The Economist explains… How did the global poverty rate halve in 20 years? Poverty is easy to spot but hard to define. America sets its poverty line at $11,490 of income per year for a one-person household, or just over $30 a day. Any income below that amount is judged inadequate for the provision of fundamental wants. Other rich countries set their poverty lines in relative terms, so an increase in the incomes of top earners results in more poverty if everything else is held constant. The threshold for dire poverty in developing countries is set much lower, at $1.25 a day of consumption (rather than income). This figure is arrived at by averaging the poverty lines in the 15 poorest countries, not because $1.26 spells comfort. This is the yardstick by which poverty reduction in poor countries is measured. Remarkably, this poverty rate has halved worldwide, from 43% in 1990 to 21% in 2010. The Economist explains … – The Economist
Dominant Social Theme: This is just wonderful and globalist institutions deserve a lot of thanks.
Free-Market Analysis: We are not so impressed as the Economist with these poverty numbers. Have the wise editors at the Economistlooked around at the West recently? How about the US where 40-plus million are on food stamps? Or Greece or Spain where half the youth population is unemployed? Doesn't that indicate poverty?
France is broke, Britain is entering a third recession, the United States is surely not in recovering no matter what the bureaucrats say … but we are asked to believe that global poverty has been cut in half in two decades.
Much of this number, assuming we believe it, has been generated by central bank stimulation in India and China, where masses were certainly in poverty. But we question whether central bank money printing is a fix or a disguise. We recall that around 2005, the US economy was being hailed as a miracle of itself and once again pundits were claiming that the business cycle had been abolished by technology.
That didn't last long. Neither did the Japanese miracle, as we have pointed out recently. There was a burst of hyper-money stimulation in the 1980s that gave way to a 20-year quasi depression from what we can tell. And now China is suffering from the Japanese disease and we assume India and Brazil will catch it, as well.
One can do almost anything when one controls the printing presses. Pick the right time and you can make a case for virtually any "miracle." Thus, we offer the opinion that this Economist analysis is a good deal less persuasive than it seems.
There is no way, in our view, that one can "halve" poverty for billions so quickly without using the power of central banking. And that is a kind of poisoned chalice, as too much monetary stimulation – as we have seen – leaves economies and people back in the ditch sooner or later.
In the meantime, Economist journos get to write these sorts of misleading articles. Here's more:
How did this happen? Presidents and prime ministers in the West have made grandiloquent speeches about making poverty history for fifty years. In 2000 the United Nations announced a series of eight Millenium Development Goals to reduce poverty, improve health and so on. The impact of such initiatives has been marginal at best. Almost all of the fall in the poverty rate should be attributed to economic growth.
Fast-growing economies in the developing world have done most of the work. Between 1981 and 2001 China lifted 680m people out of poverty. Since 2000, the acceleration of growth in developing countries has cut the numbers in extreme poverty outside China by 280m. How that growth is distributed matters too. In a country where income inequality is high, each percentage point of GDP growth will do less work than the same growth would in a more equal place. This is great news.
Unfortunately, taking the remaining billion people above the threshold will be harder. The next country that should move millions of people across the line will be India, whose economy has slowed. Then it will be the turn of sub-Saharan Africa. By 2030 two-thirds of the poorest will be in fragile states like Congo and Somalia, where they will be hard for domestic governments or foreign agencies to help. Still, shifting people above the threshold that marks dire poverty has begun to look achievable within a generation.
Okay, sorry to be so cynical but all our points are made for us in this squib of an explanation. It IS true that China lifted hundreds of millions out of poverty, or so it seems … but ONLY FOR NOW. Notice the article doesn't reference Japan, or the 60 million empty apartments in China, or whole empty cities rotting away as mold eats them up.
Like the US in 2005, Japan was a tremendous miracle in the 1980s but today Abenomics is struggling to lift that wretched country back into some semblance of prosperity. Meanwhile, the entire West quivers under the cold grip of "austerity" and the Great Recession.
In central banking economies, poverty is indeed fungible: One can go up and down – from poverty to prosperity and back again – in a single generation. This latest Chinese "great leap forward" is merely a moment in time. Let's see what happens when the Economist revisits this issue in a decade, if it does.
A final reason that we are suspicious of this sort of facile reporting is because it mentions Africa, and we have pointed out that Africa indeed seems to be targeted for the Japanese and Chinese "miracle" treatment. One begins to believe that the globalist banking arm organizing these charades is growing increasingly desperate for a victory to emphasize.
Wiping out poverty in a single generation is certainly something to celebrate, and the Economist is doing that celebrating. But celebrations, generally, tend to be ephemeral.