Posts Tagged ‘poverty’

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It sure looks like a recovery: consumer confidence, corporate profits, and the stock market are all up. Way up over their Great Recession lows, as is clear from the chart above.

But the U.S. Conference of Mayors [ht: ja] is also reporting an increase in the demand for emergency food assistance. Forty-one percent of surveyed cities reported that the number of requests for emergency food assistance increased over the past year, while 71 percent of the cities reported an increase in the number of people requesting food assistance for the first time.

From the report (pdf):

Increased requests for food assistance were accompanied by more frequent visits to food pantries and emergency kitchens. Forty-one percent reported an increase in the frequency of visits to food pantries and/or emergency kitchens each month. . .

When asked to identify the three main causes of hunger in their cities, 88 percent named low wages; also 59 percent said high housing costs and poverty. Forty-one percent cited unemployment and 23 cited medical or health costs.

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Since the end of the recession, wage increases (almost 23 percent, in nominal terms) have not been able to keep pace with the increase in rental rates for housing (which are up 26 percent).

And the situation is even worse for extremely low-income households, according to the National Housing Trust Fund (pdf). The more than 10 million extremely low-income households accounted for 24 percent of all renter households and 9 percent of all U.S. households—and they face a shortage of more than 7 million affordable rental units. Thus, 75 percent of extremely low-income households are severely cost-burdened, spending more than half of their income on rent and utilities. And that means they don’t have enough money left over for food.

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Which is why cities across the country, from Charleston to Seattle, have had to increase the amount of food they distribute—7 years into the so-called recovery.

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The extensive media coverage since Fidel Castro died has included many different voices—from those of journalists who interviewed him and wrote about him, especially in the early years, through Cold Warriors and Cuban émigrés who did battle with him to political figures whose comments have been crafted to align with contemporary constituencies and goals.* But the media have left out one important group: ordinary people who, over the years, found themselves inspired by and generally sympathetic with (even when critical of many features of) the Cuban Revolution.

I’m referring to people around the globe—students, workers, peasants, activists, and many others, throughout the Americas and across the world—who have understood the significance of the Revolution for Cuba and, as a historical example of anti-imperialism and human development, for their own attempts to enact radical political and economic change.

What we haven’t learned from recent coverage is that re-revolutionary Cuba was under the thumb of the U.S.-backed dictatorship of Fulgencio Batista, who governed a relatively wealthy but highly unequal country in which the majority of people had no voice and suffered from high unemployment, a low level of literacy, poor health, and inadequate housing. And they were exploited in an economy dominated by large landowners, U.S. corporations, and American organized crime. The 26th of July Movement (a name that originated in the failed attack led by Fidel on the Moncada Barracks in 1953) launched an insurrection in 1956, with the landing of small force that found its way to the Sierra Maestra Mountains, and, with the support of an army of volunteers in the countryside and “Civic Resistance” groups in the cities, succeeded in overthrowing Batista. A small revolutionary organization with widespread popular support managed to confront and ultimately defeat a typical authoritarian Washington-backed Latin American regime just 90 miles off the U.S. coast.

And while a great attention has been paid to the growing tensions from early on between the new Cuban government and the United States, which sponsored a series of clandestine invasions and assassination attempts, mainstream accounts have overlooked the tremendously successful campaigns to do what had seemed impossible in Cuba and elsewhere—to eliminate illiteracy, promote health, and improve living and working conditions, especially in the countryside. In fact, one of the reasons Havana became and remained so shabby (as legions of foreign visitors who rarely venture outside the capital city never fail to describe) was the Cuban government’s focus on transforming conditions in rural areas so that, in contrast to many other countries, impoverished agricultural workers and their families would have no need to move en masse into the city.

That’s what I noticed when I traveled to Cuba in the late-1970s during the administration of Jimmy Carter, when U.S. travel restrictions were allowed to lapse. I didn’t see the urban ghettoes I drove through before boarding my flight in Montreal, and nowhere did I come across the poverty and inequality characteristic of rural areas across all the countries where I’d lived and worked in Latin America.

