Tuesday, May 10, 2011

Is globalization producing rich countries full of poor people?

Advocates of globalization are correct that the process has raised average productivity and national wealth – and therefore freedom – across the world. According to the World Bank, the proportion of people living on less than $2 a day fell from 67% in 1981 to 47% in 2004. Globalization has also created a market for luxury in almost any country you care to name. This is all the evidence many pro-globalizers need. They point to increases in average per capita income and conclude this is irrefutable evidence that hundreds of millions of people have been lifted out of poverty.
But average height has always been a poor means of describing a tall person and a short one. Globalization's opponents note that you can obtain a healthy-sounding median from averaging the rocketing income of one very rich man and the falling incomes of ten poor ones. A rise in a nation's overall wealth says nothing about equality within that nation.
A 2004 report by the World Commission on the Social Dimension of Globalization found 59% of the world's people were living in countries with growing inequality, while 5% were on countries where inequality was declining. Income inequality in Western countries is now at heights unseen since the roaring 1920s. The rich have also reaped disproportionate rewards in the Asian tigers – Singapore, Taiwan, South Korea and Hong Kong. In December 2006, the World Institute for World Economics reported that 1% of the world's adults owned 40% of all global assets and the richest 10% owned 85%; the poorest half, meanwhile, owned less than 1%.
The growing gap between the haves and the have-nots strikes at the heart of globalization. Globalization was supposed to be the tide to lift all boats. But millions of boats seem to be not merely missing the tide, they seem to be sitting on the bottom of a different ocean. Capital is assimilating. Labour is not. Globalization is not about integrating the world. So far, it is about integrating the rich.

[Selected extracts from "Falling Off the Edge" by Alex Perry, Macmillan, London, 2008 (ISBN 978-0-230-70689-7)]

Submitted by Frank.