Globalization Helps the Third World
Toro @ Thu Dec 08, 2005 7:59 pm
Hey IceOwl
What do you think of this?
$1:
Hur ber man om ursäkt sterilt, formellt, utan att mena det? Genom att säga att man redan har gjort det så att hela diskussionen därmed kan förpassas till historien. I riksdagen i torsdags sade Göran Persson:
"Jag har gjort det flera gånger, och jag kan göra det en gång till så att Lars Leijonborg slipper sväva i okunnighet: Jag ber på mina egna vägnar och hela regeringens vägnar om ursäkt för de misstag vi gjorde under dessa dramatiska dagar."
Håkan Jacobson kollade med arkiven och med presschefen. Persson har inte bett om ursäkt tidigare. Inte en enda gång.
Okay for once I'm feeling too lazy to read through the monstrous sized posts in this thread...
Judging from the charts in the 1st post, its looking at it from a rather ethnocentric viewpoint.
Their income has increased, --Undoubtedly so has the country's defecit.
Has their quality of life increased however? It's measuring monetary standards. We measure quality of life in materialistic standards too it seems --There's quite a few areas out there where they to us appear "wretchedly poor" without all their material goods, except when it comes right down to it, the people are still comfortable, well fed, and living a higher quality of life overall than some of our own country's truly poor people.
Before I start saying that it actually "helps" I'd want to see evidence that it has some kind of benefit other than financial reports indicating increased income.
Toro @ Thu Dec 08, 2005 8:29 pm
IceOwl IceOwl:
Toro Toro:
Hey IceOwl
What do you think of this?
$1:
Hur ber man om ursäkt sterilt, formellt, utan att mena det? Genom att säga att man redan har gjort det så att hela diskussionen därmed kan förpassas till historien. I riksdagen i torsdags sade Göran Persson:
"Jag har gjort det flera gånger, och jag kan göra det en gång till så att Lars Leijonborg slipper sväva i okunnighet: Jag ber på mina egna vägnar och hela regeringens vägnar om ursäkt för de misstag vi gjorde under dessa dramatiska dagar."
Håkan Jacobson kollade med arkiven och med presschefen. Persson har inte bett om ursäkt tidigare. Inte en enda gång.
Just as much nonsense as your last post.
Aaaaah, I figured you THOUGHT you knew everything...
IceOwl IceOwl:
Well, I do know everything. The difference between you and me is that I can admit that most of it's wrong.
Why are you going back to school, smartass?
IceOwl IceOwl:
To tell you the truth, only to get my math back to some state of usefulness. I'm more inclined to start an apprenticeship at this point, cause my program isn't actually going to lead anywhere. But, you know, don't lay on the compliments for actually trying to be successful.
Don't worry i won't
Toro @ Sat Dec 10, 2005 8:27 am
New paper from the World Bank.
$1:
How have the world’s poorest fared since the early 1980s?
Shaohua Chen and Martin Ravallion
Development Research Group, World Bank
We present new estimates of the extent of the world’s progress against poverty. By the frugal $1 per day standard, we find that there were 390 million fewer people living in poverty in 2001 than 20 years earlier. Over the same period, 400 million fewer people were poor in China; half of this decline was in the early 1980s. Aggregate gains to the poor elsewhere in the world have roughly balanced the losses. A marked bunching up of people between $1 and $2 per day has emerged over time. If the trends over 1981-2001 continue then the aggregate $1 per day poverty rate for 1990 will be almost halved by 2015, though East and South Asia will be the only regions to more than halve their 1990 poverty rates. Sub-Saharan Africa has emerged as the region with the highest incidence of extreme poverty and the greatest depth of poverty. ...
A notable feature of these new estimates is that we go back to the early 1980s, allowing an assessment of the validity of the claim in World Bank (2002) that there were 200 million people fewer poor by the 2000. ...
