试听180秒081：China is winning the battle against poverty but still has a way to go

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Hello, Himalaya’s subscribers.My name is Timothy Taylor, and today we're going to discuss China is winningthe battle against poverty, but still has a way to go. Let me start by tellingyou a saying you sometimes hear in the United States, sometimes Americans saythat it is an old Chinese proverb. But when people say that, I never actuallyknow if it's true. Anyway, the saying is，“give a person a fish and you canfeed them for a day， teach a person to fish, and youcan feed them for a lifetime.” When thinking about howto address poverty, this saying helps to clarify two main options. If you givea person a fish, that's hopeful, but it's short term. And similarly, if yougive a poor person food or money, it's helpful, but it's short term. On theother side, if you can teach a person to fish, it helps in the long run. If youcan help a poor person make a connection with an employer and this mightinvolve building up their skills as well, then you can address poverty in thelong run, not just the short run.

The difficulty of course is thatwhen poverty happens, it's an immediate problem. People are hungry or they needshelter and they need it right now. So whenever you're trying to reducepoverty, there will be a combination, a mixture of immediate help for whatpeople need right now, but always with the intention of long term change. Sothat immediate help won't be needed in the future. An expression you hear inEnglish sometimes is that hoping those in poverty should be in a safety net. Asafety net catches you and keeps you from falling too far, but you're notsupposed to stay in the safety net forever either.

In this lecture, let's talk about how China and other countries fightpoverty, and we'll divide our talk into three parts. First, the centralimportance of continued economic growth. Second, we'll talk about China's Dibao program and use it toillustrate some of the complexities of helping the poor. And third we’ll talkabout non income methods of helping the poor.

Our first theme is the central importance of continued economic growth. Ifyou want to keep helping the poor, you probably need to have economic growth tohelp everyone. And some of this argument is really just basic math. Say China'sgovernment, back in 1980, had set the goal that it would cut absolute povertyby an enormous amount, like has actually happened in China, but say thatChina's government in 1980 tried to cut poverty without taking all the policysteps that encouraged economic growth. Instead, China's government in 1980 hadtried to reduce poverty just by redistributing from those with more income tothose with less income. Well, it just wouldn't have worked. Back to 1980 therejust weren't enough people with middle income and high incomes, not enoughcompanies paying good wages to make this kind of redistribution work in China.

If you look back over the last 40 years, the reduction in poverty in Chinais more due to overall economic growth than to any direct action by China'sgovernment to redistribute income from those with higher incomes to those withlower incomes. And in the future, I expect that helping the standard of livingfor the poorest people in China will continue to be linked to overall economicgrowth. There's a phrase sometimes used in the United States. It's oftenassociated with a speech by a U.S. president back in the early 1960s named JohnF Kennedy. Kennedy once said in a speech that a rising tide lifts all boats.

The idea is that economic growth lifts everyone. And like a lot of phrases,that are very short, a rising tide lifts all boats has some truth, but it's notthe whole truth. It is true that the rising tide of China's economy is the mainforce that's led to lower poverty and the growth of living standards in China.But it is also true that poor people are not boats, and the economy is notactually an ocean tide. So not everyone gets lifted up equally by economicgrowth. Some people in rural areas and urban areas can get left behind. And socountries around the world have programs to offer such people some immediatesupport.

Let's talk about our second main point, which is one of China's programsoffering people immediate support, called the Dibao program, in English,translates into something like the minimum livelihood guarantee scheme. Thisprogram was started back in the 1990s as an experiment in different parts ofChina, and it became a national program in 2007. The basic idea works likethis. You have a minimum living standard, which is in a way similar to thepoverty line, but it's actually set at a somewhat higher level. And if for somereason, people don't have this amount of income, and the government will givethem support to reach that level, it could be the government will give themincome directly, or it could be support like giving someone a solar generatoror a cow if they live in a rural area, or in some cases, a paying job. How manypeople received Dibao? Well, the program's run at the local level. And so ittakes usually a couple of years for the national level data to becomeavailable. But a couple of years ago, Dibao went to about 50 million people inrural areas and 20 million in urban areas.

And a number of academic studies have shown the program is a genuinesuccess in the sense that money spent on the program lead to real reductions inthe number of people who are living in extreme poverty. So although the programis a success, it also faces some challenges. And these are challenges that arefaced by similar programs in every middle income and high income country thathas programs to assist the poor including other east Asian countries likeIndonesia and countries in Latin America and elsewhere. I should say inadvance. These are problems that do not have simple or easy answers. So let megive you a sense of the complexity in trying to help the poor when you're inthe middle income country.

A starting point is, how do you decide who is poor? Who is eligible for theprogram? Well, you might say, why don't we just look at how much income theyhave? The problem is that many people who are very poor, where have very lowincomes, do not have regular pay checks. They don't have bank accounts, theydon't have financial records for you to look at. Most common approach in Chinaand around the world in other middle income countries is to look at wherepeople live.

You look at factors like how many rooms where they live, how many peoplelive in those rooms? What type of material is used in the floor, or the wallsor the roof? Does the home have a refrigerator or a stove or a television? Andyou use some combination of all those kinds of factors to decide whethersomeone is poor and needs assistance. Now, you can understand why middle incomecountries around the world need to do it this way. And you can also see theproblem that's going to happen. Really. There are two kinds of errors. One isan error of inclusion when people are treated as poor and included as eligiblefor government payments. But really, they're not actually poor. The other iscalled of an error of exclusion where people who really are poor. For somereason, the way they live doesn't seem to match up to that. And so they areleft out of the program, although they should be eligible. And those errors canbe pretty substantial.

