Attrishu Bordoloi is an economic policy analyst in the Economics and Statistics Unit at the Centre for Effective Governance of Indian States in Tamil Nadu, India. He is an alumnus of the Centre of Development Studies, University of Cambridge. Remarkably, this bien pensant young man appears to endorse Trump's protectionist policies.
He writes in Aeon-
In just three decades, the world has witnessed a radical reduction in global poverty.
Because poor countries abandoned dirigiste Socialist policies and embraced the market. Higher female participation led to demographic transition. Malthusian poverty fell as girls moved out of involuted agriculture into factory dormitories.
Data from the World Bank in 2024 show the number of people living in extreme poverty has shrunk from nearly 2 billion in 1990 – 38 per cent of humanity – to around 8 per cent today, leaving 692 million people still struggling.
It could rise if there is a trade war or as shooting wars spread.
In 2023 alone, nearly $224 billion in aid flowed primarily from Western nations – eg, the United States, the United Kingdom and Germany – channelling resources either directly or through the World Bank, the International Monetary Fund (IMF) and other institutions to fight poverty.
The fall in poverty had nothing to do with Aid.
These organisations and their major donors celebrate each incremental movement in poverty reduction, heralding their efforts as pivotal steps in taking humanity closer to the Sustainable Development Goal of ending extreme poverty by 2030.
Nobody cares about that stuff though some bureaucrats get paid to pretend to care.
Yet, as the World Bank and the IMF cheer their accomplishments,
The World Bank did help China to embrace the market back in the Eighties. But it lost salience because NGOs would keep targeting it if it financed hydroelectric or other infrastructure projects which, it was alleged, harmed the environment and displaced indigenous people. The IMF has never been concerned with poverty.
they are relying on fundamentally flawed metrics for measuring poverty.
It is easy enough to construct better metrics by focusing on things like longevity, years of school education, access to modern medicine etc.
This is why these powerful institutions are often caught off-guard when those technically above the poverty line remain deprived of basic necessities or when minor shocks push millions back into extreme poverty.
They aren't powerful institutions. There is nothing they can do about civil wars- which have a devastating effect on living standards- or, it now appears, trade wars of the type Trump is launching.
In a nutshell, we are still failing millions who have been ‘saved’ by these supposedly historic reductions in poverty.
In a nutshell, development economists are and always have been useless. They created poverty. They saved nobody from it.
The problem is that much of the success of the anti-poverty programmes depends on the chosen threshold for the international poverty line itself.
No. It is irrelevant. What matters, in India, is the State Governments identifying of the poverty line and the cash and other benefits it provides to the very poor.
According to the United Nations, extreme poverty is characterised by ‘severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information’. With respect to this clear-cut definition, the World Bank’s chosen benchmark of $2.15 per day is significantly low.
They raised it from $1.90 in 2017. However they are still using the 2017 purchasing power parity deflator. However, nobody cares about this save one or two bureaucrats and some utterly useless development economists.
The US Department of Agriculture states that the daily cost to at least meet the adequate calorie intake requirement in terms of fruits and vegetables ranges from $2.10 to $2.60.
This is the figure for Americans. It is likely to be an underestimate.
Obviously, if a person’s entire income is spent on food, they will lack clothing, shelter, education and other basic human needs. Once we consider the reality of inflation that affects most economies, the problem grows more acute.
It is a political problem. Nobody cares what figures some bureaucrats come up with. If votes can be gained through transfers, transfers are likely to increase.
We have to revisit the important question: what should be the threshold for the international poverty line?
No we don't. The Government of Tamil Nadu has to look at local prices and incomes. What the World Bank or the US Dept. of Agriculture says is wholly irrelevant.
Despite the claims of the World Bank, a person earning just above $2.15 per day is poor.
The World Bank does not deny this.
They experience the same level of deprivation as those the Bank classifies as poor. The inadequacy of this measure becomes clearer when considering inflation – as the ‘real’ value of $2.15 is below the original ‘dollar-a-day’ line when calculated in constant (1985) dollars. So, the current poverty line not only underestimates poverty but also exacerbates the issues associated with the already inadequate original threshold.
