The great majority of people throughout most of human history have precariously been able to subsist. (See Level 1 below.) A great divergence began just over two centuries ago. Global life expectancy at birth has more than doubled and abject poverty as a percentage of the population has declined.
The average life expectancy at birth used to be about 30 years. That doesn't mean no one lived to old age. One in four children born alive died before their first birthday, so the average life expectancy at birth was skewed downward. But life expectancy at every age has been improving, especially over the past century.
The researchers at Gapminder have constructed this informative chart showing anticipated improving economic status over the next twenty years. (These numbers attempt to account for changes in the value of "a dollar" over time and across national borders.) Each block equates to 100,000 people. As you can see, the population is larger in twenty years, but a higher percentage of people have moved rightward on the continuum to greater prosperity. Many people find these numbers too abstract. What does this mean in practical terms? Gapminder has constructed this helpful chart to describe what life is like at the four levels.
You can learn more about these four levels here.
Three truths. The world has become profoundly better in recent generations and is on an improving trajectory. There is much suffering and injustice as vast room for improving our world. We can make the world a better place.
From researchers Steven A. Altman and Phillip Bastian:
Despite recent trade turbulence, the ratio of gross exports to world GDP is still remarkably close to its all-time high. Even after falling from a peak of 32% in 2008 to 29% in 2019, this measure of global trade integration is still 20% higher than it was in 2000, twice as high as it was in 1970, and almost six times higher than in 1945. ... Globalization can go into reverse—as demonstrated by the trendlines between the 1920s and 1950s—but recent data do not depict a similar reversal. ...
[T]he world is—and will remain—only partially globalized. Globalization can rise or fall significantly without getting anywhere close to either a state where national borders become irrelevant or one where they loom so large that it is best to think of a world of disconnected national economies. All signs point to a future where international flows will remain so large that decision-makers ignore them at their peril, even as borders and cross-country differences continue to make domestic activity the default in most areas.
Economist Timothy Taylor reviews the report and offers other insights: What's Happening with Global Connectedness in the Pandemic?
The chart below is based on maternal mortality rates, the number of women per 100,000 who die from pregnancy-related causes in a year. The first bar shows how many women die each year while the second bar shows how many would die if they had Europe’s living standards. What conclusions would you draw?
The global rate is 216, while the European rate is 8. The global rate is 27 times higher! About 290,000 women die each year because they do not have the living standards of the most affluent countries.
I would hope this would spark a sense of injustice. Something is wrong with a system that creates such a disparity in outcomes. Surely, we must upend this inequitable system and replace it with something just.
Now look at the second chart. What conclusions would you draw?
Prior to 1800, the global maternal mortality rate was 900. Today it is 216! It has dropped by 75%. By historic standards, this borders on miraculous. Something is right about a system that radically improves human well-being. How can we preserve and extend the improvement? (Note: The global rate dropped steadily from 385 in 1990, to 216 in 2015. The trajectory continues rapidly downward.)
A holistic view of human well-being will take into consideration this chart, including all three bars.
Some observations.
First, without the systems that developed over the past two centuries, we would have a more equitable maternal mortality rate. No place on earth would have a rate of 8 deaths OR of 216 deaths. We would still have a very equitable world of 900 deaths. Is that “equality” preferable to the 8 vs 216 inequality of today? I do not think many would agree. The 8 vs 216 differential is a good thing relative to the historic alternative.
Second, that some locales have a rate of 8, points to the possibility of a world where this level of well-being spans the globe. Justice requires that what we pursue this equitable outcome. We must be looking back to understand what brought us to where we are and we must be discerning about obstacles block this objective going forward.
Third, I am using maternal mortality rates as a symbol of broader improvement in human well-being in recent generations, sometimes called the Great Divergence. Appreciating this great divergence from human history neither requires us, in some consequentialist way, to a) embrace all that has developed in the past couple of centuries nor b) to refrain from asking rigorous questions about justice going forward. There have been profound injustices and inequities in the world of the past two centuries. There obviously are today. And yet, the Great Divergence happened and it continues. Lack of historical context and blindness to trajectories, can lead us to snap-shot-in-time views that inspire us to well-intentioned but destructive actions, destroying good in the process. Keep what works and adjust with discernment. Neither revolution nor complacency will do.
Worldwide, there were 12.6 million deaths for children under five years old in 1990. As of 2017, there were 5.4 million. Keep in mind that the world population grew by 50% during this time. Had death rates continued at the 1990 rate, there would have been about 19 million childhood deaths.
(Where in the world are children dying.)
Throughout human history, 90% of people have lived at a subsistence level - at or under what economists today call the extreme poverty line. Between 1820 and 1980, that percentage shrank by half to 44%. Between 1980 and 2005, it halved again to about 22%. During the next ten years it has more than halved to less than 10%. Keep in mind that while these percentages were shrinking, the global population grew from 1 billion to 7+ billion.
That is all well and good but I find most people don't relate well to statistics. Is there some way to visually capture what this means in concrete terms?
Gapminder has an excellent graph that gives a sense of what it means to move from extreme poverty. The left column is indicative of how the extreme poor live relative to the features listed on the left. The second column is indicative of the life to which emerged.
The graph is also instructive in that it divides living standards into four levels. For many of us who went to school in the 1960s to 1990s, our tendency has been to see a binary world - developed and undeveloped, first world and third world, rich and poor, the West and the rest. That has ceased to be the case. It has been on a trajectory away from a binary world all during our lifetimes. At the bottom of the graph you will see seven yellow human figures. Each stands for one billion people. Most of the world is now concentrated in the middle and moving upward, or to the right in this chart. The percentage of people in level one is now well below one billion and shrinking rapidly.
Gapminder Dollar Street has some visited 264 families from across the world and taken photos of their homes and belongings. The links to photos of the households are arranged in columns like the chart, allowing you to walk through the homes and get a sense of what it means to live at various living standards. It is an excellent resource.
This article, Here's the difference between a 'socialist' and a 'Democratic socialist' has been circulating as an explainer as to why “democratic socialism” is different from socialism. Democratic socialists merely believe a range of services – like health care and education – should be provided by the government. People circulate this article as evidence that people who suggest that democratic socialists want to end private property and usher in a state-run economy, are either fear-mongers or ill-informed. Did they read the article?
As the economist author notes (and as any standard dictionary will tell you) socialism at its core is state control of the economy and the virtual elimination of private property. Democratic socialism is committed to the ultimate socialist ideal but works to achieve it incrementally through democratic processes. I want to point out two quotes from the article, highlighting a key word in caps:
“In the present day, "Democratic socialist" and "socialist" are often treated as interchangeable terms, which can be confusing given Democratic socialists don't necessarily think the government should IMMEDIATELY take control of all aspects of the economy.”
“As the DSA's website states: "At the root of our socialism is a profound commitment to democracy, as means and end. As we are unlikely to see an IMMEDIATE end to capitalism [i.e., market exchange and private ownership] tomorrow, DSA fights for reforms today that will weaken the power of corporations and increase the power of working people."”
Immediate means not now but eventually. Democratic socialism has state control of the economy and abolition of private property as its end game. Democratic Socialists of America say so in their own words! And fully-realized socialism inescapably leads to totalitarianism, not democratic.
