Towards the end of poverty
economist.com
economist.com
The United States now ranks lowest or close to lowest among advanced “affluent” nations in connection with inequality (21st out of 21), poverty (21st out of 21), life expectancy (21st out of 21), infant mortality (21st out of 21), mental health (18th out of 20), obesity (18th out of 18), public spending on social programs as a percentage of GDP (19th out of 21), maternity leave (21st out of 21), paid annual leave (20th out of 20), the “material well-being of children” (19th out of 21), and overall environmental performance (21st out of 21).
Add in low scores for student performance in math (17th out of 21), one of the highest school dropout rates (14th out of 16), the second-highest per capita carbon dioxide emissions (2nd out of 21), and the third-highest ecological footprint (3rd out of 20).
http://www.nationalmemo.com/weekend-reader-what-then-must-we...
Not US bashing, EU is taking a different but essentially equal direction.
WASHINGTON — The ranks of America's poor are on track to climb to levels unseen in nearly half a century, erasing gains from the war on poverty in the 1960s amid a weak economy and fraying government safety net. The official poverty rate will rise from 15.1 percent in 2010, climbing as high as 15.7 percent. Several predicted a more modest gain, but even a 0.1 percentage point increase would put poverty at the highest level since 1965. http://www.huffingtonpost.com/2012/07/22/us-poverty-level-19...
The United States, New Zealand, Canada, Ireland, Liechtenstein, Germany and Sweden round out the top 10 countries in the 2011 HDI, but when the Index is adjusted for internal inequalities in health, education and income, some of the wealthiest nations drop out of the HDI’s top 20: the United States falls from #4 to #23, the Republic of Korea from #15 to #32, and Israel from #17 to #25.
You might find this article [1] interesting. It mentions your point as well:
"But even in quite poor countries, a different concept of poverty also seems to creep in, the authors argue. It begins to matter whether a person is poor relative to his countrymen; whether he can appear in public without shame, as Adam Smith put it."
The amount of poverty in the US (and many other "developed" countries) is quite astonishing.
From: http://en.wikipedia.org/wiki/Poverty_in_the_United_States
> 16% of Americans lived in poverty in 2011
Meanwhile middle class wages in the U.S have been stagnant for decades, structural unemployment has taken hold in the U.S. and other Western nations, social program and welfare dependency is on the rise, and corporate profits are at an all time high.
We have simply unplugged the middle class in the U.S. and plugged in people who can be paid relative dirt wages, yet still see it as progress because they were so utterly poor before. This is no great economic mystery or capitalist achievement.
It is good that there are fewer people in extreme poverty, but there has also been a heavy cost. The western world and America in particular have long been addicted to free or cheap labor and this is now simply coming at the expense of those whose forebears built this country right up until the last decades.
True democratic capitalism is long overdue.
I'm frankly a little bit put off by the scare quotes you put around "progress". As if giving a billion people a better life is somehow not something to aspire to.
We must admit there is something wrong when unemployment is rising together with corporate profits and economic inequality. It's not only the average rising - standard deviation is also increasing. The social tissue can only stretch that much before it ruptures and nobody likes to be near the rupture.
This isn't true. At the heart of capitalism is any economic exchange- trading sheep for wheat, trading dollars for an xbox, etc. For any trade to occur, each party in the trade has to believe that they will gain from the exchange, i.e. get increased utility/value from it. By that means, any economic exchange where both parties are acting freely is most likely to be positive-sum, in terms of value received. Where jobs have moved to poorer countries, real wages have increased- this is indicative of the fact that they are now able to produce goods and services that their trading counter-parties perceive to be more valuable. This doesn't make rich countries as much worse off as you think it does- the majority of the increased production of poorer countries goes to meet local needs, overall having a relatively small effect on the price of global labor.
On your other point, I will agree with ya that our current income inequality is pretty bad.
Amusing example, since it is zero sum even if the two parties don't perceive it as such.
That bit of contorted reasoning has long been the dogma of some economists. Whether you belive this thinking became entrenched due to some grand globalist agenda or was simply wishful thinking, you must admit that it is counter-intuitive to believe that massive outsourcing to low wage countries would have no effect on domestic wages. And, now, many economists are having second thoughts:
[1] http://economix.blogs.nytimes.com/2012/08/29/changing-views-...