But nobody cares. The only question is whether there is political support for higher transfers.
For policymakers and governments, ‘ending poverty’ has become synonymous with rising above this arbitrary $2.15 extreme poverty line, contributing to a false picture.
Not in India or the UK or the US or anywhere else. What matters is whether there is political support and 'fiscal headroom' for higher transfers. If there is a trade war, both will diminish. Poverty will rise.
This needs to be carefully rethought as a 10-cent increase from $2.15 raises the global poverty headcount, on average, by almost 70 million people!
But nobody cares. Measuring poverty is like measuring your dick. Whether you do it or not makes no difference to its size.
Without question, reduction in global poverty has been positive,
during a period of relatively freer trade. As a Trade War looms, poverty is likely to rise. But wars have an even more devastating effect on living standards.
but moving people marginally above a low poverty line, one not high enough to fulfil their basic human needs, is less impressive. Playing this statistical game in the global fight against poverty risks being something of a sleight of hand.
Which is why nobody gives a fart about it. In the current situation where both shooting and trade wars are more likely, gassing on about how to measure poverty is like rearranging the deck-chairs on the Titanic.
That is not progress – it’s an accounting trick that conceals the nature and prevalence of extreme poverty, in its truest sense, and its scale.
It is not even a trick because nobody gives a fart.
A series of methodological fallacies also add to the underestimation of poverty. For instance, the economists Sanjay Reddy and Rahul Lahoti in 2015 highlighted the need for clear decisions on the list of food and non-food items included in poverty calculations.
But neither was involved in actually doing such calculations. The fact is, the quality of the data may necessitate ad hoc assumptions.
Without this clarification, poverty lines can misrepresent actual deprivation, as the essential goods used to measure poverty may not accurately reflect the needs of poor people.
Sadly, when economic growth falters, transfers are likely to fall. We must cut our coat according to our cloth. Poverty is created by poor people having babies who are likely to be poor. The other factor is general purpose and total factor productivity. Raising that impacts poverty. Measuring poverty does not.
In Poverty as Ideology (2018), the economist Andrew Martin Fischer emphasised that variations in what is considered a staple necessity in one country, yet rarely consumed in another, require greater attention. Ignoring these differences risks creating a one-size-fits-all poverty line, which doesn’t account for the reality of cultural and economic life across nations, thus making global poverty measures less reliable.
Nobody gives a shit about the global poverty-line. All that matters is the one used at the State level provided there is fiscal headroom for transfers.
In the same vein, the economist Andy Sumner points out that, to measure poverty, we need greater clarity on which national prices to use and how to capture price changes over time. Either a general price index for average consumption or a food price-inflation index, which better reflects price rises for items consumed by the poor. Present inflation metrics likely fail to reflect the real cost increases experienced by the poor.
Moreover, the poor don't care how poverty is measured. They just want to be given a bit of money so they can buy nice things.
In addition to these technical flaws, there are deeper issues with the World Bank’s data on poverty. The Bank’s poverty estimates rely on critical information from small states and low-income countries that severely lack regular data collection.
Why not stop publishing these estimates? Nobody gives a fart about them.
Countries in fragile or conflict-ridden situations are not included in the Bank’s data at all. The World Bank’s most recent estimates are based on consumption data from just two-thirds of countries, and the figures from 29 nations, including Iraq, South Africa and Japan, are more than a decade old.
Because nobody gives a fart about the exercise. If the thing had any importance, better data would be forthcoming.
The quality of household data collected from many other developing nations is often poor, due to a lack of trained personnel and social norms that complicate accurate reporting and collection. Consequently, cross-country comparisons may be flawed, as the timing and quality of these surveys can vary drastically between nations. How are we supposed to have confidence in poverty estimates based on such a foundation?
Confidence doesn't matter if we don't care a tinker's fart about the thing.
