Rana Foroohar
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May 19, 2009 11:32 AM
While Americans are worried about dips in their 401Ks, Asians are increasingly worried about more important things, like feeding their families, as the global recession continues to play out. I’m currently on my way to Asia (first Japan, then China and Hong Kong) with members of the Honolulu based East West Center, where I’m going to be studying the effects of the financial crisis here, and already, it's clear that one major challenge is increased poverty.
The last couple of boom decades had done a lot to decrease poverty in Asia -- since 1990, the percentage of the population living on a dollar a day had decreased from an incredible 55 percent, to less than 10 percent. That means that the number of desperately poor went from nearly 900 million, to fewer than 200. This is largely off the back of China’s rise. Btw, I’ve interviewed a number of officials and economists within China that feel that their nation should receive a Nobel Prize for alleviating poverty. No joke.
Anyway, all this is good news, because unlike in past crises, Asia is starting from a much richer base. That said, poverty estimates are rising much faster than officials thought they would. The World Bank expects that about 53 million fewer people in Asia can expect to rise out of poverty than before the crisis began. And there will be an even more significant future knock-on effect, because lots of those people will pull their children out of school, or not feed their families adequately (childhood malnutrition can wreak havoc on the economic future of a nation – just witness the difference in health and productive capacity of the populations in North and South Korea).
There are also danger factors now that didn’t exist during, say, the Asian financial crisis. Back then, lots of extremely poor city dwellers simply moved back to their rural homelands, living off the land until jobs returned. Now, thanks to massive Asian urbanization, that’s harder to do. So far, countries seem to be managing all the social upheaval, but it’s going to be interesting to see what the political fallout of all this will be. As I’ll cover in another post, history shows us that the bigger the economic crisis, the bigger the political changes in store for the world.
Katie Paul
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May 19, 2009 08:25 AM
Too Close for Comfort: Has Treasury gotten too cozy with the firms it's hired to help value and manage bailout assets? The NYT muses on this as it shines the spotlight on BlackRock, which is managing the rescues of Bear Stearns, AIG, and Citi at the same time that it is advising private clients. They could soon get even more on their plate: Treasury may approve them to buy toxic assets, using taxpayer money.
Consider It Stimulated: It's been 90 days since the stimulus bill package passed, which means it's time for federal agencies to submit their report cards. So far, only 10 of 17 have made their way over to Congress.
Getting Chummy in Sao Paolo: The presidents of China and Brazil are meeting today, strengthening economic ties between the two rising "strategic partners." The powwow caught Hillary Clinton's attention, and with good reason; this spring for the first time, China became Brazil's biggest trading partner, displacing the United States.
The Resilience of Megacities: Richard Florida, a long-time scholar of the modern city, writes that major financial centers like New York and London are well-positioned to bounce back from the crisis. Rather, it's the second- and third-tier centers that are going to have to fight for their survival.
Good News from the Back Channels: Starting in the final months of the Bush administration and continuing through March, China and the US held secret climate change talks to come to an accord on climate change. It's all preliminary, but onlookers think it could provide the foundation for an international agreement at the next UN climate conference in December.
