From Marginal Revolution University.
Globally, the number of people living in extreme poverty ($1.25 a day) is shrinking. The global poor are not getting poorer. The world population grew from 4.5 billion people in 1981, to 6.9 billion in 2010, - a 60% increase. The percentage of people living in extreme poverty in developing nations dropped from over 50% to 21%. (From about 1.95 bil to 1.2 bil - and estimates are now well below 1 bil in 2015.)
That doesn't mean life just above the extreme poverty line is desirable. That doesn't mean there isn't a great deal more to do. But let's be honest about the trajectory. And let's also be honest that central to the decline in extreme poverty has been inclusion of the poor in networks of productivity and exchange - that is to say, they embraced some form of market capitalism. Unqualified dismal of "capitalism" (almost never defined by critics), as some religious leaders are prone to do, should be challenged.
Source: World Bank - State of the Poor
National Bureau of Economic Research: What Drives Nutritional Disparities? Retail Access and Food Purchases Across the Socioeconomic Spectrum
Food deserts are not the problem when it comes to poor nutrition for low-income people, at least according to this study.
Jessie Handbury, Ilya Rahkovsky, Molly Schnell
NBER Working Paper No. 21126
Issued in April 2015
NBER Program(s): HE
The poor diets of many consumers are often attributed to limited access to healthy foods. In this paper, we use detailed data describing the healthfulness of household food purchases and the retail landscapes in which these consumers are making these decisions to study the role of access in explaining why some people in the United States eat more nutritious foods than others. We first confirm that households with lower income and education purchase less healthful foods. We then measure the spatial variation in the average nutritional quality of available food products across local markets, revealing that healthy foods are less likely to be available in low-income neighborhoods. Though significant, spatial differences in access are small and explain only a fraction of the variation that we observe in the nutritional content of household purchases. Systematic socioeconomic disparities in household purchases persist after controlling for access: even in the same store, more educated households purchase more healthful foods. Consistent with this result, we further find that the nutritional quality of purchases made by households with low levels of income and education respond very little when new stores enter or when existing stores change their product offerings. Together, our results indicate that policies aimed at improving access to healthy foods in underserved areas will leave most of the socioeconomic disparities in nutritional consumption intact.
Pacific Standard: An Anti-Poverty Program That Really Works
"The study, run by an international team of economists, included 10,495 households in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru. Almost half of the families in the study lived on less than $1.25 a day.
The specifics of Graduation varied by country, but the basic premise was the same. All the Graduation programs gave families some kind of "productive asset," such as sheep, goats, seed corn, bees, or small shops. They all provided training on how to build a business using the assets, and gave food or cash aid to the families for up to a year, in part to discourage them from eating or selling their "productive asset." The programs also gave families access to a savings account, and some programs required that families contributed to the account regularly.
One year after the program ended, researchers found that Graduation families bought more, owned more, spent more time working, were more politically active, and missed fewer meals than similar families who hadn't enrolled in the program. The changes were all statistically significant, but, the researchers note, not very large."
New York Times: A Call to Look Past Sustainable Development - Eduardo Porter
If billions of impoverished humans are not offered a shot at genuine development, the environment will not be saved. And that requires not just help in financing low-carbon energy sources, but also a lot of new energy, period. Offering a solar panel for every thatched roof is not going to cut it.
“We shouldn’t be talking about 10 villages that got power for a light bulb,” said Joyashree Roy, a professor of economics at Jadavpur University in India who was among the leaders of the Intergovernmental Panel on Climate Change that won the 2007 Nobel Peace Prize.
“What we should be talking about,” she said, “is how the village got a power connection for a cold storage facility or an industrial park.”
Changing the conversation will not be easy. Our world of seven billion people — expected to reach 11 billion by the end of the century — will require an entirely different environmental paradigm....
... The “eco-modernists” propose economic development as an indispensable precondition to preserving the environment. Achieving it requires dropping the goal of “sustainable development,” supposedly in harmonious interaction with nature, and replacing it with a strategy to shrink humanity’s footprint by using nature more intensively.
“Natural systems will not, as a general rule, be protected or enhanced by the expansion of humankind’s dependence upon them for sustenance and well-being,” they wrote.
To mitigate climate change, spare nature and address global poverty requires nothing less, they argue, than “intensifying many human activities — particularly farming, energy extraction, forestry and settlement — so that they use less land and interfere less with the natural world.”
As Mr. Shellenberger put it, the world would have a better shot at saving nature “by decoupling from nature rather than coupling with it.”
This new framework favors a very different set of policies than those now in vogue. Eating the bounty of small-scale, local farming, for example, may be fine for denizens of Berkeley and Brooklyn. But using it to feed a world of nine billion people would consume every acre of the world’s surface. Big Agriculture, using synthetic fertilizers and modern production techniques, could feed many more people using much less land and water.
As the manifesto notes, as much as three-quarters of all deforestation globally occurred before the Industrial Revolution, when humanity was supposedly in harmony with Mother Nature. Over the last half century, the amount of land required for growing crops and animal feed per average person declined by half. …
… Development would allow people in the world’s poorest countries to move into cities — as they did decades ago in rich nations — and get better educations and jobs. Urban living would accelerate demographic transitions, lowering infant mortality rates and allowing fertility rates to decline, taking further pressure off the planet.
“By understanding and promoting these emergent processes, humans have the opportunity to re-wild and re-green the Earth — even as developing countries achieve modern living standards, and material poverty ends,” the manifesto argues. …
Read the whole thing. Decoupling is essential. We have already seen this with land use. We are using no more land for agriculture in the United States than we were 100 years ago. Before that time it took a fixed amount of land to feed each person. That same decoupling is developing worldwide but it could be accelerated. The amount of energy consumed per unit of GDP has now begun to decline. We see this decoupling with other resources. Add a move to solar and nuclear power in combination with decoupling and we have a real chance to drive down carbon emissions drastically.
I haven't yet read the whole EcoModernist Manifesto linked in the article, but the parameters and reasoning laid here is the best articulation of my views on economic development and sustainability that I have read.
New Republic: Stop Trying to Save the World: Big ideas are destroying international development, Michael Hobbes
One of the first classes I took in the economic development program at Eastern University was a class where we spent the entire semester studying the wide variety of economic development models that had been tried. Few worked. The best attempts led to very modest improvements. The worst had perverse unintended consequences. The overall message? Economic development is hard to do well!
I missed this article by Michael Hobbes from New Republic last November. It is a 6,000+word essay but it is one of the best reads I have seen on the need for careful ongoing assessment and it is a warning of the inefficient - even perverse - consequences when we do not empirically test our assumptions. Here are some key excerpts.
Maybe the problem isn’t that international development doesn’t work. It’s that it can’t.
He points to these examples:
In the late ’90s, Michael Kremer, then an economics professor at MIT, was in Kenya working on an NGO project that distributed textbooks to schools in poor rural districts. Around that time, the ratio of children to textbooks in Kenya was 17 to 1. The intervention seemed obvious: Poor villages need textbooks, rich donors have the money to buy them. All we have to do is link them up.
But in the early stages of the project, Kremer convinced the researchers to do it differently. He wanted to know whether giving kids textbooks actually made them better students. So instead of handing out books and making a simple before-and-after comparison, he designed the project like a pharmaceutical trial. He split the schools into groups, gave some of them the “treatment” (i.e., textbooks) and the others nothing. Then he tested everyone, not just the kids who got the books but also the kids who didn’t, to see if his intervention had any effect.
It didn’t. The trial took four years, but it was conclusive: Some of the kids improved academically over that time and some got worse, but the treatment group wasn’t any better off than the control.
Then Kremer tried something else. Maybe the kids weren’t struggling in school because of what was going on in the classroom, but because of what was going on outside of it. So again, Kremer split the schools into groups and spent three years testing and measuring them. This time, the treatment was an actual treatment—medication to eradicate stomach worms. Worm infections affect up to 600 million children around the world, sapping their nutrition and causing, among other things, anemia, stomachaches, and stunting.
Once more, the results were conclusive: The deworming pills made the kids noticeably better off. Absence rates fell by 25 percent, the kids got taller, even their friends and families got healthier. By interrupting the chain of infection, the treatments had reduced worm infections in entire villages. Even more striking, when they tested the same kids nearly a decade later, they had more education and earned higher salaries. The female participants were less likely to be employed in domestic services.
And compared with Kremer’s first trial, deworming was a bargain. Textbooks cost $2 to $3 each. Deworming pills were as little as 49 cents. When Kremer calculated the kids’ bump in lifetime wages compared with the cost of treatment, it was a 60-to-1 ratio.
This is perfect TED Talk stuff: Conventional wisdom called into question, rigorous science triumphing over dogma. As word of Kremer’s study spread, he became part of a growing movement within international development to subject its assumptions to randomized controlled trials.
Based on his analysis, Kremer went on to ramp up a deworming NGO but Hobbes notes the NGO stopped testing after their initial research. Additional testing by others revealed more nuance.
It’s an interesting question—when do you have enough evidence to stop testing each new application of a development idea?—and I get that you can’t run a four-year trial every time you roll out, say, the measles vaccine to a new country. But like many other aid projects under pressure to scale up too fast and too far, deworming kids to improve their education outcomes isn’t the slam-dunk its supporters make it out to be.
In 2000, the British Medical Journal (BMJ) published a literature review of 30 randomized control trials of deworming projects in 17 countries. While some of them showed modest gains in weight and height, none of them showed any effect on school attendance or cognitive performance. After criticism of the review by the World Bank and others, the BMJ ran it again in 2009 with stricter inclusion criteria. But the results didn’t change. Another review, in 2012, found the same thing: “We do not know if these programmes have an effect on weight, height, school attendance, or school performance.”
Kremer and Evidence Action dispute the way these reviews were carried out, and sent me an upcoming study from Uganda that found links between deworming and improved test scores. But the evidence they cite on their own website undermines this data. Kremer’s 2004 study reporting the results of the original deworming trial notes—in the abstract!—that “we do not find evidence that deworming improves academic test scores,” only attendance. Another literature review cited on Deworm the World’s website says, “When infected children are given deworming treatment, immediate educational and cognitive benefits are not always apparent.”
Then there’s the comparison to textbooks. Kenya, it turns out, is a uniquely terrible place to hand out textbooks to kids and expect better academic performance. When Kremer reported that textbooks had no overall effect, he also noted that they did actually improve test scores for the kids who were already at the top of the class. The main problem, it seems, was that the textbooks were in English, the second or third language for most of the kids. Of the third-graders given textbooks, only 15 percent could even read them.
In the 1980s and early ’90s, a series of meta-analyses found that textbooks were actually effective at improving school performance in places where the language issues weren’t as complex. In his own paper reporting the Kenya results, Kremer noted that, in Nicaragua and the Philippines, giving kids textbooks did improve their test scores.
Here is the crux of it:
But the point of all this is not to talk shit on Kremer—who has bettered the world more with his career than I ever have with mine—or to dismantle his deworming charity, or to advocate that we should all go back to giving out free textbooks. What I want to talk shit on is the paradigm of the Big Idea—that once we identify the correct one, we can simply unfurl it on the entire developing world like a picnic blanket.
There are villages where deworming will be the most meaningful education project possible. There are others where free textbooks will. In other places, it will be new school buildings, more teachers, lower fees, better transport, tutors, uniforms. There’s probably a village out there where a PlayPump would beat all these approaches combined. The point is, we don’t know what works, where, or why. The only way to find out is to test these models—not just before their initial success but afterward, and constantly.
I can see why it’s appealing to think that, once you find a successful formula for development, you can just scale it up like a Model T. Host governments want programs that get more effective as they get bigger. Individual donors, you and me, we want to feel like we’re backing a plucky little start-up that is going to save the world. No international institution wants to say in their annual report: “There’s this great NGO that increased attendance in a Kenyan school district. We’re giving them a modest sum to do the same thing in one other district in one other country.”
