Worldwide Locations

Worldwide Locations

Amartya Sen: What China Could Teach India, Then and Now

The Citigroup & Asia Society Global Issues Series

Amartya Sen (India), professor of Economy and Philosophy at Harvard University. (Servindi/Flickr)

Amartya Sen (India), professor of Economy and Philosophy at Harvard University. (Servindi/Flickr)

The Citigroup & Asia Society Global Issues Series

Hong Kong
February 17, 2005

Moderator: Mr. Ronnie Chan

PROFESSOR SEN: When I – when we decided that something on poverty – we were talking about various subjects and I talked about identity and violence. Now, that will be the talk that I will give tomorrow at the Chinese University, but it was thought that people would be interested in hearing more about poverty, so that was how the subject came out. But I thought I might try to see the dimensions of poverty in terms of something broader than just lack of income.

Don has already mentioned the issue of political freedom, but more generally I think one could think about poverty not as a lowness of income but a lowness of one’s ability to live the way one would like to live and one would have reason to live. So it is something to do not with some lack of external objects of convenience, like income or commodity, but basically a deprivation of human life and, in particular, the thing that we value most, namely, the capability to live as we would like to live.

This is the subject of great antiquity; in fact, if you go back in time 2,500 years ago when Gautama left his princely home in search of enlightenment, he was moved by the sight of seeing on one day a dead man, and seeing on another day an extremely ill person, and on the third day a person incapacitated by old age. It is the failure, our failure to have the kind of life we would like to live, which made him start off a line of inquiry, which of course in his case took him at a different intellectual wave length, not so much about the economic issues but about the nature of the world in which we live. But I think that particular issue of how we address the lack of capability - which is, after all, what poverty is - is quite central and it has recurred again and again historically over thousands of years.

Now, income comes into it, not because it is valuable in itself, but because lack of income could be an immediate and perhaps the most important reason for people’s poverty of lifestyle or poverty of freedom. But having recognised that that is indeed the case, we still have to ask – we have to make a number of real distinctions, one of them to recognise that if income and lack of income is relevant to a study of poverty, that is not because it is intrinsically about lack of income, but it is one of the instrumental factors that predisposes us towards a reduced life. So it is a means rather an end that we have to look at.

Secondly, if you are looking at income and lowness of income, we have to see not lowness in some absolute standard(s) but inadequacy, and what is adequate depends on a number of circumstances. It may depend on our physical features. If you have – if you are prone to some kind(s) of illness, then the amount of income that you need in order to escape deprivation may be very larger. Just imagine the case of a person who has a lot of income but has an expensive illness in the form of requiring, let us say, kidney dialysis on a regular basis. Then even though he may have a higher income than another person, nevertheless, in some respects it will end up being quite clear that he or she has poverty. And it is not just because of the money that you expend in kidney dialysis reduces his net income, you can easily imagine the situation when the kidney treatment becomes impossible. If that is the case, then he does not have to spend that money for kidney dialysis, but it will be wrong to say that his poverty has now gone down because of the fact that he does not have to spend money on kidney dialysis, because given the opportunity he will rather spend the money that way.

So you have to see the predisposing condition of the poorness, the illness, as one of the factors, the physical environment, and the deprivation in which we live is one of the factors. Having just escaped from Boston with 45 inches of snow and minus 20 degrees Celsius temperature, I think the lifestyle and the need for commodities, including heavy overcoat, (are) utterly dependent on the physical universe.

And similarly, the presence of crime in the locality, violence in the locality; or to look at positive thing, the nature of the epidemiological care that we happen to have, what kind of public arrangement for health care there is dealing with epidemics, and what kind of arrangement there is for receiving medical treatment if you happen to fall ill. All these enter a picture in which private income is part of the story but need not be the only part, and sometimes not even the central part of the story.

So I think what I would talk about briefly (are) a number of these other dimensions of poverty which we ought to look at, and I would also to some extent, as I have often done in my work, look particularly at China, because I believe that the world has learned more from China over the thousands of years than from any other country in the world. Not all the lessons are necessarily positive; many of them are very positive and some of them are not, and I thought one should discuss them.

I discussed them a little bit more in an article I published in the New York Review on the 2nd of December. It’s called “Passage to China”, a slightly corny title with a variation on E.M. Forster’s novel - it was invented for me by the editor. But it really deals with the relationship between India and China. In the first millennium, they had very close contact, which is very rarely remembered now, between the 1st century AD to the 11th century AD. Very often, it related to Buddhism, but it actually involved contact on mathematics and astronomy, on science, on public health care, on medicine, on linguistics, on music, on art, and so on - very extensive things. So most of it was – the article is concerned with the 1st millennium. However, I go on in the last chapter to discuss what is the continuing relevance of this in today’s world and how some of the issues they were discussing then - public health care, the need for having a globalised approach, the importance of dissent - all these issues have remained current even in today’s world.