Despite having sympathy with the notion of a greater state role in some aspects of meeting basic needs, I will adamantly contest socialism. Market exchange is paramount to generating and sustaining human well-being. It is what has led to the “great divergence” from a world where the overwhelming majority had a subsistence existence during short difficult lives, into a world where extreme poverty is on the verge of elimination. Life expectancy has more than doubled in recent generations and indicators of well-being are improving on nearly every front. Furthermore, I’ll say that the freedom to own property, to truck and trade, to partner with others in productive enterprises, and to reap the rewards is a basic human right. Not absolute but a right nonetheless.
Advocating for a social safety net that cares for the most vulnerable is a matter of social justice. Advocating for private stewardship of property and market exchange is as well.
We have seen that life expectancy has been improving all across the planet. It is one of the most important measures of well-being. Yet most people think of income when they think of prosperity. Rightly so. Income is correlated with other factors that allow us to move beyond surviving to thriving.
The common refrain we hear today is “The rich are getting richer and the poor are getting poorer." It is widely repeated. It is a sentiment that often finds its way into the unison prayers of confession in congregations of my tradition. N. T. Wright, a theologian whose work I’ve found very helpful, writes:
And now we have the new global evils: rampant, uncaring, and irresponsible materialism and capitalism on the one hand; raging unthinking religious fundamentalism on the other. As one famous book puts it, we have ‘Jihad versus McWorld.” (Whether there is such a thing as caring capitalism, or for that matter thoughtful fundamentalism, isn’t the point at the moment.) …. It doesn’t take a Ph.D in macroeconomics to know that if the rich are getting richer by the minute, and the poor poorer, there is something badly wrong. (Simply Christian, 8)
It also doesn’t take a Ph.D. in macroeconomics to verify such claims either. ;-) The truth is much more complicated than this declaration and certainly is not true if we take the long view of multiple generations. What can we say about per capita income on an historic basis?
Comparing income across eras is difficult. Inflation and other variables make direct comparison impossible. Furthermore, comparing contemporary currency-based economies to barter economies will not do. Economic historians have developed a concept called “purchasing power parity” (PPP) to aid in this process. The value of a dollar at a fixed point in time is chosen and the value of income at all other points in time is pegged to the purchasing power of the fixed dollar. For our purposes, we will be using a PPP measure of “2011 International Dollars” (I$). Annual per capita Gross Domestic Product (the total market value of all final goods and services produced within a given country in a given period of time, usually a year) will be used as a proxy for income.
Not all economists agree on how to achieve parity between the present and more distant eras. Angus Maddison, one of the foremost authorities on this topic, suggested that about I$1,000 per capita (using 2011 dollars) is a subsistence level of income and was typical of subsistence living prior to the industrial revolution. However, economist Brad Delong, who has done his own analysis, claims:
“A large proportion of our high standard of living today derives not just from our ability to more cheaply and productively manufacture the commodities of 1800, but from our ability to manufacture whole new types of commodities, some of which do a better job of meeting needs that we knew we had back in 1800, and some of which meet needs that were unimagined back in 1800.” (Brad DeLong)
Therefore, DeLong puts historic subsistence living at a lower level, but both scholars end up with similar income estimates in recent eras. Here is the change over the last 2,000 years using Maddison's estimates.
The following chart shows their estimates between 1700 and 2015:
You can see that the growth accelerates beginning in the early nineteenth century. Many have suggested that the industrial revolution began not long after 1750 and it is true that many inventions came into being not long after that time. However, there was a lag time of a few decades between the advent of various technologies and the placement of them into productive use. Maddison argues for a beginning point of 1820 (as do other economic historians.) Whichever the case, keep in mind that the world population grew more than sixfold from less than 1 billion to more than 6.6 billion from 1750 to 2000 during this explosion in per capita income.
So in the aggregate, we can see that growth in worldwide per capita income is astounding. But how broadly spread is the economic expansion?
The following quote comes from Runaway World: How Globalization is Reshaping Our Lives. It was written in 1998, by British sociologist, Anthony Giddens.
What Globalisation is, and whether it is in any way new, are the focus of intense debate. I discuss this debate in Chapter I, since much else hangs upon it. Yet the facts of the matter are actually quite clear. Globalisation is restructuring the ways in which we live, and in a very profound manner. It is led from the west, bears the strong imprint of American political and economic power, and is highly uneven in its consequences. But globalisation is not just the dominance of the West over the rest; it affects the United States as it does other countries.
Globalisation also influences everyday life as much as it does events happening on a world scale. That is why this book includes an extended discussion of sexuality, marriage and the family. In most parts of the world, women are staking claim to greater autonomy than in the past and are entering the labour force in large numbers. Such aspects of globalisation are at least as important as those happening in the global-market place. They contribute to the stresses and strains affecting traditional ways of life and cultures in most regions of the world. The traditional family is under threat, is changing, and will change much further. Other traditions, such as those concerned with religion, are also experiencing major transformations. Fundamentalism originates from a world of crumbling traditions.
The battleground of the twenty-first century will pit fundamentalism against cosmopolitan tolerance. In a globalising world, where information and images are routinely transmitted across the globe, we are all regularly in contact with others who think differently, and live differently, from ourselves. Cosmopolitans welcome and embrace this cultural complexity. Fundamentalists find it disturbing and dangerous. Whether in the areas of religion, ethnic identity or nationalism, they rake refuge in a renewed and purified tradition – and, quite often, violence.
We can legitimately hope that a cosmopolitan outlook will win out. Tolerance of culture diversity and democracy are closely connected, and democracy is currently spreading world-wide. Globalisation lies behind the expansion of democracy. At the same time, paradoxically, it exposes the limits of democratic structures which are most familiar, namely the structures of parliamentary democracy. We need to further democratize existing institutions, and to do so in ways that respond to the demands of the global age. We shall never be able to become the master of our own history, but we can and must find ways of bringing our runaway world to heel. (3-5)
This short collection of essays has stuck with me ever since I first read it years ago. As I have reflected on the American political scene of the past two years, the insights of this book have become ever more prescient. I see the rise of Trump nationalism as a reactionary response to globalization. (This is not conservatism vs progressivism as we have recently understood them.) It is the death throes of the 20th Century world order. It may be short-lived. It may last a generation. But I suspect that it is ultimately doomed. Over the long-haul, globalization is an inescapable dynamic. However, that does not mean that great harm to human well-being and to the planet will not happen during these death throes.
Since at least the 18th Century, we have seen an unprecedented improvement in human well-being, accelerating through the 19th Century down to the present, spreading around the world. But we should not forget that this improvement was punctuated by a retreat from globalization, resulting in two destructive world wars bracketing a global depression. One hundred years from now, I suspect global human well-being will have made substantial strides over our present living standards. I think globalization is virtually inevitable because we have amassed enough information and experience to see that a globalized world, for all its present vagaries and challenges, is the path to mutual common good. What is much less clear is what happens in the short term. I suspect that this is the biggest turning point in world that most of us now living will ever experience.
