Good News About Poverty
By DAVID BROOKS

Published: November 27, 2004


I hate to be the bearer of good news, because only pessimists are regarded as intellectually serious, but we're in the 11th month of the most prosperous year in human history. Last week, the World Bank released a report showing that global growth "accelerated sharply" this year to a rate of about 4 percent.

Best of all, the poorer nations are leading the way. Some rich countries, like the U.S. and Japan, are doing well, but the developing world is leading this economic surge. Developing countries are seeing their economies expand by 6.1 percent this year - an unprecedented rate - and, even if you take China, India and Russia out of the equation, developing world growth is still around 5 percent. As even the cautious folks at the World Bank note, all developing regions are growing faster this decade than they did in the 1980's and 90's.

This is having a wonderful effect on world poverty, because when regions grow, that growth is shared up and down the income ladder. In its report, the World Bank notes that economic growth is producing a "spectacular" decline in poverty in East and South Asia. In 1990, there were roughly 472 million people in the East Asia and Pacific region living on less than $1 a day. By 2001, there were 271 million living in extreme poverty, and by 2015, at current projections, there will only be 19 million people living under those conditions.

Less dramatic declines in extreme poverty have been noted around the developing world, with the vital exception of sub-Saharan Africa. It now seems quite possible that we will meet the United Nations' Millennium Development Goals, which were set a few years ago: the number of people living in extreme poverty will be cut in half by the year 2015. As Martin Wolf of The Financial Times wrote in his recent book, "Why Globalization Works": "Never before have so many people - or so large a proportion of the world's population - enjoyed such large rises in their standard of living."

As other research confirms, these rapid improvements at the bottom of the income ladder are contributing to and correlating with declines in illiteracy, child labor rates and fertility rates. The growth in the world's poorer regions also supports the argument that we are seeing a drop in global inequality.

Economists have been arguing furiously about whether inequality is increasing or decreasing. But it now seems likely that while inequality has grown within particular nations, it is shrinking among individuals worldwide. The Catalan economist Xavier Sala-i-Martin looked at eight measures of global inequality and found they told the same story: after remaining constant during the 70's, inequality among individuals has since declined.

What explains all this good news? The short answer is this thing we call globalization. Over the past decades, many nations have undertaken structural reforms to lower trade barriers, shore up property rights and free economic activity. International trade is surging. The poor nations that opened themselves up to trade, investment and those evil multinational corporations saw the sharpest poverty declines. Write this on your forehead: Free trade reduces world suffering.

Of course, all the news is not good. Plagued by bad governments and AIDS, sub-Saharan Africa has not joined in the benefits of globalization. Big budget deficits in the U.S. and elsewhere threaten stable growth. High oil prices are a problem. Trade produces losers as well as winners, especially among less-skilled workers in the developed world.

But especially around Thanksgiving, it's worth appreciating some of the things that have gone right, and not just sweeping reports like the one from the World Bank under the rug.

It's worth reminding ourselves that the key task ahead is spreading the benefits of globalization to Africa and the Middle East. It's worth noting this perhaps not too surprising phenomenon: As free trade improves the lives of people in poor countries, it is viewed with suspicion by more people in rich countries.

Just once, I'd like to see someone like Bono or Bruce Springsteen stand up at a concert and speak the truth to his fan base: that the world is complicated and there are no free lunches. But if you really want to reduce world poverty, you should be cheering on those guys in pinstripe suits at the free-trade negotiations and those investors jetting around the world. Thanks, in part, to them, we are making progress against poverty. Thanks, in part, to them, more people around the world have something to be thankful for.

http://www.nytimes.com/2004/11/27/opinion/27brooks.html

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"This is a time for a national imperative not to fail in Iraq." Condoleeza Rice, January 11, 2007

Yes, globalization is good, it is responsible for the growth of better life in the world, but globalization isnt free trade, globalization is very regulated.