Egypt provides an example of how inaccurate and outdated data distort measures of poverty, leading to misguided policies and ineffective outcomes. A striking example is that, despite technically being above the poverty line, millions of Egyptians in the early 21st century continued to face rising living costs, pushing them into deeper economic hardship.
Everyone faces rising living costs. Economic hardship is increasing right now because of Trump's tariffs. The 401k of the average American has just taken a big hit.
The disconnect between metrics from leading global organisations and the actual experiences of Egyptians contributed to the dissatisfaction and grievances that led to the Arab Spring – a series of uprisings across the Arab world in the early 2010s.
The Army is back in power in Egypt. Let us see whether the new regime in Syria is able to keep the peace.
In India, despite its rapid poverty reduction, many citizens continue to lose a battle against malnutrition, inadequate healthcare, housing and education.
more particularly if they live in Bihar, not Tamil Nadu.
Food subsidies and cash transfers, targeted using the $2.15 poverty threshold, exclude millions of Indians who remain deprived of basic necessities.
India uses a ppp deflator such that the threshold is about 30 Rs per day. That's about 35 cents.
This exclusion has contributed to very high levels of hunger, as reflected in India’s 2024 Global Hunger Index score of 27.3. India also holds the highest rate of child wasting in the world – 18.7 per cent – showing common, severe undernutrition.
There is huge disparity even within the same district- from 5 percent to 70 percent.
The government’s own data show that more than 50 per cent of children under five suffer from chronic malnutrition, contradicting the narrative of rapid poverty reduction.
It confirms the hypothesis that those who have stopped being very poor have also stopped having lots of kids.
Worryingly, this issue extends beyond India; globally, the number of undernourished people has surged from 572 million in 2017 to approximately 735 million today.
If poor people have lots of babies while the less poor have just one or two babies, then the proportion of poor babies rises.
The truth is that large populations live just above the $2.15 line.
Or the 35 cent line.
International organisations and donors tend to overlook these vulnerable groups, who lack access to basic human needs but escape the World Bank classification of ‘poor’.
But such organizations and donors can perpetuate dependency.
In Bangladesh, for example, while the country has made significant strides in reducing poverty, recurrent flooding and climate shocks have pushed millions back into poverty. Since many of these individuals are not captured by present orthodox metrics, disaster relief and recovery programmes receive insufficient funding.
Funding will disappear altogether if the Globe goes into recession.
It is urgent that we revise the global poverty threshold to a more realistic figure.
It will make no difference whatsoever.
Without this reform, we are unable to see a clear picture of actual poverty levels.
We get a clear enough picture by looking at Youtube videos of very poor people in shithole countries.
By setting the global poverty line at $7 per day – closer to the World Bank’s upper-middle-income threshold, and one that more accurately reflects the cost of meeting basic human needs – we can launch a narrative of real poverty reduction.
You can tell fairy stories. But who will listen to them?
Under this revised measure, global poverty would have dropped from 69.5 per cent of the world’s population in 1990 to 46.3 per cent by 2022.
It would have halved from 99 percent in 1875 to what it is now in 2025.
Though not nearly at the world-historic levels put forth using the present orthodoxy, these reductions still represent significant progress, also revealing that nearly half of humanity remains trapped in extreme poverty.
In 1950 there were 2.5 billion people. Now there are 8.5 billion. It wasn't the rich who had lots and lots of kids. It was the very poor. That's why child poverty tends to rise.
This stark reality underscores the need for a fundamental reassessment of current anti-poverty policies and a move toward more strategies based on real-world information.
That reassessment was done more than 50 years ago. The emphasis was on family planning and raising productivity and female participation. Once China jumped on the bandwagon started by the Taiwanese, South Koreans, Malaysians, Singaporeans etc, hundreds of millions were lifted out of poverty. Once Manmohan Singh- who studied trade, not development at Cambridge- became Finance Minister, India too could begin to rise. Development economists were ignored or told to fuck off. A few found refuge on Leftist campuses while those with solid qualitative skills could be employed by the State to calculate the likely cost of different welfare programs. The problem here is that such programs are subject to rationing when money becomes tight.