Satirist and humorist Douglas Adams, probably best known for The Hitchhiker's Guide to the Galaxy, once wrote:
"Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works. Anything that’s invented between when you’re fifteen and thirty- five is new and exciting and revolutionary and you can probably get a career in it. Anything invented after you’re thirty-five is against the natural order of things."
We tend to view our era as a time of unprecedented change while assuming the world before our birth was virtually stagnate. In fact, rapid radical change has been the norm for at least the past few centuries. The case can be made that the generations living just prior to our generation experienced changes every bit as disorienting as ours.
I recently came across this graphic from The Atlas of Historical Geography of the United States, published in 1932. Look at these maps showing the improvement in travel times from New York 1800 to 1930.
I remember first coming across similar maps in Allan Pred's Urban Growth and the Circulation of Information: The United States System of Cities, 1790-1830. Pred demonstrates that not only did travel times shrink but the cost per mile of travel shrank as well.
Early in the nation's history, most travel was by water. We built cities on major waterways. Most states in the eastern half of the United States have a major river or the ocean as a boundary. This meant that each state had access to the water transportation super highway. Travel by land was exceedingly difficult. There were few roads. It took days to reach even nearby cities by stagecoach and each night meant fees for food and lodging that were not part of the stagecoach price. You had the labor of a driver spread across a few people. The cost of travel for even short distances could consume a week or more of wages for a typical working person. Only the wealthy and merchants could afford such travel.
I believe it was Pred who said travel from New York to Pittsburgh did not typically take a route across Pennsylvania. It involved boarding a boat in New York, sailing down the east coast around Florida to New Orleans, and then navigating up the Mississippi and the Ohio to Pittsburgh. Boats could handle far more people per trip, required no extra lodging expenses, food was generally provided on board, and laborers per person was much smaller. Water travel was far also more energy efficient and thus less costly.
As turnpikes and canals were built, and with the advent of the steamboat in the 1820s, travel times shrank and so did the prices. Depending on travel destinations, Pred shows the cost of travel per mile between 1800 and 1840 dropped by 50-90%. Railroads shrank distance and dropped costs even more. Today, we can fly from New York to Los Angeles in a few hours for one or two day's wages for someone earning around the US median Salary.
The world continues to change in significant ways but let us not fool ourselves into thinking that our age is the first to encounter sweeping technological and economic changes.
[Note: If you have an interest in American economic history, you really need to investigate the interactive Atlas of the Historical Geography of the United States.]
You may also find this clip by Louis C. K. sums up well our lack of appreciation.
For most Americans living today, there has been a presumption that our children's lives will be more prosperous than own. The American Dream, whatever particularities might include, has always included this assumption. It is virtually a social contract. Is the idea that most of our children will have a more prosperous life than we did really valid?
Robert Gordon, economic historian at Northwestern University, released a book earlier this year, The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War. Gordon's mammoth tome documents changes in the American standard of living over the past 150 years. His research leads him to conclude that not all innovations are equally significant in improving living standards. During the period from 1870-1970, a wave of technological and social innovation emerged that radically improved worker productivity, and therefore improved our standards of living. There has been innovation since 1970 but most of it, apart from communication and entertainment, has been an extension and a deepening of the innovations that occurred prior to 1970. The period from 1870 to about 1920 was a period of development and implementation of innovations that began to have full impact after 1920. Gordon estimates the average annual growth rate in output per hour like this:
1890-1920 = 1.50%
1920-1970 = 2.82%
1970-2014 = 1.62%
For those familiar with American history, you will remember that income inequality was quite high going into the 1920s. Inequality shrank steadily and substantially over the next fifty years, until the mid-1970s. This corresponds with Gordon's estimates of rapidly improving worker productivity. Since the 1970s, there has been slower growth and the growth is more related to capital investment than to improving worker productivity. We have seen income inequality grow since the 1970s.
Gordon is doubtful that we will ever again have a convergence of innovation like we had from 1870-1970. This, combined with certain demographic headwinds, will make sustainable high growth improbable for present generations. I hope to write more about this in coming days but this graphic posted by William Easterly on Twitter caught me eye. It comes from an article by David Leonhardt, The American Dream, Quantified at Last. I take it as more evidence consistent with Gordon's thesis.
“Increasing mobility has left us uprooted and disconnected from communities in America.” This is a common refrain going back at least 100 years. Think of the song following World War I that asked how are you going to keep them down on the farm once they have seen gay Paree’? The lament of increasing mobility is a compelling narrative except for one minor problem: Mobility has been declining for decades.
Sociologist Claude Fischer writes:
The evidence that mobility has declined is more robust for roughly the past 65 years, thanks to annual census-bureau mass surveys. Around 1950, about 20 per cent of Americans changed homes from one year to the next. In the 1980s, under 18 per cent did. By the 2000s, under 15 per cent – and now we are approaching annual moving rates of only 10 per cent. About two-thirds of movers do not go far, relocating within the same county, and the frequency of such local moves has dropped by about half since the Second World War. The proportion of Americans who move across county and state lines is considerably lower, but that rate, too, has dropped substantially, from about 6.5 per cent in the 1950s to under 4 per cent now.
This trend toward staying in place has accelerated since 2001. … (The Great Settling Down)
Why the decline in mobility?
So what is the cause? My best guess is that the greatest single factor in the great settling down was the increasing physical and economic security of US life.
Thanks to a growing and stabilising economy, spreading affluence, vastly improved public health, the establishment of government institutions from policing to business regulation, and all sorts of ‘safety net’ programmes over several generations – from Social Security to federal disaster assistance – fewer and fewer Americans have been forced to move because of unemployment, floods, the death of a breadwinner, and so on. Greater security also helps account for an apparent shift from the 19th to 20th centuries in who was likeliest to move.
I have done extensive work on tracing my ancestors. I have traced every line back to at least my third great grandparents, most of who were born in the early 1800s. I know more about some than others but the part that has always intrigued me is how much they moved. I would estimate that the majority lived in at least three different states and in more than five counties over their lifetimes. I suspect most people who have identified American ancestors this far back have similar stories. But I have also noticed one anomaly.
My great grandmother, Augusta (Holmes) Kruse was born in Dekalb County, Missouri, in 1870, the year after her parents had moved there from Plymouth, Massachusetts. Her ancestors go back to seven of the Mayflower passengers and include many other people who arrived shortly thereafter. Her family had stayed in place for nearly 250 years. Her maternal grandfather, Ebenezer Pierce, was seaman who owned ships and sailed the world. Her mother had been to finishing school in Boston. Her grandfather Holmes was an accomplished carpenter. These were not exceptionally wealthy people but they clearly had stable comfortable lives. Her parents moved west because of her father’s health. Augusta married my great grandfather, Carl P. Kruse, who had emigrated from a small town in Denmark where his family had lived for generations and where his father had served in the Danish Parliament. Because of the population explosion in Denmark, farmland was scarce, and wanting to farm, Carl came to America.
Most of my other family lines consist primarily of farmers, miners, and laborers. Ancestors in these families seemed to be constantly on the move. This anecdotal analysis of my family history seems consistent with what the author is describing.
