The Good (and Bad) News About Poverty and Global Trade


John Cassidy in The New Yorker:

The World Bank and the United Nations have set a goal of eliminating extreme poverty by 2030, but achieving this target will be very difficult. Today, close to half of all extreme poverty is concentrated in sub-Saharan Africa, which, despite some recent progress, is still beset by war, disease, and a lack of properly functioning institutions. In addition, it is important not to read too much from the extreme-poverty figures as regards the fight against poverty as a whole. If you are an African, an Asian, or a South American, just because you have edged above the World Bank’s bar doesn’t mean that you aren’t still poor. 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.

Furthermore, some of the recent decline in the rate of extreme poverty may be an artifact of how the bank calculates it, which changed recently. In a skeptical piece in the Financial Times, Shawn Donnan explained some of the tricky technical issues, which largely revolve around how to compare prices across countries and across time. Meanwhile, Francisco Ferreira, a senior economist at the World Bank, defended its procedures in a blog post arguing that, whichever numbers are used, the trend in extreme poverty is a downward one.

That does seem to be true, and it’s something to celebrate. Above all else, it reflects the entry of China, India, and other developing countries into the global trading system, not merely as sources of raw materials and cheap labor but also, increasingly, as independent players in global capitalism. In industries ranging from steel to autos to energy to solar panels, Chinese and Indian companies are now competing head-to-head with western rivals. The global market that Karl Marx and Friedrich Engels wrote about in 1848 is now largely a reality, with individual countries and corporations vying for the spoils.

That’s what trade agreements like the T.P.P. are all about.

More here.