But I want to draw particularly on lessons from China in this respect, and in my books on India I have often drawn greatly from the Chinese experience. I remember that – actually, China is quite a big figure in Indian thinking and has always been so. In 7th century when Xuanzang left India and went back to China after having spent about a decade in India, he asked rather implausibly the question, “Is there anyone in India who does not admire China fully?” This is the nice 7th century question. It is a serious question and of course it is coming in many different forms.

When I was growing up in Calcutta, since the left wing student movement was very strong, the big figure, of course on those days was the inspiration of the communist movement in China which was probably the stronger influence on thinking of students in Calcutta than almost anything else I can think of.

I remember also when I was a student in Cambridge, one of my teachers, Joan Robinson, a great economist, explained to me why China is so admirable, as she was making a cultural comparison of the kind which has become very common now ever since Sam Huntington wrote his book about civilisation and trying to reduce every civilisation into something like a one or two sentence summary. Joan told me that the real trouble with Indians, she told me, is that Indians are just too rude; and she said the Japanese, the trouble really is that the Japanese are too polite; and then she said the Chinese are just right. So I think those are good inspiration to go and study the Chinese experience.

Now, in so far as private income is only one of the influences on the achievements in reducing poverty, the first thing I want to mention is that even though in the poverty discussion most of the concentration tends to be these days on what happened since economic reform. The fact is that there is a very major lesson in what happened in China previous to that. I am not commenting on the excesses of the Cultural Revolution, I am not talking about the Chinese famine (from) ’59 to ’61 in which 29.6 million people died. There were all kinds of mistakes.

But the fact is that China was still the global leader as a poor country expanding basic education at a level which was very hard to imagine, as well as basic health care. All kinds of things came like “barefoot doctors” and so on. But the spread of health care across the country was quite remarkable. By 1979, when the economic reform came, the Chinese life expectancy was already 68 years; the Indian life expectancy was 54 years, 14 years behind it.

There are really major lessons there, and I might say also one of the unsung contributions of the pre-reform educational and health care expansion is, I believe, the radical economic expansion that took place in the 1980s. After the economic reform, it would have been very hard without the base of elementary education which China had and India did not at that time, which is still a factor which bothers India badly.

Now, that social delivery problem is extremely serious and that is also one of the reasons why one has to look at the social system more fully to understand the nature of poverty reduction that can be achieved. Now, here, moving from positive to slightly negative territory, along with the economic reform which was dramatically imaginative and successful in extending the opportunity of earning an income, expanding private income basically, initially primarily concentrated on agriculture through the 1980s and then later more and more globalised, along with that came a certain slackening of the social delivery of the health care. Health care suddenly became private.

In one step, China moved from a Canada-like system to the US‑like system, which in this context was not an improvement necessarily, and one of the difficulties is that you see that even in the progress of life expectancy. Even if you compare the change since 1979, even though China remains well ahead of India, the gap between China and India is now reduced from 14 years to seven years. The Indian life expectancy has grown about three times as fast as that in China, despite having a lower rate of economic growth.

And I think in this reduction in the slackening, the lack of social insurance does play a very substantial part, in my judgement, in my analysis. And you see it particularly if you look at some parts of India which has in many ways shared the egalitarian commitment that put China ahead in the first place in the pre-reform period, but which continues to have a public health insurance system, like the state of Kerala, a fairly substantial state of 30 million people. The Chinese and the Kerala population, the Chinese have roughly the same expectation of life in ’79: 68 in China; 67 in Kerala. In China now it is 71; in Kerala is 76. Infant mortality rate in China was then 37; in Kerala also 37. In China is 30 now; in Kerala is 10.

So I think there is a price that is paid in the slackening, in my judgement - I am being very frankly critical of that as a great admirer of China - in that some of the major insights that the world has learned from China in the pre-reform period, taking the rough with the smooth, is something where I believe if I were to place myself in the unlikely role of advising China, I would say that the whole issue of health care has to be looked at. China is one of the few countries in the world in which you actually have to buy your vaccines. So that in a sense, which I, as a member of the World Vaccine Board, am very concerned about that issue, because it does, if the infant mortality rate has stagnated, I think it has a lot to do with that. So I think the whole question of how public health care is delivered and arranged is one of the issues.

