The
close timing of two of the world’s most important news stories of
the year seems almost too good to be coincidental. I believe they are
connected and hold lessons for Canada.
In
the past few days, 12 nations — including Canada — signed an
agreement to form the Trans Pacific Trade Partnership, creating the
second largest trading bloc in the world (after the European Union).
Trade barriers will fall in the coming years, opening markets to
global competition that till now have been been protected by
restrictive tariffs.
Also
in the past few days, the World Bank announced that for the first
time in history, the number of people living in extreme poverty is
expected to drop below 10 per cent of total world population. Their
report flags some significant numbers: in 1990, more than a third of
the world subsisted on less than US $1.25 a day; today, a new
accounting system adjusted the rate to $1.90/day, but while global
population has risen, the portion living below that line has dropped
from the 1990 level of 1.95 billion people, to 702 million today.
Jim
Yong Kim, president of the World Bank Group calls it the “best
story in the world today.” In 2013, shortly after Kim became
president, the World Bank adopted two goals. One was the eradication
of extreme poverty by 2030; the other was to boost the rate of the
globe’s shared wealth, by raising the incomes of the world’s
bottom 40 per cent.
Where
were the greatest gains made? In two nations that were taking away a
lot of North American manufacturing jobs: China and India. Where were
the poorest gains made? In countries that have less manufacturing and
which are mostly reliant on natural resource exports.
Makes
you think, doesn’t it?
My
reading of the coverage of this report finds little or no mention of
their second goal, but I can’t help imagining that increasing the
wages of the bottom half of workers created conditions that elevated
the incomes of the poorest of the poor. This wasn’t charity alone,
it’s business.
Consider
India, which still has the world’s largest population living on
less than $1.90 a day. The Times
of India
had trouble reporting the World Bank’s story because of this. Which
is more significant: that the greatest gains since 1990 in
eliminating extreme poverty were made in India (the lowest population
percentage of countries with the largest numbers of very poor
people), but while it brought millions out of extreme poverty, India
just happens to have a very large population. So the number of those
in extreme poverty in India is still the lion’s share of the Asian
group of countries.
Or
China. In 1990, the Chinese tiger was just discovering its potential.
Two decades since of hyper-fast urbanization has fed an army of
newly-educated workers into their factories to produce stuff at a
fraction of the wages being paid in the wealthy West.
Good
news? Bad news? Depends on whether you were dirt poor in China before
you got a job making auto parts, or were paying down a big mortgage
in Canada before you got laid off doing the same thing.
My
point is we need perspective. Canada lost jobs and a fair amount of
economic potential when the BRICs stole away much of our
manufacturing sector. But if we only look at our losses, we miss a
bigger picture.
The
world is a better place with fewer really poor people in it. Rather
than moaning about businesses relocating their manufacturing to
low-wage India, China or other developing countries, we may need to
adjust our sights as to what our own income expectations are. Our
middle-class salad days may be behind us — we need to start
competing again.
One
way to do that is to level the playing field between nations in how
we conduct international trade. Developing countries discovered that
a good way to treat wealthy neighbours was to sell them stuff —
including their labour.
If
wealth were more evenly distributed, perhaps we could begin to do the
same.
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