For the first time ever, the number of poor people is declining everywhere

Let's step back a moment: Let's say person A has a widget, which he values at $5. Person has $20, and would like a widget, which he values at $10. In a free market we would expect these people to negotiate and reach an agreement where A swaps the widget with B in exchange for between $5.01 and $9.99 of cash. The aggregate benefit of the transaction is $5 (that is, as a society, we are $5 better off after this transaction is made), and A and B are each somewhere between $0.01 and $4.99 better off.

In this simple model, clearly both sides are benefiting, or if you prefer, are being enriched. Question: Is anyone being exploited? Does it depend on the price? Or do we need to know more details about the transaction, and if so, what?

I think most people intuitively have one of two reactions:

1) "Unless fraud or force is being used, of course nobody is being exploited. Both sides enter into the transaction with open eyes, and both sides benefit. They can negotiate however they want to divy up the $5 in benefit - but as long as fraud or force aren't used, this can't be exploitation."

2) "Well, we need to know more. If one side has a lot more power than the other, they might drive the price unfairly far to one side or the other. If A is a large factory churning out widgets, a price of $5.10 might be a perfectly reasonable wholesale price; if A is peasant hand-crafting widgets and B is a multi-national widget trader, maybe anything less than $6 may represent the unfair exploitation of A. Conversely, a price of $9.90 might be fine if B is a collector of rare widgets, but even $8 might be exploitive if B is desperately trying to find a widget to repair his generator after an earthquake. We just can't know."

I don't think either response is inherently more correct - both definitions are valid. But, obviously, they conflict. :) Also, in my experience people rarely, if ever, will change their initial intuition. Either you think exploitation is only the result of fraud or force (ie, using slave labour to produce widgets), or you think exploitation is involved in any transaction with a price that seems "unfair" (to you, based on fuzzy and usually undefined metrics).

As a result, I'm not sure discussions of exploitation really make a lot of sense. Given the same objective and universally agreed facts about, e.g., Foxconn, a certain chunk of the population will say "that's obviously not exploitation" and a certain chunk will say "that's clearly exploitation", despite there being no real disagreement about what's actually taking place on the ground.

And a tortilla isn't a burrito. But if you put your Mexican fillings of choice in it and wrap it up it is.

An aspersion is in the eye of the beholder, of course. The poster says, don't trust them - they're capitalist. He then qualifies that by saying, well everyone has biases or agendas anyway. To me that doesn't really change the first part.

First: PPP and inflation are both calculated using a basket of goods - the exact basket differs between researchers or institutions. Typically you want your basket to be fairly broad, and reflective of the goods and services people actually buy. But the very poor buy a different mix of goods and services than the average person - even the average person in a very poor country. IF the price of the most basic staples has increased more than the price of other food, or if the price of food in general has increased more than the price of durable goods and appliances, then the PPP adjustment used by the World Bank for, e.g., Uganda MAY misstate the actual purchasing power of the very poor[1].

Second: If you think that official inflation rates are being tampered with[2] then you may look at other metrics than should drive inflation. One such is exchange rates. If the Canadian dollar is weakening against a trade-weighted basket of other currencies, then the purchasing power of the CAD is declining. (Or if you prefer, if a lot of CAD is being printed, then we have more supply of CAD, and lower demand, resulting in lower exchange rates.) In any case, this should be reflected in inflation. If it isn't then either there is a big untapped arbitrage opportunity[3], the inflation statistics are wrong, or (more than likely) there is some other factor at work[4]. So, no, you really can't use exchange rates to predict inflation, but you almost can. :)

[1]: In other words, it COULD be that the bank is saying that someone living on $2 a day is better off now than a year ago, because coffee makers are so much cheaper that it gives them more money to buy rice, which has only increased a little bit. But if the very poor only buy rice and not coffee makers, they could be worse off now since everything they actually purchase is more expensive, even if the "basket" is cheaper overall. The choice basket of goods matters, and it needs to be appropriate for the group being studied.

[2]: This can and does[5] happen. It could be as simple as fudging numbers, or it could be more complex - for example, my picking an unrepresentative basket of goods. In the US, the most common measure of inflation - CPI - excludes food and fuel costs. This is very appropriate for picking up monetary inflation, but less so for calculating the actual change in living costs people are experiencing. As you say, inflation is not a uniform concept; if a government pretends it is they can pick a measure favorable to them.

[3]: In this case, you could buy CAD using your local currency, purchase goods inside Canada for CAD, export them, and then sell them for your local currency. This would drive the CAD up, and/or drive the prices of goods inside Canada up, until the change in the exchange rate matched inflation. And people seeking such arbitrage opportunities is one reason why inflation and changes in exchange rates tend to match, very broadly, over the long term.

[4]: And there usually is; exchange rates are incredibly noisy, and influenced by everything.

[5]: http://www.forbes.com/sites/timworstall/2011/07/11/but-why-i...