Now, we don’t have very much time so I will move on to another issue, which is - and I am trying to concentrate on those things which tend to get less discussed than others - China’s success in economic growth and the number of poorer people going down have been radically high. But let me mention here a slight contrast. The Chinese – if the world has many fewer poorer people today in terms of lowness of income, and that is indeed the case, the biggest contribution of that has come from China. The second biggest is India but quite a big distance behind China. But again in the Chinese experience, there are two periods. (In) 1980, the reduction of poverty was dramatic with mainly agricultural expansion, the Chinese agriculture grew at a rate that I have never seen in my understanding of economic history of the world anywhere else. In the 1990s there has been reduction in poverty too, with the exception of last year when poverty did go up. But it had been much slower. This is not an argument for concentrating only on agriculture, because the potential on agricultural expansion was probably expanded through the 1980s because it was a one for all jumping up, moving away from a very inefficient communal based cooperative system to a private enterprise-based agriculture.

So I think globalisation was the natural direction to go and the Chinese success in that has been dramatic, and yet there has been, along with that, not only a slackening of growth or a reduction of poverty, but also a sharp increase of inequality. I have never seen the Gini coefficient go up as fast as it has in China. This is not unknown to the Chinese economists. I went to a conference two years ago held at Beijing University where the subject of exactly this, the increase in income and equality, so it is receiving attention. I think it is receiving more attention than the other issue of the social delivery problem of health care, which I commented on first. But that is an issue to be addressed.

Now, you cannot go on with this in 1980s, certainly, the 1990s and the 2000s have to be different, and yet the whole issue of how the fruits of the massive gains of globalisation have to be shared is one of the questions that has to be addressed. It is important, if I may come back to India, to learn immensely from the way the Chinese have played the globalisation game, and I think one of the respects in which I think the Indian left, and I see myself as a part of that, has been very outmoded, is in its thinking about globalisation; it has tended to assume it to be some kind of a sea monster, like the, whatever animal it is in the Jaws that comes in and gobbles up poor swimmers, but not as something that you can turn to your advantage, and that is the great lesson and at last, happily, India is learning something from the Chinese experience, which is very good. And yet, the whole issue of inequality has to be addressed.

In the elections in May last year in which the ruling Government was defeated, and in my judgement happily defeated, I think two of the main issues - one was the increase in equality despite the globalisation success, even though the inequality increase in India is far less than that in China, but it is still a considerable increase; and secondly, of course, the inability of the Government to deal with sectarianism of the ruling party, the BJP, and in particular the riots in Gujarat in which mostly Muslims got killed, and it is that sectarian fundamentalist Hindu agenda which also was one of the big factors that played a part in the defeat of the Government. But these issues required in a multi-party democratic system, they get standardly discussed, but if you don’t have such a system you have to find ways and means of keeping these issues in the public agenda.

So I move now to a third issue, that is I briefly referred to the fact that we are dealing with a world in which lowness of income is not the concept to use even as far as income is concerned in dealing with poverty; you have to look at inadequacy of income. What is regarded as an adequate income depends on the lifestyle in a community, and this is a consideration that I think might apply even to Hong Kong, because Hong Kong is a very rich country, a very rich economy, and yet there may be a problem of poverty, as any rich economy has - the United States has in a big way and so has every other [country], Switzerland too - to fund.

In one of the deeply insightful passages in the “Wealth of Nations”, Adam Smith addressed the question in an altogether definitive way, and if I have ended up trying to view poverty as capability deprivation, I have to admit that my first insight on it came from reading Adam Smith’s “Wealth of Nation”. He was talking about what he called “necessities” and he was mentioning the fact that we have all - this is my language, not Smith’s - we have all desire to have certain basic capabilities, like taking part in public life, like appearing in public without shame. Now, the commodities that you need for any absolute level of poverty - to be able to mix with friends, to chat with them and appear without any shame - the commodity you need for that is immensely more if you live in a rich country than in a poor country. His example was that until recently in England, you could appear in public without a linen shirt or without leather shoes, but not anymore. Though he taught in France, he was still cold. Because the standard of what is accepted as minimally decent consumption has changed in England. So what it really means is that the level of income that you need in order to escape poverty is much higher in England than he thought it would be in France.

Now, the argument is this, and you have to be careful: he was not saying relative income is important per se, not at all; he was saying the absolute capability to do certain things, like mixing with others without shame, appearing in public without shame, is extremely important, and that happens to depend instrumentally on relative income. So if you live in a country in which, or in an economy in which there is a great deal of consumption that is needed as an essential part of decent life, then not having that, not having the same level of income as they have but something towards that average would reduce it to an absolute deprivation of capability, to be ashamed to appear in public. It’s like the way in New York families where everybody in (the) school where your child goes, everybody in school – the children may be talking about what they saw on television or cable, and so on, and if you don’t happen to have one, you are left out of communication. So that the level of income that you need in order for your kids to mix freely with others, the same thing, is much higher in New York than it is in, say, Tanzania, and it makes a big difference therefore to take into account how deprivation come about and why inadequacy of income is not the same thing as the absolute lowness of income.