The repeated “success, scale, fail” experience of the last 20 years of development practice suggests something super boring: Development projects thrive or tank according to the specific dynamics of the place in which they’re applied. It’s not that you test something in one place, then scale it up to 50. It’s that you test it in one place, then test it in another, then another. No one will ever be invited to explain that in a TED talk.
Hobbes goes on to explain that testing means more money spent on overhead. That overhead would lead greater effectiveness and, in the long run, lead to a bigger bang for the overall buck, but everything we do now is oriented toward keeping overhead as lean as possible. We ramp up projects that end up being incredibly wasteful. Sometimes they can be downright destructive.
This is the paradox: When you improve something, you change it in ways you couldn’t have expected. You can find examples of this in every corner of development practice. A project in Kenya that gave kids free uniforms, textbooks, and classroom materials increased enrollment by 50 percent, swamping the teachers and reducing the quality of education for everyone. Communities in India cut off their own water supply so they could be classified as “slums” and be eligible for slum-upgrading funding. I’ve worked in places where as soon as a company sets up a health clinic or an education program, the local government disappears—why should they spend money on primary schools when a rich company is ready to take on the responsibility?
There’s nothing avaricious about this. If anything, it demonstrates the entrepreneurial spirit we’re constantly telling the poor they need to demonstrate.
My favorite example of unintended consequences comes, weirdly enough, from the United States. In a speech to a criminology conference, Nancy G. Guerra, the director of the Institute for Global Studies at the University of Delaware, described a project where she held workshops with inner-city Latina teenagers, trying to prevent them from joining gangs. The program worked in that none of the girls committed any violence within six months of the workshops. But by the end of that time, they were all, each and every one, pregnant.
“That behavior was serving a need for them,” she says in her speech. “It made them feel powerful, it made them feel important, it gave them a sense of identity. ... When that ended, [they] needed another kind of meaning in their lives.”
The fancy academic term for this is “complex adaptive systems.” ...
So do we give up?
First, let’s de-room this elephant: Development has happened. The last 50 years have seen about the biggest explosion of prosperity in human history. ...
Development, no matter how it happens, is a slow process. ...
The ability of international development projects to speed up this process is limited. ...
And this is where I landed after a year of absorbing dozens of books and articles and speeches about international development: The arguments against it are myriad, and mostly logistical and technical. The argument for it is singular, moral, and, to me anyway, utterly convincing: We have so much, they have so little. ...
To this I would add one note about faith-based economic development. There is a tendency to turn a tactic into a sacrament. Christians and congregations are frequently using two metrics for mission. First, there is a desire to help those in need. Second, there is a desire for congregants to be engaged in helping others in ways that are meaningful to the congregant. If the latter becomes particularly strong, then it is very difficult to alter tactics, no matter how much data you show that demonstrates ineffectiveness, and even harm. In my book, the first consideration is an absolute must. To do development that does not achieve the first criteria, no matter how meaningful it is to the congregation, is to dehumanize those in need as instruments for stroking our spiritual self-esteem. And that is why addressing economic issues from a Christian perspective requires both warm hearts AND cool heads.
Real Clear Science - Newton Blog: Why Rich People Don't Care About You
Examine the income ladder of the United States, and you'll soon stumble upon a surprising fact: Rich people donate a smaller portion of their income to charity than poor people. In 2011, people in the bottom 20% donated 3.2 percent of their earnings. People in the top 20% donated just 1.3 percent.
These numbers don't seem to be anomalous, but there is some nuance. Data from the National Center for Charitable Statistics shows that taxpayers making less than $60,000 donate around 3.75% per year, while those making between $200,000 and $10 million donate less than 3%. However, those making more than $10 million are the most generous of all, donating nearly 6% of their income.*
Psychologists have examined this dynamic even further.
"What we've been finding across dozens of studies and thousands of participants across this country is that as a person's levels of wealth increase, their feelings of compassion and empathy go down, and their feelings of entitlement, of deservingness, and their ideology of self-interest increases," Paul Piff, an Assistant Professor of Psychology and Social Behavior at the University of California, Irvine, announced in a 2013 TEDx talk. ...
... Of course, the wealthy aren't doomed to be Scrooges. For instance, the studies did not examine if there were behavioral differences between those who earned their wealth versus those who simply lucked into it. Also, Keltner insists that the human brain is hardwired to care. The wealthy just have to consciously work to be more cognizant of their fellow humans.
I've read other studies that indicate that the wealthy are just as responsive to needs as less wealthy people but wealthy people are more isolated from the needs of people farther down the economic ladder. Social distance and ignorance may be factors as big or bigger than selfishness or indifference.
Most people are exceptionally illiterate about the trajectory of demographic and economic changes in the world, believing the world is decaying. That leads many to disengage in hopelessness. In reality, globalization combined with investment in human capital and infrastructure has put extreme poverty in rapid retreat. The global poor are not getting poorer. The world is getting better!
I have continuously pointed to evidence of these developments through social media for more than a decade. Not infrequently, posts about positive trends are met with incredulity and even anger. How can I speak of an improving world when so many are suffering? It is as if nothing positive may be acknowledged until total success is achieved. Yet it is the relentless focus on the negative, attempting to shame and guilt people into action (many times with distorted and exaggerated data) that actually drives people away from action into donor fatigue and hopelessness. There must be hope that things can get better.
A recent guest preacher recounted a scene from the end of Schindler’s List. Schindler, who saved 1,200 Jews from the Nazis, reproofs himself as he realizes that if he had sold his car or other possessions, he might have saved at least one more person. He finds himself in a difficult place. How can he celebrate the lives saved when so many still died? But how can he not celebrate 1,200 lives that were indeed saved?
Endless fixation on the negative leads to despair and diminishes the value of lives that have improved. Such fixation is unwarranted and counterproductive, and that is why I will continue to press on with stories of hope and improvement. We need balance. We need hope. And based on the Barna data below, there is much work to do.
The poorest regions of the world have been growing the fastest for at least twenty years. The Economist forecasts world GDP to be 2.9%, while Asia and Australasia (less Australia) is at 5.7%, and Sub-Saharan Africa is at 4.5%. These rates actually indicate a considerable slowing of growth from recent years. The US forecast is 3.2%. This is more evidence of the that global inequality is shrinking, even though inequality within many nations is increasing. As the bottom of the economic ladder rises higher so does the distance between the bottom and the top. A recent article forecast that their would be no poor nations by 2050. I think that is likely. See: Gauging growth in 2015
Faith and Leadership Blog: John McKnight: Low-income communities are not needy -- they have assets
Most people and institutions that want to serve poor communities are focused on what the residents lack. “What are the needs?” is often the first question asked.
John McKnight says that approach has it backward.
“I knew from being a neighborhood organizer that you could never change people or neighborhoods with the basic proposition that what we need to do is fix them,” he said. “What made for change was communities that believed they had capacities, skills, abilities and could create power when they came together in a community.”
McKnight is co-director of the Asset-Based Community Development Institute and professor emeritus of communications studies and education and social policy at Northwestern University.
He and his longtime colleague John Kretzmann created the asset-based community development (ABCD) strategy for community building. Together they wrote a basic guide to the approach called “Building Communities From the Inside Out: A Path Toward Finding and Mobilizing a Community’s Assets.”
McKnight also wrote “The Careless Society: Community and Its Counterfeits” and, with co-author Peter Block, “The Abundant Community: Awakening the Power of Families and Neighborhoods.” ...
McKnight spoke to Faith & Leadership about asset-based community development and the role the church can play in helping people identify and leverage their strengths to empower their communities. The following is an edited transcript. ...
Excellent piece on a asset-based community development. Read the whole thing. More churches need to learn to think this way.
PBS News Hour has a piece Why employees earn more at big-box chains than mom-and-pop shops.
Contrary to widespread belief, big-box stores and chains have increased wages in the retail sector as they have spread, according to “Do Large Modern Retailers Pay Premium Wages?” (NBER Working Paper No. 20313). Retail wages rise markedly with the size of the chain and the individual store, according to the study by Brianna Cardiff-Hicks, Francine Lafontaine and Kathryn Shaw. As retail chains’ share of establishments has risen from one-fifth in 1963 to more than one-third by 2000, the number of jobs that pay better than traditional mom-and-pop stores has proliferated.
Half of the difference in wages between large and small retailers appears to be attributable to differences in the average skill level of workers in the two groups of firms. On average, better workers find their way to the bigger companies. With more levels of hierarchy than small stores, larger establishments also allow better workers to move into management positions, increasing their pay even more.
“The increasing firm size and establishment size that are a hallmark of modern retail are accompanied by increasing wages and opportunities for promotion for many workers,” the authors write. “While retail pay is considerably below that in manufacturing, pay in retail is above that found in service jobs… [These results] contradict the image of the retail sector as one comprised of the lowest paying jobs in the economy.” ...
An anti-consumerism Dickensian narrative frequently emerges among critics of big box stores. Wal-Mart (or another big box) moves into an area, drives out virtuous small businesses and their owners, drives down wages, and throws people into the cold uncaring machinery of greedy behemoth. The narrative is wrong at several levels.
First, there is considerable nostalgia and romance built into the preference for small businesses. In reality, relative to big box stores, small businesses vary widely in quality of management. Management and personnel policies are often subject to quirky whims of the owners. Cross-training to improve skills and opportunities for advance are minimal. Family nepotism not infrequently triumphs over meritorious performance. Wages are lower. Big box stores are better on all these fronts.
Second, stores like Wal-Mart do not tend to drive out small business. Wal-Mart’s major disruptive impact is on other discount store chains. In fact, Wal-Mart can be a boost to small business. By creating high traffic areas, small specialty businesses can open nearby and draw from the traffic generated by Wal-Mart.
Third, rather than drive down wages, these stores actually pay better wages than the mom and pop enterprises. The also offer substantially greater opportunity for learning and wage growth, even management opportunity. And if you think the stores are monolithic soul-sucking monstrosities, I’d invited you to read about Charles Platt’s experience as an editor for Wired who went to work for Wal-Mart to find out what it was like. See Life at Wal-Mart.
Finally, there is an additional indirect, but significant, Wal-Mart impact. Your standard living can improve in two ways: Increased wages and lower prices. The article makes clear that big box stores like Wal-Mart raise wages. But Wal-Mart also brings in a wide range of quality goods at low prices. It particularly does so for things like food, clothing, household goods, and medicine. These items make up a much higher percentage of the monthly budget for low-income people. Through low prices, big box stores have a positive impact on living standards that disproportionately benefits low income people.
When Wal-Mart stores open, it is not uncommon to have ten times as many applications as jobs. Wal-Mart tried to open a store in Chicago five years ago and one source published a map that shows support for the idea by Ward (See here.) The strongest support came from the poorest wards and support decreased as you moved up the economic scale. The big box stores offend the aesthetic and ideological sensibilities of the wealthy but low-income people overwhelmingly embrace them.
I do not give blanket endorsement to the big box stores but if my wealthier and more intellectual friends are truly concerned about justice and poverty, they may want to dig a little deeper than their moralistic anti-consumerism narratives take them.
Business Insider: OK, Haters, It's Time To Admit It: The World Is Becoming A Better Place
The article includes this graph:
Then this one about poverty:
There are many other graphs that could be shown about a host of important social indicators but the article closes with the most important one: life expectancy. Improvements in life expectancy require that a wide range of variables move in a positive direction and for that reason an improvement in life expectancy is often a proxy for overall well-being.
The author closes with:
So complain all you want about how horrible everything is. There's certainly a lot left to fix. But as you complain, remember:
The world is getting better all the time.
FCS Ministries Blog: Relationships That Make a Difference
Relationships. Two teenagers tossing a football. A couple falling in love, getting married, having kids. Business partners launching a new venture. Church friends sharing a meal.
Relationships all. Why do we have them? Fun, intimacy, profit, nurture? For social creatures like us, relationships have a whole range of benefits, all of which add value to our lives.
