Rich middle class vs. The Poor in Laos

I had a conversation about a recently opened new fancy restaurant and someone mentioned, it is "for the rich middle class". Let me work on this expression a bit.
First of all, question is what "rich middle class" means. Is it upper middle class? Or lower upper class? Anyway, it sounds a bit jealous, like "the ones with money". But it reveals something I hear a lot from the developing sector (the ones usually friend with every farmer out there): The scepticism about the middle class.



So what is the middle class in the US? They are white collar workers, owning a house (still), living in suburbs, and they are the majority of the American people.

"Depending on class model used, the middle class may constitute anywhere from 25% to 66% of households" says the almighty Wikipedia.

What is for sure is that the middle class is the driving factor in the US when it comes to consumption, but more important to influence.

Considering the overwhelming presence of professional middle-class persons in post secondary education, another essential instrument in regards to shaping public opinion, it should come as no surprise that the lifestyle exclusive to this quasi-elite has become indicative of the American mainstream itself. In addition to setting trends, the professional middle class also holds occupations which include managerial duties, meaning that middle-class professionals spend much of their work-life directing others and conceptualizing the workday for the average worker.

In Germany the middle class follows the same concept, adding the middle class enterprises who are still responsible for the Made in Germany label and the overall positive economic outlook. And the trend of a shrinking middle class is already a threat there.

So what about Laos (and other emerging countries)? They usually lack of a middle class. Either communist or autocratic or monarchy, the do have a rich elite and a poor majority. While the elites interest is in just keeping power and money, the poor just look for enough food. No development possible.

This is where the middle class comes in. One of the few advantages of NGOs is that they basically help to create this class by offering over well paid office jobs and education. Only these young people are able to develop a country, seeing a chance to earn money without being part of the elite. They create start-ups, they are the entrepreneurs a country like Laos needs. And they create (or copy) a new urban lifestyle. This is what happens in Vientiane right now.

Those who complain about it just want to keep the poor poor (and don't want to create a middle class, what is quite revealing). It saves their jobs in the developing sector, and doesn't piss off the elite, who usually has to agree to set up a development project.

There is NO WAY for a country like Laos to get out of misery without a lively functional middle class. It is yet too small, and a bit to much in consumption and less in working hard, but that just may take some time. As usual here.

Why Lao markets are not ready yet

When I studied economics, one of the most important topics was price development. I had a professor who skiped tradional theory and went straight with us to chaos theory as a base for predicting (and explaining) economic developments. At that time in the early 90s he was sure that price finding can be explained by chaos theory as well.
Today I went to Phimphone market, one of the more expensive minimarts, to buy Kraft cheese slices. They cost 29.000 KIP. Before, I went to M-Point Mart, where they ask for 32.000 Kip. That is a 10 percent price difference. You would expect that M-Point is cheaper, since the have more branches and therefore a bigger turnover. But they are not.
The price for a cup of coffee latte goes from 10.000 KIP (Tonmali Cake) to 21.000 KIP (Joma).
It seems that the chaos is there, and that the traditional market mechanisms aren't working. Otherwise the price range would be much closer. Most Lao businesses are guessing prices, do not have warehouse management, no real proper accounting (and cost management), so they just put some ammount of profit on top of the ammount they purchased. There is no observation of competitors.
So how does chaos can solve this? It just needs more players. And bigger ones. Once Big C comes in, retailers will check them out - because then they have to compete, because competiton is then obvious.
For now, the price is not set by the balance between supply and demand, but by gut feeling - a kind of chaotic situation as well.

Act local, think regional

I was reading the rules for the submission of movies for the Vientianale today, and was quite surprised that it is only for Lao people. Yes, you may think, because it is an event in Laos. Wrong I say, it doesn't matter where you are, your goal matters. And the goal isn't just supporting Lao filmmakers (if there are any), but to let the industry grow and improve.

What Laos (and Vietnam and Thailand as well) need, is way more exchange with neighbors. For example, Cambodia has a lot of enthusiast with film making skills. Vietnam is good in IT and Telecommunication. Thailand might be good in management (at least compared to it's neighbors).