There are too lessons, particularly in those areas which are prosperous - and Hong Kong is one of them - the need to think about issues. I believe that Hong Kong does not have an official poverty line, but in all the thinking about that, then that is the kind of consideration that has to come in.

The other point to make related to that, that we live now in what has been called - I think rather cornily - the “global village”. I think it was Marshal McLuhan who first made that expression common. It seemed quite fetching then; it does not quite seem now. But at least in the context of a globally contacted world, the minimum consumption that people desire is also influenced by what is going on elsewhere. When we started thinking about poverty when I was going through my school days in (the) 40s and college in (the) 50s, the idea that an average Indian villager might be deprived if he did not have an internet connection would seem unthinkable to me. I did not know about the internet, of course nobody did at that time, but quite aside from that, the whole idea that you want to be in contact with the rest of the world did not come to people as an essential ingredient of living, but it is now. So that the whole issue, the Smithian perspective of the people you mix with and how the standard of living that you need, the commodities that you need in order to do the things that are absolutely normal - namely, mix with people you would like to mix with - that has become a very important factor.

I think two other quick points and then I am going to stop and we are going to have some Q and A I believe. Another issue that is worth considering very much in the context of global poverty is disability. That of course is a big issue that changes the amount of income that you need in order to escape poverty. I had to give a keynote address to a conference arranged by Jim Wolfensohn in the World Bank on disability and in that context gained a massive amount of data. One of the things you have to do before giving a keynote address is to learn something about it. It is a good way of getting oneself educated. I was amazed to find that one way or another, 600 million people in the world have substantial disabilities of a kind that is debilitating. That is 10 per cent of the population - very large. The impact of it can be quite serious, even for a rich country.

There was recently a PhD thesis which I examined by a German young student called (indistinct). Her thesis looked at poverty in the United Kingdom, and using a cut-off rate of 60 per cent of the median income of UK, being the poverty line, she found 17.9 per cent of the UK population fell below that line. If, however, you looked at the families in which there was at least one disabled person, there are two things you have to look at. Disability reduces your ability to earn an income, but it is a double whammy because it also reduces your ability to convert income into the capability to live, and she used a capability-based approach to do the calculation and the numbers suggest that 17.9 per cent for the general population, if you look at the families with at least one person disabled, in terms of just lowness of income, not 17.9 per cent but 23.1 per cent fall below the poverty line income, and if you then adjust the extra income you need in order to compensate for disability, you never fully compensate. You know, with a prosthesis you may be able to walk but never fully, but just the cost of prosthesis, then the percentage below the poverty becomes 47.4 per cent, so nearly half the population.

Now, that affects the total, since this is only a small section of the UK population, it increases the below poverty population for the country as a whole from 17 per cent to 20 per cent. On the other hand, if you look at that seven or eight per cent of the British population that has a disability, then you are dealing with about 50 per cent being affected. Now, that is a very important factor. One of the reasons why it is important, and that is my last point, is the whole importance of health care, which I have already touched on in terms of the issue of social delivery of health, but I end up by mentioning that there are two aspects of health: the bit that is captured very well in things like the Human Development Report, the Human Development Index, which I had a hand in constructing for the UN, it captures the mortality aspect very well, but along with that of course there is a massive disability aspect. If you think of Aids, the amount or the number of people who need caring because of physical illness or because of becoming orphaned is extraordinarily high. So along with the whole issue of spreading knowledge, taking early care and making sure that Aids does not impair life in the way that it is in many parts of the world, especially in Africa but with some threat in other parts too, like in India and China as well, one has to think about the disability creating features of this illness, which is a serious issue to think about.

When I had the privilege of co-chairing the UN-related Human Security Commission along with Sagato Ogata, we did discuss how some types of insecurit(ies) are much more discussed than others. It is, for example, not recognised that on 911, 11th of September 2001, more people died of Aids than died of violence on that very day. And if you take any other day, of course many, many times more people died of Aids, and then if you add to Aids, the malaria, tuberculosis and many other illnesses which still survive which still dwarf Aids in terms of mortality, you have a massive picture.

So we are dealing with challenges in the world in which income remains central, in which making intelligent and humane use of globalisation remains important, but along with that there is an enormous amount of other issues to concentrate on, and that is why I thought that I would choose many dimensions of poverty as a subject.