Demographers talk of migration in terms of push and pull factors. Push factors are those that make the status quo more unbearable to maintain. Pull factors are those that promise relatively better circumstance than the status quo. It would appear that in past generations, push factors might have played a bigger role; things like war, drought, local economies gone bad, and the like. However, as America has become more prosperous, there have been fewer pushes pushing fewer of us. Migration is more about positive pulls.
The “settling” of America is one more piece of evidence about an improving world in terms of material well-being. But as the author notes, we still have challenges to social cohesion. While improved transportation and communication may not have made us more inclined to move, it may have reshaped who we choose to interact with in our communities. And as the global economy reshapes the work we do, the trauma of regional job loss is possibly made more traumatic because we are less and less accustomed to uprooting and relocating. Focusing on increasing mobility as a cause of rootlessness takes us in an unproductive direction.
One of the most persistent worries about population and economic growth is that we will eventually use up all our resources and land. It is based on the intuitive (but false) assumption that if it takes X acreage of land to feed a person today, then it will take 2 times X acreage to feed double the population in the future. This thinking does not allow for ongoing innovation and adaptation.
Look at this graph showing total global hectares being used in farm production from 1960-2009. Note that the global population grew from 3 billion in 1960, to 6.8 billion in 2009.
(Source: Nature Rebounds)
The population will likely grow again by half over the next fifty years. Note that the projections are for the number of hectares used for farming to actually decline. The alternative projection assumes we adopt more efficient food consumption and stop growing crops for fuel. In either case, we will be using significantly less land than we did in 1960.
This is one example of decoupling, where two seemingly connected trends become disconnected. We are seeing this in water consumption, CO2 produced per dollar of produced goods, and with the amount of natural resources we use. The direst predictions about resources and climate tend to minimize or ignore these decoupling developments. We should not allow dire predictions that ignore decoupling to frighten us away from growth and achieving prosperity for the whole world.
Challenges? Yes. But we are not at the edge of doom.
Many Americans, especially progressives, are now “socialists.” The rise of Bernie Sanders has had much to do with it. Yet, when I hear them talk, I keep hearing Inigo Montoya, “You keep using that word. I do not think it means what you think it means.”
According to Marxian theory, Socialism is a transitional economic system between capitalism and communism. Capitalism (i.e., private property ownership and the distribution of goods and services through market exchange) will run its course and one day a classless society with no private property will evolve. The workers will hold things in common and goods will be distributed according to need.
Some Marxists believed they could accelerate this evolution through violent revolution and imposition of communist principles. We saw that tactic attempted several times in the last century. Others believed economic evolution should run its course. People could work for greater social justice within the system as they methodically brought every aspect of the economy under the control of the government, eventually ending private ownership of the means of production. From there, it would be just a few more steps to the communist utopia. This transitional system is socialism.
Socialists called themselves “social democrats,” or “democratic socialists,” advocating “social democracy.” The emphasis here is democracy. Since communism is the inevitable outcome, there is no need to short circuit the process through violent revolution. People will choose their way into communism.
During the last century, it certainly became clear that relying on markets and philanthropy alone was not an optimal strategy for a just and flourishing society. Government has assumed control of some functions to ensure the broader welfare of citizens in all of today’s capitalist societies. These functions have been “socialized.” But the broader context is still private property and market systems. “Socializing” selected functions is not a tactical progression toward communism. This is welfare capitalism.
However, a funny thing happened to socialism along the way through the last century. It was mugged by reality. It has become clear that socialism is fatally flawed. Market systems provide a real-time feedback loop of information, matching ever-changing demands with an ever-changing supply. Markets empower countless strangers to benefit each other through specialization and exchange. There is simply no way a centralized entity can manage the production of goods and services. Assuming those with the sufficient information could be trusted to have the wisdom and ethical courage to make optimal decisions, the endless churn of supply and demand makes sufficient information utterly impossible. (Other insurmountable barriers exist but that is for another day.) The “inevitable” road to communism was wrong.
Most political parties variously named “democratic socialist” or “social democrats,” have become advocates for expanding welfare capitalism. For precisely this reason, the word “socialist” has fallen out of favor in many regions. So in short, we have learned that neither pure libertarianism nor socialism is workable. We are all welfare-capitalist now: We rely primarily on private ownership and market exchange, and quibble about what societal functions might be better if socialized.
So let us look for a minute a Bernie Sanders, the “socialist” icon for hipster intellectuals. Sanders talks of making America more like Denmark – or the Nordic economic model. Are Nordic countries socialist? Finnish-American journalist, Anu Partanen, author of The Nordic Theory of Everything: In Search of a Better Life, recently noted:
The problem is the way Sanders has talked about it [Nordic economic model.] The way he’s embraced the term socialist has reinforced the American misunderstanding that universal social policies always require sacrifice for the good of others, and that such policies are anathema to the entrepreneurial, individualistic American spirit. It’s actually the other way around. For people to support a Nordic-style approach is not an act of altruism but of self-promotion. It’s also the future.
In an age when more and more people are working as entrepreneurs or on short-term projects, and when global competition is requiring all citizens to be better prepared to handle economic turbulence, every nation needs to ensure that its people have the education, health care, and other support structures they need to take risks, start businesses, and build a better future for themselves and for their country. It’s simply a matter of keeping up with the times.
In a recent address at Harvard University, Denmark’s prime minster, Lars Løkke Rasmussen, made this observation:
I know that some people in the US associate the Nordic model with some sort of socialism. Therefore, I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy. … The Nordic model is an expanded welfare state which provides a high level of security to its citizens, but it is also a successful market economy with much freedom to pursue your dreams and live your life as you wish.
Are you getting that? A robust welfare system is a means to a robust market economy! And that raises another issue: markets.
Paraphrasing Partanen, progressive Americans see Nordic social policies as anathema to market capitalism. They argue that allowing corporations to rig the system in the favor of a few, allegedly an inherent feature of capitalism, is social injustice. It makes no sense. If corporations are rigging the system, then it is not truly a market! The socialist answer would be for the government to assume ownership of corporations. If you just want to end inordinate privilege for big-business, then what you are advocating is – wait for it – freer markets!
In reality, there is no such thing as "free markets." Market economies are based on the premise that absent fraud, misinformation, and externalities, people will make the best and most efficient decisions about what to consume and produce for their own needs, mediated through price information generated by supply and demand. Producers who produce well will be rewarded and those that do not will eventually fold. The reality is that there is always incomplete information and there are nearly always some externalities inherent in trade. Taxes and regulation are also necessary. But generally speaking, trade unencumbered by planners or by gamers of the system leads to higher living standards.
Big-business capitalists use political power to block competition and preserve economic power. They constrain markets. Writing 240 years ago, Adam Smith wrote, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Free markets are the answer to powerful economic players conspiring with government to choke off competition and preserve their privileged status through subsidies, tariffs, and onerous legislation.
Socializing some aspects of society is not antithetical to market economics. We cannot deliver some social goods through markets, or at least not deliver them well. But we must have a robust market economy to generate the tax revenue to make socialized services sustainable. Denmark is the top rated country in the world on business and trade. The other Nordic countries are right behind them. This is not the Sanders model.
