Posts Tagged ‘poverty’

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OECD-income inequality

Back when I was a kid, the country where kids-who-weren’t-me were starving was India, and my parents regularly told me to finish what was served to me at supper because somehow that would help those needy children. (I confess my smart-aleck answer to my parents was to tell them to send the uneaten food to India or wherever for the hungry kids. Problem solved.)

That was pretty much Tim Worstall’s response to the latest OECD report on inequality, In It Together: Why Less Inequality Benefits All. Poverty is the only thing that matters, and the poor in the United States aren’t really poor—not in comparison to the “really poor” elsewhere in the world. So, clean your plates and be thankful you’re not like “them.”

they’re worried that rich Americans have ten times the incomes of poor Americans, not that any and every American has an income many multiples of that of someone who is truly poor. For example, if you’re on the average amount of governmental help to aid you in beating poverty in the US (that’s around $9,400 a year) then your income, from that source alone, is some 25 to 30 times that of someone living in real, absolute, poverty.

Myself, I think that’s the only inequality that we should be worrying about: and absolute poverty the only sort of poverty we should be worrying about. As I then go on to insist that the absolute poverty is being beaten by globalisation, and the relative inequality in the OECD countries is also being caused by globalisation, then I say that this is all a very good idea indeed. Let rip with yet more globalisation and trade, the absolutely poor will continue to get richer and the in-country inequality can rise for all I care. And given the link between the two I even tend to applaud the rising in-country inequality as evidence that that absolute poverty continues to be beaten.

But it’s not just Worstall: that’s pretty much the usual response from conservatives these days (from a recent commentator on this blog through Bruce D. Meyer and James X. Sullivan to Deirdre McCloskey) when the issue of inequality comes up. Don’t worry about inequality and keep hoping that—someday, somehow—poverty in the world will be eliminated.

Except it hasn’t, and it isn’t. What the OECD report shows is:

1. Poverty within the OECD nations (no matter how measured) increased during the most recent economic crisis.

2. Inequality (in the distribution of both income and wealth) has also increased—and not just in terms of those at the very bottom, but especially with respect to the bottom 40 percent of the population.

3. The growth in poverty and inequality has negative effects on overall economic growth.

4. And, finally, redistributive measures do not have a negative effect on growth.

There is nothing in the clean-your-plate attempts to ignore the existence of already-grotesque and still-rising levels of poverty and inequality that can effectively counter or overturn those findings—much less respond to what I consider to be the key finding in the report:

The most efficient policy package will address inequalities at the point where they originate rather than trying to pick them up only at a later stage.

In other words, additional growth won’t solve or eliminate those inequalities. We need to tackle the point where they originate: by radically transforming the existing set of economic institutions.

That Reminds Me

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Issa

From Jessica Roy [ht: sm]:

Worth over $448 million, Republican congressman Darrell Issa is by far the richest congressman in America, so he has a lot to be thankful for. Know who else has a lot to be thankful for, at least according to Congressman Issa? America’s poor people. After all, it’s not like they’re living in one of those *sniffs* third-world countries.

“If you go to India or you go to any number of other Third World countries, you have two problems: You have greater inequality of income and wealth. You also have less opportunity for people to rise from the have-not to the have,” Issa said, according to CNN Money. America has actually made “our poor somewhat the envy of the world,” he added.

Personally, I’m more envious of the guy with the $448 million than I am of the 48 million Americans living below the poverty line, but that’s just me.

My long-time friend Stephen T. Ziliak is doing great things with students at Roosevelt University, including teaching an introduction to economics based on the Grapes of Wrath and Theories of Justice, whence the video above.

Here is an excerpt from the lyrics:

Readin’ Greg Mankiw,
Queue the conservative man’s view
Supply, demand, invisible hand too
Following these Ten Commandments he hands to you
Hey kids, you understand what Econ really can do?
These ain’t the pearly gates, Mr. Mankiw
Just preachin’ on profit and Max U
But where’s the vertical mobility?
Masses are enslaved in poverty
Millions for your fat pockets see
This poverty of nations ain’t so efficient
Mainstream economists are mentally deficient
Monotonous lectures despite student resistance
What works on the Blackboard but not with existence
Your crackpot theories plot all the wrong axes
If you are the state we-Uber-killin’ all your taxis