So when an affluent American church says they are building a relationship with a poor African church, what value are they expecting to gain? Relationship-talk is common among churches these days. It usually means something like: “We are not giving them money, not much anyway, not yet. We want to establish a relationship first, get to know them, build mutual trust. Then perhaps we will find healthy ways to invest together in ministry. But it’s the relationship that’s most important.” This is familiar, politically correct mission-speak that’s currently in vogue.
Something had to change when colonialistic missions fell out of favor. But simply channeling funds to indigenous leadership had its challenges. Long distance partnerships, we found, were difficult to manage.
So the alternative was relationships. If we invest time simply being together, learning from each other, experiencing the distinctives of each others’ cultures, then friendships will grow, trust will deepen, and we may find our way into productive, enduring mission together. We hope.
But how long will this take? How long before we can launch into a productive project together – one that will not end in misunderstandings or unhealthy dependency? And, of course, our African friends are wondering how long it will be before we trust them enough to let loose of our ample reserves.
It’s a delicate dance, this relationship building. We wonder when (or if) our relationships will become strong enough or our agendas align well enough to allow a true partnership.
Genuine liking. Mutual respect. Enjoyment of each others’ company. Appreciation of each others’ uniqueness. All important, yes. But is this all we want? At what cost? Cultural exchange is a pricey process.
Come on. Is cultural exchange really what we want? Don’t we really want to do something? Build something. Help someone? Don’t we really want to effect change, make a difference?
How long do we have to wait around pen-pal-ing and guest-swapping before we actually accomplish something of significance?
So what is it in Africa (or our other favorite place of need) that we are really interested in fixing? Saving souls? Africans are far better evangelists than we are and besides, they speak the local language and know the culture.
Building orphanages and schools? That may be fine so long as we make a heavy commitment to fund on-going scholarships and overhead. But, of course, we are well aware of the problems such dependency creates. We also know that education without a good job at the end is futile.
At the risk of sounding unspiritual and upending our mission-trip methodology, why don’t we just go ahead and invest our mission money in something that will make a lasting difference? Like a profitable business that will create legitimate local employment as well as produce a return that can be re-invested.
When local people are working, the need for subsidized social services decreases. A profitable company can provide health care. A business that shares profits enables employees to educate their children. Workers with disposable income can improve their homes, maintain their water supply, build their own churches.
Decent jobs do all of this. And more. Profitable businesses spawn other businesses that create additional jobs. Isn’t it time for us to admit that what works so well for us in our culture may be the very thing that will allow other cultures to flourish?
Legitimate business relationships – now there’s the kind of relationship that adds value.
(Republished with permission)
Pacific Standard: Why Are So Many Low-Income People So Overweight?
... More recently, in Slate, Heather Tirado Gilligan cites peer-reviewed research to conclude: “[M]ore fresh food closer to home likely does nothing for folks at the bottom of the socioeconomic ladder. Obesity levels don’t drop when low-income city neighborhoods have or get grocery stores.” ...
... That said, I worry about this counter-argument’s implications. If healthy food is available and affordable, and if obese, low-income consumers aren’t choosing it, it becomes very, very easy to blame the overweight victim in this scenario. In a country that places a big rhetorical premium on individual responsibility, we tend to not only do a lot of blaming the victim—we also seem to kind of enjoy it. ...
... The recent rebuttal to the conventional wisdom that food access doesn’t necessarily equal healthier choices—in essence, that poor people could eat well but don’t—hardly gives us license to rant, as another commenter did, that “the fact they can’t feed themselves is THEIR fault.” Instead, it suggests the need for a more nuanced way to think about why so many Americans end up trashing their bodies with corn dogs and cookies when other options are on hand. It’s an opportunity, in other words, to rethink the very nature of eating.
We might begin this process by trying to understand diet as a psycho-socioeconomic phenomenon rather than as a matter of food access. There’s a critically important aspect to McMillan’s story that’s essential to this shift in perspective: the people she profiles live lives defined by persistent scarcity—not necessarily food scarcity, but a generalized and even traumatizing kind of material instability. Absolutely nothing about their lives is secure. ...
... The subjects pictured and videotaped in McMillan’s story are not just overweight. They’re scared out of their minds.
And being scared out of your mind affects how you eat. In their book Scarcity: Why Having Too Little Means So Much, Sendhil Mullainathan and Eldar Shafir write that “scarcity captures the mind.” Scarcity, they note, “has its own logic.” It doesn’t take much imagination to hypothesize that, if your entire material existence teetered on the edge of loss—that is, if you were obsessed with scarcity because you had to be—that you’d likely blow your limited food budget on a bag of cookies and fried gizzards rather than a peck of apples and sweet potatoes. Nobody’s saying such a choice would be advisable in terms of maximizing personal or public health. To the contrary, buying crap over carrots means that you are driven to eat by a scarcity-induced craving for the most immediate and gratifying satiation—the kind that sugar, salt, and fat excel at providing. But you remain, in fact, a victim. ...
Reading this post, my mind immediately went back to a post I wrote seven years ago, reviewing Charles Karelis' book, The Persistence of Poverty: Why the Economics of the Well-Off Can't Help the Poor.
... Karelis asks us to imagine being on a picnic when suddenly we are stung by a bee, on the hand lets say. Our mind is now directed toward the pain in our hand to the exclusion of whatever other physical discomfort we may be experiencing. Karelis has one dab of salve at hand and he applies it to our bee sting. Our pain is relieved. The salve has a high degree of utility for us.
Now instead of one sting on the hand, we are stung on the hand and on the neck. There is still only one dab of salve. Its application to one sting will decrease the pain some but will still be left in considerable distracted discomfort. A second dab of salve would have more marginal utility than the first did.
But now let’s say we have six bee stings at various locations on our body and still only on dab of salve. The one dab of salve provides minimal relief for us. But each successive dab supplies an increasing quantity of relief.
So what if you woke up every day with six bee stings and you had been supplied with six dabs of salve to cover your next six days. Would you allocate them one a day across the next six days or would you use them all in one day to have at least one day out of the six pain-free? The chronic poor routinely choose the one blissful day. ...
... Therefore, the poor are rationally inclined to spend a small pile of money in one big bang. Buying an expensive set of clothes gets you esteem for at least a moment. Entertainment, gambling, or substance abuse provides at least temporary distraction and relief. Experience tells you that there is an inadequate supply of relievers around so when you have the fortune to get an amount that gives you complete temporary relief, do it! ...
I suspect something similar is at work with food. Food provides comfort from chronic fear and pain. Better to buy some really satisfying food that relieves pain in the moment than to make healthy food choices aimed at long-term health. And that points to another challgene. The chronic poor typcially have no long-term time horizon. Debates go on about whether poverty leads to a short-term horizon or whether it is the other way around, but clearly expanding time-horizons is a piece of the puzzle, as well as finding stablity.
"... According to Palaniappan, the real culprit here is the very concept of the payday. The way he see is, there’s no reason people who already have done their work should have to wait several days, or even weeks, to get the money they’ve rightfully earned. So, in May, Palaniappan launched ActiveHours. The Palo Alto startup, which recently raised $4.1 million, makes an app that allows hourly workers to immediately access pay they’ve already earned, without having to wait for their employer’s standard pay cycle.
What’s more, there are no fees. Instead, ActiveHours makes money on tips, asking users to pay what they want. “We’re trying to build something that’s completely aligned with the consumer, unlike what people are used to today in typical financial services, where it’s, in some ways, adversarial,” he says.
Palaniappan is far from the only entrepreneur who sees opportunity in creating an alternative to the payday loan. LendUp, for instance, has raised $64 million to offer loans with lower interest rates that become cheaper over time. ZestFinance, launched by an ex-Googler, is similar. But even these players still rely on fees, both for profit and protection. In this demographic, after all, there tends to be a high rate of delinquency, so even the most upstanding lenders typically account for those losses upfront. But with its no-fee model, AfterHours is a radical departure.
It’s also riskier. The company is betting that when given the choice, its customers—already struggling financially—will still pay for the service it provides. “Some people look at the model and think we’re crazy,” Palaniappan says, “but we tested it and found the model is sufficient to building a sustainable business.”
Conversable Economist: Universal Basic Income: A Thought Experiment
"... What about the politics of a universal basic income? It's no surprise that many who lean liberal like the idea of guaranteeing a basic income. However, the idea has a reasonable number of conservative and libertarian supporters, who like the idea of a program that addresses the basic concern over helping those with low incomes, but in a clean, clear way that involves much less interference of eligibility rules and phase-ins and phase-outs in people's lives. Dolan claims that there are lively debates over a universal basic income happening behind the scenes between those with very different political persuasions.
The idea of a universal basic income is appealing to me in theory, but I have a hard time believing that once enacted, the U.S. political process would be willing or able to leave it alone. One one side, those who favor higher tax rates for those with high incomes would immediate start trying to figure out ways to claw back payments to those with high incomes. On another side, there would be continual pressures to reinstate programs like Food Stamps, or targeted welfare payments for certain types of families, or favored tax provisions for home-buying or charitable contributions or retirement. There would be continual political pressure to alter the amount of a universal basic income, as well. The U.S. political system does not excel at replacing complexity with simplicity, and then leaving well enough alone."
This is pretty much my perspective.
This is about a social enterprise on a mission to reinvent the coffee supply chain, giving farmers a bigger and more equitable piece of the action.
Aimed at growers producing specialty-grade, premium, Fair Trade certified coffee, Vega hopes to enable farmers to roast and package their beans and connect to customers directly via an online subscription marketplace. As a result, they can make a lot more money than they normally do.
... So, even though advocates of Fair Trade and organic coffee are trying their best, because they work within the usual supply chain, small-scale farmers end up with a paltry share of the pie, according to Ketabi. Each small scale farmer produces about 500 pounds of Fair Trade organic coffee a year and gets around $1.30 a pound, or $700 a year. The upshot: Farmers of specialty grade coffee beans earn $1 a pound for a product costing U .S. consumers maybe $20.
Vega’s aim is to cut out most of those other players. To that end, it would set up a processing, packaging and distribution center located 20 to 30 minutes from farmers. There the coffee would be loaded in pallets, shipped overseas via a U.S. carrier, then broken down and mailed to consumers. Farmers would be paid when the processing is done, so it’s not contingent on supply and demand fluctuations. The founders are still working out the details, but, ”We’ll match the Fair Trade price and pay for the value of the processing on top of that,” says Ketabi. The result would allow farmers to earn up to four times what they typically receive. ...
HT: Sarah Stanley
When it comes to understanding inequality, the debate is frequently encumbered with a multitude of misunderstandings about data. When talking about wealth inequality, we see statements like “85 people own more wealth than the bottom half of humanity.” Wealth is routinely misunderstood to mean the money and things someone owns. It isn’t. Wealth is someone’s total assets minus their liabilities. It is common to have negative wealth. The peasant farmer in rural China who has managed to save $200 and is debt free, is “wealthier” than the high-income young M. D. who has a negative net worth due to substantial student loans (i.e., she owes more than she presently owns.) I recently wrote about this in The World’s Bottom 10%: 7.5% Live in North America and None Live in China … And Other True But Worthless Facts.
Then there is the constant citation of growing inequality in pre-tax and pre-transfer income in the U. S. (usually just stated as “income”), and the need to rectify it through redistribution. But if you only look at pre-tax and pre-transfer income, no amount of redistribution will have one penny of impact. We could transfer $100,000 to every household in the bottom half the income distribution and it wouldn’t matter because it would be income after taxes and after transfers. When we look at after-tax and after-transfer income, we see that there has been little change in inequality between those at the 95th percentile and those at the 20th percentile for the last twenty years. See my post, Is Income Inequality Really the Problem? It Depends on What You Call Income.