Sanders wants to institute protectionist policies, raise taxes on corporations (USA is already on the high side), set a minimum wage 50% higher than other developed countries, and do a host of other trade unfriendly measures. Meanwhile, taxes for all but the wealthiest will stay low (taxes in Nordic countries are high for everyone.) He wants to expand the safety net golden egg while strangling off the goose that lays it. He thrives on populist anti-market and anti-business sentiment. Curiously, Clinton is probably closer to the Nordic model, embracing an expanded and smarter welfare model, while championing (at least in the past) trade and business. Yet she dismisses Denmark as contrary to this vision. Partanen speculates Clinton knows her plans are more genuinely like Denmark than are Sanders’ but she avoids association with the Nordic model because of public misconceptions. I think that is true.
So why are so many supposedly well-educated people now calling themselves socialists? One big reason is surely economic illiteracy. Going back to at least the 1930s, conservatives warned of “socialism” with the advent of Social Security. Same with Great Society programs in the 1960s - now also with ACA and talk of single-payer healthcare. To some degree, left-leaners just decided to own the moniker. Simultaneously, enough libertarian-leaning folks falsely used free markets to rationalize away ANY government involvement in anything; so many lefties just owned this misconception of “free market.” What they want is a more robust version of welfare capitalism and less big-business domination. Economic illiteracy is my generous reading of why people call themselves socialist. But I have a less generous reading as well.
Partanen writes:
Americans are not wrong to abhor the specters of socialism and big government. In fact, as a proud Finn, I often like to remind my American friends that my countrymen in Finland fought two brutal wars against the Soviet Union to preserve Finland’s freedom and independence against socialism. No one wants to live in a society that doesn’t support individual liberty, entrepreneurship, and open markets. But the truth is that free-market capitalism and universal social policies go well together—this isn’t about big government, it’s about smart government. …
Like the Finns, countless Americans fought to keep America free from the totalitarian ideologies that emerged in the last century. They largely won. They considered it a legacy to pass to future generations of America and to the world. Rightfully so. So why would people seeking a more robust welfare state and less big-business domination call themselves socialists?
Inigo Montoya is wrong with regard to many of the new “socialists.” They know exactly what the word means! They know the emotion it stirs. The misuse is intentional. Calling yourself “socialist” is the left’s version of Trumpist politics: Stir up tribal rivalry with incendiary language. Raise a verbal middle finger to your opponents. When they call you on it, roll your eyes with incredulity that people would accuse you of advocating totalitarianism. “After all, we just want to improve the safety net end reign in corporate greed like any good social democrat.” So to my “socialist” friends who cannot fathom the origins of anger in Trump voters, part of the answer is staring at you in the mirror. Sow the wind and reap the whirlwind.
If your sole concern is fomenting tribal political battles, then the above is mostly irrelevant to you. Calling yourself a socialist is effective for your purposes. If you care about clarifying the truth in pursuit of a greater good for humanity, then you will use language that is faithful to what is being described. Whether through illiteracy or insolence, “socialism” fails that standard. You really need to stop using that word.
The world is becoming a better place. It is not utopia. We are not without substantial challenges. But we are becoming (as in movement along a trajectory) better (as in measurably improved according to a standard.)
The Human Development Index is a United Nations measure of well-being combing data about income, literacy, education, and life expectancy. Here is the index for the nations of the world in 1980 and then in 2012. The reality is that we are living through the most astonishing transformation toward human well-being in all of history. You can find the interactive version of the chart at Our Data.
Are you smarter than a chimp? When it comes to knowledge about global socioeconomic trends, there is a good chance you are not. For years, Swedish global health expert, Hans Rosling, has been giving Ted talks and making presentations about global trends. One his favorite teaching tools is to ask people a question like this:
Globally, over the past 20 years, the rate extreme poverty has:
Now chimps will select at random, giving a 33% chance of each answer. Yet when Rosling asks audiences, at least half will say A, a sizable percentage will say B, while a few will say C. Yet C is the correct answer! This is the case on one variable after another. Audiences routinely score worse than chimps, choosing the most negative option.
As an old adage has it, "It isn't what we don't know that gets us in trouble. It's what we know that ain't so." That we routinely pick the wrong answer more often than chimps shows that we clearly we have bias.
In the Ted talk, How not to be ignorant about the world, Hans' son Rosling notes that part of the problem is our education system. Teachers go to college at a particular point in time and learn the state of the world at that time. But they tend not to learn about ongoing developments. The data has often been hard to come by and hard to interpret. So teachers are biased by what they learned years ago. (Reporter have the same problem.) But there are other factors.
During our evolutionary history, our brains became wired to notice threats. Hunters walking through the brush who were attentive to the possibility of tigers lying in wait, likely survived those who went about carelessly enjoying a beautiful day. So when we reflect on broad human trends, we are disposed to fixate on perceived threats. What was useful for us in the wild, is counter-productive for us as we try to interpret socioeconomic trends. If you want to outscore a chimp on an exam about global well-being, Ola Rosling suggests that you must drop your predispositions and adopt these four rules of thumb:
1. Assume most things are improving.
2. Assume most people are in the middle of a distribution, not a binary of rich and poor.
3. Assume social development precedes becoming wealthy. (Don’t assume that a population must be rich before meeting basic social needs.)
4. Assume you are exaggerating the threat if the topic is something about which you personally have great fear.
Additionally, Hans, Ola, and others have been working to build the Gapminder website to provide you with data that can be presented in meaningful ways. But one of the most important contributions the Roslings have made is their collection of entertaining and informative videos. In this post I am including every video I can find with a brief annotation. (I'll add more as I find any.) Many of the videos overlap or cover similar data but they are all well worth viewing. So here is your resource for becoming smarter than a chimp. Don't say I never gave you anything.
(This link also has links to most of these videos including some shorts not listed here: Gapminder Video)
Hans Rosling's 200 Countries, 200 Years, 4 Minutes (2010)
If you are just getting acquainted with Rosling, I'd begin here. This 4 minute presentation gives you a quick sense of what he is talking about.
Hans and Ola Rosling: How not to be ignorant about the world. TED June 2014
This is the second video to watch. The front half is Hans making his case that the world is improving and the back half is Ola explaining, as I recounted above, why are so disinclined to see positive change.
Hans Rosling: The magic washing machine. TED December 2010
This is the third one to watch. This one of my favorites. While fully embracing the concern about environmental impacts of economic growth, Rosling shows the importance of economic growth through the story of the washing machine.
THE REST ARE IN CHRONOLOGICAL ORDER
Hans Rosling: The best stats you've ever seen. TED February 2006
The TED presentation that kicked it all off. He focuses on the positive changes underway in world and points to his efforts to liberate, integrate, and animate data, and to find ways to present data the public finds understandable.
Hans Rosling: New Insights on Poverty. TED March 2007
Rosling shows that social development tends to precede economic development. He addresses the issue that unfortunately to date, economic development has always been based on fossil fuels. Higher yields, technology, and markets are key to ending poverty but there are more dimensions that need our attention like human rights, environment, governance, economic growth, education, health, and culture. The ending has a great surprise!
