Summary
Highlights
In the 1990s, the UN set Millennium Development Goals, with the first being to eradicate extreme poverty. Poverty is defined differently by country; in the U.S., it's under $11,770 a year. Extreme poverty is living on less than $1.25 a day. By 2015, extreme poverty had fallen from 1.9 billion to 836 million, showing significant progress, though most who escaped extreme poverty are still very poor. Climate change, however, threatens these improvements.
The decline in extreme poverty is attributed to factors like education, humanitarian aid, and international organization policies, but mainly to globalization and trade. Interconnected economies and free trade have boosted developing economies. Technological advancements, like mobile phones, have been transformative, offering access to banking, education, and market information, allowing countries to 'leapfrog' older technologies.
Globalization drives companies to seek the cheapest production locations, leading to labor-intensive products being made in countries with low wages and weak regulations. This benefits corporations, stockholders, and consumers through lower prices. However, high-wage workers in developed countries lose jobs. Low-wage foreign workers often face hazardous conditions but also gain employment with above-average wages, creating a multiplier effect on local economies. Economist Paul Krugman argues that industries in countries like Bangladesh, even 'sweatshops,' are vital for their economies.
Critics of globalization view outsourcing as exploitation, advocating for protectionist policies or better wages and protections for foreign workers. The core issue is that companies operate with fewer regulations in developing countries regarding minimum wage, safety, and child labor. Public awareness and international pressure, like the U.S. list of goods produced by child or forced labor, are steps towards improvement. Pro-globalization advocates argue that economic growth in developing countries creates more opportunities, leading to competition for labor and higher wages.
A strong argument against globalization is its unsustainability, as a growing global economy pressures the environment through deforestation, pollution, and climate change. The challenge is to alleviate poverty while preserving the planet. Microcredit, pioneered by Nobel laureate Muhammad Yunus, is presented as an effective way to empower individuals. Small loans, often to women, enable poor people to start businesses and participate in the economy, leveraging their entrepreneurial spirit. While not a complete solution, microcredit supports the idea that economic participation improves lives, despite the harsh working conditions some face in the global economy.