Today, Arnold Kling reviews Chasing the American Dream by sociologists Mark Robert Rank, Thomas A. Hirschl, and Kirk A. Foster. (See Kling's post: The Longitude of Well-Being) He cites a stat that shows that homeownership rates have remained fairly constant at about 67%. Kling then asks you what percentage of Americans aged 55 have owned a home? A) 50%, B) 70%, and C) 90%. Kling says he would have guessed 70% when in fact it is 90%. The 67% number is a cross-sectional piece of data, taking a “snapshot” of homeownership at a given point in time. The 90% number is a longitudinal piece of data, taking a “video” of homeownership for over a period of time.
… the question that I asked concerns what demographers refer to as longitudinal information. If you follow given individuals over a long period, what sort of cumulative outcomes will you observe? In particular, over a lifetime, how many people will at some point own a home? To answer a longitudinal question, you need to use longitudinal data. To instead use time-series cross-section data risks making serious errors.
Most of the conventional wisdom about relative economic well-being, including the famous studies by Thomas Piketty and Emmanuel Saez, commits the time-series cross-section fallacy. Rank, Hirschl, and Foster did not set out to debunk this fallacy or to attack the many economists guilty of it. Instead, they took what seemed to them a natural approach for studying the evolution of wealth and poverty: longitudinal data. The result, in my reading, is that, like the boy in the fable, they have in an innocent, unintended fashion exposed statistical nakedness among many economists who are regarded as experts on the topic of inequality.
Once you think about it, the truth about homeownership rates makes sense. At some point in our lives, nearly all of us have been renters. In addition, most of us are likely to "downsize" as we grow older, and in the process many of us may choose to rent.
Kling moves on to the authors’ discussion of how many years a household spends in poverty or in affluence between ages 25 and 60. Kling offers an interesting alternative.
I would be interested in what the data show if, rather than looking at the extremes, one does the opposite. That is, throw out each household's lowest and highest three years of income. For the remaining years of income, take the average relative to the poverty line. If this average is below 150 percent of the poverty line, call it low. If it is above 500 percent of the poverty line (which works out to about 200 percent of the median), call it high. Then calculate the proportion of households that have high, medium, and low incomes by this longitudinal measure.
This would produce a very different breakdown. For instance, suppose that, rather than quitting my job to start an Internet business, I had kept working and that my salary had continued to increase gradually until I reached age 50. In that case, under the authors' measure, our household would be in the bottom of the income distribution, because of the "poverty" of my graduate school years and my failure to achieve the income level that they require for "affluence." However, using my approach, my household would have been somewhere in the vicinity of the boundary between high-income and middle-income. That seems much more reasonable to me.
Overall, as with homeownership data, the longitudinal view of income paints a picture in which life-cycle variation and idiosyncratic factors play a role. This role is overlooked in discussions of inequality that commit the time-series cross-section fallacy.
As I read Kling’s piece, I began to wonder how many people have had pimples. My guess is that the answer approaches 100%. Yet we don’t see headlines about acne being experienced by more than 90% of people at least one year in their lives. We understand that for most people this is a temporary life-stage issue. The universe of people for whom acne is an ongoing problem is much smaller. The same is true with poverty. I’m intrigued by Kling’s idea of discarding outliers and looking at 90% of the data between the outliers.
The reality is that no one set of data, or particular lens, can tell us the whole picture about issues like poverty and inequality. We must look at the issues from multiple angles to get to the truth. But it is incumbent on us to be cognizant of what lens we are using at any given time and what that lens is actually showing; in this case, knowing the difference between a snapshot and a video.
Christian Science Monitor: How focusing on profit can help the poor
Water technology company Xylem makes a profit on its foot-operated irrigation pumps for poor farmers. But those profits allow it to stay around to service its products and develop new ones.
When leading water technology company Xylem started manufacturing simple pumps for smallholder farmers, it wasn't for charity: The company expected to profit.
The new Essence of Life line caters to the everyday water needs of farmers with small plots of land, among some of the world’s poorest customers. Like any of its customers, Xylem expects these farmers to pay for the right product at the right price.
“Many of us in the water business – Xylem and its peers – are engaging in a lot of the same strategies: premium products in premium markets,” said Keith Teichmann, vice president and director of innovative networks and marketing at Xylem in an interview with Global Envision.
The new Essence of Life line caters to the everyday water needs of farmers with small plots of land, among some of the world’s poorest customers. Like any of its customers, Xylem expects these farmers to pay for the right product at the right price.
“Many of us in the water business – Xylem and its peers – are engaging in a lot of the same strategies: premium products in premium markets,” said Keith Teichmann, vice president and director of innovative networks and marketing at Xylem in an interview with Global Envision.
So Xylem developed the Essence of Life program to focus on the water needs of the 1.5 billion smallholder farmers who live on less than $2.50 per day, said Teichmann.
By doing so, Xylem became one of the few original equipment manufacturers making water management products directly for the individual smallholder farmer. ...
Economist: Not so fair trade
BUYING ‘Fairtrade’ coffee is not really helping the very poor, new research suggests. By comparing living standards in Fairtrade-certified producing areas in Ethiopia and Uganda with similar non-Fairtrade regions, four development economists from the School of Oriental and African Studies (SOAS) in London found that Fair Trade agricultural workers often earned lower incomes.
After four years of fieldwork in the coffee, tea and flower sectors in Ethiopia and Uganda, where they gathered 1,700 survey responses and conducted more than 100 interviews, the SOAS researchers found people living in ordinary rural communities enjoyed a higher standard of living than seasonal and casual agricultural workers who received an apparently subsidised wage for producing Fairtrade exports. Women’s wages were especially low among producers selling into Fairtrade markets, according to the researchers. ...
... PS: The Fairtrade Foundation has published a lengthy reply: "We note the innovative methodology and large sample size that SOAS’s research project has used to answer its three research questions, only one of which focuses on Fairtrade. We also note however that the study has not sought to evaluate the impact of Fairtrade’s model and interventions as it has not followed an impact evaluation methodology."
Just Facts Daily: Think Progress exaggerates child hunger by 8,000%
... However, instead of reporting the facts of this important issue, a number of influential media sources are greatly exaggerating the problem.
One of these sources is Think Progress, which ranks among the nation’s top-15 political websites. In a recent article, Alan Pyke, the Deputy Economic Policy Editor of Think Progress, reports that “more than a fifth of America’s children are going hungry,” government food “programs have faced wave upon wave of funding cuts,” and “America does a slightly better job at feeding adults” than children.
All of those statements are categorically false according to data from the U.S. Department of Agriculture (USDA), the Census Bureau, and the White House Office of Management and Budget. These primary sources show, for example, that on an average day, less than 1% of U.S. households with children have a child who experiences hunger.
These sources also show that the annual hunger rate for children is lower than adults and that federal spending on food and nutrition programs has risen by more than two thirds since 2007, even after adjusting for inflation and population growth.
Below is the documentation of these facts, along with the details of how Think Progress has distorted the truth.
“Food insecure” does not mean “hungry”
The crux of Pyke’s misreporting is that he falsely equates food insecurity with hunger. “Food insecurity” is a technical term used by the USDA to categorize households based upon a survey conducted by the Census Bureau.
This annual survey includes a series of questions about food consumption, and if respondents answer “yes” to at least three of ten questions, their households are classified as food insecure. For example, respondents are asked if they ever “worried” that their “food would run out before” they “got money to buy more.” For another example, they are asked if they “couldn’t afford to eat balanced meals.”
According to this survey, 21.6% of children and 15.9% of adults lived in households that were food-insecure at some point during 2012. These are the figures quoted by Pyke, but they do not apply to hunger, especially for children.
The title of Pyke’s article is “More Than A Fifth Of America’s Children Are Going Hungry.” Just to be clear, “hungry” means hungry (not food-insecure), “children” means children (not households), and “going” means currently (not once during the past year). Beyond the standard ten questions in this survey, the Census asked direct questions about child hunger, and the results look nothing like what Pyke reports. ...
... Pyke is not the only purveyor of inflated hunger statistics. PolitiFact, the Pulitzer-Prize winning fact check organization, has alleged: “According to the U.S. Department of Agriculture, ‘food insecurity’ means that at some point in a year, someone in a household went hungry because the household couldn’t afford food.”
That claim is in direct opposition to what the USDA explicitly states. Again: “Households classified as having low food security have reported multiple indications of food access problems, but typically have reported few, if any, indications of reduced food intake.” ...
The article also includes this graph:
I'm glad to see someone do a detailed analysis of these claims about hunger. I hear and read so many widely varying claims about hunger in the U.S. that it is hard to know what is factual. I simply haven't taken the time to research this myself, and while I didn't know what the right number was (less than 1%), the 21.6% was just preposterous. It is good to understand how the misconception has occurred.
AEI - James Pethokoukis: World Bank: ‘The world has become more equal’
Lots of attention being given to a new World Bank study suggesting China may overtake the United States this year as the world’s largest economy, adjusted for living costs. But this other World Bank finding, noted by the Financial Times, is also interesting:
When looking at the actual consumption per head, the report found the new methodology as well as faster growth in poor countries have “greatly reduced” the gap between rich and poor, “suggesting that the world has become more equal”.
As the above chart shows, high-income countries in 2005 had 16.4% of global population and 60.4% of global GDP vs. 16.8% of population and 50.3% of GDP in 2011. Although income inequality within nations may be on the rise, global economic inequality between nations is collapsing.
But here’s what is really amazing: Back in 2005, low-income countries represented 7.1% of global GDP vs. 1.5% today. Now it’s not as if these nations became poorer. Rather they moved up the income ladder. In 2005, 35.4% of global population lived in “low-income countries.” Now that number is just 11.1% as more than 1 billion humans “moved” into middle-income nations which now represent 72.1% of global population vs. 48.2% in 2005. ...
I've seen the graphy below but it points to aninteresting dynamic. It seems to suggest as economic growth happens in developing nation, the distance between the top and bottom of the income ladder widens considerably, leading to increased inequality in the nation. But economic growth also seems to move the very bottom of the distribution away from zero. It brings the income distribution more in line with developed nations, thus reducing the inequality between nations.
Dirty air killed an alarming 7 million people – or, one of every eight human lives lost – in 2012, according to new estimates released today by the World Health Organization (WHO).
n 2010, air pollution ranked as the fourth leading preventable health risk, behind poor diet, high blood pressure and tobacco smoke, according to a major study funded by the Gates Foundation.
Indoor air pollution, primarily caused by burning solid fuels for heating and cooking, accounted for slightly more than half – 4.3 million – of those deaths in 2012.
Outdoor air pollution accounted for the remaining 3.7 million deaths. ...
2014 Gates Annual Letter: 3 Myths the Block Progress for the Poor
"By almost any measure, the world is better than it has ever been. People are living longer, healthier lives. Many nations that were aid recipients are now self-sufficient. You might think that such striking progress would be widely celebrated, but in fact, Melinda and I are struck by how many people think the world is getting worse. The belief that the world can’t solve extreme poverty and disease isn’t just mistaken. It is harmful. That’s why in this year’s letter we take apart some of the myths that slow down the work. The next time you hear these myths, we hope you will do the same." - Bill Gates
I sometimes have issues with Gates' optimism about aid but I think he does a fairly balanced job in this piece. There were also two graphs that I really liked. They demonstrate once again how misugided so many doomsayers are. There is reason for hope. How can we get more of this good stuff to happen better and faster, in sustainable ways is the big question.
"The developed world holds up the ideals of capitalism, democracy and political rights for all. Those in emerging markets often don't have that luxury. In this powerful talk, economist Dambisa Moyo makes the case that the west can't afford to rest on its laurels and imagine others will blindly follow. Instead, a different model, embodied by China, is increasingly appealing. A call for open-minded political and economic cooperation in the name of transforming the world."
This is a from Bob Lupton, FCS Urban Ministries, in the Urban Perspectives newsletter. He is always thought provoking. This issue was especially good! (Note: Urban Perspectives allows copying these articles if attritbtion is given.)