Today, even under the misguided parameter of $2.15 per day, 1.1 billion people across 110 countries still remain multidimensionally poor. This number is significantly high, as almost four of 10 multidimensionally poor individuals (39 per cent) are not captured by monetary poverty. Certainly, such low levels of poverty reduction, even after decades of poverty alleviation policies, are simply not remotely as successful as billed.
Because poverty alleviation is lipstick on a pig. Either general purpose and total factor productivity goes up or the country goes off a fiscal cliff and there is entitlement collapse. If Trump crashes the global economy, nobody is going to be talking about UN sustainability goals. Indeed, the UN may itself be scrapped.
A key factor for the underperformance lies in the World Bank’s principles shaping anti-poverty policies, particularly the neoliberal emphasis on free-market solutions.
McNamara & Edwin Lim of the World Bank helped China to rise in the Eighties. When Lim came to India and met Manmohan, Montek, Ajith Singh etc, he thought he had died and gone to heaven. It seemed obvious that India could do even better than China in embracing laissez faire. Sadly, he discovered that, in India, the useless 'andolanjivi' activist, or the fool with a Cambridge sheepskin in Development Studies, considered it a highly virtuous and meritorious thing to prevent Development.
Free markets can be highly efficient in resource allocation, but they have undoubtedly often contributed to widening economic inequalities, pushing vulnerable populations deeper into poverty.
Did you know that if you learn a useful skill and start earning good money, then you are causing 'economic inequality' and pushing vulnerable people deeper into poverty? This is because all money is money stolen from the poor. If you get paid more it is not because you are more productive. It is because you secretly enter the hovels of the poor and steal all their money.
Let’s take the case for free trade. A well-accepted proposition in modern economics by David Ricardo is that free trade will be beneficial for all, as countries specialise in what they do best.
No. They should specialise in activities where they have the lower opportunity cost. This is 'comparative' not 'absolute' advantage.
Perhaps, the inevitable creation of ‘losers’ as part of the same process is rarely highlighted.
Because people don't believe that Bill Gates got rich by stealing money from starving people in the Third World.
With the opening up of trade barriers, certain industries face stiff competition from their foreign counterparts, leading to the contraction of less efficient domestic firms and the reallocation of their resources into another industry. However, capital as well as labour tend to be sticky and don’t move easily.
When a company goes bankrupt, it ceases trading. Its employees don't get paid however sticky they may be. Perhaps what the author is thinking of is 'downward stickiness of money wages'.
When faced with increased competition, despite taking a hit to their profits, the firms stay put and continue their production line.
No. They go bankrupt.
This may partly be because of the transaction costs of shifting to a new product: such as the need to retrain workers, buying new machines, etc.
Going bankrupt means having less revenue than expense. Your checks bounce. Your employees and suppliers don't get paid. Thus you can't make anything. Your creditors appoint a receiver who sells your machinery for scrap.
So, we know in fact that there is no improvement in efficiency through trade,
In India, people can see that the car industry is much more efficient and produces much better cars than it did back in the Eighties.
rather everyone associated with the industry starts to lose their earnings.
This is Trump's argument. It isn't true that the Taiwanese work harder and thus make a particular type of computer chip better and more cheaply. What is actually happening is Taiwanese dudes surreptitiously enter the trailers of honest American folk. They anally probe them and steal all their money. True, the Taiwanese now have factories in the US. But they have to bring in Taiwanese people to work in them. Americans are too lazy.
In areas with lax labour laws, workers are more vulnerable to layoffs.
Whereas, where labour laws are draconian, the percentage of workers in the organized sector is much smaller- e.g. 17 percent in India.
Displaced workers, now without a stable income and forced to dip into their savings, often need to relocate in search of new employment opportunities. The resulting job and population losses reduce consumer spending, which in turn causes a decline in demand for goods and services. As demand drops, other businesses in the area suffer, causing a ripple effect. The reduced spending leads to a shrinking tax base, making it harder for local governments to fund schools, public lighting and other essential services. As the locality becomes less attractive, it struggles to draw new businesses.
