Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
1–10 of 93 posts
Re: Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
#2Growth describes the size of the economy. Poverty describes distribution. While size and distribution may correlate long enough that people start to believe they causally relate, they don't have to.
"A rising tide lifts all boats" is a nice belief and accurate for many boats and tides, but there's no reason to believe that what holds for boats holds for economies, any more than the behavior of dominoes held for Southeast Asian countries.
For that matter, it doesn't hold for all boats. A big enough tide could completely submerge a boat firmly enough anchored to the sea floor, for example.
Re: Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
#3It's interesting to me that the stagnating or declining middle class is largely a first world issue, while in the developing world the middle class is exploding.
The best explanation I've encountered is Peter Thiel's commentary on horizontal vs. vertical development. We've taken an energy and industrial system that absolutely cannot scale to seven billion people and now we're trying to make it scale to seven billion people. The result is a kind of low-grade, very slow malthusian event in which people in the developed world are (relatively speaking) impoverished by exploding energy and resource costs. What we need is vertical development -- technological development -- to create systems that actually will scale. Everybody can't drive a hydrocarbon powered car. It can't be done.
I think this also explains why first world poverty rates are not shrinking. The poorer you are the more price sensitive you are to things like energy prices, so the poor are impacted by scarcity exponentially more than the wealthy.
Note that if this is true then wealth redistribution might not help. It might just trigger price inflation in scarce resources. Redistribute more and they'll inflate more, and more, and more. ... But then again maybe it would help by causing lots of investment money to chase that demand and develop alternatives. It would cause hockey stick price signals across all the rate limiting inputs for the economy.
Hmm... well now... maybe we should drop money from helicopters...
Re: Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
#4Looks like they're moving the goal posts a little bit here. "Poverty" today is not the same as "poverty" decades ago.
The standard of living for people in poverty today is (a lot) higher than the standard of living for people in poverty decades ago.
Re: Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
#5[deleted]
Re: Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
#6Looks like they're moving the goal posts a little bit here. "Poverty" today is not the same as "poverty" decades ago. The standard of living for people in poverty today is (a lot) higher than the standard of living for people in poverty decades ago.
This is interesting. Do you have any details?
Re: Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
#7Looks like they're moving the goal posts a little bit here. "Poverty" today is not the same as "poverty" decades ago. The standard of living for people in poverty today is (a lot) higher than the standard of living for people in poverty decades ago.
Poverty is always relative to the era one lives in.
Re: Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
#8Somewhere around a billion people have been lifted out of poverty in the past 30 years or so. (Citing from memory, don't have a source handy, but it's about that number). It's amazing how good that is.
But they weren't in the US.
So why hasn't US poverty declined? The same reason it has declined other places: globalization.
Re: Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
#9Looks like they're moving the goal posts a little bit here. "Poverty" today is not the same as "poverty" decades ago. The standard of living for people in poverty today is (a lot) higher than the standard of living for people in poverty decades ago.
This is interesting. Do you have any details?
In 1950, middle class was a small house, one car, probably not a dishwasher, only one television in the house (if that), no computers (duh), no cell phones (also duh), no designer jeans, no fancy sneakers, much less snack food, much less eating out. You could live exactly that life today (maybe even on one income), but people would think that you were in poverty, or close. (Note well: I am not claiming that official statistics would say that you are in poverty. But I think this thought exercise does show that the goalposts have moved over the last 60 years.)
Re: Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
#10Growth describes the size of the economy. Poverty describes distribution. While size and distribution may correlate long enough that people start to believe they causally relate, they don't have to. "A rising tide lifts all boats" is a nice belief and accurate for many boats and tides, but there's no reason to believe that what holds for boats holds for economies, any more than the behavior of dominoes held for South…
I think you're on to something with the anchor-chain analogy. It's also possible that the government lies about economic growth.