Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
nytimes.com
nytimes.com
"A rising tide lifts all boats" is a nice belief and accurate for many boats and tides, but there's no reason to believe that what holds for boats holds for economies, any more than the behavior of dominoes held for Southeast Asian countries.
For that matter, it doesn't hold for all boats. A big enough tide could completely submerge a boat firmly enough anchored to the sea floor, for example.
I was able to find that definition with a casual skim of the source report. (It's possible that they go into more depth about their methods; I didn't care to look.) Your inability to find it, combined with your hyperbolic language, says more about your biases than it does about the argument they're making.
I'll let this be my last comment.
http://www.theatlantic.com/business/archive/2014/05/its-expe...
The data in this article is on the timescale of the last decade, but it's enough that your claim doesn't really stand on the basis of being self-evident.
With this logic, anybody living better than a caveman should be grateful, even if he has to sleep in the streets and can't afford health care, because, hey, cavement couldn't afford those things either.
Whether their personal wealth is a larger or smaller proportion of global riches is irrelevant.
That's what the guys that get the larger proportion of global riches say -- people who play life in "easy" mode.
A socialist can live with inequalities, as long as they're not glaring and the floor is high enough to allow a decent living.
It is a natural human way of thinking that the present is worse. Couldn't find a better article in the 5 seconds I looked. http://www.psychologytoday.com/blog/ulterior-motives/201212/...
Having worked with Urban Children since 1990 it is a million times better! I rarely see a hungry child. Neglect hasn't really changed.
Here are some other interesting comments that should throw the entire conversation into doubt: - They are intended for use as a statistical yardstick, not as a complete description of what people and families need to live. - Many government aid programs use a different poverty measure - Poverty thresholds were originally derived in 1963-1964, using: U.S. Department of Agriculture food budgets designed for families under economic stress. and Data about what portion of their income families spent on food.
BTW, they also admit that they do not take geography into account. Anybody see a problem with that?
Has increased productivity and economic growth really 'trickled' down as some would argue? It would seem not, as wages have not increased proportionally with productivity [1]. It is at least worth thinking about the author's conclusion: "You also have to devise strategies that make the benefits of a stronger economy show up in the wages of the people on the edge of poverty, who need it most desperately."
[1] http://economics.stanford.edu/files/Theses/Theses_2007/Sachd...
The best explanation I've encountered is Peter Thiel's commentary on horizontal vs. vertical development. We've taken an energy and industrial system that absolutely cannot scale to seven billion people and now we're trying to make it scale to seven billion people. The result is a kind of low-grade, very slow malthusian event in which people in the developed world are (relatively speaking) impoverished by exploding energy and resource costs. What we need is vertical development -- technological development -- to create systems that actually will scale. Everybody can't drive a hydrocarbon powered car. It can't be done.
I think this also explains why first world poverty rates are not shrinking. The poorer you are the more price sensitive you are to things like energy prices, so the poor are impacted by scarcity exponentially more than the wealthy.
Note that if this is true then wealth redistribution might not help. It might just trigger price inflation in scarce resources. Redistribute more and they'll inflate more, and more, and more. ... But then again maybe it would help by causing lots of investment money to chase that demand and develop alternatives. It would cause hockey stick price signals across all the rate limiting inputs for the economy.
Hmm... well now... maybe we should drop money from helicopters...
Suure, let's take that at face value.
I'm personally both for it and against it. I'm against it in perfect world post-violence volitional society land, but I'm for it in pragmatic real Earth that we live on right now land.
The problem is that we absolutely do not live in a volitional society, and pretending we do often results in worse injustices than the pragmatic approach. Our world is run by gangsters and armies with fraud and guns. It's not that far removed from the ancient tribalism we clawed our way out of. Wealth redistribution is an acceptable band aid that moves us in the right fundamentally humanistic direction. It empowers the great unwashed masses to improve their bodies and minds. Abolishing wealth redistribution amounts to a kind of unilateral disarmament unless you can also convince all global elites to stop using violence and deception to advance their own economic goals.
The standard of living for people in poverty today is (a lot) higher than the standard of living for people in poverty decades ago.
Not everything in life is about possessions.
Homicide (and presumably other violent crime) is about the same as 1950.
Further, "poor" people have always had lower social status and higher stress, so there's no change there.
In 1950 it wasn't uncommon for people to still use outhouses and not have electricity.
Life expectancy reference: http://esa.un.org/unpd/wpp/unpp/panel_indicators.htm
homicide rate reference: http://www.infoplease.com/ipa/A0873729.html
http://books.google.com/books?id=SNkDAAAAMBAJ&pg=PA178&dq=sm...
http://books.google.com/books?id=xdwDAAAAMBAJ&pg=PA65&dq=smo...
