- Registration time
- Last login
- Online time
- 92 Hour
- Reading permission
"Globalization does not cut poverty because it violates all the main points of my 12-guidelines" by Mr. Liang|
China Resurgent Forum
Originally posted in Dec 10 2005.
Republished by Admiral ChengHo, Dec 21 2005.
Summary: This article debunks the myth of globalization and why China should adopts the 12-Guidelines of Mr. Liang.
Globalization does not cut poverty because it violates all the main points of my 12-guidelines.
Many poor developing countries in the world are not raising their standard of living much if at all. These countries are fixated on doing exports in a vain attempt to make their countries wealthy. But doing exports of cheap labor intensive products only cause the wages to get lower and lower. This is because all the backward countries try to out-compete each other by lowering their wages to make their exports more competitive. This is what is meant by the "race to the bottom." It should be clear to the developing countries that continuing to rely on exports of cheap labor intensive products will only keep them poverty stricken forever.
It has been pointed out that US$2 per day is the poverty level. For the vast majority of the Chinese people, the income is still less than that $2/day. The household incomes of an average Chinese rural household is only some 3,000 yuans per year. At the current exchange rate of 8 yuans to the dollar, this is only some $375 per year. While those who work in the export sector may earn higher incomes, yet it is still only some 10,000 yuans or $1,250 and not much above the poverty level. Furthermore, the higher incomes of the export sector only serves to suck away the resources from water and electricity to steel and aluminum and stunt the overall economic growth of China as a whole. And as the export sector keep growing robustly at some 35% or more year after year, the domestic consumer market keep stagnating and very little jobs are created to produce goods for domestic consumption.
A revealing measure of how badly the export trade is hurting China's economy, consider the per household income to per capita GDP ratio. In America, the median per household income is around $50,000 while the per capita GDP is around $40,000. So the per household income to per capita GDP ratio is around 1.25. For the Chinese rural family, the same ratio is only 0.3 (per household income of 3,000 yuans and per capita GDP of 10,000 yuans). This is because the Chinese GDP is dangerously dependent on foreign trade which is now more than $1 trillion and accounts for more than 70% of China's GDP. It should be obvious that if foreign trade continued to expand, China's internal development will be suppressed even more.
In the end, the only way to raise the standard of living of the Chinese people is to provided more goods and services to them. This means putting the Chinese people to work producing goods and providing services for themselves. Since these goods and services are consumed locally, the workers can be encouraged to become as productive as they can and be paid in as high wages as they deserve. And with ever increasing incomes they will be able to continue to raise their standard of living until they have become the most productive in the world to earn the highest incomes in the world and be able to enjoy the highest standard of living in the world.
Many developing countries are too small to develop all the high technologies themselves. Therefore, they are forced to import most of the high tech products. The need to import high tech products in turn require them to export whatever they can to earn the hard currencies to pay for the imports. Therefore, the developing countries are forced into the "race to the bottom" which will keep them poor forever. China on the other hand is very fortunate to have the largest pool of genius level people in the world. With proper educational program and intensive programs for R&D, China should be able to become the most advanced country technologically. And as the most advanced technological country, it will not need to import any foreign high tech products. This in turn will allow China to export expensive high tech products at full PPP value for its RMB to pay for cheap raw materials. And with such a truly advantageous mode of trade, China will be able to provide the highest standard of living for its people.
I've often pointed out that in order for any country to give its people the highest standard of living, it must have the highest technologies and abundant raw materials. It is because most developing countries lack both that they have become poor and will be kept poor. On the other hand as I've pointed out above, China can advance its own highest technologies in the world. And those raw materials it lacks it can replace with domestic substitutes such as hydrogen for oil to power fuel cell cars. And those few raw materials that it lacks and cannot be replaced by domestic substitutes, it can buy from developing countries by paying for them with high tech exports.
In the final analysis, most developing countries in the world are kept poor because they lack both high technologies and raw materials. And China would be foolish to continue to rely on foreign technologies when it has the most number of genius level people in the world. And China is also very foolish if it does not attempt to replace raw materials it lacks with domestic substitutes. For example, if China continued to rely on the importation of oil while selling cheap textiles to America to earn the dollar, then it will never be able to become an advanced country. It will be forever poor while subjecting the Chinese people to the humiliation and the hardship of poverty.
The quickest and surest way for China to develop quickly is by implementing my 12-guidelines which emphasizes the education of China's genius level people to the highest doctorate degrees in science and engineering. It also emphasizes the development of the domestic economy through the urbanization of the farmers while simultaneously upgrading the urban and rural infrastructures. And lastly, it emphasizes the need to encourage the private enterprises because it is the only way to encourage and motivate the Chinese people to work hard and be innovative.
To read my 12-guidelines, please go to the following link:
http://www.network54.com/Forum/t ... 7&lp=1105667957
A peopledaily.com.cn article commented on the fact that globalization has not improved the incomes of developing countries. I insert a few quotes below from the article and the link:
Globalization fails to cut poverty, UN report shows
Global economic growth is increasingly failing to translate into new and better jobs that lead to a reduction in poverty, according to a new report issued by the International Labor Organization (ILO) on Friday.]
The report noted that currently half the world's workers still do not earn enough to lift themselves and their families above the 2 US dollars a day poverty line.
"Globalization has so far not led to the creation of sufficient and sustainable decent work opportunities around the world. That has to change, and as many leaders have already said we must make decent work a central objective of all economic and social policies. This report can be a useful tool for promoting that objective," Somavia said.
The report showed that within this global trend, different regions show mixed results in terms of job creation, productivity results, wage improvements and poverty reduction.
The total number of working women and men living on less than 2 dollars a day has not fallen over the past decade although at 1.38 billion it is a smaller share of global labor at just below 50 percent, a decline from 57 percent in 1994, the report said.
In many developing economies the problem is mainly a lack of decent, productive work opportunities rather than outright unemployment. Women and men are working long and hard for very little because their only alternative is to have no income at all.
The report examined 20 key indicators, covering quantitative topics such as labor force participation, employment, inactivity, employment elasticities, sectoral employment, labor productivity and unemployment, and qualitative issues like hours worked, wages, employment status and unemployment duration.
This article may be re-posted provided attribution of source is given.
China Resurgent Forum (Index): http://www.network54.com/Index/31522
General forum: http://www.network54.com/Forum/238054
Article link: http://www.network54.com/Forum/t ... 3&lp=1045247248
[ Last edited by admchengho at 2005-12-21 04:26 PM ]