We find that the 200 million figure is probably an under-estimate. Indeed, our best estimates suggest that it is almost twice that number. That is good news. However, as we also show, a closer inspection of the data leaves little room for complacency about the world’s progress against poverty. Indeed, the picture that emerges is one of highly uneven progress, with serious setbacks in some regions and time periods. And we find that more people living near $2 per day became worse off over the period than the number who gained. Thus the number living under $2 per day rose. ...
Using the Sundaram-Tendulkar distributions, the $1 per day poverty rate for India falls from 38.7% to 32.3% between 1993 and 1999/00; a 6.4% point drop, as compared to our estimate using the Deaton adjusted distributions of 7.1% points and 9.6% points from the official data. ...
Over the 20 year period, we find that the percentage of the population of the developing world living below $1 per day was almost halved, falling from 40% to 21% over 1981-2001. Expressed as a proportion of the population of the world, the decline is from 33% to 18%. (This assumes that there is nobody living below $1 per day in the developed countries.) The number of poor fell by 390 million, from 1.5 billion to 1.1 billion. ...
the late 1980s and early 1990s were a difficult period for the world’s poor, with low growth in both China and India. Once growth was restored, the rate of poverty
reduction by the $1 per day standard in the 1990s had returned to its long-term trend. The percentage below $1 per day fell from 28% to 21% over 1990-2001. The number of poor fell by about 125 million in 1990s. ...
The composition of world poverty has changed noticeably over the period. The number of poor has fallen in Asia, but risen elsewhere. There has been dramatic progress in East Asia. In China alone, there were 400 million fewer poor in 2001 than 20 years earlier, though a staggering half of this decline was in the period 1981-1984 ...
For the developing world outside China, the number of poor living under $1 per day increased, from 840 million to 890 million over 1981-2001. The number of poor has also fallen in South Asia, from 475 million in 1981 to 430 million in 2001. The poverty rate in that region fell from 52% to 31%. We also find an increase in the number of poor in Latin America, with roughly constant poverty rate (10% for $1 per day; 25% for $2, which is closer to poverty lines found in that region). The Middle-East and North Africa region was experiencing a marked downward trend in the poverty rate during the 1980s, but in the 1990s the rate stabilized at around 2% for $1 per day and a little over 20% for $2 per day.
We find a rising incidence and number of poor in Eastern Europe and Central Asia (EECA) comparing the 1990s with the 1980s. Very few people live below $1 per day in this region. The poverty rate by the $2 standard rose from almost 2% in 1981 to 20% in 2001. ...
The incidence of poverty in Sub-Saharan Africa has also remained fairly constant in the 1990s, at around 45%. The number of poor has almost doubled in Sub-Saharan Africa over 1981-2001, from 164 million to 316 million. The share of the world’s poor in Africa has risen from 11% in 1981 to 29% in 2001.
While these results suggest that the poorest as a whole have seen net gains, the 390 million fewer people living below $1 per day in 2001 (compared to 1981) are still poor by the standards of middle-income developing countries. Our estimates suggest less progress in getting over the $2 per day line. The poverty rate by this higher standard has fallen from 67% in 1981 to 53% in 2001 (Table 2). This has not been a sufficient decline to prevent a rise in the number of people living below $2 per day, from 2.4 billion to 2.7 billion. Thus the number of people living between $1 and $2 has actually risen sharply over these two decades, from about 1 billion to 1.6
billion. This marked “bunching up” of poor people just above the $1 line suggests that a great many people in the world remain vulnerable to aggregate economic slow downs. ...
The most striking feature of the results in Table 4 is the depth of poverty in Africa, with a $1 per day poverty gap index of 20%, as compared to 6% for the developing world as a whole. Furthermore, the mean income of Africa’s poor has been falling over time (Table 5). The mean income of those living under $1 per day in Africa was $0.64 per person per day in 1981 and fell to $0.61 in 2001. For the $2 line, the mean income of Africa’s poor remained roughly constant. By contrast, the overall mean income of the poor in the developing world as a whole tended to rise over time, from about $0.70 in 1981 to $0.77 in 2001 by the $1 line, and even more markedly for the $2 line, from $1.02 to $1.25. Poverty has become shallower in the world as a whole, but not in Africa.
