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How to end poverty

A new article by Max Roser, founder of Our World in Data, spells out exactly how to end poverty.

I calculated that at a minimum the world economy needs to increase five-fold for global poverty to substantially decline. This is in a scenario in which the world would also achieve a massive reduction in inequality: inequality between all the world’s countries would disappear entirely in this scenario. It should therefore be seen as a calculation of the minimum necessary growth for an end of poverty.

Anyone arguing that economic growth is in any way bad, or needs to be reduced, is saying that they have enough and they do not care about anyone else.

24 comments to How to end poverty

  • Paul Marks

    The post links to an article which is long – but not very good.

    The article says that if you get richer you are less poor – which is true, but stating the obvious. It does NOT say what policies make a country such as Denmark richer than a country like Ethiopia over time.

    Someone could read the article and then say “right you are then – Ethiopia should adopt the level of government spending and taxation that Denmark has, then we would have stronger economy and less poverty!”

    And if Ethiopia did adopt the the level of taxation and government spending that Denmark now has, the economy of Ethiopia would totally collapse and most people there would starve to death. That would indeed radically reduce poverty – because the poor would be dead.

    Of course when Denmark became a wealthy country it had LOW government spending and taxation. But I do believe the article says that. And Denmark certainly is not a low government spending and taxation country now.

    As for inequality (NOT the same thing as poverty) – the primary driver of inequality in the modern world is the “Cantillon Effect” (named after Richard Cantillon – an Irish economist of some three centuries ago) – Credit Money tends to go the wealthy and politically connected (the Corporations and so on) who use it to buy real assets (such as real estate) before the value of the money drops, thus the rich get richer and the poor get poorer – in terms of assets, as ownership gets concentrated.

    The article does not tell us what policies to follow in order to get better economic growth and reduce poverty. And nor does it tell us what policies to follow in order to reduce ARTIFICAL inequality (inequality produced by Credit Money) – a different, but related, aim.

  • Paul Marks

    “spells out exactly how to end poverty” – a description of an article that, I think, contains no policy suggestions.

    Was the post meant to be ironic?

    Essentially what the article says is “when you get richer you are less poor” – it says nothing about HOW a country gets richer.

  • Paul Marks

    As for extremes of inequality – taxation and benefits (whether called a “guaranteed income” or anything else) do not address that.

    California used to be a wonderful place for ordinary people – now it has more poverty, adjusted for the cost of living, than any other American State (yes even worse than Mississippi).

    New York and New Jersey are much the same.

    These are places of very high and “Progressive” taxation, lots and lots of government benefits, and endless regulations.

    For example, New York State has won the “least free State” title every year that Reason magazine has done its survey (since 2000).

    If anyone thinks that Ethiopia can deal with poverty OR inequality by having high and “Progressive” taxation and government spending (lots of benefits for the poor), like Denmark, then I have a nice bridge to sell them.

  • Paul Marks

    I suppose the “Greens” are saying that there should be less (or no) economic growth. That may be the point of the article.

    But that is truism. The point is HOW do we get economic growth. And creating money from nothing (the modern way of government dependent bankers and other crooks) is not the road to long term prosperity.

    Nor is the high taxes and government spending of Denmark – although those taxes are not quite so high as people think they are, remember there are no Social Security taxes in Denmark.

    Overall I doubt that people in Denmark really pay much higher taxes (when one includes Social Security taxes and Property Taxes) than people in New Jersey and other high tax American States.

  • William O. B'Livion

    This is in a scenario in which the world would also achieve a massive reduction in inequality

    Utter bollocks.

    “Inequity” is a function of being human, not of any particular economic system.

  • Ferox

    “Inequity” is a function of being human, not of any particular economic system.

    Yes indeed. Give everyone in the world a nice shiny new bike. In a week some people will have 20 bikes, some will have none, and a bunch of them will no longer be in working order due to absurd (ab)use.

    If scarcity, then inequality. And there can be no end to scarcity without an end to personal freedom.