One study looking at China's data right after the Dibao program wentnational in 2007 found that as much as 70 percent or more of those who werebelow the minimum living standard were not actually getting help. And abouthalf the help was going to people who did not meet the actual definition ofbeing poor. But those same studies have showed that the targeting and thoseerror rates have been getting better over time. Uh, when you look at wheresomeone lives and use it to make a decision about whether they have enoughliving standard, it's never going to be perfect, not in China or any othercountry. And in studies around the world, it's common to see errors ofinclusion and exclusion at 30 percent or more. Now I should say these errorsare not necessarily the worst thing in the world. Um. Let's say there's someonewho's actually a little bit above the minimum living standard. They get somehelp, but you know they're very close to poverty. And helping a near poorperson is just not the worst thing in the world. Obviously, if some peoplegetting government assistance are pretty far above the minimum standard, that'snot so good. But I tend to worry more about the errors of exclusion, those whoare below the poverty standard but are not being identified as needing help.

The next issue that comes up is whether the program is run on a local or acentralized basis. In China, the decisions about who is eligible havetraditionally been made at the local level, not by the central government. Andthere's a trade off here. On one side, there's a danger favoritism. It might bethat those who have a family tied those in charge are more likely to getbenefits, and others are less likely to get benefits. On the other side, anadvantage of local decision making is it let's local factors be taken intoaccount, like maybe there's someone who lives in a nice house but has very poorhealth and can't really earn any income. And so giving some assistance mightmake sense. Now, I don't know of a study that's focused on local control in China'sDibao programs specifically. But in other countries, it turns out that peoplewho live in rural villages often feel like local control is more fair and morein touch with their situation. As long as people in the rural area can seeclearly who is getting assistance and can understand why and maybe complainedto someone if it seems unfair，local decision making can work out pretty well. So thetrade off seems to be if you're going to have local control, you also need tobe open about how the money is being spent and maybe have just a bit ofoversight from the higher levels of government.

And next issue that comes up is called the poverty trap by economists.Consider this situation. I'll just sort of make up some numbers here, but saythe minimum living standard in an area, it's 3000 yuan and say that you'resomeone who has 2000 yuan and income. If you don't earn any more income, thegovernment will raise you up to 3000 yuan. But if you go out and earn another 1000yuan, the government doesn't give you any aid at all. You've got 3000. Youdon't need assistance. So the situation here is if you go earn 1000 yuan, youlose 1000 yuan in benefits. You did the extra work for no actual gain. Andeconomists call this the poverty trap. When there's a program to help the poorand the poor start earning money, but losing benefits, are we reducing theirincentive to work? It's kind of like if you give someone a fish, they mightlose their incentive to learn how to fish.

The key factor here is the rate at which benefits are removed. If I earn 100yuan extra and I lose 100 yuan in benefits, it's like I have a tax rate of 100%. But if I earn 100 yuan and I lose only 20 yuan inbenefits, then the tax rate is only 20%, and there is a much better incentiveto work. In theoretical terms, the Dibao program looks like it might have 100% removal of benefits. Uh, but actual studies donein rural and urban areas of China suggests that it doesn't actually work thatway. Local governments make adjustments, and when someone increases earnings,their Dibao benefits often fall only by about 20% or so. But of course, thebenefits are reduced more slowly, the program also tends to cost the governmentmore.

A final complexity I want to mention here is called conditional cashtransfers. The Dibao programme is sometimes called an unconditional benefit.You don't have to do anything specifically to get the money. But many countriesuse an approach called a conditional cash transfer, where perhaps you get anextra payment. Say if your children go and get their health check ups regularlyor your children stay in school regularly. Now these programs sometimes workand sometimes don't work. And there have been some studies in China and somework better than others, but I wouldn't be surprised in the future to see morestudies with conditional cash payments.

Let's move to our final point. Non income methods of helping the poor. Whatabout things that benefit people other than income? For example, if thegovernment helps with access to good education or good health care or cleandrinking water or reliable access to electricity and phone and internet serviceand good roads or maybe a big company in the city is encouraged to start up afactory in a certain area at which creates some local jobs. All of these thingsmight not be income directly to the poor, but they still might help poor peoplea lot. Overall, direct spending on those with low incomes is controversial inmost countries and China's Dibao spending has been controversial, too. As I'vesaid, these concerns are legitimate. But China's spending on the Dibao programis really quite small. It's about point two percent of GDP. That is about twotenths of one percent of GDP. And that's not a lot for a middle income countryto spend on direct payments to reduce the worst kind of poverty.

Let's finish here with some review questions. What do economists mean whenthey say a rising tide lifts all boats? Can you discuss some of the challengesthat a government program faces when it seeks to help the extremely poor, forexample, how to determine who is poor,errors of inclusion and errors ofexclusion, local versus central control, the poverty trap, and conditional andunconditional assistance? In the next few lectures we’ll shift to discussion ofinequality, which, as you already know from the previous lecture, is not thesame as poverty.

I'm Timothy Taylor. Thank you for listening to Himalaya.