Link
Toro @ Sun Dec 11, 2005 7:36 pm
Great article by Paul Krugman
$1:
In Praise of Cheap Labor
Bad jobs at bad wages are better than no jobs at all.
By Paul Krugman
(1,669 words; posted Thursday, March 20; to be composted Thursday, March 27)
For many years a huge Manila garbage dump known as Smokey Mountain was a favorite media symbol of Third World poverty. Several thousand men, women, and children lived on that dump--enduring the stench, the flies, and the toxic waste in order to make a living combing the garbage for scrap metal and other recyclables. And they lived there voluntarily, because the $10 or so a squatter family could clear in a day was better than the alternatives.
The squatters are gone now, forcibly removed by Philippine police last year as a cosmetic move in advance of a Pacific Rim summit. But I found myself thinking about Smokey Mountain recently, after reading my latest batch of hate mail.
The occasion was an op-ed piece I had written for the New York Times, in which I had pointed out that while wages and working conditions in the new export industries of the Third World are appalling, they are a big improvement over the "previous, less visible rural poverty." I guess I should have expected that this comment would generate letters along the lines of, "Well, if you lose your comfortable position as an American professor you can always find another job--as long as you are 12 years old and willing to work for 40 cents an hour."
Such moral outrage is common among the opponents of globalization--of the transfer of technology and capital from high-wage to low-wage countries and the resulting growth of labor-intensive Third World exports. These critics take it as a given that anyone with a good word for this process is naive or corrupt and, in either case, a de facto agent of global capital in its oppression of workers here and abroad.
But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.
After all, global poverty is not something recently invented for the benefit of multinational corporations. Let's turn the clock back to the Third World as it was only two decades ago (and still is, in many countries). In those days, although the rapid economic growth of a handful of small Asian nations had started to attract attention, developing countries like Indonesia or Bangladesh were still mainly what they had always been: exporters of raw materials, importers of manufactures. Inefficient manufacturing sectors served their domestic markets, sheltered behind import quotas, but generated few jobs. Meanwhile, population pressure pushed desperate peasants into cultivating ever more marginal land or seeking a livelihood in any way possible--such as homesteading on a mountain of garbage.
Given this lack of other opportunities, you could hire workers in Jakarta or Manila for a pittance. But in the mid-'70s, cheap labor was not enough to allow a developing country to compete in world markets for manufactured goods. The entrenched advantages of advanced nations--their infrastructure and technical know-how, the vastly larger size of their markets and their proximity to suppliers of key components, their political stability and the subtle-but-crucial social adaptations that are necessary to operate an efficient economy--seemed to outweigh even a tenfold or twentyfold disparity in wage rates.
And then something changed. Some combination of factors that we still don't fully understand--lower tariff barriers, improved telecommunications, cheaper air transport--reduced the disadvantages of producing in developing countries. (Other things being the same, it is still better to produce in the First World--stories of companies that moved production to Mexico or East Asia, then moved back after experiencing the disadvantages of the Third World environment, are common.) In a substantial number of industries, low wages allowed developing countries to break into world markets. And so countries that had previously made a living selling jute or coffee started producing shirts and sneakers instead.
Workers in those shirt and sneaker factories are, inevitably, paid very little and expected to endure terrible working conditions. I say "inevitably" because their employers are not in business for their (or their workers') health; they pay as little as possible, and that minimum is determined by the other opportunities available to workers. And these are still extremely poor countries, where living on a garbage heap is attractive compared with the alternatives.
And yet, wherever the new export industries have grown, there has been measurable improvement in the lives of ordinary people. Partly this is because a growing industry must offer a somewhat higher wage than workers could get elsewhere in order to get them to move. More importantly, however, the growth of manufacturing--and of the penumbra of other jobs that the new export sector creates--has a ripple effect throughout the economy. The pressure on the land becomes less intense, so rural wages rise; the pool of unemployed urban dwellers always anxious for work shrinks, so factories start to compete with each other for workers, and urban wages also begin to rise. Where the process has gone on long enough--say, in South Korea or Taiwan--average wages start to approach what an American teen-ager can earn at McDonald's. And eventually people are no longer eager to live on garbage dumps. (Smokey Mountain persisted because the Philippines, until recently, did not share in the export-led growth of its neighbors. Jobs that pay better than scavenging are still few and far between.)