I could have gone on a little bit more, but I think I should not now, and I should look forward to questions and hopefully some possible answers. I am not quite sure. I mean, I remember when I was a young man in Cambridge, there was a nice sketch about the sanguineness with which the independent nuclear deterrence was being sold in the United Kingdom, and one of the sketches I think in the Footlights Review in Cambridge consisted of the UK Government explaining why having nuclear bombs does not pose any danger to the world at all, it is extremely peaceful, and one of the persons asked the question saying, “I have for you five questions,” to which the UK Government representative said, “And I have five answers.” I am afraid I am not quite in that position of being able to show that I can answer them, but I will try. Thank you.

THE MODERATOR: Okay, ladies and gentlemen, the floor is open. Noel Patten.

MR NOEL PATTEN: I don’t know about that, but you are talking about the health care and the need to drastically improve health care in various parts of the world. Who is going to pay for this? Where is the money going to come from? By that, I am particularly thinking of the ageing population all over the world, and still people retiring at the same age or perhaps even younger, so there is also the issue of the social security payments, and less and less people working for those who are retired, less and less people working for those who need medical benefits and assistance.

PROFESSOR SEN: Thank you very much, it is a very good question. I think the whole issue of how to pay for (it) is serious. Let me say, you have raised two different types of issues there: one is the question of affordability, if you happen to be in a poor country; and secondly, the issue of an ageing population and its impact, which can be particularly serious for relatively rich countries where people tend to live rather longer.

As far as the first is concerned, if there is one great lesson that emerged from the Chinese experience in the pre-reform period, it is that in order to expand health care in a poor country, you don’t need as much resources, in terms of money, as you might think if you were looking by standard in a richer country.

And let me give you an economic analysis. The reason for that is health care basically (is) a very labour intensive activity; it’s doctors, it’s nurses, it’s the whole arrangement connected with it. So that a country which is poor and has low wages, relatively speaking - and I discussed that in my book called “Hunger and Public Action” published in 1989 - while the relative costs are dramatically less in a poor country, which is also why if you take parts of India like Kerala, where the life expectancy is 76 years and has expanded, it has not ended up spending, as a proportion, a dramatically high amount of its resources; it has spent something which is slightly higher than the rest of India, but the difference has not been dramatic.

So one has to be an economist and not look only at this as the supplies that have to be created, but also the relative cost of that and bear in mind that a low wage economy also makes health care, as well as education, basic education, cheaper. That is the first issue.

But the second issue - as you are very right to ask that question, because it is an important question to address - is it affordable? And if you look at many other countries, and in my joint book, the 1989 book co-jointly with Jean Dreze, we discussed a number of other countries like Costa Rica, and so on, which have actually expanded health care at the time when they were still very poor.

The ageing population raises a different issue. I think the whole issue about social security reform in the United States is to a great extent being posed in a way that is not fully informative. One does not have to agree with all the critique that you see, but the idea that there is an immediate danger in the United States does not seem to me to be the case. I mean, I think at least until 2050 the social security would not have been in any kind of deficit anyway.

That does not mean that one should not think about it now. But the issues that you have to look at here at two – are three, actually. The first issue is - and this is a radical issue to consider - whether the way the world is organised today in terms of work and retirement is properly done or not. If anything, there has been a tendency to reduce the retirement age, as in Italy, say, but one of the medical things to emerge is not only that people are living longer, but most of their capacities are also much longer lasting, and this is especially so for non-physical work, and the world has been turning away from physical work to more and more work of a kind that is less endangered by age. So I think the whole issue of retirement has to be considered and taken seriously. That is one of the issues.

The second issue is that if that is the case of (...tape turned over...) it is not the question of saying, “What a pity people live long,” but it is a question of making do with how best to face this problem which is, after all, a reward of goodness rather than badness.

The third thing is to address the whole issue of social health care, because quite a lot of the high expenditure is connected with medical expenses really. And here I think, since I live in the United States and have had the opportunity of looking at their health care system, we have the oddity that the United States certainly has the best health care in the world. If I were suddenly to fall ill, if I wanted treatment – you know, at the moment I have a home in Cambridge, England, and Cambridge, United States. I will go to Cambridge, United States, to have myself treated.

And yet, if you look at the cost effectiveness compared with the percentage of income that goes into health care, the life expectancy - again, in the United States - it is a middle-income country among the rich, not the top flyer. A real issue about how to address the social delivery question - I raised it in the context of poor countries like India and China, but the same issue has to be addressed in the context of the rich countries too. The issue, is there something on the European side to learn?

One of the frustrating things for me in the debate that took place in the Clinton era about health, coverage of all for health insurance, was that the only model that was being considered was Canada, which of course is an extreme model in which no private treatment is allowed. It seems to me impossible to imagine a situation in the United States where the rich could spend as much as they like on a yacht, on buying a villa, but they cannot spend their money in order to get something which affect them most, namely, their own health care.