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Thanks to the Revolution, Cuba has achieved enormous progress—not only in comparison to the rest of Latin America and the Third World but even (at least in terms of indicators like infant mortality) the United States. That radical turnaround, and the ability to maintain it in the face of unrelenting U.S.-government opposition over decades, is the major reason Fidel and the Cuban Revolution have been admired around the world.

By the same token, the Cuban Revolution has not been romanticized or supported uncritically, especially as a model for left-wing movements elsewhere. For the most part, the economy has been organized around state ownership, not worker-run enterprises. And a small number of political leaders, including Fidel himself, and a single political party have managed to hold onto power, with little in the way of democratic decision-making beyond the local level—not to mention public antipathy towards and discrimination against LGBT people, the jailing of journalists and political dissidents, and so on. Economically and politically, Cuba is no paradise.

Still, for all its faults and mis-steps, the Cuban Revolution has long served as an example of the ability of people to struggle against the impossible and to win. Fidel was thus on the right side of history.

 

*Including the anti-socialist drivel offered by John McTernan, a former speech writer for Tony Blair.

Cartoon of the day

Posted: 22 October 2016 in Uncategorized
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Cartoon of the day

Posted: 18 October 2016 in Uncategorized
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Right now, lots of people—especially young people—don’t believe in capitalism. And so Harvard economist Sendhil Mullainathan takes it upon himself to make the counter-argument, that capitalism is actually good: because the “free market” fights poverty.

But it doesn’t. And it can’t.

What Mullainathan describes, when food banks bid on donations (pasta vs. fresh vegetables, for example), is not really a market. As I explained back in 2011, in discussing the work on market design by Alvin Roth and others,

what Roth and others are designing—for schools, kidneys, and so on—are not markets but something else. The nonmarket mechanisms they propose are useful precisely when markets fail or don’t exist, which is often.

In the case of food donations, what’s going on is different food banks (using a virtual currency) register their needs for different kinds of donations.

Food banks sought some items, like diapers, that “sold” at relatively high prices. Some food banks focused on bidding on these items, which had the effect of lowering the prices of staples, like produce. The neediest food banks were able to obtain these staples at bargain prices.

But that’s not a market. It’s just a way of iteratively registering (via a pseudo price mechanism) different availabilities and needs of donated food across the country.

Even if Mullainathan and others want to call it a market, it’s certainly not an argument in favor of capitalism or the market system. As classically defined (by, among others, Karl Polanyi), a market system is a form of social economy in which land, labor, and money have become commodified, and in which the rest of society is subject to the dictates of markets.

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It’s precisely such a market system that is responsible for creating mass poverty and hunger, in the United States and around the world. When people are forced to have the freedom to sell their ability to work and receive (if they are successful) low wages (and, when they are not successful, no wages at all), and when in turn they are forced to have the freedom to purchase food as a commodity, many of them (more than 15 percent of the U.S. population in 2014) become food insecure.* Food-insecure households are then forced to rely on federal programs (like the Supplemental Nutrition Assistance Program) and, when such programs come up short, on private food banks.

So, large numbers of people find themselves in the situation where—because of poverty and food insecurity created by the market system—they need to turn to food banks in order to survive. And no story about using a “market” to allocate donations among food banks can overturn that particular economic truth.

 

*In addition, when people don’t have access to the housing commodity (including the land on which the housing is built), or when they don’t have direct access to the land commodity (especially in countries where small-scale agriculture is still the norm), then they end up living in poverty and finding themselves in a situation of food insecurity. Similarly, the existence of money as a commodity—in the form of mortgage credit, financial derivatives, and the like—has enriched a tiny group at the top and pushed many more people into poverty.

