An Excerpt from Through the Eyes of Tiger Cubs: Views of Asia's Next Generation; By: Mark L. Clifford and Janet Pau.

Excerpt from Part 1: Chapter 2, pp. 35-38:

Introduction

Deng Xiaoping famously turned his back on the Maoist ideal of equality, adopting economic policies that allowed some people to get rich first. Deng unleashed the raw energy of China’s entrepreneurs. Today, the country’s 1.1 million millionaires are witness to the success of Deng’s vision. China’s growth, since reforms began in 1978, has brought more than 600 million people out of poverty.1 This is an achievement unmatched in human history. At the same time, while China as a whole has become richer and poverty has declined, inequality has increased dramatically. These sorts of growing income disparities, along with persistent poverty, are a source of concern for Tiger Cubs around the region.

East Asia has produced the fastest sustained rate of economic growth in history. First Japan, then the Four Tigers (Hong Kong, Singapore, South Korea, and Taiwan), clocked up record GDP growth, decade after decade of increases in the high single digits or double digits annually. Other countries in the region have also shown impressive performances.

Growth in the low single digits would have been regarded as a miracle in the past: England grew only 2 percent a year from 1820 to 1870, the heyday of its nineteenth-century Industrial Revolution.2 But countries that grow at twice that rate now are regarded as laggards in Asia. China has been outpacing its neighbors, averaging 10.1 percent annual growth since 1978.3 India’s annual growth looks set to remain in the high single digits for decades to come.

From the perspective of the overall economy, this all sounds like good news. Unfortunately, as is true for most countries during periods of rapid economic growth, inequality in much of Asia has widened. Even if everyone in general is better off, there are always losers. Some people actually find their situations worsening. Small farmers are often among those who suffer. Workers who now must compete against imported goods or find their wages or benefits cut as a result of privatization can see their living standards decline in absolute terms. But even for those who are better off, the presence of a newly rich class of the very wealthy can provoke resentment and a political backlash. In Thailand, for example, the urban–rural divide of wealth and power provided much of the fuel for the protracted and violent standoff between protestors and the government in the first half of 2010. In China, the notorious “BMW collision affair” in October 2003 incited a ferocious online assault on China’s newly rich population after a wealthy woman abused a farmer for allegedly scratching her car, and then jumped into her car and drove into a crowd of people, killing the farmer’s wife.4 In March 2011, 10,000 young people in Hong Kong protested against a new government budget, claiming it favored the rich. Similar cases of confrontation between rich and poor have occurred across the region. Countries with weak rule of law and poor governance are more prone to these sorts of incidents.

Since 1980, the world has become a more equal place. The Gini coefficient, a widely used and comprehensive measure of income inequality, has declined, indicating more equal income distribution. However, income inequality within a number of Asian countries is on the rise, including China, India, Indonesia, Hong Kong, and Japan.5 High levels of income disparity leave out a large population of potential consumers. So, in theory, narrowing the gap between the haves and have-nots contributes to social stability and facilitates an economic shift toward domestic consumption. How to do this without discouraging growth is a balancing act that challenges every government.

An increasing amount of attention to the issue has spurred some Asian governments into action. In May 2011, Hong Kong for the first time introduced a minimum wage. China’s 12th Five-Year Plan, a set of guidelines for the country’s development from 2011 to 2015, seeks to mitigate inequality through increased wages and tax reform. In the Philippines, the government is experimenting with a conditional cash transfer program to help the poor provide proper medical care and education for their children. Generation Y Asians feel that such efforts are both welcome and needed. In addition, essayists emphasized that sustainable improvement requires governments to find ways to create skilled, well-educated labor forces in order to avoid the trap of overreliance on export-oriented development.

While young Asians are concerned with the ways to raise people up in order to create a more equitable society, they have also called attention to a different group of people: the abject poor. For millions in Asia, the question isn’t how to benefit from growth, but merely how to find the next meal. After the signing of the Millennium Development Goals (MDGs) in 2000, an ambitious UN agreement aiming to drastically reduce poverty by 2015, a slew of poverty-reduction programs were implemented in Asian nations. Although China has made the most dramatic reductions in poverty, most countries have made improvements as well.6 Before the financial crisis hit in 2008, Asia as a whole was on track to achieve the MDGs of halving the numbers of people living on less than $1.00 a day and of people without access to clean water. The 2008 –2009 crisis, which stalled progress made toward the anti-poverty targets and slowed development, had pushed 21 million more Asians into extreme poverty by early 2010.7

Poverty, along with weak and ineffective governments, means that the poor are by definition vulnerable to everything from natural disasters like typhoons and earthquakes to global economic meltdowns. In spite of improvements, the continent still holds more than half of the world’s poor.8

Citation source:

1. Shaohua Chen and Martin Ravallion, “China Is Poorer than We Thought, But No Less Successful in the Fight against Poverty,” World Bank Development Research Group, last modified May 2008, www wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2008/05/19

/000158349_20080519094812/Rendered/PDF/wps4621.pdf.

2. Angus Maddison, Monitoring the World Economy 1820 –1992 (Paris: Development Center of the Organization for Economic Co-operation and Development, 1995), 255.

3. Alan Wheatley, “Calculating the Coming Slowdown in China,” International Herald Tribune, May 24, 2011.

4. Christopher Bodeen, “China BMW Collision Shows Anger vs. Rich,” Associated Press, last modified April 6, 2004, http://forums.anandtech.com/showthread.php?t=1295085 (accessed May 30, 2011).

5. Asian Development Bank, “Key Indicators for Asia and the Pacific 2010,” August 2010, 143, www.adb.org/documents/books/key_indicators/2010/pdf/Key-Indicators-2010.pdf.

6. MDG Monitor, www.mdgmonitor.org/map.cfm?goal=0&indicator=0&cd (accessed May 27, 2011).

7. Paul Tighe, “Economic Slump Raises Poverty Threat in Asia Pacific, UN Says,” Daily Mirror, last modified October 18, 2010, http://print.dailymirror.lk/features/139-feature/24581.html (accessed May 27, 2010).

8. World Hunger Education Service, “2011 World Hunger and Poverty Facts and Statistics,” www.worldhunger.org/articles/Learn/world%20hunger%20facts%202002.htm (accessed May 30, 2011).

Through the Eyes of Tiger Cubs: Views of Asia's Next Generation; By: Mark L. Clifford and Janet Pau; ISBN: 978-1-1180-9463-1; Copyright 2011 Mark L. Clifford and Janet Pau. The local edition of the book is available at leading book stores across India.

Reprinted with permission of John Wiley & Sons.