Human Rights and Democracy Statistics- Gapminder c. 2008
Rosling describes why human rights are so hard describe and evaluate.
Yes they can! - Gapminder c. 2008
Rosling explains that poor nations will one day become prosperous and we should welcome that.
Poor Beats Rich in MDG Race - Gapminder c. 2008
Rosling shows that countries that have developed from poverty to well-being have done so at far faster rates that Western nations did. Poor countries today can make the transition much quicker because of what previous countries have learned.
What stops population growth? - Gapminder c. 2008
The key to ending population is small families, and the key to small families is childhood survival.
Hans Rosling: Insights on HIV, in stunning data visuals. TED February 2009
Uses Gapminder data to show nuances in how AIDS has spread and what it takes to defeat it.
Hans Rosling: Let my dataset change your mindset. TED June 2009
This is the third video should watch. Rosling deconstructs the dichotomy of wealthy and developing nations, and challenges the idea of thinking in sweeping terms like "Africa."
The Joy of Stats with Professor Hans Rosling - Gapminder c. 2010
Rosling shows how making data available and animating is empowering people to make better decisions, sometimes without really realizing they are using statistics.
Hans Rosling: Asia's rise -- how and when. TED Nov 2009
Rosling forecasts when China and India catches up with the USA and UK.
Hans Rosling: Global population growth, box by box. TED June 2010
Rosling says that child survival is the new green. This video explains why.
Hans Rosling: The good news of the decade? We're winning the war against child mortality. TED September 2010
Rosling breaks down the remarkable trends in child mortality. Education of women accounts for at least 50% of the drop.
Hans Rosling: Religions and babies. TED April 2012
Religion is not a factor in family size. No significant difference between Islamic and Christian countries when it comes to births per woman. The defining difference is economic well-being.
DON'T PANIC — Hans Rosling showing the facts about population. BBC November 2013
A one hour investigation into the dynamics of population growth using stories about real live families interspersed with Rosling's entertaining presentation of data.
Don't Panic - How to End Poverty in 15 Years. BBC September 2015
No embed is available.
Here is a link to a series of short videos on how to use development data visually.
An introduction to visualising development data
Once again, Oxfam is circulating their statistic that 62 people have as much wealth at the bottom half of the world’s population. Think about that for a moment. When you read that, what do you think that means? Particularly, what is wealth?
Many people will interpret “wealth” as financial assets. Many others realize wealth includes the value of our non-financial possessions. Therefore, Oxfam is saying that if you add up the value of all our possessions, 62 people own half. Right? Wrong! Though that is the message they want you to hear.
Terminology lesson. The sum of your financial assets and your non-financial possessions is your total assets. Wealth is your total assets minus your debt. Wealth is your net worth. Oxfam misconstrues wealth as total assets. (And as this has been thoroughly documented in the press for years now, we can only assume the misrepresentation is intentional.)
Thanks to Reuters reporter Felix Salmon, who dug into Oxfam’s sources, we know Oxfam uses Credit Suisse Global Wealth Databook to calculate their numbers. Here is how it works (using the 2015 Databook):
That may seem right at first glance but look at this graph from Credit Suisse’s Global Wealth Report 2015. (p. 15) It shows what percentage of each decile lives in which region of the world. I’ve added two notations.
Note that the United States has 10% of the world’s least wealthy people (circle 1). China has none of them (circle 2)! How is that possible? Because the bottom number for wealth at he left side of the chart is not zero. It is a negative number. The middle class American with a mortgage, student loans, and consumer debt totaling more than the value of her home, bank account, and other possessions, is less “wealthy” than a Chinese peasant farmer who owns virtually nothing but also has no debt. The entrepreneur who borrowed a million dollars for his business is even “poorer” than these two. This is who Oxfam is grouping together in its bottom 50% of wealth. It is a meaningless comparison. But the deception does not stop there.
Oxfam builds a narrative that the increasing concentration of wealth at the top has the corresponding negative effect of making people poorer at the bottom. Their misrepresentation of wealth as total assets gives us no insight into this claim. I will suggest that for the poorest people in the world, income is a more critical issue than wealth or total assets. One must have an income that at least meets basic needs before she can begin to save, invest, and buy capital goods.
Extreme poverty, measured by income, is rapidly disappearing. The percentage of people living on less than $1.90 per day has shrunk from almost 40% in 1990, to less than 10% today (and we have added an extra 2 billion people.)
(Source: Washington Post)
Furthermore, the global distribution of income has been progressively moving toward a bell curve distribution and away from a bi-modal distribution, with wealthy people clustered at the top and very low income people clustered at the bottom.
(Source: Business Insider)
And this chart shows hows the mean and median global per capita income numbers keep rising, also noting that the global GINI coefficient declined from 68.7 to 64.9 between 2003 and 2013. (Lower GINI number means more equality.)
(Source: Conversable Economist)
As I have continued to learn about these issues, I keep coming to this graph as a discussion starter on economic inequality.
(Source: Pew Research)
To me, this chart suggests that recent trends in technology and globalization have benefited billions of people who once lived in bare subsistence poverty. There is a small minority of people at the left of the chart who are not being touched by these changes, most of them living in counties with turmoil and failed nation-states. At the extreme right are the owners of capital who have benefited from productivity and expanded trade. Middle class people in developed nations have experienced downward pressure on their wages due to technology and from a burgeoning supply of labor in a global economy. However, living standards are not just a function of wages but also the cost of living. A case can be made that the developed world middle class had improvements in living standards because globalization kept the cost of living lower than it otherwise would have been. That does not show up in this chart. It is more complex than this but I think a chart like this is a better place to begin a discussion.
In short, Oxfam wants to promote a narrative that casts global capitalism primarily as an exploitative enterprise, a zero-sum game where the growth of wealth at the top necessarily means the reduction of wealth at the bottom. The narrative intuitively makes sense. Some version of this thinking is common but it is virtual gospel on the left where the moral compass is directed predominately by equalization rather a robust conceptualization of justice. But it is wrong. It is every bit as ideologically myopic as the "free markets and democracy fixes everything" mantra on the right.
Finally, let me be clear about what I did not say. I did not say I thought that the growing concentration of wealth at the top was good, that there are not masses of people who need substantial improvement in their economic well-being, that global capitalism is an unqualified good, or that there are not profound economic injustices in the world. I did not speak to any of Oxfam's proposed policy solutions. Discernment on economic issues is complex and requires our best efforts at sound analysis if we want to be bring lasting and just change. Oxfam's misuse of the data to support ideologically predetermined policy's does not help. They are telling the truth about the numbers they use, knowing the numbers they use will lead most of us. That is what I'm addressing.
Denmark became a central topic during the Democrats' debate last week. Bernie Sanders calls himself a democratic socialist. Hillary Clinton loves Denmark but is dismissive of the idea that America can be Denmark. This inspired a number of articles by various commentators about the truth behind Denmark economic model (or the Nordic model more generally.) Progressives like the high taxes, low inequality, and high government spending. Conservatives counter by noting that the Nordic countries rank among the countries highest in free trade and low corporate taxes. I've been linking articles on Facebook but I thought this piece in Niskanen was the best. Double-Edged Denmark
Right-leaning arguments about the free-market marvel that is Denmark cut both ways. Denmark shows us that a much larger public sector and a much more robust social-insurance system need not come at the expense of a dynamic market economy. In other words, Denmark shows us that capitalism and a large welfare state are perfectly compatible and possibly complementary.
