[Editor’s note: this lecture was delivered to the Leavey Institute of Santa Clara University in 2003. You can find it reproduced in whole here]

Poverty, some International Trends

Now, let’s look for objectionable new facts in the worldwide distribution of income. (It’s too difficult to get international data on wealth.) In the nineteen-fifties, the total of the national incomes of all other countries in the world barely equaled the national income of the US alone (Delacroix, 1974). Today, the US GNP constitutes less than one third of the sum of all countries’ GNPs (World Bank, 2002:4.2), although the US has experienced healthy economic growth since the fifties. It’s true that a number of countries are mired in deep poverty and that some are even regressing. (See below.) It seems to me those are all countries with exceptionally corrupt or tyrannical governments, such as Haiti on the one hand and North Korea, on the other, or stand-alone plutocratically-run former colonies such as the so-called “Democratic Republic of the Congo” (formerly Zaire), or Sierra Leone (where, incidentally, the bulk of the population was almost certainly better off under European colonialism), or that they have especially poor access to current information (because of high illiteracy and other reasons, including government censorship or even deeply entrenched cultural facts [4]), such as Afghanistan (but no hard data are available). By far the worst economic performers in the past ten years are the European countries that have been trying to recover from their cruel experiment in state socialism (“communism”), not the Third World countries.

In spite of loose talk of “globalization” somehow deepening the poverty of the Third World (5), the following countries experienced higher average Gross Domestic Product rates of annual growth than the US (and higher than any Western European country, except one; see below) between 1990 and 2000:

Bangladesh, Benin, Bolivia, Cambodia, Costa Rica, Egypt, Ethiopia, Ghana, India, Jordan, Papua-New Guinea, Peru, Vietnam, not to mention strongly foreign trade-oriented Malaysia, Chile and Ireland (each of these three with about twice the US rate), and China, with a whopping 10%. Even Lesotho did better than the US (4.1% vs 3.5%).

(This is an eclectic and incomplete list that accounts for 45 % of the world population, circa 2000, and for a much higher percentage of the population of Third World countries, traditionally defined.)

Let me deal briefly with the common but erroneous notion that, “Poor countries have nowhere to go but up”, which is an attempt to suggest that economic growth among the poor nations is automatic and therefore, not meaningful. During the long, twenty-year span 1980-2000, Haiti (admittedly a basket case) saw its economy shrink by an average.

4% per year; Jamaica’s grew by a humble average 1.75% ; Algeria, an oil-rich country with a good infrastructure by Third World standards, experienced growth of 2.3% per year on the average. Venezuela, another oil-endowed country, experienced a modest rate of 1.35%. Zambia grew by less than 1%. The Indian Ocean island republic of Madagascar, grew by only 1.6%. By contrast, Mauritius, a small tropical island country close to Madagascar, with a higher population density than any country except Bangladesh and Singapore (Smith,1999), devoid of natural resources, and populated mostly by South Indian immigrants who have every right to be confused (because they speak French and follow English law), Mauritius had an average annual growth of 5.2 % between 1980 and 2000. That’s comparable to a family’s income going, in real terms, from $10 000 to $27 500. (A lot better than the American working class is supposed to have done during the past twenty years, according to left-wing opinion.) During that period, Mauritius’ manufacturing sector increased by 8.4% per year, on the average. During the same period, for purposes of comparison, the manufacturing sector of comparatively healthy Finland went up 4.5% per year, that of Ghana, .03% (That’s 3 per thousand), while the former Soviet and still largely socialist Republic of Latvia experienced a mean 3.3% shrinkage per year.

If you want to guess where the capital for this rapid industrialization of Mauritius came from, you may want to look at the tag on the top back inside your sweater. This is not the place to develop a case study of Mauritius’ success, but I can’t help notice that Ghana has a corporate tax rate of 33 % (close to the US 35%), while Mauritius’ rate is 15%, one of the lowest in the world. Guess which tropical country multinational corporations find most attractive?

(All figures in the preceding six paragraphs are from the World Bank’s World Development Indicators 2002, except as otherwise specified.)

Does this mean that “globalization” is only a slogan for the ill informed, not a reality? Maybe not. It’s plausible that some multinational corporations are big enough relative to national governments to escape the rule of law in some countries. I cannot deal with this important issue here. At any rate, it would require that one disentangle the effects of corporation size and power from those of corrupt, ineffectual and tyrannical national governments, a basketful of opportunities for ideologically motivated mischief. Independent from this issue, it seems to me that there is both something new under the sun that harms the poor of this world and that there exists a real world-wide domination of the productions of one country in one economic sector, but that it is both ordinary, in accord with conventional economics, and beneficial, in its social consequences.

(4) The whole Arab world translates annually fifty times fewer books per capita than Greece (computed from the United Nations Arab Human Development Report 2002 and the World Development Indicators 2002). Of course, this has nothing to do directly with economic conditions. The cost of translating books is insignificant if there is a reading public.

(5) Critics of globalization often argue in the same breath that it is responsible both for increasing poverty and for intra-society inequality. The latter observation is probably correct. Since the works of Kuznets, in the fifties, it has been shown repeatedly that rises in standards in living are normally associated with greater inequality. This is simply because it is not the case that all become richer at the same rate. Hence this criticism of globalization is, in fact, a roundabout admission of its possibly beneficial effects on all standards of living. It’s possible to disapprove of inequality without confusing it with poverty.

Go back to Part 1; Proceed to Part 3