This does not affect the Canadian rich so much because the United States exists as a country next to it, and that would cease to be the case if United States went through as Canada. The thing to look at would have been the European experience, and we have not got time to discuss it. The varieties of systems there, the United Kingdom, France, Italy, Germany and there is lot to see how the social delivery network could be expanded without choking or in a counter-productive way the possibility of private expenditure in health care also.

So I think in these lines I would like to look for (a) solution to the problem. I think the problem does exist, but I don’t think it’s really as much of a doom scenario as is sometimes made to be. But I am delighted (that) you asked it.

MR JAMES OGILVY: Thank you, Ronnie. My question is recent discussion among G7 countries regarding the forgiveness of debt to third world countries. Is there any marked relationship between forgiving debt and the reduction of poverty among the individuals within those countries, or are the two somewhat different or divergent?

PROFESSOR SEN: Well, I think there is a connection, a clear connection. As you know, the initiative in this particular case is coming primarily from the UK and Gordon Brown in the G7 countries. And the analysis on which it is based, and which I was just two weeks ago – Gordon Brown and I were jointly addressing a conference in Manchester on something else, but I had the chance of talking with him a little on that. The argument it seems to be that in terms of the impact it will have in releasing some of these very poor countries from releasing resources to spend on things like education and health care, we are talking about, could be quite dramatic. So I believe that that is a serious thing to look at.

Against that, you have to look at two things. One is that the last thing you want is a situation in which the instrument of borrowing money becomes unavailable because you are afraid that you may have to forget the debt at some stage, so you have to look at the system, and there is no – any system that carries out a reform of such a radical kind has to pay attention to that.

It is not the same thing as the argument that was presented by the US Government - actually by a friend of mine, John Taylor, a fellow economist whom I have worked together with in the American Economic Association; when I was President of AEA, he was in the Executive Committee, and I know that he is a very humane man too - but the argument that was presented by John was mainly that this would be somehow illegal. I am not sure that I fully understand that argument, because it is really for the question of the legality within the countries to work this out. But it would be quite interesting, especially suddenly if the UN, for example, or actually mainly more the World Bank, if it suddenly did not receive the money, it would do something to finance it, but part of the Gordon Brown plan therefore has been to see how that issue could be addressed.

These are serious issues to be addressed - there is no question - but you also have to bear in mind, since sometimes people are greatly moralist about this, that there is a history of the world in which G7 has reason to be very concerned and take some responsibility. Much of the debt in the third world, particularly Africa, was incurred in the period where military dictatorships were strongly encouraged by the Cold War. Every time a military strongman overthrew a democratically elected government, depending on whether it was pro-Soviet or pro-American, it got support from the Soviet Union or from NATO, and therefore dictators and military rulers never lacked friends. It is that which has done more harm, not just in terms of debt, most of the debt or the bulk of it, a high proportion of it, came from buying military expenditure, military expenditure in that period.

In that I think the Cold Warriors really had a very substantial goal. This was only one of its minor effects, the major effect was a continent which was proceeding towards democracy. I remember visiting first Africa in 1963, Uganda, and it really seemed to be a kind of dramatically nation democracy. I remember writing for a Bombay paper as to how vigorous the journalists were in Uganda compared with the tameness of the Indian journalists. I am afraid within 10 years of that, I think I calculated about 60 per cent of my friends were dead and Africa was turning a page, and with the connivance of the NATO countries on one side and the Soviet Union on the other.

So I think that one has to think that, and there is a legacy of that. Even today, if the war continues in these areas - of course a lot of it, if you are looking at armament sales, it depends on both demand and supply, and the demand of course comes from there. But there is a supply issue too. The availability of arms in the world to feed these very often civil wars remains confined to G7 countries to a great extent. More than 85 per cent of armament exported in the world is exported by G7 countries. It is a dramatically high ratio.

So along with the high philanthropic drawing of the debt forgiveness, one has to consider a total picture of a global order. And what G7 is doing in that context, what it did in the past, since the past is incredibly involved in dealing with debt, as well as what it is doing today.

But the fourth answer - I am sorry, I took the opportunity of your question to broaden it a bit - but the short answer is, yes, it will help a lot, but that does not mean it is an easy solution to look for, because one has to preserve the institution of borrowing and lending, because you don’t want to threaten that in the context of where we want all pardoning of debts.

MR WEIJIAN SHAN: Professor Sen, I very much enjoyed your remarks. If you would allow me to make a few remarks with regard to the pre-reform health care system in China.

PROFESSOR SEN: Yes. Right.

