Wednesday, October 07, 2015

You will always have the poor among you?

Remember those guilt-tripping commercials in which Sally Struthers hugged poor kids and asked us to open up our hearts and our wallets?  Which then provided enough materials for comedians, like in this one?  The world is keen on putting all of them out of business, it seems!  Consider this:
The number of extremely poor people (defined as those earning less than $1 or $1.25 a day, depending on who’s counting) rose inexorably until the middle of the 20th century, then roughly stabilized for a few decades. Since the 1990s, the number of poor has plummeted.
In 1990, more than 12 million children died before the age of 5; this toll has since dropped by more than half.
More kids than ever are becoming educated, especially girls. In the 1980s, only half of girls in developing countries completed elementary school; now, 80 percent do.
Global poverty is in decline.  A huge decline.  How huge, you ask?
On Sunday, the World Bank announced that this year, for the first time on record, the percentage of the earth’s population that is living in extreme poverty is likely to fall below ten per cent. As recently as 1990, the proportion was more than a third. 
You want details, right?
In 1990, 60.8 per cent of the population in the East Asia and Pacific region, which includes China, lived below the extreme poverty line. By 2012, that figure had fallen to 7.2 per cent, and this year it will be 4.1 per cent, according to the bank’s projections. For the South Asia region, which includes India, the trend is similar, if a bit less dramatic. In 1990, 50.6 per cent of the population lived in extreme poverty; by 2012 the figure had fallen to 18.8 per cent, and this year it will be 13.5 per cent.
You perhaps noticed that it was the data for "extreme poverty" and you think that there is now a huge increase in moderate poverty.  It is not an increase, but, yes, there is moderate poverty,:
In the poorest forty per cent of countries, according to the bank’s own figures, about half the population is still in “moderate poverty,” which it defines as existing on less than four dollars a day of income.
Poverty reduction is a huge story that should be in the front pages of every newspaper, and should be the lead story of every television news program.  But, of course, who cares about the good news when it is bad news and sex that sell!

While we celebrate it, the new global economy raises new problems:
in many developed countries the poor and near-poor are actually falling further behind. One way to see this is to look at how households in the bottom forty per cent of the income distribution are doing. When the bank’s researchers did this, they found that in seventeen of thirty-six advanced countries, per-capita income in such households has fallen since 1990.
That figure doesn’t easily jibe with the upbeat story of mutually reinforcing prosperity that trade economists used to tell. It reflects the reality of a world transformed, with globalization creating winners and losers in a manner that defies easy description. Globalization reduces some inequities, such as the scourge of extreme poverty, while accentuating others, and everywhere it causes political tensions.
The problem in dealing with all those trends is this: it takes responsible political leaders to understand such trends and then to exercise leadership in order to create a new social contract that will reflect the changing fortunes.  It will take an informed and interested electorate to think about such trends and to elect responsible and thoughtful leaders. The Economist notes about a golden era of policymaking, though it was in a completely different context of foreign policy:
What did it take to make the country act in such enlightened self-interest? According to “The Wise Men”, a history by Walter Isaacson and Evan Thomas published in 1986, the magic ingredients included a rarefied East Coast foreign-policy elite who could easily glide between Wall Street and high office; responsible media; a thoughtful Congress capable of bipartisanship; a public that could be united against a common ideological enemy with which America had few economic links; and a president, Harry Truman, who was a war hero.
"enlightened self-interest" seems so impossible now!


Ramesh said...

The reason why a new social contract is not being designed is simply because its so hard to agree to. In fact, the new social contract is being articulated all the time by the politicians. Trump is indeed articulating a new social contract. We may not like it , or even hate it, but it is being articulated. Ditto Bernie Sanders on the other side. A zillion others are doing likewise. But since the views are so polarised, an agreement is so difficult. In this world of "enlightened my interest only and to hell with anybody else" , its almost impossible to have any form of contract.

So lets simply applaud what's happened on poverty reduction in the developing world. The one country which has single handedly changed the world's statistics on poverty is China. You should at least give them the credit, however much you hate their system.

Sriram Khé said...

Oh yeah, Trump is clearly defining a new social contract--but that is not coming from "enlightened self-interest" ... perhaps in this age of polarization, which is facilitated and developed by social media, we might never again see "enlightened self-interest" ... we humans are idiots!

I will never ever give credit to China's system.
Let me present it another way. India and China started self-determining their fates about the same time. In the years since, China's system has reduced poverty, yes, but it was the same system during the seventy years that 45 million died from starvation and systematic torture during the famine. The system that added misery via the "cultural revolution" and the "great leap forward." The system that imposed a tight control over the number of children that people could have. The system that made sure not to recognize that humans have rights. If you praise this system that then "lifted" hundreds of millions out of poverty, then surely you also mean that India would have benefited from such a system? A system that continues to deny many of the basic rights that people in India do not even have to think about because it is so much a part of their existence?

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