Now, it's true that pollution is still generally worse in poor areas compared to wealthier areas, but the pollution issue alone makes me prefer a "poor" lifestyle today over a "middle class" one from 50 or 60 years ago. We also have additional consumer protections for food and medicine compared to 60 years ago, which makes it hard to compare products across decades.
People didn't have fancy sneakers but shoes were usually made with a Goodyear welt to be rebuildable and long-lasting, and such shoes usually cost hundreds of dollars today. Sears and similar stores sold durable, American-made clothing— visit a vintage store some time (acknowledging survivorship bias, though).
Houses were also small in 1950 because the housing pipeline was essentially clogged up from 1929 to around 1950, due to depression and war. Housing also was a much smaller percentage of most families' consumption baskets at that time, as well— there was a lot of buildable land at the edge of major metro areas, and the capital-GDP ratio was low so asset prices were low.
Working-class (evolving into lower-middle-class) employment was much more stable in 1950, and stability is a big part of being middle class.
It's not really possible to live a 1950s lifestyle today, since a significant proportion of lifestyle comes from living around, and being respected by, peers. And from the better availability of stability in employment, which one cannot get via personal finance.
But ~40% of the population lived in rural areas, and what I understand from relatives who lived there during that time, travelling to town was considered a luxury. Today, nobody thinks twice about hopping into the car and going to town every day.
By many of these standards, on average, poor people are generally better off today than they used to be. By other standards, they're worse off. Upward mobility, for instance, is more stagnant today than it has been in many decades. Health care costs and access have been getting worse, not better -- and recent reforms are unlikely to have changed much, despite what Democrats or Republicans would tell us. (Fucked health care costs are offset, to some degree, by advances in medicine and science, of course.) Access to food is generally a lot better, but the quality of the calories has grown worse, leading to health problems -- for which our health care system is inadequate. Housing is...well, kind of a fucked situation, but has been for quite some time; our interest rates and tax system create a lot of perverse incentives in the housing market. That market is now pretty warped and dysfunctional, with no return to sanity in sight.
On the balance, I think you could say that a poor person today is better off than a poor person would have been in the 1920s. But is a poor person today better off than he would have been in the most recent era of prolonged stagnation, the 1970s? Very debatable.
I'd certainly feel worse off if you took away my TV - or replaced it with a 1970's black-and-white version. Isn't it obvious that the cost and quality of TVs affects people's "standard of living"?
People living in abject poverty also enormously value their TVs. Here is an example of a man who goes hungry in order to watch TV, from the book Poor Economics [1]:
We asked Oucha Mbarbk, a man we met in a remote village in Morocco, what he would do if he had more money. He said he would buy more food. Then we asked him what he would do if he had even more money. He said he would buy better tasting food. We were starting to feel very bad for him and his family, when we noticed a television, a parabolic antenna, and a DVD player in the room where we were sitting. We asked him why he had bought all these things if he felt the family did not have enough to eat. He laughed, and said, “Oh, but television is more important than food!”
If you think the cost of rent and house prices affect the standard of living then so should the availability of TVs and internet.
[1] http://www.amazon.com/Poor-Economics-Radical-Rethinking-Pove...
Cancer was essentially a death sentence back then. So was a heart attack.
No MRI. No CAT scan. No minimally-invasive surgery.
They were still performing major surgery to "treat" ulcers back then. Now we know they're caused by bacteria and can clear them up with no surgery needed.
Really poor people in the United States do get free healthcare. It's called "Medicaid".
Decades ago? Like 1990? 1980? Or 1930?
After half-heartedly searching for some data on living standards in the US, I came across this report that tries to argue the point that poverty isn't all that bad in the US, seeing as how most poor families have coffee makers and a stove (I'd imagine it's difficult to cook food over a fire and remain free from police harassment in most parts of the US...):
http://www.heritage.org/research/reports/2011/07/what-is-pov...
It offers such bright points as:
"It is widely supposed that the poor are unable to obtain medical care, but in reality, only 13 percent of poor households report that a family member needed to go to a doctor or hospital at some point in the prior year but was unable because the family could not afford the cost."
"Only" 1 in 7 households needed medical help, but couldn't afford it -- and that's among those that had a family member that needed medical attention for that year.
More in the same vein:
http://www.forbes.com/sites/timworstall/2013/06/01/astonishi...
(I don't think living on the level of poor people in Finland is quite so glamorous as the commentary makes it out to be)
Some more numbers (less commentary):
http://www.nclej.org/poverty-in-the-us.php
For some links to international numbers:
http://www.worldbank.org/en/topic/poverty
eg: http://siteresources.worldbank.org/EXTPREMNET/Resources/EP12...
And: http://www.worldbank.org/en/topic/poverty/publication/food-p...