MR WEIJIAN SHAN: I was one of the “barefoot doctors”, as you described, during the Cultural Revolution in China and, as such, I must say that I thought that system was probably the only good thing during the Cultural Revolution. I observed with my own eyes not just the inadequacy of medicine, but (the) total absence of medicine in many parts of China. However, I thought that that system was entirely unsustainable because if there was any freedom of choice, you wouldn’t stay on as a “barefoot doctor” to walk around barefoot. It was not particularly comfortable to start out with, and (the) starvation was even worse, and I am still catching up.

In fact, I was a great admirer of India at that time because - especially the Buddhist religion - as I was so much looking forward to my next life as the present one was so bad. After the Cultural Revolution, I actually thought a lot about this health care system because I saw the breakdown of (the) health care system in the countryside again, where there was absolutely no medicine at all.

It was not until in 1989 that for the first time I visited Taiwan, and by chance I visited one rural clinic where I saw a few young doctors in a very poor part of Taiwan. So I asked them why they liked to stay there to take care of the poor and earning very little income. They told me that they were scholarship students and part of their obligation was to serve in the countryside for at least two years after graduation, very similar to the military scholarship that you get from the United States.

I thought that’s a great system because with freedom of choice, the only way that you can have something like a “barefoot doctors” system is to incentivise people, like providing scholarships when they go to medical school, and I though that China ought to emulate Taiwan in this particular regard. Thank you.

PROFESSOR SEN: I applaud your remarks also very much. My point wasn’t to say that the Chinese health care system in the pre-reform period was in any sense ideal. What I was saying (were) two things: first of all, judged in terms of life expectancy, mortality rates, including infant mortality rates, it had achievement which for that level of income was extraordinarily high. Now, the Taiwanese of course had already, when you looked at ’89 income level(s), that was enormously higher than that of mainland China as a whole, so that in some way(s) the comparison is not all that easy.

But the other thing to look at here, and that is the second point, is that the choice is not just between “barefoot doctors” and badly stocked medical cabinets in rural health care and having private medical insurance only. Many countries in the world have a higher role of delivery of public health care in relatively poor countr(ies). I was giving the example of Kerala which has never had “barefoot doctors” and not in - certainly compared with Taiwan, it would not be regarded as a great achievement or in fact its life expectancy is higher than in Taiwan.

It is a question of whether one has to recognise that there is a role of social delivery of health care which we don’t see in a way in the post 1979 period. Now, in that context I was pointing out that there was considerable achievement even in an earlier period. This does not in any way negate the criticism you made. I think being barefoot is not my favourite way of moving around either.

I was very impressed to see – actually, we had gone to this meeting I was mentioning earlier - Gordon Brown and I - in a conference in Manchester, when we were celebrating, among other things, Manchester’s past, and Richard Cobden, who was one of the great thinkers in the free trade link and one of the Manchester liberals – and also, by the way, one of the things which is often forgotten, one of the most vocal critics of imperialism and vocal critics of spending money on army and navy in the aspect of the 1830s, an aspect that is not completely overlooked. But there he mentioned that in order to have peace between France and England, he is going to walk barefoot to Paris. So I think I recognise that is regarded as a vigorous state to be in, and I don’t doubt that.

But my point, it does not contradict what you were saying; the system they had was very defective in many ways. The question is whether the only alternative is to privatise medicine, and also if you look at the achievement in terms of such criteria with demographers and health statistics with life expectancy and infant mortality, there is a serious issue: why is it that the Chinese life expectancy or the Chinese infant mortality should be going down only from 37 to 30 and not closer to something like 10, I think, as in Kerala? That question, it seems to me, needs to be addressed.

That does not contradict anything whatsoever that you did. But in order to make provision for your next life, we have to make sure that we have a system which learns from the rationality that emerges of a different system, and you have given good reason for being very sceptical of the pre-1979 health arrangement, but one has to combine that scepticism also with the scepticism of a system which has primarily private health care insurance and very little social delivery.

MR KIM: Professor Sen, I am very pleased to have an opportunity to learn about the poverty with your valuable knowledge. I had the chance to embark in preparing for the first Economic and Social Development Plan in Korea. At that time I found one thing: unemployment is one of the biggest reasons of poverty, so maybe job opportunity to create a workplace is very important to Seoul, this kind of issue. In the supply side also, you mentioned the capability to do something is very important. I think that fundamentally education and vocational training is very important to Seoul, to improve the capability. I would like to hear more about your knowledgeable points. Thank you.

PROFESSOR SEN: Thank you. No, I entirely agree absolutely with that. If we had more time, I would have liked to have had a conversation with you on the Korean experience, which is a very important one I think in the history of the world from many points of view, both in terms of the intelligence and the division with which the globalisation challenge was taken on Korea earlier, beginning from a period earlier than that of China in fact, but also the role that education plays in the Korean expansion and development.