So everything that is done should be seen in a wider perspective. I was attending a workshop about radio frequency monitoring, organized by NAPT. They made is right: They invited the government officials from Cambodia, Vietnam and Thailand, to share their ideas and knowledge.


When I was in Cambodia recently, I met the GM of Tiny Toones, a dance group. When I asked her if she knows about Lao Bang Fai, she had never heart of it. That is just not good. Instead of copying Korean pop culture, the SE countries should stay together and learn from each other.

When you want to plant something for harvesting later, make sure that you have enough seeds, no matter where they are from.

The Barcamps have such a good response, because you always meet people from other countries there.

The lack of curiosity in developing countries

I am constantly wondering why things are like they are in Laos and Cambodia. Since globalization, internet and satellite TV there is equal access to information. Why are developing countries still struggling to improve?
We all now that on the one hand the old elite's don't want change. But as we see in China right now, this is shortsighted. People want change, and the leaders have to find a way to deal with it.


Beside from imminent measures like improvement of infrastructure, for the long term the education sector is the only place to establish sustainable development in society.But that's where the program starts. The traditional way of teaching and learning failed, especially in Asian countries. Why? Because school and university doesn't support or even push curiosity. Unfortunately this is the driving force in self-education, and the reason why some students are more successful. In western countries this problem is compensated by parental education and society. Curiosity is a value, it is positive (at least until now). We explore things, we discover our environment.
In Asia, at least in my experience so far, no one wants to explore anything. People sometimes (actually quite often) don't even know their neighborhood well, not to speak about their own town. In school, you are not allowed to ask "why". At home, you are not allowed to question your parents orders and advice. But "Why" is the basis of curiosity, the start. But when you watch kids, they are different. They do explore. Sadly, education steps in quite fast and stops it.

So how to solve the problem?
First, encourage self-education. I tell people every day to stop studies and learn from life and others. it is actually not so much about what they learn, its about how. In school, the teacher is lecturing. Wow. No reason to pay since this stuff is usually available on youtube or iTunesU already. So better invite some friends, watch a real teacher on the internet and discuss what he said.
Also, instead of study English over and over again, get some people to start an English club and self assign tasks for presentations. That is gonna be way more fun. You like engineering? Then start engineering. Just do the minimum at school, then go home and dismantle the toaster, buy some chips and cables and create an solar powered oven out of it. THAT's engineering.

I don't even start about accounting. This can be purely studied by books. You want practice? Then take over family financial planning and monitor daily expenses. Schoolbooks give ypu problems to solve you don't like. Real life gives you real problems to solve. "Mum, we had a loss of 500 Dollar this month" will take you faster into combat mode than any assignment in school.
We need a radical change in education. In developing countries, that means get the foreign advisers and consultants out, but even more urgent the NGOs and GOs from foreign countries, As we can see, they failed. There is no need to educate a village. There is a need to educate champions. Easy done. They will teach the others. Get out quickly.


Find this video about how curiosity encourage learning

Why NGOs so often fail - and why they should be start-ups

I will never become a fan of the multinational NGOs and also government sponsored agencies working in the developing field. Wht I experienced so far it is a waste of money. They may have a good intention, but they lack of executing, mainly because most of them are either academics or administration officers. for example if there is a project in improving rice quality, they spend a lot of money in research and papers ad studys before actually getting into the field. But it's easy to work like that, since money is just pouring in from donors.

What if NGOs would work like start-ups? Developing a business plan, getting money only from profits, just have a initial funding by VCs who want have a return of investment. If for example organic farming works on markets, then make a business, not a project. Get a 40 percent share and a veto right in a cooperative and start earning money.

As long as NGOs just give advise and waste donations for themselfs, there is no change. I hear many complaing about the Mekong damns, but haven't heard any solution where Laos should get energy from instead.

Western NGOs actually want keep developing countries kind of poor. There is no intention of developing economy, because they will become a competitor. Thats why so many are focusing on health care: No competion from there, and you can sell some pills from your countries pharma companies (as it happend in Cambodia).

Just some thought. Proof me wrong please