And, from Nobel economist, Michael Spence
[2] http://www.cfr.org/industrial-policy/evolving-structure-amer...
For instance, while it may be positive sum strictly for trading partners, the positive value accrues to a smaller percentage of the population (i.e. the corporations and shareholders) and frequently even comes at the expense of the worker (or ex-worker).
This is in large part why we are seeing the economic inequality that you referenced. It is a product of the "zero-sumness" of the game when viewed in total vs. just between trading partners/corporations.
>More people with money also means a bigger market for western products.
A bigger market for western products that are also manufactured elsewhere cheaply, giving the corporations higher profits that generally benefit a relative few shareholders who continue to grow wealthier.
I put quotes around progress because there is more to the story than just pure progress.
But, I explicitly acknowledged that giving people a better life is a good thing. My point was that it is not the product of some grand benevolence and it comes at a price. Look at poverty rates in the U.S. alone, for example. For instance, in 2013, U.S. child poverty rates reached record levels.
All we have really done is redistributed jobs and wealth from the working and middle classes of the developed world to developing nations and the wealthy.
This is only because compensation has shifted from taxed wages to untaxed benefits. This is easily fixable - eliminate the income tax but raise taxes on health insurance.
http://www.minneapolisfed.org/publications_papers/pub_displa...
Furthermore, even the stagnation of wages is caused purely by a composition change.
http://www.chrisstucchio.com/blog/2011/immigrants_simpsons_p...
On the other hand, economists are now finally acknowledging the negative domestic wage effects of globalization and outsourcing on the U.S. I referenced these elsewhere, but it's also relevant here:
[1] http://economix.blogs.nytimes.com/2012/08/29/changing-views-...
[2] http://www.cfr.org/industrial-policy/evolving-structure-amer...
The idea that continuous outsourcing to low wage countries would bring negative pressure to domestic wages was a common sense notion decades before now. Seems like economists are finally catching up.
EDIT: The other elephant in the room and perhaps the most salient point is that relatively speaking, the working/middle-class is bearing the brunt of stagnation, no matter which metrics you apply or how you rationalize it. That is, the wealthiest are realizing a massive acceleration in wealth accumulation, period.
How does this make sense? Are you saying that all negative wage effects are offset by an equal rise in other benefits?
Because that's not what the article you referenced states. And even to the extent that it does implicate benefits, it attributes only a small difference to this cause.
In any event, the far more salient point in this discussion is that the relative income (and wealth) growth of the working/middle class has dramatically paled in comparison to that of the wealthiest. That is, as the economy has expanded, the former group has not--by any measure--participated proportionally in the rewards it conveys.
...relative income (and wealth) growth of the working/middle class has dramatically paled in comparison to that of the wealthiest.
Since I'm not the jealous sort, why should I care? Life has improved significantly for everyone. Why worry that it has improved for some more than others?
That is, as the economy has expanded, the former group has not--by any measure--participated proportionally in the rewards it conveys.
The former group has also not--by any measure--participated proportionally in expanding the economy.
Here is a somewhat dated quote by a rather famous economist describing the 1980's (but it applies equally well to the 1990's and 2000's):
"...growth in inequality is not a simple picture. Old-line leftists, if there are any left, would like to make it a single story--the rich becoming richer by exploiting the poor. But that's just not a reasonable picture of America in the 1980s. For one thing, most of our very poor don't work, which makes it hard to exploit them. For another, the poor had so little to start with that the dollar value of the gains of the rich dwarfs that of the losses of the poor..."
Paul Krugman, The Age of Diminished Expectations, 1990, p. 22.
Has nothing to do with jealousy. My income easily places me in the famed "One Percent". Of course, there are others in that cohort who are wildly richer than I am, however, that is to say that I've had more than my share of success. Doesn't mean I can't see the inequality or wish to benefit from it. Likewise with people like Warren Buffet who are certainly far wealthier than I, but who also agree that income equality, skewed tax codes, etc. are not good for America.
Attempting to skew the argument to one of jealousy or "class-warfare" waged by the poor/middle-class (as if that were really possible) is small-minded, and a red herring.
>Life has improved significantly for everyone. Why worry that it has improved for some more than others?
It's not simply a matter of everyone's life improving, but some more than others. For many life is getting worse. Witness the increasing poverty rate in America to record highs in some categories.