Wealth. A sign of God’s favor. At least that’s how it was viewed in Old Testament times. Wealth was equated with prominence, influence, leadership, and yes, even righteousness. Consider Job and Abraham. Oh yes, there were evil and corrupt rich men to be sure. The prophets took them on. But generally riches were seen as evidence of God’s blessing. That’s why the disciples were so puzzled by Jesus’ pronouncement that it was harder for a rich man to enter the Kingdom than for a camel to go through the eye of a needle. “Well who can get in, if not the wealthy?!” they questioned. It was clear that they viewed wealth like most other devout Jews – as a sign of God’s favor. Their Teacher was casting an entirely new (and dubious) light on the nature of riches.
Money, power, prestige – these would no longer be the measures of prominence in this Kingdom Jesus was introducing. Meekness, humility, compassion – these would become the defining attributes of greatness. Rich people could certainly join, He said, but this new order of things would be difficult for them – difficult to divest their personal assets rather than contine to accumulate more, difficult to subordinate their privileged status to those of lesser social standing, difficult to place their security in God rather than in their wealth. It would not be impossible, He said, just difficult. Matthew the tax collector was case in point, and of course the very wealthy Zacchaeus. Luke the physician was another. But by and large the wealthy were relegated to lower standing in the pecking order of the Kingdom. It was all upside down – the first being last and the last first. Big change from Old Testament to New.
And so the value of being wealthy was turned on its ear. The well-off became suspect. It was a rich man who treated poor Lazarus poorly and was condemned to eternal damnation. A rich young ruler too tied to his wealth to become a follower. A proud rich man in the Temple whose offering was unacceptable. A successful farmer who took early retirement who was declared “a fool.” Deceitful Ananias and Sapphira, tragic examples of rich folk who held out on God. Wealth became associated with self-indulgence, with mercilessness, with arrogance, with fraudulence. As a matter of fact, one is hard pressed to find a single reference in the New Testament affirming wealth as God’s blessing. Warnings, yes, but no recognition of its essential role in Shalom.
But just behind the scenes, unmentioned but clearly present, were wealthy supporters of this Kingdom. Zacchaeus was still one of the richest men in Jericho even after he made restitution and gave half his money to the poor. And what about Matthew’s tax business and Luke’s medical practice? And the women of means who supported the Messiah campaign? And members of the early church that sold property to underwrite the church budget? Oh yes, wealth was there alright. It’s just that generosity and self-sacrifice and living by faith were the themes that got the sermon coverage.
But then, how could it be any different? Everybody in the early church was readying for the eminent return of the Messiah. Everyone was on a short-term schedule. Don’t even get married, the apostle Paul urged. Put all your energy into preparedness for the second coming. But Christ didn’t return as expected. (Not yet.) And so in time everybody began settling into a new normal of church and community life, some thriving, others surviving. The themes of generosity, self-sacrifice and living by faith imbedded themselves in the culture of the church. Wealth remained suspect. The apostle James made quite sure that the rich were not shown deference.
And so the issue churns. Those who create wealth continue to receive the warnings while those modest souls who live off the benefits of the economy that wealth-producers create receive the affirmation. John Coors, a very wealthy and very devout Christian, calls it an “industry of making the rich feel guilty.” Billionaire Robert Kern, who loves the church but endures the judgment, has allocated a large portion of his estate to educating ministers in the fundamentals of how the economy works.
“Give it all away,” Jesus said. Even your second coat. Don’t concern yourself about tomorrow. Budgeting? Trust a miracle. Hmm. Does the One who holds the economies of the world in his hand not realize that thoughtful planning and responsible investing are essential for stable societies? Was it not He who gave the promise of prosperity to Israel if they would keep His commands? Was He not the One who warned Joseph in a dream about seven years of famine that would befall Egypt, and positioned him to plan ahead during seven years of plenty? How then are we to understand this radical “take-no-thought-for-tomorrow” departure from divinely guided resource management?
He came to fulfill the law, not do away with it, He said. Don’t abandon the God-given teachings and principles of the past – take them to a deeper level. The blessing of wealth is meant for the Shalom of the entire community, not to be hoarded for personal sumptuousness. Managed well, it provides a stable lifestyle for a workforce and their families, stimulates ancillary enterprises, contributes to the prosperity of the whole village or region. No, He did not come to destroy Shalom but to inspire it. Admittedly, He did use some highly provocative words and actions to shake up a religious culture that was misusing wealth to amass personal power, privilege and possessions. Scattering stacks of money-changers’ cash all over the Temple portico floor was a bit extreme perhaps. But sometimes dramatic intervention is required when greed and self-indulgence become acceptable norms within the Temple community. And He certainly did that!
But perhaps the time has come to bring theological balance back to our understanding of wealth. 2000 years of cautions for those who have the gift of wealth creation may be an adequate length of time to make the point that mammon is seductive, that one’s heart must be carefully guarded against its enticements. At a time when the entire world is awakening to the reality that healthy economic systems are fundamental to the elimination of extreme poverty, perhaps this is a moment for resourced members of the Western church – who have unparalleled capacity to create profitable businesses – to step forward. Perhaps this is the time when the church begins to see itself as more than a purveyor of compassionate service, but as a catalyst of just and fruitful economies. Might this be a turning point when the wealthiest church in history awakens to the reality that their job creators are the very ones gifted by God to bring economic wholeness to struggling souls too long resigned to unending poverty?
MRUniversity. "What do we know about how extremely poor families earn their money? This video focuses on families earning $2 a day or less."
The video notes that most poor people earn their money with undercapitalized small enterprises. To get a cycle of prosperity going, capital investment is needed. Very small capital improvements can add significant productivity. This leads to greater specialization by labor, ultimately increasing productivity even more and enabling labor to get higher wages. A cycle begins.
However, this also inevitably leads to creative destruction. Should one of these businesses begin to realize great increases in productivity, it will begin to knock other less productive enterprises out to the market. But with rising productivity and living standards comes more demand for other types of goods and services (and thus workers.) Productivity cycles higher, which causes more creative destruction, and so on. It is chaotic and can be disorienting. Some people end up with hardships for a time. Some will experience reversals from which they may not recover. But no economy has risen to broad prosperity without this dynamic.
For prosperity to take hold, there must an abundance of small-to-medium enterprises (SME). If you plot an economy’s firms by employment size, in prosperous countries you will find some very small firms, same very large firms, with a huge bulge of SMEs in the middle. Developing nations have a huge number of very small firms (as noted in the video), some very large firms, and almost nothing in the middle.
A big challenge in developing nations is that so much of the economy (often between 70-90%) operates outside of the official economy. People in the unofficial economy have no access to credit and always risk losing capital investments because they can't demonstrate official claim to their real estate and equipment. This discourages them from capitalizing in the first place.
This is usually not accidental. The official economy is usually dominated by an interconnected elite, with its members cycling in and out of business, government, and military institutions. They operate the locally-owned large enterprises and they use government to block the emergence of any competitors. They use government to take land held informally by the by the poor and to suppress worker rights. The USA was an active participant in supporting this behavior in Latin America throughout the Twentieth Century, to the point of sending troops in many cases. It was all done on the pretense of protecting "capitalism" and "markets" when what was being practiced was anything but capitalism and markets. Capitalism and markets are grounded in well-defined and well-protected property rights and the various players being able to make choices free from coercion.
The ideological right trots out “free markets” as the solution to poverty but too often without attention (and I think intentionally so at times) to the challenge informal economies bring to opening up trade with an emerging nation. That is why some multi-country free trade agreements can be challenging. There need not be perfection in dealing with unofficial economies in emerging nations but trade agreements should be contingent upon continuous improvement in improving property rights and breaking the stranglehold of elites. Some on the right are too quick to jump on a deal just because it has “free trade” in the name.
But the ideological left goes off in another unhelpful direction. Rightly concerned about the injustices that have been visited on the poor in emerging nations through these alleged “free market” episodes, they frame things in terms of the poor keeping their small family farm and small enterprise, and being sustained to stay in those economic modes. They correctly see the need for just systems that help the poor garner and protect property rights but then they actively work against the emergence of SMEs, seemingly grounded in romantic notions of bucolic bliss on a family farm and labor intensive artisan work, often connected with a desire to protect “local culture.” This framing is especially strong in my Presbyterian Church, USA, tribe.
If we are truly going to bring justice and prosperity to the poor, SMEs are critical and the ideological right and left, as they exist today, aren’t going to get us there.
Rev. Dr. Susan Brooks Thistlethwaite has a post at the Huffington Post today titled Proof Jesus Was Not a Capitalist: The Richest 1 Percent Own Half the World's Wealth. Here is my response.
...Biblically speaking, probably not. As Jesus warned, you have to choose. Either money rules you, or your highest values rule you. There's no middle ground. "No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money." (Luke 16:13)
Jesus was not a capitalist.
God's rules on economics, as articulated both by the prophets and Jesus of Nazareth, are strikingly clear. Not small concentrations of great wealth and the vast majority of people in poverty, but 'each under their own vine and fig tree, living without fear.' (Micah 4:4) Jesus announces his ministry as "good news to the poor" (Luke 4:18), that is, the "Jubilee," the really radical redistributive economic strategy of ancient Israel.
So, is it likely the leaders gathered at the World Economic Forum in Davos serve that vision, a vision of a reasonable abundance shared by all, or are they in service to the vast accumulated wealth of the 1 percent? Is it going to be possible for people at that meeting to enact policies that start to close this disastrous economic gulf between the rich and the poor? ...
First, advanced agrarian societies of the Near East and Rome are the context of the Bible (Hebrew and Christian Testaments.) The economy, to the limited degree they even thought in macroeconomic terms, was a zero-sum game. Land and labor were the two inputs for production. Both were relatively fixed. There was little you could do to alter the productivity of land and one person’s labor was not substantially different from another's. Consequently, with variable productivity off the table, economics was constrained to considerations of consumption and distribution. Both personal and societal abundance was cyclical and sharing of the fixed pie was essential for community survival.
The great divergence of the past two centuries or so is the realization that productivity can be radically altered. Through the application of technology, energy, exchange, stable institutions, and improving human capital, productivity can be radically altered. But these changes have included the need to concentrate wealth into productive assets and assume larger risks in order to effectively achieve greater productivity. We live in a different world from advanced agrarian societies and trying to apply morals from their context directly to ours is useless.
Second, the Jubilee was categorically not a “radical redistributive economic strategy.” Land was to revert back to its perpetual owners every 50 years. Jubilee stated that if someone needed to “sell” their land, then the price would be determined based on the number of crops that could be gathered between the “sale” date and the next Jubilee. Then the land would revert back to the perpetual owner. In other words, it was a lease. A person could “sell” their labor on the same conditions. These provisions only applied to agricultural land and it had nothing to do with non-agricultural land or other private property. Significantly, it ensured that everyone had access to at least a minimal level of capital (land and labor) to provide for themselves and to produce goods for exchange, living individually and corporately as God’s stewards. That has interesting theological implications for thinking about economics but it was not radical redistribution.
Third, from where does abundance come? Apart from maybe air and sunlight, name one thing that humans use that does not require human action to transform matter, energy, and data from a less useful form to a more useful form? Absent human action, there is near absolute scarcity of the things that humanity uses. If we each had to provide for ourselves and our families alone, our days would be a precarious existence, doing little else but hunting and gathering our way through life. But through specialization, technology, concentration of wealth in productive enterprises, and trade (i.e., capitalism) we achieve high levels of productivity resulting in unprecedented abundance. Had Jesus known that productivity could be radically altered, I suspect he may have offered different guidance (and I don't mean a blanket blessing of the American economic system.)
Fourth, just what is the negative impact of inequality that should give us pause? The article doesn't say, but it is strongly implied: If wealth is becoming concentrated at the top, then it must be that it is being taken from others, making them poor (1% are wealthy while 99% are in poverty) ... the rich are getting richer and the poor are getting poorer. She is not alone in this thinking. A recent survey of Americans showed that 66% of respondents think that the proportion of the global population living in poverty has doubled in the past twenty years and another 29% think there has been no change (total of 95%), when in fact the proportion has been halved:
Furthermore, the number of well-paying jobs is expanding around the world. Life expectancy at birth, the most holistic measure of human well-being, is now at 70 years and closing in on the 80 year mark enjoyed by the wealthiest nations. Studies show that inequality within nations is increasing but inequality between nations is falling.