The lesson Bernie Sanders needs to learn is that you cannot finance a Danish-style welfare state without free markets and large tax increases on the middle class. If you want Danish levels of social spending, you need Danish middle-class tax rates and a relatively unfettered capitalist economy. The fact that he’s unwilling to come out in favor of either half of the Danish formula for a viable social-democratic welfare state is the best evidence that Bernie Sanders is not actually very interested in what it takes to make social democracy work. The great irony of post-1989 political economy is that capitalism has proven itself the most reliable means to socialist ends. Bernie seems not to have gotten the memo. But Bernie Sanders isn’t the only one failing to come to terms with the implications of Danish social-democratic capitalism.
The lesson free-marketeers need to learn is that Denmark may be beating the U.S. in terms of economic freedom because it’s easier to get people to buy in to capitalism when they’re well-insured against its downside risks. That’s the flipside irony of free-market “socialism. ...
... the reason the U.S. is lagging so far behind big-government Denmark on free trade, corporate taxation, ease of doing business, and more may very well be that the American safety net isn’t good enough, and economic insecurity at the bottom and middle makes free-market policies a tough sell to anxious American voters.
I don’t know that this is true. But, then again, libertarians and free-market conservatives don’t know that it’s not. Mostly, ideological American capitalists really badly want to believe it’s not true that we’re falling behind Denmark as capitalists because we’re not redistributive enough. (I mean, the previous paragraph made me feel like I was channeling E.J. Dionne, which was … unsettling. But let us put away childish things.) Because if it is true, and social insurance and capitalism are complementary in this way, then champions of economic liberty will be forced to face up to the possibility that attacking the welfare state undermines support for laissez faire economic policy. Some of us might even be forced to choose between our love of capitalism and dislike of the welfare state. Awkward. ..."
Economic development always includes, in some broad sense, an embrace of trade and freedom from arbitrary interference in market activity. Yet when you look at the various nations that rose to affluence in the last century, diverse paths were taken to get there. The particular path toward trade and freedom seems not to be as important as is the issue of stability. When the various players in the economy and society behave in predictable patterns, they are better able to predict and coordinate their behavior, even if the patterns are not optimal in terms of trade and freedom. Imposition of trade and freedom that generates too much instability may be worse than simply staying with less effective economic models in the short-run and letting things evolve.
This need for security and stability is a piece that is frequently undervalued by most libertarians at both the macro and micro levels. Economic historians will tell you that one of the pivotal developments in history (among several) was the emergence of limited liability. People could pool their resources and form joint ventures without putting their entire assets at risk. Bad choices or unforeseen developments would not leave you destitute.
If the aim is a dynamic risk-taking economy leading to high productivity and economic growth, then we need security and stability for citizens. With a basic safety net in place (here I’m thinking mostly of a guaranteed minimum income as opposed to our wasteful welfare industry), people would become less risk-averse, knowing that trying new stuff doesn’t lead to destitution if you fail.
But if libertarian conservatives are blind to issues of security, then progressives are blind to productivity and economic growth. Take the living wage debate. It is said that Walmart’s low wages are possible because we taxpayers subsidize the workers through the welfare system. Nonsense. Welfare support drives up wages. If the wages aren’t at least comparable to welfare options, then why work?
Furthermore, while each business should have the aim of helping their employees flourish (improving their skills and providing opportunity to gain more responsibility in a safe environment), businesses are neither benefactors nor aid agencies. They are the institutions responsible for transforming matter, energy, and data from less useful forms to more useful forms on a sustainable basis. Sustainability means creating more value than the value of resources being used. Wages artificially set above the economic value contributed by labor are unfavorable to productivity and sustainability.
I know of no country, including the Nordic countries, who presume that every job in every circumstance should provide a “livable” income “unsubsidized” by government. Minimum wage is a temporary introductory wage people earn as they develop skills and experience. Few earn it for more than a period of few months. Excessively high introductory wages compels businesses to adapt in ways that reduce the amount of this labor they use, and decrease the opportunities for the least-skilled to find an on-ramp into the economy.
So while precisely replicating the Danish or Nordic model in a large diverse nation like the United States may not be feasible, there are lessons here. To the degree the Nordic models have worked, they have done so because they have successfully married security and growth. This is a managed polarity for them, much like breathing embraces both inhaling and exhaling. In America, our partisan factions each grasp one pole of the polarity and demonize the other. To the degree either succeeds, we are in deep trouble. That is the lesson I learn from double-edged Denmark.
The Globe and Mail: The world has improved since 2000 – but not because we planned it
Millennium Development Goals: ...
... The headline goal, of cutting the proportion of people living in poverty in half, was achieved five years early, in 2010, by which time a billion people had left absolute poverty. And now the rate of poverty has fallen to less than a third of its 1990 level (that is, from 47 per cent of the world’s people to 14 per cent).
The other MDGs saw impressive outcomes. The percentage of malnourished people has been cut in half. So has the number of children dying before the age of five, and the percentage of people without access to clean drinking water. The maternal mortality rate has almost dropped by half. The number of primary-age children out of school fell from 100 million to 57 million; the primary enrollment rate in sub-Saharan Africa rose to 80 per cent from 52 per cent. New HIV infections annually fell from 3.5 million in 2000 to 2.1 million in 2013. ...
... There’s a problem with all the self-congratulation, though: Nobody has been able to find any connection between those impressive outcomes and anything done by the UN since 2000.
Charles Kenny and Andy Sumner of Washington’s Center for Global Development have spent the decade tracking the progress of the UN’s goals. In a series of studies, they’ve found that in most areas the goals had little or nothing to do with the outcomes. ...
... What did cause the world to improve so dramatically between 2000 and 2015? In large part, two things: After 1990, the old closed, nationalist economies of the postcolonial era and the Cold War broke down (with ugly results at first) and gave rise to the set of phenomena we call “globalization.” And after 2000, countries in Asia, South America, Eastern Europe and much of Africa started developing better institutions of government, education and health. Stronger liberal economies and stronger states worked wonders.
The UN’s new post-2015 goals at least recognize that economic growth is crucial (they call for an astonishing 7-per-cent growth a year in the poorest countries). It may, in fact, be the only key factor – and it’s the one the UN can’t control.
In fact, what is needed is a healthy economic ecosystem grounded in efficient and just soci0-economic structures, with markets providing a real-time feedback loop through which a society can be adaptive to ever changing priorities. That ecosystem needs to be justly connected to the larger ecosystem of global productivity and exchange.
There is a common tendency to believe that development can be achieved through top down analysis, planning, and implementation. This is generally the U.N. Millennium Development Goals model. Such projects rarely effective. It presumes that experts can correctly identify the most critical needs, that the priority of those needs will stay constant, and that they can identify which levers to flip to get the optimal outcome.