If this is the case, then Trump is a genius who will Make America Great Again. The 'Rust Belt' will boom as 'in-shoring' of production occurs. Other countries should follow Trump's example and go in for 'autarky'- i.e. self-sufficiency. The result won't be another Great Depression. On the contrary, Trumpism will put an end to poverty and inequality and evil foreigners anally probing Trailer Trash and stealing all their money.
India saw such economic downturns
No it saw an economic upturn
following the liberalisation of its economy
caused by a financial crisis which led to India's gold reserves being shipped to London
– marked by reduced government restrictions on trade and industry. A 20 per cent decline in poverty, from 35 per cent in 1991 to 15 per cent in 2012, followed.
This shows that freer trade reduces poverty. Tamil Nadu, in particular, has greatly benefitted. It exports about 10 billion dollars worth of electronic goods.
Until 2012, cheaper imports supported domestic firms and boosted Indian exports; however, the advantages of trade liberalisation then led to a slowdown in poverty reduction.
No. What happened was increasing divergence between exporting states like Tamil Nadu and involuted agricultural states like Bihar. Currently, T.N has over five times the per capita income of Bihar. In 1990, it was less than two. It must be said TN had demographic transition at an earlier period- i.e. there was divergence even before liberalization.
The manufacturing districts experienced significant tariff cuts, resulting in heightened foreign competition and job losses, which threw people into poverty.
No. Crazy Trade Unionists had already destroyed manufacturing in places like Calcutta and Bombay. More and more manufacturing was done in small scale units. Liberalization did harm some older conglomerates whose owners took little interest in running their businesses. But manufacturing districts, speaking generally, saw a dramatic rise in wages and material standards of living. Those States- e.g. Haryana- which took a tough line with Trade Unions took off economically. Incidentally, Chief Minister Stalin can be pretty tough when he wants to be. A case in point is the recent Samsung strike.
In contrast, districts focused on cereal production were largely unaffected by tariff changes and hence saw no significant change in rates of poverty reduction.
Cereals are protected and subsidized in some parts of India. Poverty did not fall there. Why? The benefit of free trade was only on the consumption, not the production, side. Sadly, even Modi could not push through agricultural reform.
So contrary to a neoliberal orthodoxy, the anticipated benefits of free trade did not unfold as expected.
This silly man has just proved the opposite. He says districts where free trade led to more competition and efficiency on the production side saw a big reduction in poverty as well as dramatic increases in income. Those which remained protected and agricultural, did not see any poverty reduction. They fell behind. Look at Haryana which was once laggard compared to Punjab. It has now surpassed its neighbour by a wide margin.
Further evidence, not just pertaining to the case of India, indicates that neoliberal policies have frequently slowed poverty reduction efforts.
What the author means is that countries which used to borrow a lot suffered when they could no longer borrow. This isn't 'neoliberalism'. It is just what happens to spendthrifts who borrow money which they can't repay.
During the African Structural Adjustment Programs of the 1980s and ’90s, many African economies faced severe balance-of-payments deficits, meaning they were spending more on imports, debt repayments and capital outflows than they were earning through exports, foreign investment and remittances.
They had thought that they could borrow more and more without ever having to pay the money back. Then commodity prices fell and the market decided they could not service their debt. But this also happened to Communist countries which had borrowed a lot.
The Africans were compelled to seek loans from the IMF and the World Bank. The Bank granted the loans but with several conditions, namely, trade liberalisation with minimal government intervention, privatisation of state-owned enterprises, etc. The adoption of these policies led to a decline in Africa’s per-capita gross domestic product by an annual average of 1.6 per cent from 1981 to 1994.
No. Low commodity prices- relative to the Seventies- led to a fall in the GDP of commodity exporters. There were other problems- e.g. AIDS, Civil Wars, etc.
The promise of neoliberal economic methods is that an overall increase in economic output, or an ‘expansion of the pie’ will benefit everyone, but the opposite happened in African economies.
