Virgina Postrel puts the hammer down in the NY Times (Business section):
To critics of economic liberalization and international trade, it is an article of faith that the rich are getting richer and the poor poorer.More rationality by following the link. You don't think the United Nations and the socialist flies hovering around it would be trying to scam us, now would you? As for the African countries, removal of impacted tin pot dictators sounds like the only remedy. But when it comes down to it, I really don't think it's the USA's problem.
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Antiglobalization activists are not just making up this idea. They have taken it from seemingly authoritative sources, notably the 1999 United Nations Human Development Report.
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Fortunately, this scary portrait is highly misleading.
"When I started looking at the numbers, I saw a lot of mistakes," says Xavier Sala-i-Martin, an economist at Columbia. Some were departures from standard economic procedures, like not correcting for price levels from country to country.
"Some agencies didn't adjust for the fact that Ethiopia is cheaper than the U.S.," he said. "Some of them were hiding numbers that we know exist." For instance, the report included data from only 19 of the 29 industrialized countries then in the Organization for Economic Cooperation and Development.
But the biggest problem was not so technical. It was hidden in plain sight. The United Nations report and others looked at gaps in income of the richest and poorest countries - not rich and poor individuals.
That means the formerly poor citizens of giant countries could become a lot richer and still barely show up in the data.
"Treating countries like China and Grenada as two data points with equal weight does not seem reasonable because there are about 12,000 Chinese citizens for each person living in Grenada," writes Professor Sala-i-Martin in "The World Distribution of Income (Estimated from Individual Country Distributions)." That is one of two related working papers for the National Bureau of Economic Research. (The papers are available on Professor Sala-i-Martin's Web site at www.columbia.edu/~xs23/home.html.)
Counting by countries misses the biggest economic advance in history, completely distorting the record of the globalization period.
Over the last three decades, and especially since the 1980's, the world's two largest countries, China and India, have raced ahead economically. So have other Asian countries with relatively large populations.
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"You have to look at people," says Professor Sala-i-Martin. "Because if you look at countries, we do have lots and lots of little countries that are doing very poorly, namely Africa - 35 African countries." But all Africa has only about half as many people as China.
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There is, however, one large country where the poor really are getting poorer while the rich grow richer: Nigeria, the most populous country in Africa.
Nigeria's economy has actually shrunk over the last three decades, and the absolute poverty rate - the percentage of the population living on less than $1 a day in 1985 dollars - skyrocketed to 46 percent in 1998 from 9 percent in 1970.
While most Nigerians were falling further into destitution, the political and economic elite grew richer. The problem is not too much liberalization but too little, a politicized economy with widespread corruption.
