Not Surprising in the Least

Via Tyler Cowen:

The Asian
Development Bank presented official survey results indicating China's
economy is smaller and poorer than established estimates say. The
announcement cited the first authoritative measure of China's size
using purchasing power parity methods. The results tell us that when
the World Bank announces its expected PPP data revisions later this
year, China's economy will turn out to be 40 per cent smaller than
previously stated......The number of people in China living below the
World Bank's dollar-a-day poverty line is 300m - three times larger
than currently estimated.

Well, this is a bit sad, as I would hope everyone likes seeing people emerge from poverty**.  But it is really not surprising.  Strongly state-run economies are notoriously hard to measure from the outside, and westerners systematically overestimated the size of the economy of the old Soviet Union.

**  I make this statement because I am an optimistic guy full of confidence in the generally good intentions of mankind.  Because if I were not such a person, and actually judged people by their actions, I would come to the conclusion that a lot of people DO NOT want people in countries like China to emerge form poverty.  Trade protectionism, apologias for looting dictators like Castro or Chavez, anti-globalization riots, anti-growth initiatives, and calls for rollbacks in fossil fuel consumption all share in common a shocking disregard for people trying to emerge from poverty -- often from folks on the left who purport to be the great defenders of the poor.  I tried to explain the phenomenon before, at least among self-styled "progressives':

Progressives do not like American factories appearing in third world
countries, paying locals wages progressives feel are too low, and
disrupting agrarian economies with which progressives were more
comfortable.  But these changes are all the sum of actions by
individuals, so it is illustrative to think about what is going on in
these countries at the individual level. 

One morning, a rice farmer in southeast Asia might faces a choice.
He can continue a life of brutal, back-breaking labor from dawn to dusk
for what is essentially subsistence earnings.  He can continue to see a
large number of his children die young from malnutrition and disease.
He can continue a lifestyle so static, so devoid of opportunity for
advancement, that it is nearly identical to the life led by his
ancestors in the same spot a thousand years ago.

Or, he can go to the local Nike factory, work long hours (but
certainly no longer than he worked in the field) for low pay (but
certainly more than he was making subsistence farming) and take a shot
at changing his life.  And you know what, many men (and women) in his
position choose the Nike factory.  And progressives hate this.  They
distrust this choice.  They distrust the change.  And, at its heart,
that is what the opposition to globalization is all about - a deep
seated conservatism that distrusts the decision-making of individuals
and fears change, change that ironically might finally pull people out
of untold generations of utter poverty.


  1. Andy:

    Spot. On!

    Free trade is not the bogeyman that fair-traders make it out to be. If, big IF, the core concern is our global corporations are not doing enough to raise the emerging countries’ standard of living, then tariffs are not the way to go since the beneficiaries of the added costs will not be the poor in either country.

    Simply put, trade barriers are lose-lose.

    I could theoretically accept it if our govt sought to peg foreign labor rates at a certain level and mandate environmental goals. The problem is when and how our govt would adjust to economic realities. Given their track record for ham-fisted calibration, they’re better off by just staying out of it.

    The better solution is just to let the free market do its thing. Witness the competition for labor in Indian call centers as the rates spiral upwards as companies up the ante to maintain the workforce. This will level off as the workforce reaches parity in wages and standards of living — supply and demand.

    But as you point out, that goes against everything that allows progressives to feel that they are helping the poor, the oppressed...

  2. ParatrooperJJ:

    Considering that they are one of the major threats to the US, I am not too upset that they are taking longer to become a first world country.

  3. The Dirty Mac:

    China's trade barriers and currency manipulation (a trade barrier in itself) virtually guarantee impoverishment of the average worker. "Jobs" without goods to consume may move the populists to a frenzy but represent a loss to the working class.