Actually, trade theorists like Bhagwati, Prebisch etc. had been talking about 'immiserizing growth' from the late Fifties onward. It is obvious that if demand is inelastic, then if supply rises, total revenue falls. In other words, an adverse movement in the terms of trade reduces the money value of exports. What is the solution? Diversification into higher value adding activities. But that is easier said than done.
Even in cases where total output expands,
but the terms of trade fall more than proportionality
there are several challenges.
There is only one challenge- having less money.
As the gross national product rises, there’s supposed to be more wealth to be shared, and in principle even those displaced by trade could benefit. But that requires redistributive taxation, which depends on political will and efficacy.
High taxes have a disincentive effect on supply. Killing the golden goose is a bad idea. The worry is that India will fail to take off because the productive sector has to pay more and more doles to the unproductive. The country could go off a fiscal cliff. There may be entitlement collapse.
Over time, the higher output and wages may naturally boost demand, creating new jobs that absorb displaced workers. However, the flaw of this neoliberal theory lies in the timing: the economic benefits and job creation promised to offset job losses can take years to materialise, a time lag that those who have lost their livelihoods cannot afford.
The flaw was to think you can borrow more and more without ever paying that money back. Also, it turned out, rich nations were being hypocritical when they talked about handing out lots of money by way of International Aid.
The Trade Adjustment Assistance in the US and other programmes provide some support to workers in these situations, but they are insufficient, and such initiatives are largely entirely absent in most developing countries.
Why? Because the money for such things is not forthcoming. I suppose other affluent countries will now follow Trump's example and take an axe to Aid funding. Britain has just cut aid from 0.5 percent to 0.3 percent of GDP.
Economists have begun to see the smoke and mirrors involved in claims of poverty reduction.
No. Economists are sensible enough. They know that places which are raising exports- e.g. Tamil Nadu- are cutting poverty while those which remain sunk in agricultural involution- e.g. Bihar- are increasing it.
The historic counterexample bedevilling neoliberal poverty reduction claims is the case of China.
It was poor when private enterprise was banned. It rose very rapidly when it embraced the market. However, specific programs- e.g. Chairman's Xi initiative to end absolute poverty in remote parts of the country- have been very well-thought out and implemented. We can compare Xi to LBJ- whose 'Great Society' program helped millions of poorer Americans in rural shitholes.
India, Nigeria and Bangladesh all embraced neoliberal policies and have experienced significant poverty reduction. However, they all reduced poverty more slowly than China, which adopted non-neoliberal methods.
No. China was much more neoliberal than India. Ease of doing business was very high. The compliance burden was very low. Indians started setting up factories in China in the Nineties. They were astonished that they would be greeted at the airport by local functionaries and taken to a brand new industrial unit. The electricity and water connection was guaranteed to be done within a week. The officials had brought all the paper work. You just signed the forms and you were good to go. Within one month, production could start. Infrastructure had already been built and was being upgraded all the time. The workforce was docile and diligent. There was no problem with Trade Unions or corrupt officials demanding bribes. China was more Capitalist than America. It wasn't Marxist, it was 'Georgist'- i.e. the local authority made its money on land. Moreover the 'houkou' internal passport system meant that immigrants from the countryside got lower entitlements. They weren't allowed to set up shanty towns and there was no 'vote bank politics'. Edwin Lim says that China embraced Capitalism because the leading Party ideologues quoted Marx as saying 'to each according to his contribution'. China broke the 'iron rice bowl' and never looked back. Currently, local government cuts the wages of employees. Such a thing would be unthinkable in India. Indeed, the Chinese market is more 'flex-price' than any other because 'downward stickiness of money wages' does not exist.
Some people claim China to be a variant of neoliberalism, while others see it more as an alternative to neoliberalism. In my view, even though China embraced market-oriented reforms in the 1970s,
In 1978. But there was a lot of scepticism as to follow through. It wasn't till the crushing of the Tiananmen protests that there was confidence that China would stick to the laissez faire path.
its approach is not neoliberal due to its evident state control, protectionism and limited political liberalisation.