Now none of this is to say that rising inequality is good or bad. We have to be specific by what metric we use. If the metric is that inequality means more poverty and is therefore bad, then the assertion the inequality is "bad" isn't true. People are not getting poorer. That doesn't mean inequality isn't problematic for other reasons but we need to specific about what we are tackling.
“Unregulated market capitalism has only one master, and that is money. And that is why 85 people control half the wealth of the whole world.”
Dr. Thistlethwaite, if you identify one nation on the face of the earth that has “unregulated market capitalism,” then I will right you a check for $1,000 right here and now. They don't exist! This issue is not unregulated market capitalism but corporatism. If there is a governance problem it is that the biggest corporate entities and government have joined together to stack things in favor of their mutual interests over and against market forces that might threaten them. That is corporatist business capitalism and antithetical to market capitalism. Furthermore, economists have not reached a consensus on why there has been an increasing concentration at the top but the idea that it is summed up in “unregulated market capitalism” is just absurd.
With all that said, I’m not saying that growth in inequality isn’t a problem and that it isn’t worthy of theological and moral reflection. I am asking for a more responsible discussion.
I will also agree that change largely begins from the bottom up. Muhammad Yunus uses the image of a bonsai tree. The seed that grows into the tiny bonsai tree is the same seed that grows into the tall tree in the forest. The difference is that the bonsai grows from the limited foundation of the flower pot while the tall tree has the rich foundation of the forest bed. The poor are bonsai people. By improving the soil in which they grow, by instituting property rights and rule of law, by including them in networks of productivity and exchange, they too can flourish as people in wealthier nations have. Trickle-up capitalism is a promising strategy. It is already at work around the world. Let's joing them and support them. Populist ideological warfare about poorly defined issues and remedies is nothing but a moralistic distraction. The world deserves better from Christian thinkers.
... In the chart, left of zero mean fewer jobs in those income groups, while right of zero mean more jobs. So in sub-Saharan Africa and South Asia, the share of jobs for the poorest workers will contract while jobs for people with more income will expand. ...
Christianity Today: Why Am I Not Poor? Dale Hanson Bourke
For many years I sat in a pew on Sundays, listening to occasional sermons about the poor, giving to special offerings and looking appropriately sympathetic and concerned about poverty. But I did not truly—in evangelical speak—have a heart for the poor.
For much of the rest of the week I was consumed with not being poor. I was working to build my business, increase profits, and move up the wealth ladder. I reasoned that the more money I made, the more I could help my church and other worthy organizations. While I heard Christian concern expressed about poverty, the stronger message was that I was rewarded for accumulating wealth. The farther I moved away from poverty, the more I was asked to join church committees and nonprofit boards. The poor may be "blessed," but the wealthy are popular, especially in Christian circles.
As a woman business owner, I was sometimes asked to speak about my experience. I usually gave a nod to good timing, luck, and being blessed. But I mostly talked about hard work, determination, and focus. My upbeat message was aimed at helping others realize that they, too, could succeed. In retrospect, the subtext was a not so subtle "God helps those who help themselves" theme.
My worldview began to change when I joined the World Vision board and traveled to the developing world. There I met men and women who were remarkably hard working, determined, and focused. I spent time with women who cared for their families and also worked at other jobs from before sun up until dark. I encountered people who were intelligent, entrepreneurial, and absolutely ingenious at overcoming obstacles. And despite all of these attributes, they were still numbingly poor.
For the first time in my life, I actually knew desperately poor people. The more I listened to their stories the more it became obvious to me that if there was a difference between us it was that they worked even harder than I ever had. I remember standing next to a woman in a Haitian slum, watching her cook with one hand, care for her baby with the other, and occasionally use her cooking spoon to defend her one room shack from the dogs and young men who threatened to take the little food she had. With stunning clarity, I realized that I could never survive in such circumstances, let alone succeed. ...
... Much of what I had taken for granted in my life took on new meaning when I compared myself to some of the people I had met and noted our differences. My list included:
Bill and Melinda Gates Foundation:
We hear these myths raised at international conferences and at social gatherings. We get asked about them by politicians, reporters, students, and CEOs. All three reflect a dim view of the future, one that says the world isn’t improving but staying poor and sick, and getting overcrowded.
We’re going to make the opposite case, that the world is getting better, and that in two decades it will be better still. ...
... By 2035, there will be almost no poor countries left in the world. Almost all countries will be what we now call lower-middle income or richer. Countries will learn from their most productive neighbors and benefit from innovations like new vaccines, better seeds, and the digital revolution. Their labor forces, buoyed by expanded education, will attract new investments.
I still hear many people today talk about the "Third World." It refers to those nations that were poor and not aligned with either the Western capitalism (First World) or the communist world (Second World.) The Third World has vanished and it is time to bury the term. The world’s nations and populations exist on a continuum and there are now multiple poles, not two, shaping the world. Furthermore, the story is not one of descent into global dystopia but one of rising prosperity. It is hard to meaningfully address contemporary problems with antiquated frameworks.
It’s time to develop a new framework for assessing the post-Cold War, post-9/11 world. ...
... The three worlds used to be capitalist, communist, and the rest. Now they are the West, the failed states, and the emerging challengers. But that's still too simple a view. A small and declining number of developing countries are charity cases. And none are competitors with us in a zero-sum game. Rather than dividing most of the planet into two threatening classes, we need to see states of the developing world as vital partners—both in strengthening the global economy and in preserving the global environment. ...
... Given that much of the world only makes headlines when it is in the midst of a humanitarian crisis and U.S. assistance is on the way, it isn’t surprising that the average American thinks things are going to hell in a handbasket: a recent survey of Americans found that two thirds believe extreme poverty worldwide has doubled over the past 20 years. The truth is that it has more than halved. This might also explain why Americans think that 28 percent of the federal budget goes to foreign aid—more than 28 times the actual share.
According to the World Bank, the developing world as a whole has seen average incomes rise from $1,000 in 1980 to $2,300 in 2011. Life expectancy at birth has increased from 60 to 69 years over that same time, and college enrollment has climbed from 6 to 23 percent of the college-age population. Progress is happening everywhere, including Africa: Six of the world’s 10 fastest-growing economies over the past decade are in Africa. There were no inter-state conflicts in the world in 2013 and, despite tragic violence in countries including Syria and Afghanistan, the number of ongoing civil wars has dropped considerably over the last three decades. Emerging markets themselves are also playing an ever-expanding role in ensuring global security. The developing world is the major source for blue-helmeted UN peacekeepers, who are ending wars and preserving stability in 16 different operations worldwide. The 20 biggest contributors of police and military personnel to the UN’s 96,887 peacekeepers are developing countries. ...
Very interesting piece. For more data, see yesterday's post, The (Mostly) Improving State of the World.
Washington Post: 40 charts that explain the world
Our friend and colleague Max Fisher over at Worldviews has posted another 40 maps that explain the world, building on his original classic of the genre. But this is Wonkblog. We're about charts. And one of the great things about charts is that they show not just how things are -- but how they're changing.
So we searched for charts that would tell not just the story of how the world is -- but where it's going. Some of these charts are optimistic, like the ones showing huge gains in life expectancy in poorer nations. Some are more worryisome -- wait till you see the one on endangered species. But together they tell a story of a world that's changing faster than at arguably any other time in human history. ...
As the author notes, we have challenges but we hardly descending into some global dystopia. I think these charts give a pretty holistic view. Here are a three examples.
It was commonly believed that primitive societies were more peaceful and that modern civilization gave rise to unprecedented violence. This chart compares death rates by war in primitive societies as calculated by anthropologists to the death rates for Europe/USA in the 20th century.
And then there is this:
The graphs point to environmental protection and adaptation as the biggest problems in the days ahead. Those challenges are not insurmountable. Energy sources like natural gas and nuclear power can be used in the interim on the way to practical renewable technologies. Genetically modified crops can help to reduce water consumption, increase yield, and improve hardiness. Innovations in fields like biotechnology, nanotechnology, and 3-D printing hold the promise of revolutionizing the world economy into a less wasteful and more affordable human existence for everyone. There is work to do but there is also much reason for hope of a better world.
Jan 16, 2014 in Demography, Economic Development, Economics, Environment, Generations & Trends, Globalization, Health, Poverty, Religion, Science, Sociology, Technology (Biotech & Health), Technology (Digital, Telecom, & Web), Technology (Energy), Technology (Food & Water), Technology (Manufacturing & Construction)), Technology (Transportation & Distribution), Weatlh and Income Distribution | Permalink | Comments (0)
I watched the 1950 version of "A Christmas Carol" Christmas Eve. There is an interesting part of the story that I suspect few even notice. In the exchange between Scrooge and the Ghost of Christmas Past, it comes out that both Scrooge's mother and sister died giving birth. Can you imagine a case in our society where both mother and daughter die in childbirth? Such a thing would so strange that we might look for some hereditary or environmental connection between the events.
Scrooge's mother likely died in the 1780s and his sister in the early 1800s, based on Scrooge's age and calculating back from 1843 (when the book was written.) While certainly tragic, you get no sense that this was especially odd. That's because in 1843 and prior it wasn't odd. Throughout world history many women died in childbirth and upwards of one in four children born alive died before their first birthday. Average life expectancy at birth was around 30 years old. (That doesn't mean that some people did not live much longer but so many died so early that the overall average from birth was quite low.) Today it is nearly 70 years globally and 80 years in advanced nations.
The interesting thing to me is how people of Scrooge's day would have seen our life expectancy today as miraculous. Yet once a society moves into the “new normal” of high life expectancy, the miracle is quickly forgotten and seen as the natural order. We are entitled to the new normal and we come to see those not living in the new normal as victims of some injustice or malady that caused their abnormal plight.
I see this over and over with a range of socio-economic problems. For instance, I’ve seen countless books that examine what “causes” poverty. Yet if you were to go back 300 years you would see that the norm was the overwhelming majority of people living just below or just above subsistence levels. By today’s standards, the difference between those below and above was marginal. Someone looking forward from 300 years ago would have seen many of the poorest communities in African or Asia today and not been particularly surprised. Their question would not have been what causes poverty. They would have wanted to know what caused the astounding rise in prosperity in other parts of the world.
As I see it, the human propensity to cocoon within “new normals,” losing all perspective on how change occurred, is one of the biggest challenges to creating a better world. It causes us to be ungrateful for the good we have inherited and to ask bad questions as we seek the welfare of others. Maybe what we need are ghosts of economic past, present, and future, to help us see more clearly.
Huffington Post: Rich Man, Poor Man: Poverty, Then And Now
Should we try to end poverty? "Yes," you reply, and wonder why we'd even ask.
People in earlier times would have been surprised, too. And for them, the answer would have been equally obvious -- "no." Well into the 19th century, poverty was widely seen as inevitable: Economists estimate that in 1820 around 84 percent of the earth's population lived in absolute poverty, or on the equivalent what we now call "a dollar a day" (it's actually $1.25). Poverty was also seen as useful: "Everyone but an idiot knows that the lower classes must be kept poor or they will never be industrious," the English writer and traveler Arthur Young wrote in 1771.
That quote comes from a fascinating paper by Martin Ravallion, which traces -- from an economist's perspective -- the great shift in attitudes towards poverty over the past three centuries. For much of that time, poverty was regarded as necessary: "True, it was miserable for the poor," as The Economist commented recently. "But it also kept the economic engine humming by ensuring the availability of plentiful cheap labour." Not just cheap, but uneducated: "To make the Society happy and People easy under the meanest Circumstances, it is requisite that great Numbers of them should be Ignorant as well as Poor," the 18th century economist Bernard de Mandeville wrote.