  • Duncan S

    Meanwhile, here in my part of the UK, the SNP want to “reduce car kilometres travelled by 20% by 2030.

    The report acknowledges that in rural areas, people depend on their cars: which means that those in some areas will have to reduce their mileage by a lot more than 20%.

    The route map sets out a range of sustainable travel behaviours grouped into four categories:

    travel less: use online options where appropriate
    stay local: chose a more local destination to meet your needs
    switch mode: to walk, wheel, cycle, or use public transport where possible
    combine a journey: where the other options are not feasible

    Additionally, research will be commissioned to explore equitable options for demand management to discourage car use, to enable the development of a new Framework for Car Demand Management by 2025.

    …we also need to recognise the unfairness of a status quo where the ‘car is king’ and where car use is made too easy, at the expense of other healthier, fairer options.

    In addition to meeting our climate change commitments we will
    experience a new localism in our villages, towns and city neighbourhoods;

    There are plenty round my way who’ve never ventured out of a 5 mile radius: just like it was in their great-grandparents’ day. And now the powers that be want to turn the clock back for the rest of us.

    As per all things north of the Solway/Tweed Line, this is out for “public consultation“. So the vested interests will provide the echo-chamber answers that are required to push this through.

  • Stonyground

    Aren’t there a lot of countries, mainly in the far east, that have moved from being dirt poor to having an advanced economy since around the time of the end of WW2? Maybe other poor countries could copy whatever it was that they did.

  • mmg

    The man is a moron. Takes no account of differing costs of living.

    In my wife’s home country, $30 a day, $210 per week, $900 per month would provide a reasonably good standard of living a far cry from anyone’s concept of poverty.
    BUT, can’t run a Beemer or take intercontinental vacations on that kind of money! Bummer! Now I get what he means by poverty!

  • Rob Fisher

    “Takes no account of differing costs of living” incorrect. Everything is in “international dollars”, a unit designed explicitly to take that (and inflation) into account.

    “an article that, I think, contains no policy suggestions”

    Ok fine, but it says how much growth is needed and growth as the solution may be obvious to you and me but it is not obvious to a depressingly large number of people.

    ““Inequity” is a function of being human, not of any particular economic system.”

    Fine. But I hold that given enough growth inequality of material things like health, shelter, food, comfort will reduce. I don’t care about nonsense measures involving relative income.

  • Patrick Crozier

    My understanding was that thousands of people – if not tens of thousands – were being taken/taking themselves out of poverty every day. This seems to contradict the notion that a five-fold increase in wealth is necessary.

  • bobby b

    A five fold increase in the world economy would merely result in the “poverty level” being once again redefined.

    “Poverty” used to mean subsistence-level living or lower. As more people are raised out of this circumstance, governments simply redefine it to mean anyone in the bottom fifth of the economy.

    We’ve had that five-fold increase many times over the course of history. We all live better for it. But we still talk about the 20% living in “poverty” as if that means something.

  • NickM

    There is an obsession on the left with “equality” rather than “freedom”. I saw this quite a few years ago. I wrote an email to Peter Tatchell (the noted gay rights campaigner) and oddly enough I got a very nice, well written, reply which I fundamentally diasagreed with. Now, fair play to Tatchell for bothering and all that but I realised we were both utterly different in terms of basic philosophical principles. I had asked why he wanted both gay marriage and straight civil partnerships. I thought this a reasonable question not least because legally they essentially mean the same thing. I was not (and am not) against gay marriage at all. Tatchell though seemed to think if you’re gonna have gay marriage and also retain gay civil partnerships then you have to have both for heterosexual couples… because of “equality”. I have never had an email which used that word so many times – and it was a long and, I guess, thoughtful one. He never addressed something I, though, think important. I have known gay and lesbian couples and they always used the same terminology as straight ones do about marriage when talking about same-sex marriage: “Getting ‘hitched'”, “Tying the knot” etc…

    Tatchell essentially argued just on the basis of “equality” that there should be four states. I thought, and think, there should be one. I prefer my view because it is simpler and closer to how people actually are.

