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The Chinese eradication of extreme poverty in one generation

There have been write-ups in the media of the decline of extreme poverty due to a World Bank data release in the past few days. This is kind of a pretty big deal, and one of the reasons that books like Enlightenment Now are still worth writing: much of the American public is unaware of the “good news.”

But as made clear in the graphic in The Wall Street Journal, this is to a great extent a regional story. In particular, it is the story of the near eradication of extreme poverty among the ~20% of the world’s population that is Chinese.

As the chart makes visible, the “Third World” or the “Global South” or the “Developing World”, whatever you call it, is very economically diverse. Was very economically diverse. In 1990 most of the world’s extreme poor lived in East Asia. Overwhelmingly in China. Outside of Sub-Saharan Africa and South & East Asia extreme poverty, using this definition, was actually not that common. Latin America, the Middle East & North Africa, and the post-Soviet world suffered by comparison to North America and Western Europe.

People who traveled widely across the “Third World” knew this. In the 1980s and 1990s one of my uncles was an engineer, and later officer, for an Iranian oil tanker, and so traveled across the Middle East. He eventually wrote a peculiar book on poverty in Bangladesh after he retired, and in it he recounted how clear and distinct the differences in acute poverty were when he compared Iran with his homeland.

To give you a different general sense, I pulled the World Bank data and focused on a few large nations of diverse profiles. And, rather than looking at just the % below a very low poverty threshold ($1.90 per day), I increased the threshold ($5.50) and focused on the poverty gap. While the poverty headcount just tells you what % of the population falls below the threshold, the poverty gap is measuring the average distance below the threshold. In other words, it is measuring intensity of poverty.

What you can see above is that China went from having the highest poverty gap to the lowest in 25 years. But the story isn’t just about China. Fifteen years ago Vietnam had just as much extreme poverty as Bangladesh, but today it is in the same range as China. In the 1990s we talked a lot about the “Asian Miracle.” But that was minor leagues. The real miracle has occurred in the 21st century.

But it wasn’t really a miracle at all. Nations such as Vietnam and China (and earlier Japan and Korea) had relatively high literacy rates, and a tradition of meritocratic advancement, long before contact with European colonialism. Before Communism. With high native human capital resources to begin with, they were poised for lift-off before they ever made it down the runway.

My wife happens to know a Chinese man who is now a professor of science at an American Research I University. Because this is someone we know, aspects of his life history have slowly emerged. In short, he grew up in a very poor peasant household in rural China. And not one that had just recently fallen down the class ladder from what we can tell.

Today he is a professor doing rigorous science, who has achieved an upper middle class American lifestyle. My horizons may be narrow, but I have never met a South Asian in the United States who has come from an analogous background of such grinding deprivation. I know they exist. But in general South Asian peasants in deep deprivation, the children of landless laborers and the like, do not seem to have the opportunity or expectation that they could become researcher professors in the United States.

Finally, Communism. It is strange today, though perhaps not, that much of the younger populace of developed nations are beginning to look with eagerness toward some sort of inchoate socialism. And yet here you have more than a billion who sloughed off the dead hand of command socialism, and in the process eradicated extreme poverty.

I understand the qualms about Chinese authoritarianism. I’m well aware that some elements of China’s economic growth are unlikely to be sustainable. Perhaps there will be a correction. Almost certainly there has to be one. But we can’t forget what the very recent past was like. We shouldn’t shrug off the miracle of anti-poverty that has occurred in East Asia.

To Americans, and Mexicans as well, 1990 wasn’t a different land. But in the past generation nations like China and Vietnam have transformed themselves in ways that we can’t even imagine.

15 thoughts on “The Chinese eradication of extreme poverty in one generation

  1. i think tyler cowen was pointing out how this makes U.S. syle capitalism look less good and chinese market-communism look less bad. people don’t mind a little authoritarianism if it comes with money, i guess. they don’t need to worry about voting or gov’t – just find a way to make money.
    then again, FPolicy, recently pointed out that we really don’t know much about china for sure. it might be made up!

  2. then again, FPolicy, recently pointed out that we really don’t know much about china for sure. it might be made up!

    this is on the margin. the number of students china sends abroad, the speed of its trains, and the # of ppl on its internet are not ‘made up.’ the chinese demand for resources from abroad is not ‘made up.’