I'll remind you you of the mid-90s at the Washington Conference when the 1st world countries of the world handed the poorer nations a list of things to do with their economy to drastically improve their economies over a few decades. Countries like Russia, Argentina, and Indonesia immediately applied these free trade/globalizatin/unregulated rules and their economies (as well as other countries that followed these rules) immediately crashed.

Free trade is good, but it must be regulated, globalization is very regulated. The question is how much should it be regulated. The thing I hate about many liberals and conservatives believe the economy sould be completely unregulated or completely regulated. They're both wrong. Both extremes always failure, economies need to be in the middle.

Thats what Bono and Springsteen complain about (from my understanding) that free-trade must be regulated or else it gets out of hand (but too much regulation is a bad thing).

Personally, from my knowledge of history, economic history, my father's knowledge, economics classes, and news it seems to me that be that being a little bit more regulated (not 40% more, nothing that extreme) is better because I personally believe that good stable governments tend to look at the the interests of people more so than corporations involved in globalization.

Good points all

We get caught up in terms and semantics. Globalization is not a bad thing in and of itself. Economic laws suggest that it is good. Only when such trade is, a) completely under the control of MNC's or b) completly unregulated does it lead to problems.

Competition is tough, but we all must remember that while the pie is increasingly divided, the pie itself is growing larger and larger. It could very well be a win-win situation for everyone when we do what we do best, and let others do what they do best.

Has it really been proven that free trade is good for poorer, less developed countries though?

Many countries in Latin America opened their markets to free trade with the US in the 1980's for example, but Latin America continues to have the greatest disparity between wealthy and poor people, with 15% of the population controlling roughly 85% of the wealth. Over 1/3 of the population lives in poverty.

I also remember reading about how Under the Central American Free Trade Agreement, Nicaragua was granted special trade privileges that will allow abusive factories like King Yong to export 427 million garments to the U.S. duty free.

So if countries aren’t required to improve working conditions and we all know how bad many poorer countries working conditions are, how good is it for the poor?

Ask yourself this...do those people have to work there? They choose to. It is an improvement over their alternative. Therefore it is beneficial to some degree.

The world isn't all "us vs. them" and "evil overlords" taking advantage of peasants.

But you do raise a good point. Those places, in order to trade with us, should establish that they do operate humane business places and that they provide reasonable wages and accommodations to their employees. If they can't do that, then I guess we'll have to make our sweatshirts and shower flip flops here.

(why can't a politician come up with something that common sense?

I realize that working in a sweatshop for 9 cents an hour sure beats not working at all for many people in poorer countries. That’s just looking at the bright side of a really bad situation. Like “Hey I work 16 hours a day 7 days a week, but I can at least afford a bowl of rice for my family.” Those poor people deserve better and their lives haven’t improved enough to say free trade is making their lives easier. Their labor is still extremely undervalued and the benefits their getting from working in the shops that are “getting rich” from free trade isn’t anything to brag about.

Like I said, I’m for economic freedom, but whether it’s helping the poor is very questionable.

No, you're wrong, dead wrong. The standard of living of countries all around the world is rising at amazing rates. All indicators point to globalization. What you're pointing out, sweatshops, is a cheapt attack and is barely the tip of the iceburg. Just take China, ever economic indicator shows that through globalization EVERYONE is slowly starting to get out of the gutter, even poor peasants in teh rural areas. Even those working in sweatshops in China are having their standard of living raised.

The global average per capita income rose strongly throughout the 20th century, the income gap between rich and poor countries has been widening for many decades. Globalization has not worked for the poor as you claim.

Countries are now involved in a "race to the bottom" to attract and retain investments. Multinational corporations are taking advantage of this to employ sweatshop labour and then skim off huge profits while paying very little tax. How is this helping the standard of living for people at the bottom???

It helps the standard of the people at the bottom by raising the bottom. It hurts the ones at the top who can't compete on wages. It isn't a race to the bottom, it's a race to "equilibrium" in economist's terms, a race to the middle in everyday parlance.