    I replied to Tatchell. He replied to me. He just didn’t get where I was comming from. For him “equality” was his great God.

    The point of this annecdote is that some abstract concepts like “equality” can get so ingrained into the psyche that people can fail to see the wood for the trees. This applies just as much in the economic sphere as family law. The same mindset that sees “equality” as trumping “freedom” in one arena is all too easily translated into economic terms so people genuinely prefer us all to be living equal but dismal lives rather than the whole mixed bag we tend to have now. It is easy to see this as just envy but I think it isn’t just that. They genuinely believe that equality is the ultimate goal ignoring that Nick, who is neither especially rich nor poor, really cares.

    The Tatchell obsession with “equality” is poison because it is so much easier to “level-down” than “level-up” and that’s what will happen if such idiocy is allowed. I fix computers for a living. That there are richer people than me with complicated networked systems in my area is kerching for me. Or we could all have standard issue craptops to insure equality. Some people think this is good because at least we’d all be on the same shitty barge to nowhere. Fuck that!

    What I do know is that I’m materially better off (without even trying too hard) than my ancestors and this applies to almost everyone. That Elon Musk has a space program and I’ve just got a laptop doesn’t fill me with inchoate rage. Because trust me the levellers would ensure that neither of us had more than an abacus – if we were lucky.

  • NickM

    bobby b,
    I think you much more succinctly got there before me. I suppose that says something about the “equality” poison!

  • Paul Marks

    I repeat – much of the inequality in the modern world is NOT the result of “human nature”, hard work, talent, or any other such thing.

    It is the result of the Cantillon Effect – people may not like the fact that it is the result of the Cantillon Effect (i.e. the creation of money from nothing – and it being handed out to the connected), but it is a fact.

    I have no problem at all with inequality and I certainly do not confuse it with poverty – however I do have a very big problem with the Cantillon Effect as it has totally twisted the Capital Structure of the economy.

  • Paul Marks

    As for how to define poverty – again I have already explained this in the comments at the start of the thread. One must be careful to take cost-of-living (not just number of Dollars in income) into account.

    That is why California, today (not in the past) has even worse poverty than many States that were traditionally much poorer. The cost of living in California is very high compared to the cost of living in these States.

  • mmg

    Rob Fisher.
    Fair enough about “international” dollars, didn’t see that.

    But reviewing the Global Poverty chart, I question the criteria used to adjust for price differences. $900 per month doesn’t go very far in the US, the chart put the US poverty rate at 22%.

    But the same chart puts China’s poverty at 94% despite four or five decades of unprecedented growth. The CCP could not have survived this long if poverty truly persists in the 90%+ region.
    Other countries I am more familiar with are assessed to have very high levels of poverty well over 80%. From personal experience and observation, I do not agree with the assessment.
    Certainly, many people do not have much cash, and they have money worries, but they work, they have homes, they eat well, they clothe their children and send them to school, and over time their lives improve. They work hard, and look for opportunities to do better. They may not be able to afford iPhones or drive Toyotas. They are not rich, but they are not poor in any absolute sense, merely by comparison to the comfortable Westen middle class, but certainly not in comparison to their parents’ generation.

  • Rob Fisher (Surrey)

    mmg – this is probably a discussion worth having. I, too, find it hard to believe how anyone can even have a roof over their head for $30 per day. But there is a lot I don’t know about other people’s lives.

    I still think the article I posted is a good counterargument to this sort of nonsense: https://www.theguardian.com/news/2019/jun/17/is-time-to-end-our-fixation-with-gdp-and-growth

    A lot of that is semantic obfuscation: redefining what growth is and then arguing about it as if it is something it is not. But if you are in any way against growth then you are harming poor people. (You are harming everyone; but I am trying to use arguments that would appeal to the kind of people who are persuaded by lefty arguments.)

  • Paul Marks

    mmg

    The Communist Party dictatorship in China survived tens of millions of people STARVING TO DEATH.

    Yes most people in China are poor – even though the cost of living is lower in China.

    By the way the Dollar is overvalued – absurdly over valued.