The benefits of export-led economic growth to the mass of people in the newly industrializing economies are not a matter of conjecture. A country like Indonesia is still so poor that progress can be measured in terms of how much the average person gets to eat; since 1970, per capita intake has risen from less than 2,100 to more than 2,800 calories a day. A shocking one-third of young children are still malnourished--but in 1975, the fraction was more than half. Similar improvements can be seen throughout the Pacific Rim, and even in places like Bangladesh. These improvements have not taken place because well-meaning people in the West have done anything to help--foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor. It is not an edifying spectacle; but no matter how base the motives of those involved, the result has been to move hundreds of millions of people from abject poverty to something still awful but nonetheless significantly better.
Why, then, the outrage of my correspondents? Why does the image of an Indonesian sewing sneakers for 60 cents an hour evoke so much more feeling than the image of another Indonesian earning the equivalent of 30 cents an hour trying to feed his family on a tiny plot of land--or of a Filipino scavenging on a garbage heap?
The main answer, I think, is a sort of fastidiousness. Unlike the starving subsistence farmer, the women and children in the sneaker factory are working at slave wages for our benefit--and this makes us feel unclean. And so there are self-righteous demands for international labor standards: We should not, the opponents of globalization insist, be willing to buy those sneakers and shirts unless the people who make them receive decent wages and work under decent conditions.
This sounds only fair--but is it? Let's think through the consequences.
First of all, even if we could assure the workers in Third World export industries of higher wages and better working conditions, this would do nothing for the peasants, day laborers, scavengers, and so on who make up the bulk of these countries' populations. At best, forcing developing countries to adhere to our labor standards would create a privileged labor aristocracy, leaving the poor majority no better off.
And it might not even do that. The advantages of established First World industries are still formidable. The only reason developing countries have been able to compete with those industries is their ability to offer employers cheap labor. Deny them that ability, and you might well deny them the prospect of continuing industrial growth, even reverse the growth that has been achieved. And since export-oriented growth, for all its injustice, has been a huge boon for the workers in those nations, anything that curtails that growth is very much against their interests. A policy of good jobs in principle, but no jobs in practice, might assuage our consciences, but it is no favor to its alleged beneficiaries.
You may say that the wretched of the earth should not be forced to serve as hewers of wood, drawers of water, and sewers of sneakers for the affluent. But what is the alternative? Should they be helped with foreign aid? Maybe--although the historical record of regions like southern Italy suggests that such aid has a tendency to promote perpetual dependence. Anyway, there isn't the slightest prospect of significant aid materializing. Should their own governments provide more social justice? Of course--but they won't, or at least not because we tell them to. And as long as you have no realistic alternative to industrialization based on low wages, to oppose it means that you are willing to deny desperately poor people the best chance they have of progress for the sake of what amounts to an aesthetic standard--that is, the fact that you don't like the idea of workers being paid a pittance to supply rich Westerners with fashion items.
In short, my correspondents are not entitled to their self-righteousness. They have not thought the matter through. And when the hopes of hundreds of millions are at stake, thinking things through is not just good intellectual practice. It is a moral duty.
Paul Krugman is a professor of economics at MIT whose books include The Age of Diminished Expectations and Peddling Prosperity.
Link
Good posts Toro. I enjoyed teh Krugman piece -- very thoughtful.
Toro @ Sun Dec 11, 2005 8:27 pm
Why thank you, Zipperfish.
IceOwl IceOwl:
Goooo spam!
IceOwl IceOwl:
To tell you the truth, only to get my math back to some state of usefulness.
Well, I'll help you here.
IceOwl math quiz.
2+2=?
A). 4
B.) Spam
Think hard now.