The system is not a meritocracy that has simply rewarded those who are more deserving more than those who are not. The system is rigged and does not deliver economic justice or opportunity. That's the problem.
>The former group has also not--by any measure--participated proportionally in expanding the economy.
That is a patently false right-wing generalization. Pretending that the middle class didn't bail out banks who profited wildly from their problematic activities and pretending that we don't subsidize one of the wealthiest industries on the planet (oil) is ridiculous. I could go on. The economy and our government have been completely rigged by wealthy interests who write the laws. The working/middle-class get utterly pimped, then people like you turn around and say, "hey, if you can't make it in America, it's your own fault".
>...Paul Krugman, The Age of Diminished Expectations, 1990, p. 22.
That quote is actually dated and helps to make my point. The last three decades have brought profound changes with regard to the very topic of this thread: globalization and outsourcing. As a result, we now have a rapidly growing class of so-called "working poor".
So, there is very definitely a rapidly growing number of people who are being exploited. Working hard and still below the poverty line? In America?
Further, there are also those poor who are unemployed due to these structural reasons. They have certainly been victimized (if you prefer that term to "exploited") by globalization.
The poverty line is not a fixed measure of wealth. People below the poverty line are richer than the middle class of the past.
http://www.heritage.org/research/reports/2004/01/understandi...
You have yet to demonstrate life getting worse for anyone.
As a result, we now have a rapidly growing class of so-called "working poor".
Over 10 years it rose from 2.3% to 3.4% of the population. (The "working poor" are still a small fraction of the total poor. Most poor choose not to work - as of 2010, only 15% of the poor attempted to work full time at least 50 weeks/year.
http://www.bls.gov/cps/cpswp2000.htm http://www.bls.gov/cps/cpswp2010.pdf
That [the fact that many poor/middle class have not contributed to growth of the economy] is a patently false right-wing generalization...Further, there are also those poor who are unemployed due to these structural reasons.
You contradict yourself. People unemployed due to structural reasons are people who have nothing to contribute to the modern economy. That's what structural unemployment means.
Ah, yes, the ol' "Today's poor people have color TVs and cell phones" argument. Wow. What a strange rationalization.
>You have yet to demonstrate life getting worse for anyone.
Nearly half of all Americans (146 Million) don't earn enough to meet their basic needs (food, shelter, etc.).
[1] http://finance.yahoo.com/news/census-shows-1-2-people-103940...
And, the number of people slipping below the poverty line is increasing. These any many others are simply objective measures of poverty. If you reject facts, then of course nothing can be proven to you.
>Over 10 years it rose from 2.3% to 3.4% of the population.
1.) You're citing the wrong stat for the point you're trying to make but, but even that would be a 50% increase in just a decade. As I said, "rapidly growing"
2.) A decade does not begin to capture the period during which globalization's effects were most profound (i.e. the stat you cited started after the effects had begun to manifest).
3.) You're citing the BLS definition of poor. Many economists (and now the U.S. Census Bureau) better define "poor" so as to provide a fuller picture of poverty in the U.S. (see above re: 146 million such Americans).
>You contradict yourself. People unemployed due to structural reasons are people who have nothing to contribute to the modern economy
Why do they have nothing to contribute to the modern economy? And, how is it that the people to whom their jobs have been outsourced for pennies on the dollar do have something to contribute to the modern economy? No contradiction on my part. You're just talking in circles and failing to make the appropriate connections.
Painting with broad strokes, how would you define that? And was it / is it working anywhere? Is that an idealized model that is unstable in the real world (much like other idealist systems)?
So, ironically, I think it's this "free market at any cost and by any manner" ideology that is the unstable idealization. Witness the grave economic disparity that it is producing.
It's funny, because the "democratic capitalism" system that I'm referencing consists of the capitalism that is defined in economic textbooks and the democracy that is described in the U.S. Constitution, etc. It's what we have now that is the bastardization of these principles: the crony-capitalism and pay-to-play political system into which we've devolved.
So, I'm arguing for a true meritocracy and economic opportunity for more than just a handful of bankers and gatekeepers. It would need to start with a true democratic government vs. one that has sold out to those same bankers and gatekeepers.
Yes, wages have stagnated in the west, but our standard of living is still very high. The cost of lifting a billion people out of poverty for the first time in the history of the world was for our own standard of living to increase at a slower rate than it otherwise would have for a few decades.