    The Credit Bubble economy is going to collapse – one reason the Biden/Harris regime (or rather the forces that control them) are seeking to use other means to stay in power.

    Systematic election fraud, unlimited illegal immigration (with the illegals getting the vote – illegally), and the imprisonment or disqualification of political opponents. These are their plans – what they are trying to do.

    As Tim Pool and other independent journalists are pointing out – things are getting very dark in the United States of America, how long they will be allowed to continue to report is hard to say.

    Democratic elections may still remove the grip of evil (for it is evil) that has taken control of the United States government – but it will be a difficult task.

  • Tim Worstall

    “increase five-fold”

    Ooooh, that’s good. The usual prediction is that – as long as we keep this neoliberal globalisation thing going – then the global economy will grow some 11 times between 1990 and 2100. Or perhaps 6 times from now to 2100. Got to be true, it’s part of the climate change science.

    So, we’re done and dusted there, right?

  • Rudolph Hucker

    Poverty and inequality are great myths, most often and most readily believed by young people (often students) who are not poor and not suffering from inequality.

    In that light, Hans and Ola Rosling deserve much praise and respect for their myth-busting work with Gapminder. Especially the wonderful : “How not to be ignorant about the World“. Well worth watching, for its evidence-based optimism and humour, if not least to discover why Zoo Chimps are more intelligent than University Students.

    https://www.youtube.com/watch?v=Sm5xF-UYgdg

    This interview with Hans Rosling is particularly revealing. Hans persists until it dawns on the TV interviewer that the media bubble the interviewer is in reflects a very partial view of reality.

    You can’t trust the news outlets if you want to understand the world

    https://www.youtube.com/watch?v=xYnpJGaMiXo

  • mmg

    Rob Fisher – I agree with you 100% on growth.
    My wife comes from a still nominally Communist country (not PRC) that adopted a quite liberal attitude to business. With the growth that enabled, my wife’s family has prospered and raised themselves out of the objective poverty of her childhood (at times living on only rice and peanuts).

    Paul Marks – I cannot disagree with any of your remarks.
    I will only note that the widespread famines lasted only a few years and led to policy reversals. And then came the Cultural Revolution. By the early 80’s the Chinese had had 4 or 5 generations of turmoil, war, famine, revolution and social upheaval. It waws finally time for the CCP to deliver. Its survival over the past 5 decades has been contingent on reducing poverty and increasing prosperity.
    I cannot believe that poverty in PRC today, measured by any objective metric, could be as high as 94%. It must be much lower, but whether 70%, 60%, 50% or 40% I could not say.
    But I am confident that if it were still 94%, PRC would not be the industrial powerhouse it is and would be in turmoil.

  • Paul Marks

    mmg – the Communist Party dictatorship has NOT “delivered” anything good. Getting out of the way a bit since 1978 is not “delivering” – it is allowing people to deliver things (a bit) for themselves. Yes poverty in Chinese coastal cities is not obvious – because it is illegal, homeless people are arrested in China (as they were in Britain and the United States at one time – when we called the homeless “vagrants”). But away from Western eyes there is a lot of poverty in the PRC.

    Tim Worstall – please define what “neoliberal” means. Does it mean endless government spending and endless regulations, Credit Bubble banking (vast amounts of money being created from NOTHING and handed out to the rich and politically connected), and manufacturing being increasingly concentrated in China?

    Because that is what we have had for decades now – and has not been a good policy for the Western world.

    You give the date of 1990 – fiscal, monetary and regulation policy since 1990 have been terrible in the United Kingdom and the United States. Utterly terrible.

    If you are really saying that the policy of the last 32 years is neoliberalism – then the last thing we need is more neoliberalism, Sir.

  • Paul Marks

    It is utterly astonishing that anyone could look at the policies of the United Kingdom and the United States since 1990 (i.e. the last 32 years) and think those policies of endless government spending, endless regulation, and wild money creation (endless Credit Money created from nothing) were good.

    Indeed the terrible monetary policy actually started years before 1990.

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