I'd love to see some numbers that go further back, though. Some casual googling didn't reveal much (I did not try very hard).
So? Would you be satisfied living with the sanitation, health-care, technology level, etc of "decades ago" today?
There's no absolute "poverty level". You can perhaps starve (that is absolute), or be homeless (also absolute), but there's no such thing as absolute poverty level against which to measure all ages.
You have to measure poverty as it relates to what others have now.
[1] http://en.m.wikipedia.org/wiki/Multidimensional_Poverty_Inde...
Sure, the poor of today can have access to electricity and running water, and even basic drugs like penicilin. Things that even the kings of 18th didn't have.
That doesn't mean the kings of 18th century were "poor", nor that the trailer-park people of today are "rich". Both would be absurd statements.
What's acceptable is not static.
If we think about poverty as almost "always having to worry about money" then poverty is probably very much like it was.
Sure people living in poverty may have a mobile phone, and TV. Will giving up those mean giving up the constant stress of not having enough money? For a month or two maybe. Then you will be back to square one.
Debating policy based on a chart showing one clean* variable -- growth -- and one that a faceless bureaucracy sets by fiat every year is not a brilliant idea.
As ever, Adam Smith, writing in 1776, had the right idea. Here is how he defined poverty: “By [poverty] I understand, not only the [lack of] commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life. . .But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt. . .Custom, in the same manner, has rendered leather shoes a necessary of life in England. The poorest creditable person of either sex would be ashamed to appear in public without them. . .Under necessaries, therefore, I comprehend, not only those things which nature, but those things which the established rules of decency have rendered necessary to the lowest rank of people.”
* The growth variable isn't clean, either. Much of the alleged growth is in transfers, government, and credit.
Without a doubt, today's definition of poverty would be very different from the one used in the 1950s but the fundamental question is whether we should have an absolute metric or a relative one.
Not 'nice food' but 'food', period.
The answer is usually - and increasingly - a very simple 'no.'
Here are stats from one food bank org:
http://www.trusselltrust.org/stats
Or how about being too poor to heat your home? At least 15% of households are in fuel poverty:
http://www.opportunitystudies.org/repository/File/fuel%20pov...
Aside from the humanitarian questions, which should be self-evident, the reality is that poverty is a criminal waste of potential. At least some of those worrying about food and heat have - had - the potential to be inventors and entrepreneurs.
That's not going to be possible while the culture they live in keeps them poor.
Growth appears to be good, but all the profits are going to the owners and employees of these relatively small technology companies.
This is also probably a major part of the reason why the wealth disparity is increasing.
I tend to think of it "don't have to do that work anymore". They can focus on other things, but basically the work is done for us. So the machines are creating wealth and in the end people will have to work less and less.
I'm not sure this is the right example, but wasn't it revolutionary of the Ford motors factory to introduce 8-hour work days in the early 1900s? Didn't people work much longer before then, if I remember correctly? And isn't Sweden implementing a 6-hour work day right now?
I think we are making great progress with taking work out of people's hands. The people who used to make cars, which is now largely automated, could do other things that are in greater demand, while on the whole humanity has to expend less work for the same wealth.
This is just the way I look at things, but of course I may be too young and naive to really understand it.
That's the crux of the problem. Maybe there will be another revolution in jobs that need to be done that these people will be able to take up, but until that time we are sentencing a huge number of people to live in poverty. We need to find a way to help those people until this new class of jobs people imagine will appear actually become reality.
Isn't it? You're right in that I have yet to hear someone laying off staff and then paying them because machines do all the work, but on the whole I do think everyone profits. At least in the Netherlands you get money during the time that you are looking for employment.
> we are sentencing a huge number of people to live in poverty
Last I heard we are still free to start our own farms and live off of those, but it seems people rather like having things like cars, power, the Internet and other luxuries of the past few decades. And most people living in "poverty", as you say, have all of the above.
Those won't be the best cars or the fastest connections to the Internet, but I never heard about a "huge" number of people being laid off and then having to go without all of that. You'd think they'd be in the streets rioting against the machines if it was that bad.
Where are they getting the land? Where are they getting the crops and equipment needed? Where are they getting the general knowledge of how to even grow a farm that can sustain a family?
This is an enormously common fallacy. There are certain things that have their costs driven down very easily by technological innovation (consumer goods, electronics, transport, etc) and certain things that are very resistant, at least on short and medium time scales (healthcare, education, land for obvious reasons). Being increasingly able to afford things like Internet and cars may make it seem like someone CAN'T be "poor" because rich people 40 years ago didn't have it, but that's a lot less significant than their relative ability to access the (much more important) things in the second category. (Inasmuch as Maslow's pyramid is a good heuristic for priorities, you can think of these as things further down the pyramid).