Like South Korea or Taiwan in the Sixties and Seventies, we would describe it as authoritarian Capitalism.
According to the data from the World Bank itself, in the past 40 years, China alone has lifted close to 800 million people out of extreme poverty.
They worked hard and lifted themselves.
Nothing like that has occurred before in history. China’s share of global poverty in 1990 constituted 41 per cent, as compared with 2020 when its share was less than 1 per cent. This historic feat in poverty reduction was possible only due to the rapid expansion of the manufacturing sector.
Which was only due to free trade. China did have quite a large, but inefficient, Public sector manufacturing base. There was some reform of it but the PSUs still enjoy monopoly powers in many fields. The difference between China and India is that a corrupt official may be shot. In India it will take many years to prosecute the fellow.
Growth in manufacturing provided jobs to millions of workers with low to moderate skills in the early stages of growth. At every level, the state played an integral role in the industrial expansion, overriding regulations for favoured companies, offering land below the market prices and loans at subsidised rates, sometimes in return for an equity stake.
In other words, local authorities acted in a Capitalist manner to maximise revenue from their land banks.
China even blocked competition from outside firms, as evidenced by its average industrial tariff rate of 40-55 per cent during the past decades.
So did India. The difference was that China pursued Capitalist policies while India, for political reasons, preferred to buy votes from poor people.
China also implemented social safety nets, for example expanded health coverage, social insurance schemes and targeted poverty-alleviation programmes.
So did India. But China's 'collective insurance schemes' appear sustainable. India's may not be.
None of these are neoliberal policies, but they led to an increase in China’s annual per-capita income, from $76 in 1961 to around $12,500 in 2023.
What increased China's per-capita income was raising exports from 40 billion dollars in 1980 (one percent of global trade) to 2.6 trillion in 2020 which is at least 15 percent.
On the other hand, India – a neoliberal economy with a similar demographic structure to China (in terms of population size and rural-urban divide)
No. India's population has overtaken China's. The latter has an 'ageing' population. The fear is that India is not taking advantage of its 'demographic dividend'. Moreover, there is a lot of small scale industry in China's rural hinterland whereas this is absent in many parts of India. It would be truer to say some parts of India are like China was ten or fifteen years back. But many parts are nothing like any current part of China.
– offers an instructive point of comparison and contrast. In 1961, India had an annual per-capita income of $86, and today has one of the highest number of people living in extreme poverty.
China had a draconian one child policy. Parts of India still have high fertility. They are falling even further behind states like Tamil Nadu
Some economies that leaned more towards neoliberal policies, Japan for example, have developed extensive social welfare programmes. During the 1990s, Japan implemented labour market reforms that promoted greater flexibility in hiring by allowing more part-time, temporary and contract workers. Although this policy boosted productivity and reduced cost for firms, it also led to increased job insecurity and a growing population of workers without stable employment. To mitigate these negative outcomes, the government expanded its unemployment insurance and social welfare programmes, ensuring that displaced workers had access to financial support during periods of unemployment.
In other words, Japan became more similar to other OECD countries. This was also happening in South Korea and Taiwan. They all first grew their economies and only then did they go in for 'welfare'. India put the cart before the horse.
Japan thus reduced the social costs of market-driven reforms. During the 1970s and ’80s, Korea and Taiwan also adopted social welfare programmes, recognising the need for government involvement in social protection.
No. They recognized that they could reduce 'Knightian Uncertainty' through sustainable 'risk pooling'. Insurance is a Capitalist concept. It has nothing to do with 'to each according to her needs'. You pay into a fund and, if misfortune strikes, you receive money from it.
These changes helped in successful poverty reduction.
No. Rising general purpose and total factor productivity (e.g. efficient law courts) led to poverty reduction because poor women got jobs in factories. They didn't remain in the villages having babies like crazy.
So recent history suggests a balance between market forces and government intervention remains essential.
No. Recent history shows that 'Government intervention' has to end when the money runs out. To get more money general purpose and total factor productivity has to rise.
