, mathematical calculations showed that the burst would have been so intense that tiny jitters from the quantum realm would have been stretched enormously and smeared clear across space. Like overextended spandex showing the pattern of its weave, this would yield a precise pattern of miniscule temperature variations, slightly hotter spots and slightly colder spots dotting the night sky. In the early 1990s, NASA’s Cosmic Microwave Background Explorer satellite first detected these temperature variations, garnering Nobel Prizes for team leaders John Mather and George Smoot.

Remarkably, mathematical analysis also revealed—and here’s where the multiverse enters—that as space expands the cosmic fuel replenishes itself, and so efficiently that it is virtually impossible to use it all up. Which means that the big bang would likely not be a unique event. Instead, the fuel would not only power the bang giving rise to our expanding realm, but it would power countless other bangs, too, each yielding its own separate, expanding universe. Our universe would then be a single expanding bubble inhabiting a grand cosmic bubble bath of universes—a multiverse.

It’s a striking prospect. If correct, it would provide the capstone on a long series of cosmic reappraisals. We once thought our planet was the center of it all, only to realize that we’re one of many planets orbiting the sun, only then to learn that the sun, parked in a suburb of the Milky Way, is one of hundreds of billions of stars in our galaxy, only then to find that the Milky Way is one of hundreds of billions of galaxies inhabiting the universe. Now, inflationary cosmology was suggesting that our universe, filled with those billions of galaxies, stars, and planets, might merely be one of many occupying a vast multiverse.

Yet, when the multiverse was proposed back in the 1980s by pioneers Andrei Linde and Alexander Vilenkin, the community of physicists shrugged. The other universes, even if they existed, would stand outside what we can observe—we only have access to this universe. Apparently, then, they wouldn’t affect us and we wouldn’t affect them. So what role could other universes possibly play in science, a discipline devoted to explaining what we do see?

And that’s where things stood for about a decade, until an astounding astronomical observation suggested an answer…

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Washington Woodshed

This image has been posted with express written permission. This cartoon was originally published at Town Hall.

‘Please Help’

This image has been posted with express written permission. This cartoon was originally published at Town Hall.