    (and i read the piece. if there is a 10% undercount of its population for example that’s a big deal in aggregate terms, but doesn’t change the qualitative point)

  3. yeah, it wasn’t the strongest piece but i think it alludes to the broader point that Stoller and others have talked about a lot in regards to the amount of fraud there. maybe it doesn’t matter since the gov’t can do as it pleases and just “make it right.” I’m glad the Trump admin is talking about this too. There’s a section of Bob Woodward’s new book that describes Don arguing with his cabinet members about WTO violations, etc.
    but maybe i’m not objective since i hate everything about china. nothin’ but a big snake in the grass imo and ground zero the the worst animal torture i’ve ever seen on a regular basis. fuck ’em!

  4. RK, It is very, very hard for Westerners to grasp just how much China has changed. Korea did something similar, but on a much smaller scale.

    I knew a girl who became rich through speculating in Beijing real estate. She was smart, driven, and now lives a 1% style life. She was born in a loess cave. Her parents literally lived in a hole in the ground.

  5. I heard from a BBC podcast, not Chinese sources. The starting salary for graduates might not be that good, but a Taiwanese and many of her friends in China after a few years are getting 3x the salary of similar positions in Taiwan which have not changed for the past few decades. That far exceeded my expectation. Their ability in fluent English might help. They are in private companies, unlikely to be the government’s tactics of soft power. The soft power tactic is easier to get visa for Taiwanese.

  6. But it wasn’t really a miracle at all. Nations such as Vietnam and China (and earlier Japan and Korea) had relatively high literacy rates, and a tradition of meritocratic advancement, long before contact with European colonialism.

    I think you somewhat overstate the human quality of East Asia in the past. For example, Korea had pretty low literacy rates prior to the Japanese colonization (1910-1945), the American-influenced modernization in the 50’s and 60’s, and the intense industrialization of the following years. One paper puts literacy rate in Korea at 23 percent in 1930 after 20 years of Japanese colonization and modernization (among the Japanese residents in Korea, the literacy rate was 80%): https://pdfs.semanticscholar.org/f311/bc6d5581449a0d2a54da392b0a52bcd0a6f5.pdf

    I am certain that in 1910, the percentage was considerably lower still. Indeed, Westerners typically had a pretty low opinion of the human quality in Korea (as opposed to that in China and Japan). Jack London wrote, after visiting all three countries, “The Korean is the perfect type of inefficiency — of utter worthlessness.” Meanwhile, he reported, “The Chinese is the perfect type of industry. For sheer work no worker in the world can compare with him.”

    Although there was likely a considerable degree of hyperbole, he was probably right that Koreans were backward, timid, and ignorant at the time, and perhaps even – gasp! – lazy.

    The high human quality of (South) Koreans today appears to be a relatively recent phenomenon if the IQ gains in the recent decades are any indication (an increase of 7.7 per decade for those South Koreans born between 1970-1990 when the significant portion of industrialization took place).

  7. Hi Razib Khan, I am very curious about your uncle’s book and like to check it out. What is the name of it? I am an Iranian who grew up in Iran during 80’s and I left the country by 1992 and I have not gone back to Iran since then. I don’t know much about Bangladesh in general but I am assuming that the government is secular and not a theocracy although it is a Muslim majority nation.

  8. Jaak,

    Yeah. I had heard that historically in China, significant regime reforms had precipitated out of quasi-religious mass-movements in China that became stealth vehicles to focus peasant agony against the rulers. I remember, around late 1990’s thinking that Falun Gong was going to be that movement in the present post-Cold War era.

    Then news reports began appearing about crackdowns against Falun Gong. Then my life went on, and yeah now, as we imagine, there’s fabulously wealthy stiletto-heeled fashion-babes wearing red sequined tube dresses who are slinking around Shanghai, investing in robotized factories, who were born in peasant caves.

    So out of curiosity I thought I would review whatever happened with ol’ Falun Gong. I knew all this incrementally as the news reports dribbled out, but to see it all assembled in two brief paragraphs is still a solid kick in the conscience:

    “Foreign observers estimate that hundreds of thousands and perhaps millions of Falun Gong practitioners have been detained in “re-education through labor” camps, prisons and other detention facilities for refusing to renounce the spiritual practice.[3][9] Former prisoners have reported that Falun Gong practitioners consistently received “the longest sentences and worst treatment” in labor camps, and in some facilities Falun Gong practitioners formed the substantial majority of detainees.[10][11] As of 2009, at least 2,000 Falun Gong practitioners had been reportedly tortured to death in the persecution campaign.[12] Some international observers and judicial authorities have described the campaign against Falun Gong as a genocide.[13][14] In 2009, courts in Spain and Argentina indicted senior Chinese officials for genocide and crimes against humanity for their role in orchestrating the suppression of Falun Gong.[15][16][17]