The need for such a balance became even more evident after the 2008 financial crisis – a byproduct of financial deregulation, particularly of derivatives, in the US.
It was a by-product of a stupid, populist, scheme to get poor Americans to buy 'sub-prime' property. What was hilarious was that the Germans lost a lot of money on this. The result was that Europe stagnated- growing at about 1 percent for the last 18 years- while the Indo-Pacific grew at six or seven times that. The result was that the US pivoted to the Indo-Pacific and now takes much less interest in NATO.
The crisis triggered the collapse of Iceland’s three largest banks, whose liabilities exceeded the country’s annual economic output.
Iceland has a population of 400,000. It is an outlier.
As credit availability dwindled, global demand plummeted, affecting businesses worldwide and pushing millions into poverty. This crisis made many neoliberal countries reconsider the risks of an unfettered free market, leading to a resurgence of state intervention in social protection, trade and industrial policy.
No. Countries doubled down on free trade and Globalization. The fear was that a return to Protection would turn a recession into a Great Depression.
A recent example is India’s Production Linked Incentive scheme, introduced in 2020, which offers subsidies to foreign firms manufacturing in India based on their incremental sales relative to a baseline period.
This has nothing to do with the financial crisis which did not have much impact on India. Rather, it was worries about corruption and fiscal headroom which caused the Moody downgrading of Indian gilts.
The initiative aims to create low-skilled manufacturing jobs, particularly for the poor, by leveraging state support to drive industrial expansion.
In other words, it is bound to fail.
Although the role of the state in economic management has expanded in response to financial crises,
In India, a financial crisis- viz. India's inability to pay its debts- caused the role of the state in economic management to shrink. Dr. Manmohan may have studied in Cambridge but he wasn't Bengali- i.e. a stupid virtue signalling cunt.
it remains far from a fundamental shift away from market-driven paradigms.
That fundamental shift involves a Dictator beating and robbing the productive element in Society and then pissing the money away building palaces for himself.
Many neoliberal countries continue to celebrate incremental progress and emphasise market-driven solutions, concealing the real challenges by overstating, sometimes radically, their successes using World Bank data.
But nobody cares about that sort of propaganda.
However, any discussion of poverty reduction today must grapple with the undeniable reality of China’s success in global poverty reduction.
By raising productivity rather than giving money to the unproductive.
China has lifted hundreds of millions out of poverty through deliberate state-led strategies, an achievement that far surpasses even the most optimistic claims of the free-market model.
But it used free-market methods. North Korea didn't. Its people are as poor as shit.
If global policymakers
there are no such creatures. Who is the Secretary General of the UN? I don't know and I don't care. The UN is useless.
are serious about poverty eradication,
as opposed to being serious about abolishing death
they can no longer afford to ignore this contrast.
What contrast? The fact is, it is still much easier to set up an industry in China than it is in India. That is why India imports a lot from China but exports little. I suppose, sooner or later, India will have to make it easier for China to open factories in India.
The question is not whether state intervention works,
a sensible intervention works. A stupid intervention fails to work. It doesn't matter whether it is a public or private intervention. What matters is whether the money spent on the thing results in a bigger benefit.
but why so many continue to resist learning from the most effective example in modern history.
China looked at North Korea. Then it looked at South Korea. It chose to imitate South Korea. India had previously looked to the Soviet Union. But the Soviet Union crashed and burned. That's why Manmohan was permitted to scrap the licence permit Raj. Later, Modi got rid of the Planning Commission. Parts of India did grow but other parts remained stuck in agricultural involution and the politics of envy. The big question now is whether India will go down the path of buying votes while perpetuating poverty or whether the country will go off a fiscal cliff. In the latter case, there will be no alternative to laissez faire.
I may mention Rahul Gandhi got his MPhil in Development Studies from Cambridge- which is where this gentleman got his PhD. Both qualifications aren't worth the paper they are printed on. They make stupid virtue signallers stupider and more hysterical in their virtue signalling.
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