Mohammad Yunus uses the image of the Bonsai tree to illustrate the problem. The tiny Bonsai tree grows from the same seed as the tall tree in forest. The difference is that the Bonsai tree has only the nutrients of the tiny pot in which to grow. The poor are Bonsai people. They are capable of growing as strong and tall as anyone else if planted in the right soil. The right soil is healthy socioeconomic structures and inclusion in networks of productivity and exchange.
The U.N. approach has elements of paternalism. The poor are quite capable of addressing their own needs if the"right soil" is present. Because of geopolitical concerns or pure ineptness, the West has too often played a role in "degrading the soil." This article reminds us once again how impotent so many of our "big idea" solutions are. The critical factors lie in the less than glamorous work of building healthy institutions.
The SATtalks begin next week in Kansas City, October 8-10. What are they about? They are about Mission 3.0:
Like many others in the world, the church is realizing it is no longer enough to simply “do good.” The good to help others must rise above relief and intentionally lead to Sustainability and Transformation (SAT) or else it fosters ongoing dependence. SATtalks provides a space for important conversations about doing Sustainable Good.
SATtalks is a groundbreaking event designed to provide a new, much-needed forum to highlight strategies and best practices that are working in the exploration and development of more sustainable ways of doing good. Through a proven peer-learning environment, SATtalks is helping faith-based organizations and churches, accelerating the learning curve for all.
Go to the SATtalks website to see links to presentations from last year's inaugural event. Look at the list of presenters. It is good stuff! I'll be there. You should consider attending as well.
Interesting graph from the Economist.
Pew Research: Latin America’s middle class grows, but in some regions more than others
Three interesting graphs:
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
Harvard Business Review: Stuff: When Less Is More
One of the most persistent economic misconceptions I see is the presumed fixed relationship between a unit of GDP and the energy/resources that get consumed in the process. This false relationship is projected into the future to show that growth is leading to total collapse in the near future. These graphs dispel the validity of that relationship.
However, the article goes on to point out that this incredible increase in productivity makes products cheaper and so consumption of the products grows dramatically. That does create a greater aggregate demand for energy/resources. The question is whether or not the decoupling of energy and resources can one day get out ahead and then go into decline through some combination of innovation and slowed demand. These two graphs were especially interesting.
"Material intensity continues to fall dramatically. In the U.S., the amount of resources extracted per dollar of GDP has decreased by nearly 75% over the past 90 years."
"Energy intensity, the portion of the total energy supply required to produce a material, has also dropped markedly. For example, the manufacture of 1.5 gigatons of steel would have gobbled up one-fifth of the world’s total primary energy supply (TPES) in 1900. In 2010 it used only about one-fifteenth."
Huffington Post: 'Great Decoupling' of Wages and Productivity Driven by New Technology
Interesting chart.
Conversable Economist: The Rise of Remittances
"Here's a pattern showing the rise in remittances over time compared to some other international financial flows. Back in 1990, international remittances were lower than official development assistance (ODA). Flows of foreign direct investment (FDI) to developing countries were also smaller than ODA, as were flows of private debt and portfolio equity to developing countries. (The FDI flows to developing countries show here exclude China.) Remittances have been larger than development assistance for some years now, and the gap is growing. Perhaps more surprising, remittances also outstripped debt and portfolio equity flows to developing countries in recent years. The flows of remittances also look quite stable compared to other private-sector capital flows."
Thirty years ago this July, Bob Geldof helped organize Live Aid, a concert to help victims of a lengthy famine in Ethiopia. Months earlier, he was behind the release of the song Do They Know It's Christmas? that raised money for Ethiopia as well. While clearly well intended, both ventures - and the Aid ventures they would spawn - reflected a highly Western-centric and paternalistic view of Africans, portraying Africans as dysfunctional and helpless without the help of the Great White Hope. Their welfare is a contingent on Western benevolence, not their own initiative and creativity.
Pope John Paul II said the poverty is not lack of wealth. Poverty is exclusion from networks of productivity and exchange. The solution to poverty is appreciation for the God given creative capacity in each person and the inclusion of everyone in networks of productivity and exchange.
Now, thirty years later, some of these rockers are seeing the light. Bono of U2 has been singing the praises of entrepreneurial capitalism for a few years now. (Bono: 'Capitalism Takes More People Out of Poverty Than Aid') And now we learn Bob Geldof himself has entered the venture capital business. (Rock Star Bob Geldof Spearheads U.S. Private-Equity Push Into Ethiopia)
Below is a video interview with Geldof about his ventures. Note that right out of the gate the interviewer challenges Geldof because Geldof will be making a profit off of his ventures. Yes! That is exactly right! That is because profit for all parties is what happens when equals - creative productive people - specialize and began to exchange goods and services. Their profits get invested in expansion or in new ventures, creating more wealth, jobs, and higher standards of living. Instead, the interviewer's paradigm is of a patron to an inferior, an inferior with nothing of value to produce and exchange. Maybe some of our paternalism will begin to fade as these high profile celebrities begin to embrace economic development and exchange.
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
Pew Research: People in Emerging Markets Catch Up to Advanced Economies in Life Satisfaction
People in emerging economies are considerably more satisfied with their lives today than they were in 2007. A Pew Research Center survey finds that publics in emerging nations now rival those in advanced economies in their self-reported well-being. The rise in happiness among middle income countries is driven in large part by attitudes in Asian nations, such as China, Indonesia and Malaysia. People in developing economies are also happier today than they were seven years ago, though the improvement has been more modest. ...
Here are graphs that summarize key findings:
Why aren't you signed up for SAT Talks?
How do we achieve sustainable community and economic development? With a little study, it is easy to appreciate the need for sustainable community and economic development. It is also easy to identify countless models that are ineffective, at best, and harmful, at worst. But identifying models that actually work ... that is another story, especially discerning the role of faith-based organizations.
I've been writing and talking about these issues for years. As I have found stories with promise, I have shared them here at the Kruse Kronicle and on Facebook. My hope has been to inspire people with a new way of thinking, to see examples of things that work, and to give hope about utlimately addressing poverty. It is time to take things to another level.
I want to invite you to event in Olathe, Kansas, (suburban Kansas City) on October 29 and 30, called Sat Talks. The event is structured like the TEDS Talks with six experienced practioners giving short thought-provoking presenations followed by a time of lively question and debate. It is all centered on one big idea:
How can churches and other faith-based organizations pursue their missional goals in ways that lead to self-sustaining solutions where needs are being met without relying on charitable resources and where the person or community has the ability to provide the ongoing means and opportunities to achieve their full potential?
Sponsors include United Methodist Church of the Resurrection, Soleran, McDaniel-Knutson Financial Partners, and Inhance Leadership. This inagural event will feature:
Please help spread the word. Tell people buisnesspeople you know who may be looking for ways to employ their gifts for helping the least of these. Tell you pastor and mission leaders. Tell anyone you know who has a heart for seeing faith-based sustainable community and economic development take root. This is only the beginning of better things to come.
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Forbes: A Supply Chain Overhaul To Boost Coffee Farmers' Income 400%
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.
The company, which is based in Leon, Nicaragua, is launching a Kickstarter campaign today. ...
... 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