Of course, Korea had a long tradition of education-based policies going back to the days among neo-Confucians and so on through the period, and historically that is a big hurdle that Korea had. But it has sometimes overlooked how dramatic the Korean efforts were in the post Second World War period in expanding elementary education. When somebody like Sir Sam Huntington contrast(ed) Korea with Ghana and attributed just the culture, it overlooks the fact that, yes, culture is obviously important, but one form that the cultural expression took in Korea, which was entirely absent in Ghana, was the massive expand from the school education that occurred in the post World War period. And if one was to look for what dramatic difference basic education can make, I think the two countries to look at particularly are Korea and, in an earlier period, Japan from the major Restoration when the educational expand was very great.

So I think these are issues if I had - among the other dimensions of poverty - if I had more time I would have gone into, and I am very grateful that you have allowed me to, given me the opportunity to supplement it. And among the dimensions of poverty to look at, illiteracy is the major one which makes a big difference. I think if you look, say, if you look at the success of Kerala, it began with basic education. It was very lucky in being, I might say, outside the British Empire and Hong Kong has been very lucky in some ways in being inside the British Empire and being part of the global system. Most of India wasn’t all that lucky, but the two native states, Travancore and Cochin, had a very long history of expanding public education. (In) 1817, the Queen of Travancore, Maharani Lakshmi Bayi made a big statement on the importance of education, especially girls’ education, very early for 1817. And I think it had played a major part in the education now. Even the health care thing is really an off-shoot of the basic educational efforts there. So I am very, very glad you made the point.

MS (?)......: Thank you, Professor Sen. Thank you for this opportunity. I am a student from mainland China and I am studying at the City University of Hong Kong. I wonder, because you have already said a lot of things about poverty and you said about absolute income and about inequality, actually I wonder which one is actually important, because you say in 1980s, you say a lot of the reduction of poverty in China is great, and in 1990s it seems the reduction is slower and actually it is about before that – actually, a lot of people, although others see it as poverty but they feel themselves, because the people around them are not as poor as them, so they don’t think them as poor people, but now using the differences of the income and the standards of living, actually the difference is bigger, and so a lot of people are now actually in the poor condition. So I actually wonder which one is important: absolute income or the inequality? If it is the inequality is more important, then it seems that we can – we don’t have a bright future, because most of the Governments are acting in the interests of the wealthy people actually. So what can we do, actually? Thank you.

PROFESSOR SEN: Well, I am delighted with the question and I wish I had the privilege of having you as my student; it would be very nice to have a conversation on this. It’s a very good question. I think the short answer is that both absolute and relative income are important for different reasons. Because many of our capabilities depend on our ability to buy goods, including when the public health service does exist, buying medical care would be one of them, but buying books, being able to go to a movie, to enjoy life in other ways, absolute income is important.

And yet, as Smith (has) pointed out, when, as Ronnie points out, he was in an ostracised situation without his black tie in a dinner here, the relative income is important because if you are not able to buy what others are wearing, or other ways, you don’t have the facilities like cable or internet and so on, then you will feel deprived and then relative income becomes a concern. So I think one has to take a sufficiently plural view to see what is the relatively important – what the importance is of absolute income and of relative income.

Now, since you commented on the 80s on China, let me mention why the 90s would have been an inescapably more difficult period for China, for three different reasons. First of all, (in the) 80s, I think I pointed out, I already mentioned, China had a major mismatch of its lower agricultural productivity and its potential because of a very unfriendly co-operative collective system. So (the) 80s absorbed that and there was a dramatic increase in income and in employment in the way that you could not go on doing it. There was one for catching up, so in the 90s it would have been different.

Secondly, given the fact that the concentration was so much on the agricultural sector, there was (an) industrial expansion, but the whole world of global economy had to be exploited. I (have) mentioned already in Korea; Korea was way ahead at that time in making use of the global world. (The) 90s had to take this up, but the nature of this kind of employment is invariably – it is not the case that development is only about the rich people or some sceptical remark of that kind that you might extend your remark to, but that quite a lot of the globalised effort will immediately affect mainly the rich people to start with, like in India too, where there has a lot of globalisation in India, but it is primarily people who are trained in, you know, higher education and not many others.

So I think in some ways that problem would have come up in the 90s, but the issue is how you could make that wealth more widely shared. And the third issue that with globalisation comes with regional concentration, because things are easy to produce in some areas and not in others.

I remember visiting Shenzhen, I guess it was three years ago, and I was quite impressed by how the city has changed. The dramatic growth is just unbelievable. And you have to think about the problem that globalisation raises in terms of regional concentration. That is not to say that you have to avoid globalisation, but to see the problem and to address it, so these are the issues.

And if you were a student of mine, you and I would have chatted on that, but I am very grateful at least for you to have raised this right now. Thank you.