That is only a "heavy cost" if you are an incredibly short-sighted, self-centered westerner, a rabid anti-capitalist moron, or some combination of the both. Go tell the Chinese factory worker who is sending money back home to her poor family that the temporary halt in our standard of living was not worth her family being able to stop scraping a living out of the mud.
Yes, the capitalist system is employing cheap labor, and in the process, it is allowing those people to create something of value in return for the opportunity that our culture had a few centuries ago. And when their standard of living rises to the point at which their labor is no longer cheap enough, our capitalist system will look for another pool of cheap labor, and if allowed to continue, the process will continue ad infinitum until all of the world's pools of cheap labor have been "exploited" right out of poverty for the first time in human history.
In the meantime, our own standard of living might not increase as fast as it otherwise would have, and gasp it might even stagnate! The horror! The sky is falling! Capitalism is failing!
What bullshit.
/r/politics is invading HN, I see.
Those are some of the heavy costs to which I referred. It's not just one less dinner out, as you'd like to make it sound. So ignoring these very real tradeoffs makes you come off like a ranting idiot.
And in your brilliant explanation of continuous labor exploitation, I didn't happen to notice your explanation of what happens when the previous pool is no longer the cheapest (aside from one less dinner out, that is). Do they magically evaporate? And when all cheap pools have been exploited, then what? Does all the world just work for the same slave wages?
Because, you also didn't mention that through it all, corporations are realizing record high profits and the world's wealth is accruing to a smaller and smaller percentage of the population. We are seeing global economic inequality on a massive scale and it is only accelerating. If you think that story has a happy ending, then I (and history) will have to disagree.
Let me guess: you're probably the kind of person who argues the above and also argues that the U.S. needs to cut its debt and kick the entitlement loving free loaders off the government dole. And, like the other "free market at any cost" drones, you probably fail to see any contradiction in holding both positions.
Your argument is bad, and if you had some critical thinking skills of your own, you would see that. But you don't, which tells me that no matter how well I refute it, you will not change your mind.
Well done.
So, I get your need to declare victory and move on and I'm always glad to help those in need. Guess that's the liberal in me.
1. http://www.economist.com/news/briefing/21578643-world-has-as...
I'm far more interested in conversations regarding where we are headed, rather than from whence we've came [1].
1. http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robo...
Can you have the former without the latter?
Interesting, I can think of a number of issues:
1) Rising inequality in the Western World. And the article you pointed out really shows the end result -- robots replacing people. That has been happening with industrialization for a while now. But now robots can build robots and the ones who will have the power will be the ones who will control the robots that build the robot factories. Kind of like meta robotics (I am sure there is a more defined term or concept that I am just not familiar with here). What happens to all the masses then. Robots make us food, do our work for us, and what do the average number of people do? State sponsored welfare? Just get a check every month enough to buy food and shelter and then play video games. There is thought that it actually wouldn't be that bad to have a direct subsidy like that but it would be a complete anathema according to certain other political and economic principles. Resources will be become the final bottleneck? Maybe even with robots we can't grow enough corn.
2) Related to the above there is some notion of "trickle-down" effect. Not related to wealth necessarily but related to technology, where countries can jump from agrarian or tribal life straight to using cell phones. That's pretty interesting. Idealistic perhaps, as I doubt that in an of itself will make a dramatic difference in their quality of life but it is good to keep an eye on that. What happens if even the most poor eventually have access to smart phones? Does it help them put food on the table in the evening?
3) Related to 2) -- information becomes unchained. The real globalization happens when groups of citizens can communicate with each other directly rather than goings through official propaganda and power control channels. Sort of stuff we saw with Arab Spring, now Turkey. This is kind of stuff is really interesting. Apparent stability to a large state of revolt in <24hrs is pretty impressive.
4) Back-pressure starts building from entrenched interests (countries, governments, traditional gatekeepers). The idea that there is citizenship and you can't just move from one part of the world to another unless you are a large multinational corporation, is here now, does it make sense, who does it benefit? The desire to de-anonymize sharing of information. I can see cryptography becoming illegal in many contexts. DRM being shoved into more devices -- on one side yay, more people have access to information!", on another, "oh but they only get locked down controlled, filtered and monitored information coming from a few distribution channel monopolies". Religious, nationalism, fear was/is a very good mass control lever. Maybe that won't work as well going forward? But what will?