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It is hard to derive a ∆ from a single data point. Joel Send a noteboard - 24/09/2012 11:11:32 PM
You probably saw a TED video of Hans Rosling introducing it a few years back. Now you can make your own comparisons. Admittedly all data doesn't exist for every year (2005 is the only year with income distribution data for China, for example).

But the 2nd poorest quintile in China made 9.8% of the total, and the second richest 22% of the total (2005). Corresponding numbers for the US is 11% and 22.4% (2000). The American income per capita is about 10x bigger though, adjusted for inflation and purchasing power. But remember that the richest 20% in China represents as many people as the US population.

Which is all we have for China, Indonesia and India; their GapMinder data is thus irrelevant to this discussion, since no trend CAN be demonstrated.

So let us look at stats on the other Third World nations among the worlds ten most populous: Brazil, Pakistan, Nigeria and Bangladesh; I will throw in Mexico (though they are 11th most populous, and I am unsure they or Brazil qualify as "Third World" or "developing") because they are particularly relevant to the US aspect of the discussion, since the NAFTA predates the WTO. I will say at the outset I expect Brazil to be the big winner here, but we shall see....

There is more (but inconclusive) data for Mexico: After the lowest quintiles income share nose-dived 1.45% 1984-89, it sharply rose 1.08% 1989-96 (when Ross Perot warned us not to pass the NAFTA,) dropped 0.3% in '98 (about the time the NAFTA took effect) and fell 0.14% more in 2000. It rebounded in each period since, and in the last (2007) was only 0.03% BELOW the 1984 level. Income for the next quintile follows a similar pattern, except for a fall in '94 and rise in '96 rather than the reverse, and a decline 2004-06. The middle quintile tracks almost exactly like the lowest, except that its share of national income also fell 2004-06.

From that I conclude 20 years of "free" trade has only negligibly and inconsistently increased lower class Mexican income (if at all.) The NAFTA produced the Giant Sucking Sound Ross Perot predicted in 1992 and 1996, and delivered the coup de grâce US unions then feared, but has not raised many people OUT OF poverty to compensate for those it lowered INTO poverty.

In Brazil, the lowest quintile has seen marginal but steady income growth since '97, except for a 0.04% drop in '01. The next quintiles income grew slightly more and just as steadily in that period. Likewise the middle quintile, except for a 0.01% drop in '98, and its income grew nearly 1.5% between '02 and '07.

It should be noted, however, that Brazil is far from the laissez-faire paradise of China or Indonesia; throughout most of the last decade its president was a former union boss capitalists at home and abroad condemned as a socialist. The moral is that globalism is not inherently bad, and can work well where developing countries have some consumer, labor and environmental regulations to hold Western multinationals accountable, rather than freeing them to rape and pillage as they please and sell the resulting products for a profit back home.

Pakistan is next. The bottom quintiles income share rose 1.5% 1991-93 (pre-WTO,) a respectable 0.4% in '97 (post-WTO,) plunged 1.2% in '99, rose 0.6% in '02 and fell 0.3% in '07. In 2007 it was ~0.5% BELOW the '93 level; "free" trade evidently helped little. The next quintile fared somewhat better, but generally followed the same pattern: Its income share rose 0.7% immediately before and 0.4% immediately after the WTO, dropped nearly 1% in '99, rose 0.5% in '02, and finally dropped 0.2% in '07; at least that was 0.5% ABOVE the '93 level. Likewise the middle quintile, excepting a slight drop in its '93 share; it rose respectably in '97, plummeted in '99, rebounded in '02 and sank slightly in '07, coming to rest a whopping 0.03% ahead of the '93 level. If we average ∆0.5, -0.5 and 0, what do we get...? ;)

Nigerias data is nearly as spare as Chinas, but 1993-96 (pre-WTO) its lowest quintiles share of national income rose 1%; between then and '04 (post-WTO) it rose 0.06%. 1% in four years or 0.06% in eight; which is better? The next quintile may have benefited slightly; its share of national income grew only 0.25% pre-WTO but 0.6% in the next survey period (OTOH, since the latter was twice as long, that may mean a constant growthrate before and after "free" trade.) The middle quintile saw two large fluctuations almost completely cancel each other: Its share fell 1% immediately before and grew 1% immediately after the WTO, finishing 0.1% above its '93 level (the '07 share is much higher than in '93 for the other quintiles, but most of those gains came by '96, well before "free" trade became the global standard.)

Finally, we have Bangladesh, where data is also limited. The lowest quintiles share of national income fell in every surveyed period until '07, when it finally rose a whopping 0.1% to end 0.6% below where it was in '93. The next quintiles share has fallen in every period surveyed since '93, and was nearly 1.5% lower in '07 than then. The middle quintile follows a nearly identical pattern, except that its share of national income has fallen 0.06% more since '93.

I realize each nations GDP, total and per capita, has risen greatly since '93 (or '89 in Mexicos case,) but, as we are often reminded, per capita GDP=/=per capita income/wealth. I guarantee the 60 million Americans in its bottom quintile do not earn 20% of its $16 trillion GDP (that would work out to slightly over $50k/year, which would in turn be slightly above the average annual US income, far from the lowest quintile.)

"Free" trade is a scam, man, and a spectacularly successful one because it pushes all the right buttons:

Consumers on ever-tightening budgets are promised lower prices for critical goods.

Small business onwers are promised lower prices for labor, raw materials and wholesale goods will lower their production costs.

Liberals are promised the Third Worlds improving economy will empower it to achieve democracy, regulation and higher living standards.

Unfortunately, there is scant evidence any of that is actually happening. Instead we see only the decimation of Western labor on which the welfare state depends, even as falling birthrates produce an alarmingly top heavy population pyramid, and multinationals sounding a rallying cry of deregulation to Third World levels in an effort to keep them from moving production there. Make no mistake, however: That is a THREAT, not a plea. Again, they told us for years we must give back all the consumer, labor and environmental reforms of the past century or production costs would force them overseas; when that did not happen, they aggressively lobbied to remove barriers to overseas production, and in many cases even wangled SUBSIDIES for it. Now their threat has teeth, but still no BENEFITS to anyone.

Thanks for the link though, because I had not seen it earlier, and will certainly put it to good use. :)
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This message last edited by Joel on 24/09/2012 at 11:14:07 PM
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It is hard to derive a ∆ from a single data point. - 24/09/2012 11:11:32 PM 581 Views
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