That's not to say that the poor didn't have their defenders. But, as Ravallion points out, efforts to help them were focused on easing suffering, not eradicating poverty. Workhouses began to appear in Europe in the early 17th century: "Welfare recipients were incarcerated, where their 'bad behaviours' could be controlled, and obliged to work for their upkeep."
When did attitudes change? ...
We're living at a far more equal, peaceful, and prosperous time than the pontiff acknowledges....
Pope Francis is Times’ Person of the Year, an excellent pick in my estimation. He strikes me as man with incredible integrity. I’m enjoying watching him live into this new calling.
Of particular interest to me has been response to his Evangelii Gaudium, with the left gleeful about his condemnation of capitalism and the right going apoplectic about the same. In our age of bumper sticker sound bites, I don’t think either side is listening with appropriate nuance. I haven’t read and digested the whole document but I have read the sections that deal with economic issues. I don’t see a radical departure with what previous Pope’s have written.
Twenty years ago Pope John Paul II wrote the following in Centesimus Annus:
Can it perhaps be said that after the failure of communism capitalism is the victorious social system and the capitalism is the victorious social system and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this model which ought to be proposed to the countries of the Third World which are searching for the path of true economic and civil progress?
The answer is obviously complex. If by “capitalism” is meant an economic system which recognizes the fundamental and positive role of business, the market, private property, and the resulting responsibility for the means of production as well as free creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a “business economy,” “market economy,” or simply “free economy.” But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative. (Centesimus Annus, 42)
I don’t find Pope Francis saying a great deal different although his emphasis may be a little different. We need to remember that John Paul II ministered under the tyranny of Soviet Communism while Francis did so under the tyranny of right-wing dictatorship. These differences are surely a factor.
The part that does trouble me some, as it does with an overwhelming number of religious figures who speak to economic issues, is a distorted picture of what is happening in the world. It isn’t what is said. It’s what’s missing. For the past century or two we have been living through the most astonishing surge in human flourishing in history. That reality needs to be brought into discussion every bit as much as the challenges and the injustices.
David Ropeik in How Risky Is It Really: Why Our Fears Don’t Always Match the Facts shows that we are innately inclined to fixate on threats and negative developments. People who do so aren’t stupid or ideological … they are human. All of us do it. The inclination to focus on threats is instinctive and has served human beings well over millennia. But in the face of very complex issues we need to bring our concerns into perspective with more objective analysis. Otherwise we run the risk of doing more harm than good. We need to approach problems with warm hearts and cool heads.
I have some minor quibbles with Tupy in the article but it brings important balance. I’ve documented some similar factors in past series like American Social Indicators and World Social Indicators, two series I intend to update next year. I think the challenge is to hear the Pope’s important calls for inclusion of the poor and his warning against our propensity to justify indifference. Not heeding the Pope's warnings is also to misunderstand the world. But we need to heed the warnings with an informed understanding of what is unfolding in the world. Read the Atalantic article and see what you think.
James Pethokoukis includes the following graph and commentary in his post Actually, global income inequality seems to be on the decline.
As a follow-up to my blog post on the Pope Francis and his recent statement on economic inequality, here is what’s been happening on inequality globally. While inequality has increased within countries since 1970s — it’s not just America, gang — it’s dropped between countries. See the above chart from this study (h/t to Overcoming Bias.) When you combine the two, it looks like inequality has been declining.
Very poor countries tend to have high percentages of the population living at subsistence levels with a small fraction of people with high income at the top. That means a distribution with the masses bunched at the bottom with a small tail extending off toward high income.
But the high-income people in these poor countries would not compare to the wealthy in West. The gap between the poorest and richest persons is much smaller in poor countries. As economic growth occurs, the distribution begins to look more like a bell curve where no one is living at subsistence levels but the high-income part of distribution has extended much further out. That is to say that absolute poverty is eliminated but the distance between the bottom and the top widens considerably. Nations are finally becoming more economically developed, thus there is widening within countries but narrowing between countries and narrowing on the global level.
You can see this graphically in a presentation at Gapminder: Human Development Trends, 2005. Here are four slides:
New York Times: Nicholas Kristoff - A Way of Life Is Ending. Thank Goodness.
... For thousands of generations, a vast majority of humans have lived brief, illiterate lives marked by disease, disability and the loss of children. As recently as 1980, a slight majority of people in the developing world lived in extreme poverty, defined as surviving on less than $1.25 in today’s money.
Yet in a time of depressing news worldwide, about dysfunction and crisis from Syria to our own Congress, here’s one area of spectacular progress.
The share of people in the developing world who live in extreme poverty has been reduced from 1 in 2 in 1980 to 1 in 5 today, according to the World Bank. Now the aim is to reduce that to almost zero by 2030.
There will still be poverty, of course, just as there is far too much poverty lingering in America. But the extreme hanging-by-your-fingernails subsistence in a thatch-roof hut, your children uneducated and dying — that will go from typical to essentially nonexistent just in the course of my adult life. ...
... In 1990, more than 12 million children died before the age of 5. Now that figure is down close to 6 million. ...
... Illiteracy is retreating and technology is spreading. More people worldwide now have cellphones than toilets. ...
... When additional kids survive in poor countries, does that really matter? Isn’t the result just a population explosion leading to famine or war, and more deaths?
That’s a frequent objection, but it’s wrong. When child mortality drops and families know that their children will survive, they are more likely to have fewer babies — and to invest more in them. There’s a well-known path from declining child deaths to declining births, which is why Bangladesh is now down to an average of 2.2 births per woman.
Ancient diseases are on the way out. ...
... AIDS is also receding. ...
... Rajiv Shah, the administrator of the United States aid agency, says he is optimistic that extreme poverty will be eliminated by 2030 but notes that increasingly the focus will have to be on lagging countries like Congo. ...
... So let’s acknowledge that there’s plenty of work remaining — and that cycles of poverty in America must be a top priority at home — yet also celebrate a triumph for humanity. The world of extreme poverty and disease that characterized life for most people throughout history may now finally be on its way out.
Atlantic Cities: The Astonishing Decline of Homelessness in America
Despite a housing crisis, a great recession, rising income inequality, and elevated poverty, there is some good news among the most vulnerable segment of American society. America’s homeless population – an estimated 633,000 people – has declined in the last decade.
This seems incredible – perhaps literally, so. The National Alliance to End Homelessness, a leader in homelessness service and research, estimates a 17 percent decrease in total homelessness from 2005 to 2012. As a refresher: this covers a period when unemployment doubled (2007-2010) and foreclosure proceedings quadrupled (2005-2009).
It’s equally shocking that politicians haven’t trumpeted this achievement. Nor have many journalists. Yes, there’s a veritable media carnival attending every Bureau of Labor Statistics "Jobs Report" on the first Friday of the month. We track the unemployment rate obsessively. But the decline in homelessness hasn’t attracted much cheerleading.
And what about the presidents responsible for this feat? General anti-poverty measures – for example, expanding the Earned Income Tax Credit -- have helped to raise post-tax income for the poorest families. But our last two presidents have made targeted efforts, as well. President George W. Bush’s "housing first" program helped reduce chronic homelessness by around 30 percent from 2005 to 2007. The "housing first" approach put emphasis on permanent housing for individuals before treatment for disability and addiction.
The Great Recession threatened to undo this progress, but the stimulus package of 2009 created a new $1.5 billion dollar program, the Homeless Prevention and Rapid Re-Housing Program. This furthered what the National Alliance called "ground-breaking work at the federal level…to improve the homelessness system by adopting evidence-based, cost effective interventions." The program is thought to have aided 700,000 at-risk or homeless people in its first year alone, "preventing a significant increase in homelessness."
Since then, the Obama administration also quietly announced in 2010 a 10-year federal plan to end homelessness. This is all to say that the control of homelessness, in spite of countervailing forces, can be traced directly to Washington—a fact openly admitted by independent organizations like the National Alliance to End Homelessness. ...
... As quietly as homelessness has fallen, so too it will go up quietly – unless there is major intervention. The United States Department of Housing and Urban Development estimates that sequestration cuts from homelessness programs are set to expel 100,000 people from a range of housing and shelter programs this year. That’s nearly one sixth of the current total homeless population. Far from gently raising the homeless rate, it would undo a full decade of progress. ...
Christian Science Monitor: A penny saved is two pennies earned for poor women in savings groups
Saving for Change operates in 13 countries with 680,000 members, most of them women. They not only benefit from receiving loans but share in overall profits of 30 to 40 percent. ...
... The poor, often unconnected to banks, can benefit from savings groups because they offer a safe place to save money, the chance to borrow small amounts on flexible terms, and a strong support group.
Saving for Change (SfC) is an Oxfam America program that operates in 13 countries throughout the world with 680,000 members, most of them women. Saving for Change works in rural areas, training women to save regularly by meeting every week to put a few cents into a savings box and to borrow from their group’s fund as needed--tiny loans that they later pay back with interest.
At the end of a savings cycle, typically one year long, the fund is divided among the members, who receive not only their own savings but a portion of the profit. The yearly return on the savings is 30 to 40 percent or more. The end of the savings cycle is scheduled thoughtfully, usually during the beginning of the hungry season when members are more vulnerable. The money shared out is mainly used by the women for food, business, and livestock, with 41 percent of the total share-outs being used for income-generating purposes. ...
Is India winning the battle against poverty? Going by the latest figures, yes.
The number of Indians living in extreme poverty has fallen from 37% to 22% in the past seven years, according to the latest official data from the Planning Commission.
The good news is that poverty in large swathes of dirt-poor northern India - states like Bihar, Madhya Pradesh, Orissa and Uttar Pradesh, which have been considered a drag on India's development - has fallen sharply.
Today there are more people living in extreme poverty in the economically prosperous western state of Gujarat (16.63%) than in the traditional northern laggard Rajasthan (14.71%). ...
... Despite the good tidings, India's war on poverty is far from over.
Remember, 270m Indians still live in extreme poverty. That is one in five Indians.
Joseph Cardinal Ratzinger (a.k.a. Pope Benedict XVI) famously said, "A morality that believes itself able to dispense with the technical knowledge of economic laws is not morality but moralism." This certainly is true of Fair Trade coffee. Here is a clip by San Jose State University economist Colleen Haight on "Combating Global Poverty with a Cup of Coffee." It might not be what you think.
Acton Institute PowerBlog: Is Fair Trade Coffee Curing Poverty?
Sarah Stanley does a great job summarizing Victor Claar's take on Fair Trade Coffee:
“Who could be against fairness?” Victor Claar asked this question at Acton University last month. He and Travis Hester gave a talk titled, “Fair Trade Versus Free Trade” with their focus on the coffee industry. They explained what the fair trade movement is, evaluated its effectiveness, and explored ways for caring people to help coffee growers overcome poverty. ...
You can listen to the talk here: Victor V. Claar — Fair Trade vs. Free Trade
... Does the fair trade movement work? Unfortunately, there are a plethora of problems with it. In general, while the demand of coffee is inelastic, the supply is elastic. The artificially high price, set by FLO and other fair grade organizations, greatly increases the quantity supplied by incentivizing individuals, who would normally pursue other endeavors, to enter the coffee industry as growers and by incentivizing current coffee suppliers to grow more. This excess of coffee and coffee growers makes everyone in the industry poorer. Growers will produce more coffee than consumers want. Coffee growers that are not fair trade certified become significantly poorer because they will have to charge a much lower price for their coffee than they would in a truly free market. Claar goes on to explain that the consumer also suffers, but not just because he or she is paying more for a morning brew. Fair trade coffee growers have little to no incentive to grow the best crop as they are guaranteed the highest prices no matter what. In some cases, fair trade growers have been known to sell lower quality crops in the fair trade market and then sell higher quality coffee beans in the non-fair trade market for a competitive price. A guaranteed price means that growers do not have to guarantee quality.