    In 2006, allegations emerged that a large number of Falun Gong practitioners had been killed to supply China’s organ transplant industry.[8][18] An initial investigation found that “the source of 41,500 transplants for the six year period 2000 to 2005 is unexplained” and concluded that “there has been and continues today to be large scale organ seizures from unwilling Falun Gong practitioners”.[8] Ethan Gutmann estimates 65,000 Falun Gong practitioners were killed for their organs from 2000 to 2008.[19][20] Following additional analysis, the researchers significantly raised the estimates on the number of Falun Gong practitioners who may have been targeted for organ harvesting.[21] In 2008 United Nations Special Rapporteurs reiterated their requests for “the Chinese government to fully explain the allegation of taking vital organs from Falun Gong practitioners and the source of organs for the sudden increase in organ transplants that has been going on in China since the year 2000.[22]”

    Lest we forget. This is one aspect of just how it was that the growth ‘miracle’ went down. I’m guessing open popular revolt unlikely anytime soon.

  9. Not to forget the role of Western & Japanese industry in this. Without foreign investment, this “miracle” wouldn’t have been possible, surely not to this degree, anyway.

    But there is a reason why they chose to invest in China & not eg. India. That would be the more interesting part…

  10. but I have never met a South Asian in the United States who has come from an analogous background of such grinding deprivation

    Try some Sri Lankans specially in the sciences and mid 50’s to the 70’s. I would not think grinding deprivation though.

    University education is free, just very limited to less than 1% of the year cohort.

    The first indication is they have studied at a village vidyalaya and then a Maha Vidyalaya (Central school in small town).

    I had few in my years in Uni who now doing very well in the US, either in academia or industry.

    Here is one such (not my uni mate). note: Palugasdamana Maha Vidyalaya in Polonnaruwa. Its a nowhere place in the Dry zone.
    http://www.dailymirror.lk/article/US-don-Mendis-visits-his-village-teacher-151923.html

    Senaratne studied in Wadduwa Central. Its western province, but an unknow school. My late wife went to that school. Ph.D. from US but back in SL.
    https://www.linkedin.com/in/senaratne-ranamukhaarachchi-4a7b5171/?originalSubdomain=lk

  11. It is indeed extremely rare (perhaps vanishingly so) for truly poor people in South Asia to have children who become research professors in America, but I did know a Bengali engineer (a long time ago, in the early 90s) who told me he had come from a very poor family in rural Bangladesh, first to go to college, first to go abroad, now with a PhD in engineering. He was a Marxist and said he was trying to translate Das Kapital into Bengali (I assume others have done so before him, but for some reason he wanted to do it too). Incidentally, he was my introduction to anti-postmodern Marxism! He was EXTREMELY irritated by what were then new fangled trends towards wokeness and gaia worship in the American Left. His point was that these White Marxists are enjoying full stomachs, chai lattes and whatnot and want Bangladeshi peasants to cultivate “traditional” lifestyles and low carbon footprints (I don’t think the word carbon footprint was used, but you know what I mean). I credit him with the start of my own gradual skepticism about postmarxist Marxism. I lost touch with him when I moved away from him, but he was an interesting character, very bright, and quite successful (very math-based too)..

  12. Robert Ford,

    Not to put too fine a point on it, but James Palmer is a joke. What he meant to say was Western journalists don’t know anything about China. The fact that the article spread across the China watchers twittersphere is quite telling, and not in a good way.

  13. A few years back, I read an argument that one reason why the “Chinese model” seems to be more responsive to public interest (at least when viewed narrowly along economic lines) is because authoritarianism is intrinsically much less capable of tamping down public dissent than the western model (which relies heavily on what Gramsci called cultural hegemony). Because the Chinese system is less resilient, the ruling class – despite not being democratically elected – paradoxically has to be more responsive to public will in those areas which it can cede ground without threatening its political monopoly.

  14. Karl, as odd and counter-intuitive as that seems, I think there is something in it. In a democracy, a government is elected on the strength of an election platform, and considers it has been given a mandate to implement that platform without the need for further consultation. In an autocracy you don’t have that, so in my observation there tends to be a lot more sounding out before policy changes are implemented.

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