This phenomenon is clearly common-sense after a moment's thought, but I found an article that goes into this phenomenon in more detail: http://www.theatlantic.com/business/archive/2014/05/its-expe...
Without overly discouraging them from looking for those new jobs, because that's an important part of how we create new classes of jobs.
Personally, I think a low basic income is our best bet, but I'm eager to hear other suggestions.
But I think expecting the people who are automated out of jobs to go and create entirely new categories of job on there own is being extremely over optimistic. So, between the time that they are replaced and the time that new categories of jobs become available something /more/ than just a basic income is necessary. As more and more automate-able jobs become automated there will be less and less employment opportunities available for the displaced workers until these new categories of job become available.
To be clear, I (most emphatically) do not mean "Ths ese people should just go create new jobs - lazy bums, jeeze!" People looking for ways to help others, in order to get ahead, is an important part of how we find new jobs - but until they're found most people will be failing and we don't want them suffering to be sure.
This isn't a new problem by any stretch of the imagination. Almost every technological advance has had the same effect (pretty much by definition: if a tool is more effective at a job then less humans are necessary/cost-effective for the job). In modern history though, the (obvious) response has been to educate the population to leverage the skills that humans are still better at (c.f. the US gov't literacy drive and the post-WWII GI bill, both of which smoothed the path to an increasingly white-collar labor force). Sometimes this also includes providing a soft-landing (in the social welfare sense) for those who are old enough that it's unlikely they'll be able to easily switch out of their obsoleted industry, but this is less common.
Not directly, no. But in the end it is better for humanity as a whole, plus you get money from the government if you are unemployed for a while and prove that you are trying to get employed.
I know, that's exactly what I'm saying. This discussion isn't as simple as "this is good and this is bad" in black-and-white terms. We're talking specifically about the fact that poverty rates and growth aren't tightly coupled, and I was explaining why.
> plus you get money from the government if you are unemployed for a while and prove that you are trying to get employed.
This is also what I said (the "soft landing"). Though UI (unemployment insurance) lasts a year or two, so you're sorely mistaken if you think that UI per se functions as a substitute for a social welfare system.
But they weren't in the US.
So why hasn't US poverty declined? The same reason it has declined other places: globalization.
Manufacturing
Education to get a better job [I don't mean college. I mean something like a trade school to become a plumber or the like].
The kind of blue collar manufacturing jobs they could get is largely done in other countries and imported to the US. There simply aren't enough of these in the US to employ a larger percentage of the population.
Education has gotten too expensive and given these are likely people who could never graduate college...it is very high risk for them as well, even at a trade school.
I think we really need to get people to go from High School to a Trade School to a Job. Because otherwise, I don't see a way to really shrink the poverty level without raising the minimum wage which is politically unreliable [e.g. We might raise it for 2-3 years, but in 6-8 we will ignore it for a decade again]
I don't think that's a given at all. IMO, whether a large portion of the populace thinks they could graduate, would want to go to college, or feels they have the option to go to college does not imply whether they actually could finish if they desired.
I don't think that is true.
http://www.duck9.com/College-Student-Drop-Out-Rates.htm Over 50% are from financial or academic disqualification reasons...
http://nces.ed.gov/fastfacts/display.asp?id=40 We are talking about 50-60% graduation rates in 6 years for the people colleges already accept.
I think poverty would make it hard enough that rate would drop significantly.
It's possible I misread the intent of your original comment and we aren't in disagreement on this.
(I'm thinking of the U.S. where home building is at a relatively low rate right now)
http://www.coloradoan.com/story/money/2014/05/07/subcontract...
http://contractormag.com/plumbing-contractor/skilled-tradesm...
I think you are mistaken based on the fact I can find plenty of articles talking about a shortage. Likely due to the fact people think like you [and assume there is enough people].
It wouldn't absorb millions but it'd still reduce poverty.
(I'm being sloppy with numbers, but you've highlighted a larger, growing county that is ~3,000 workers short, and there are only about 3,000 counties total, many of which are smaller than Larimer and experiencing population contractions)
This is a classic display of macro vs micro economics. On a micro scale an individual always gets ahead of the competition by becoming over credentialed (and over educated helps too). But on a macro scale, all the local waitresses and bartenders already have fluffy non-STEM bachelors degrees so more education would merely make the average waitress a little older and deeper in debt, or make the high school grad janitor unemployed in favor of the new poli sci grad janitor. Its not going to deliver my food any quicker or make the bathrooms at the bar any cleaner, no economic gain at all other than bank interest (socialize losses and privatize gains!)
[1] http://www.tradingeconomics.com/charts/united-states-balance...
It's not necessarily that the underprivileged got poorer, it's more that they didn't grow, which results in a virtual gap still widening.