Another significant problem with the fair trade movement is the regulation against child labor. This rule may ultimately hurt children. According to Hester, the school year in Honduras is built around the coffee picking season. Families pick coffee together all contributing to the family’s income. Children are not allowed to work under fair trade rules, so if adults own a fair trade farm, their children will look for work down the road at another non fair trade coffee farm. Thus, they will no longer with their parents or older siblings, but will be working on their own. In effect, child labor is not eliminated it is simply displaced.
The well intentioned fair trade movement places coffee growers in “golden handcuffs.” The incentive of slightly higher prices encourages growers to stay in that industry when they might otherwise pursue more productive endeavors. Claar and Hester both pointed out during their presentation at Acton University that “you will never have a middle class lifestyle growing coffee.” ...
... How might a caring person respond? Some have suggested that the best way to help coffee growers is by ordering coffee directly from the growers so they receive all of the profit. Unfortunately, this may reduce coffee’s quality and taste. People who have tried coffee sold directly by growers say that is significantly more bitter and tastes very little like coffee. However, at least one group has figured out how to do this successfully.
Madcap Coffee in Grand Rapids, Mich. imports the raw coffee beans and roasts them in house. A representative from Madcap has personally visited 75 percent of the farmers who provide their raw beans. While Madcap is not “fair trade” certified, nor do they only work with fair trade growers, they seem to be moving in the right direction to help coffee growers. Madcap owner and founder Ryan Knapp gave an unpublished interview to PovertyCure and explained why he decided to avoid the fair trade certification: “We have been intentional on the fact that we are not going to have a label to say what our coffee is as much as we are going to be a brand that is committed to great business practices.” He goes on, “Fair trade, a certification doesn’t really tell the whole story…Fair Trade isn’t the best option always for producers.” What is the best option for producers? According to Knapp, “the big piece of it is the transparency aspect and knowing exactly where our dollar is going and being able to trace that down to people that are actually growing the coffee, farming the coffee.” This is one solution to helping poverty-stricken coffee growers outside of the fair trade movement.
Instead of paying a premium to fair trade coffee that does not help coffee growers and may in fact harm them, Claar and Hester suggest that caring consumers should donate that extra cost of fair trade coffee to a microfinancing organization or invest it in more holistic and valuable ventures. ...
Also, you might want to pick up the monograph written by Claar: Fair Trade? Its Prospects as a Poverty Solution
Q Ideas for the Common Good: The Shift from 'Alleviating Poverty' to 'Creating Prosperity'
"We see poverty in the developing world and we
ask—what can I do? So we send food, water, clothes. We sponsor children,
build wells, start schools and go on mission trips; we wear wristbands,
we sign petitions, we advocate. But what if the question that animates
our activity is the wrong one?
What if instead of asking how we can alleviate poverty, we asked, “How do people in the developing world create prosperity for their families and their communities?” This sounds like a simple shift, but it can transform the way we think about poverty and the poorest among us because it takes the focus off ourselves and puts it where it belongs. People in need are not objects of our charity, they are subjects, and should be seen as the protagonists of their own development. Changing the question helps lead to an inter-subjective relationship.
Ask people in the developing world what they want most, and they don’t mention more aid or charity. They want jobs; they want the opportunity to build businesses; they want access to markets, to broader circles of exchange so they can provide for their families. As Ghanaian entrepreneur Herman Chinery-Hesse told me, “The people here are not stupid. They’re just disconnected from global trade.” ..."
Forty-one years after publication of the infamous Limits to Growth, Bjorn Lomborg offers this excellent piece, The Limits to Panic:
... But the report’s fundamental legacy remains: we have inherited a tendency to obsess over misguided remedies for largely trivial problems, while often ignoring big problems and sensible remedies.
In the early 1970’s, the flush of technological optimism was over, the Vietnam War was a disaster, societies were in turmoil, and economies were stagnating. Rachel Carson’s 1962 book Silent Spring had raised fears about pollution and launched the modern environmental movement; Paul Ehrlich’s 1968 title The Population Bomb said it all. The first Earth Day, in 1970, was deeply pessimistic.
The genius of The Limits to Growth was to fuse these worries with fears of running out of stuff. We were doomed, because too many people would consume too much. Even if our ingenuity bought us some time, we would end up killing the planet and ourselves with pollution. The only hope was to stop economic growth itself, cut consumption, recycle, and force people to have fewer children, stabilizing society at a significantly poorer level.
That message still resonates today, though it was spectacularly wrong. For example, the authors of The Limits to Growth predicted that before 2013, the world would have run out of aluminum, copper, gold, lead, mercury, molybdenum, natural gas, oil, silver, tin, tungsten, and zinc.
Instead, despite recent increases, commodity prices have generally fallen to about a third of their level 150 years ago. Technological innovations have replaced mercury in batteries, dental fillings, and thermometers: mercury consumption is down 98% and, by 2000, the price was down 90%. More broadly, since 1946, supplies of copper, aluminum, iron, and zinc have outstripped consumption, owing to the discovery of additional reserves and new technologies to extract them economically.
Similarly, oil and natural gas were to run out in 1990 and 1992, respectively; today, reserves of both are larger than they were in 1970, although we consume dramatically more. Within the past six years, shale gas alone has doubled potential gas resources in the United States and halved the price.
As for economic collapse, the Intergovernmental Panel on Climate Change estimates that global GDP per capita will increase 14-fold over this century and 24-fold in the developing world.
The Limits of Growth got it so wrong because its authors overlooked the greatest resource of all: our own resourcefulness. Population growth has been slowing since the late 1960’s. Food supply has not collapsed (1.5 billion hectares of arable land are being used, but another 2.7 billion hectares are in reserve). Malnourishment has dropped by more than half, from 35% of the world’s population to under 16%.
Nor are we choking on pollution. Whereas the Club of Rome imagined an idyllic past with no particulate air pollution and happy farmers, and a future strangled by belching smokestacks, reality is entirely the reverse.
In 1900, when the global human population was 1.5 billion, almost three million people – roughly one in 500 – died each year from air pollution, mostly from wretched indoor air. Today, the risk has receded to one death per 2,000 people. While pollution still kills more people than malaria does, the mortality rate is falling, not rising.
Nonetheless, the mindset nurtured by The Limits to Growth continues to shape popular and elite thinking. ...
... Obsession with doom-and-gloom scenarios distracts us from the real global threats. Poverty is one of the greatest killers of all, while easily curable diseases still claim 15 million lives every year – 25% of all deaths.CommentsThe solution is economic growth. When lifted out of poverty, most people can afford to avoid infectious diseases. China has pulled more than 680 million people out of poverty in the last three decades, leading a worldwide poverty decline of almost a billion people. This has created massive improvements in health, longevity, and quality of life. ...
The key issue here is innovation. Think in terms of a continuum. At one end is the ape from the opening of 2001: A Space Odyssey. The first human ancestor discovers the idea of using a large bone as a tool for manipulating his environment.
Further along the continuum might be simple tools like hammers and plows. They are extensions of the human body. Then come machines. Human beings are no longer wielding tools but are directing and servicing machines. Next there is artificial intelligence, where computers are able to make some decisions for us, as well as doing repetitive dehumanizing work. Finally, at the other end, might be something like the replicator in Star Trek, where you simply state your wish and a device rearranges atoms to create the desired object.
The problem with the Limits to Growth mentality is that it is locked into a current point along the continuum. It correctly observes that there is a fixed amount of resources in the world but it incorrectly assumes that economic growth means increased use of a materials at rate proportional to the rate of economic growth. To get the depletion date for a resource you calculate the quantity of a material known to exist, calculate annual present usage of the material, project a rate of economic growth, and subtract the projected annual usages from the total.
Total Resource/Current Annual Resource Usage = Years to Depletion (Increase economic growth and the years to depletion shrinks.)
Since the material quantities are fixed, the only variable is economic demand. Consequently, economic growth … whether the result of escalating wants and needs per capita or from increasing population … is unsustainable. (Similarly, take the current level of pollution and multiply it times the rate of economic growth to see how polluted the world will be.) Human innovation is nowhere in sight!
But we are not frozen at a point on the continuum. Human creativity is constantly changing the equation. Here is how.
First, in the short run, there is productivity. As demand for a natural grows it becomes more profitable to go after previously unconsidered deposits of that resource. For example, copper is everywhere but it varies in its accessibility and quality. Quality accessible cooper is the first to be used. But as demand increases, new techniques are invented for finding cooper, accessing deposits, and processing cooper. The Limits to Growth report estimated available cooper in the world in 1972 and projected we would run out of cooper by 2000. Today, not only have we not run out, but we are using more annually and the amount of available cooper has grown magnitudes larger.
Second, economizing. Figuring out how to do twice as much (sometimes much more) with the same resource changes the equation. Household appliances today use less than half the power they did forty years ago and often have features that were not imagined then.
Third, substitution of less plentiful resources with more plentiful resources, especially renewable resources. It is true that over a long time horizon that cooper would one day be depleted barring changes in consumption. But as productivity and economizing gradually lose their ability to keep cooper plentiful, the price of cooper will begin to rise. Recycling cooper will become more attractive. But even more likely is replacement of cooper by other alternatives. Think how much of our communication now is done with sand (fiber optics are made from silica) versus cooper (our old phone lines.) Furthermore, virtually everything made of nonrenewable resources can eventually be made using renewable resources.
Fourth, nanotechnology. We are in the beginning stages of manipulating matter at the molecular level. Nanorobots, about fifteen times the size of an atom, that can disassemble molecules and assemble atoms into new molecules. 3-D printers are already “printing” a range of items, including human tissue and organs. Scientists are developing printed food for long-term space voyages. Something akin to a replicator is not that unthinkable. The range of materials we can use for particular applications, our ability to manipulate matter at the molecular level, and our flexibility at forming matter into useful forms continues to evolve.
A finite stock of materials is not a limit to economic growth. That is not to say to we are without challenges. While many resources can be made more plentiful over time it is true that the very near term there can be shortages and injustices. Extraction of raw materials without adequate consideration for environmental impact could lead to horrific consequences. I’m not making the case that everything will magically take care of itself. I’m making the case that opposition to economic growth based on static zero-sum perceptions of the world that sees inevitable depletion of resources or over-pollution is groundless.
Dacher Keltner: We're starting to paint this really interesting picture of how wealth influences generosity. If you study at the societal level, who gives higher proportions of their income away to charity? Lower class people give more.
And what's really interesting is we're finding that lower class people just have a sharper sensitivity to need and to people who could use a little help. But when you simply prime, or you just get people from an upper class background, to think about the need in their environment, you see rises in generosity.
Paul Solman: Rises to the same extent that poorer people give away their money?
Dacher Keltner: Yeah. The very simple experiment that we've done is if we have upper class individuals going through an experience of compassion or see something that portrays suffering, you see rises in generosity to comparable levels of the poor. ...
... Dacher Keltner: Yeah, there's a lot of very deeply entrenched skepticism about altruism in western culture that goes back millennia, and one of the great advocates of this skepticism is Ayn Rand. I'll quote from her 1960 essay: "If any civilization is to survive, it is the morality of altruism that men have to reject." And she had this argument that thinking about the needs of others is an enemy of freedom, and strength and self-expression.
There are a lot of new data that show if you're generous, and charitable and altruistic, you'll live longer; you'll feel more fulfilled; you'll feel more expressive of who you are as a person; you probably will feel more control and freedom in your life. So the science calls that thesis into very deep question.
Paul Solman: And yet that's a thesis that has a lot of traction these days.
Dacher Keltner: It does, but, you know, I'm really encouraged by, you know, what's happening with the millennials and the interest that places like Facebook and Google are showing in terms of promoting charity and generosity and a consideration of other people's interests.
I'm lucky enough to be doing a bit of work on Facebook that's oriented towards making their site more compassionate, and they are actively interested in creating pieces of the social network that are for giving away things. So, it's going to be interesting to see if they deliver on that. ...