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To read National Public Radio’s [ht: ja] article on the latest World Bank report on Poverty and Shared Prosperity: Taking on Inequality, you’d think the problem of global poverty was well on the way to being solved.

Is that just wishful thinking?

In terms of the headline numbers, the author of the article is correct:

In 2013, fewer than 800 million people lived on less than $1.90 a day. That’s less than 11 percent of the global population. As recently as 1990, about 35 percent of all people lived in such extreme poverty.

That means about 1.1 billion people rose out of extreme poverty.

But, before we get too excited, there are 3 key issues to keep in mind.

First, the World Bank itself follows the presentation of the numbers with a note of caution:

Although this represented a noticeable decline, the poverty rate remains unacceptably high given the low standard of living implied by the $1.90-a-day threshold.

That’s right. The threshold is a miserly $1.90 a day, an update taking into account inflation of the previous limit of $1 a day. If they used anything more reasonable—say, an absolute level of $5 a day or, even better, a relative level of 50 percent of mean income—the level of global poverty would be much higher.*

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Second, while it’s never mentioned in the article, the actual focus on the World Bank report is inequality. And there the results are, at first glance, bewildering: global inequality has fallen while average within-country inequality is greater now than 25 years ago. But it can be easily explained: Rising incomes in China and India alone, given the size of their populations, have led to a reduction in between-country inequality. However, in many countries, the income share of the top income groups has been expanding—in the United States, of course, but also in Argentina, India, the Republic of Korea, Taiwan, and China. And in South Africa, the top income share roughly doubled over 20 years, to levels comparable to those observed in the United States!

Finally, we need to understand what is actually causing the reported declines in global poverty and inequality. The World Bank singles out five countries—Brazil, Cambodia, Mali, Peru, and Tanzania—as the best performers. And here the NPR article is just plain wrong. The policies the World Bank itself cites are the following “building blocks of success”:

prudent macroeconomic policies, strong growth, functioning labor markets, and coherent domestic policies focusing on safety nets, human capital, and infrastructure.

This is exactly what one would expect from the World Bank: more growth—in other words, business as usual—will solve the problems of poverty and inequality.

The Peruvian example (based on reading the World Bank report and the background research papers) is particularly instructive. The “remarkable” improvement in living conditions among the poor and bottom 40 percent mostly occurred through the labor market (which explains about three-quarters of the reduction in extreme poverty).

What does that mean? Extreme poverty in Peru declined because more people, men and women, joined the labor market. Some left rural areas and migrated to cities; others exited the informal sector and went to work for larger enterprises. In both cases, more Peruvians were forced to have the freedom to sell their ability to work to someone else and, as a result, received more cash income in the form of wages—and then, of course, could use those wages to purchase more commodities.

So, as far as the World Bank is concerned, more Adam Smith development—a faster growing wealth of the nation—was both a condition and consequence of expanding the labor market and reducing poverty. The World Bank’s much-vaunted “shared prosperity” is just another name for more markets and more people working to make profits for a tiny group of employers at the top.

That’s the key point the article missed and the reason the World Bank, in the report, is so keen on celebrating the progress toward achieving the goal of eliminating extreme poverty by 2030.

 

*In fact, in a World Bank research paper, Shaohua Chen and Martin Ravallion (pdf), compared absolute and relative measures and found “a simultaneous rise in the numbers of relatively poor, alongside the fall in absolute poverty.”

 

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Provoked, first, by liberal celebrations of the recent decline in the poverty rate in the United States—and, then, by conservative attempts to dismiss the issue of inequality, I decided to run some numbers. Just to see.

As it turns out, the corporate profit share (on the right in the chart above) and the poverty rate (on the left) appear to have moved in tandem since the mid-1990s: when the profit share declines, so does the poverty rate, and vice versa.

This is one of those times when I don’t have a theory or an explanation. But I was reminded of that long-forgotten ruthless critic of political economy:

Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil slavery, ignorance, brutality, mental degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital.