By Paul Buchheit, the author of “Disposable Americans” (2017). He is an advocate for social and economic justice. His essays, videos, and poems can be found at YouDeserveFacts.org. Originally published at Alternet
“Take a bow, capitalism.” That’s from the Economist, a business-happy publication that has every reason to perpetuate the myth that a world run by free enterprise is improving people’s lives. Its story continues with an astounding claim: “The world now knows how to reduce poverty.” Perhaps by presenting questionable data that seems to support what the business community wants us to believe.
Other super-capitalists are similarly exuding hyperbole in defense of their shaky beliefs. Said a spokesman for the American Enterprise Institute: “It was the American free-enterprise system that started to spread around the world. They looked at you and said, ‘I want to have their life, their freedom, and their stuff, and they threw off their chains of poverty and tyranny.'” But it’s clear, when the facts are checked, that the chains of poverty are being wrapped around more and more human beings.
Extreme Poverty Has Increased, in Terms of Wealth
According to the Credit Suisse Global Wealth Databook 2016, the median wealth of the world’s adults is $2,222, down from $3,248 at the end of 2007. While the rich people of the world have taken more than their share of the $35 trillion wealth gain since the recession, the world median has dropped by over $1,000!
There are other recent indications of rising poverty. Based again on Credit Suisse wealth data, in just seven years the world’s Gini Coefficient, the most widely accepted measure of inequality, has surged from 88.1 to 92.7. Wealth inequality between countries has grown dramatically. It’s a stunning rise, further evidence of a world splitting into two.
A widely held misconception is that global inequality between countries is declining because of growth in China and other developing countries. But that claim is generally made with respect to income inequality, and it is only partially true. Global income inequality is down only in relative terms, in the sense that an income boost from $1 to $2 a day is greater in percentage than an income boost from $1,000 to $1,500 a day.
The Poverty Threshold Is Absurdly Low
The world poverty threshold was recently increased by the World Bank from $1.25 to $1.90 per day. Numerous sources have recognized the absurdity of this dollar amount for day-to-day survival. The United Nations Conference on Trade and Development argues for a $5 minimum; ActionAid says $10; even the World Bank admits that the $1.90 poverty line is “too miserly for middle-income countries,” and that“more than 50 percent of the population in IDA [the world’s poorest] countries live on less than US $6 a day and are considered at high or moderate risk of relapsing into poverty.”
In addition, the poverty threshold has not kept up with inflation. The World Bank set the first poverty threshold to $1.01/day using 1985 purchasing power parity. It eventually raised the threshold to $1.90/day at 2011 purchasing power parity. But with inflation, $1.01 in 1985 is equivalent to $2.10 in 2011. The World Bank’s most recent threshold adjustment falls far short of realistic human needs.
Taking Credit for China, and Further Fudging the Numbers
Most of the so-called “escape from poverty” has occurred in China, where starting in the 1980s millions of residents of farming communities moved en masse to the cities for jobs in the factories of technology and in service-related positions.
The UN’s Millennium Development Goals took advantage of this in the year 2000, calling for a halving of poverty, but backtracking to the year 1990 to include the income gains across China. The UN also revised statistical and caloric standards to ensure that its poverty reduction goals were reached.
An Extra $1 a Day, but is it Worth It when You’re Living in These Conditions?
China may have pulled millions “out of poverty,” but in reality they’ve gained a few dollars a day while the country has become increasingly unequal in terms of wealth. The new Chinese “middle class” has in many ways gone backwards. According to China Labor Watch, weekly working hours in Apple’s factories surpass 60 hours, much of it without compensation. Toy builders labor in the factories 11 hours a day, 6 or 7 days a week, earning minimum wage, while at night 10 workers share a small dormitory room that may not even have hot showers. In the factories making products for Walmart and Home Depot, there are hundreds of underpaid student workers who labor in workshops that are hot and dusty, with volatile chemicals in the air, but with few health safeguards.
Numerous surveys and studies have made it clear that the Chinese people, despite their nation’s unparalleled economic growth, are no happier than they were 20 years ago, and have generally experienced a loss of well-being in their daily lives.
It goes well beyond China. BBC journalist Paul Mason writes that the developing world middle class is characterized by life in a “chaotic mega-city, cheek-by-jowl with abject poverty and crime, crowding on to makeshift public transport systems and seeing your income leach away into the pockets of all kinds of corrupt officials..” In a review of Mike Davis’ “Planet of Slums,” urban areas are described as “horizontal spreads of unplanned squats and shantytowns, unsightly dumps of humans and waste, where child labour is the norm, child prostitution is commonplace, gangs and paramilitaries rule and there is no access to clean water or sanitation, let alone to education or democratic institutions.” And, ironically, this is caused in great part by the policies of neoliberal institutions such as the World Bank, which would have us believe that conditions are steadily getting better.
Conditions getting better? Only in the minds of capitalists who don’t want their comfortable lives disrupted by a rebellion among their billions of victims.
Capitalism could be practiced so there was a more equitable sharing of it’s rewards. Unfortunately the way it’s now practices encourages the rewards to go disproportionally to a few at the expense of the many.
HA! When has capitalism NOT encouraged the rewards to go disproportionately to a few at the expense of the many? When has it ever been equitable? And what is “more equitable? When the white middle class does not feel the squeeze? Inequality is the main subroutine of capitalism.
You want it to be more equitable? Tell your employer to pay you the same as the lowest wage worker in your company. Evey one likes to blame “capitalism”, but it is their own greed that makes its cruelty flourish.
I actually tried that once, at a nursing home.
It came to my attention that I was making 10 cents an hour more than a woman hired the week before me. I figured if one of the housekeepers was going to get a higher wage (even just 10 cents an hour more), it should be the one who’s a single mom, rather than the bachelor twenty-something. So I asked my manager to cut my pay and raise my co-workers. My manager looked at me like I was crazy and told me that wasn’t possible and that I should go back to work and stop talking about wages with my co-workers.
It might be more appropriate to describe what we have now is neofeudalism as opposed to capitalism. To make it in China you must have a direct line to the party leadership and clearly the party leadership doesn’t give a damn about the average citizen, only maintaining its grip on power. Although less obvious, a similar dynamic plays out through the rest of the world where markets are anything but free and creative destruction is only for the proles.
This is pure capitalist apologetics.
Feudalism is inherently capitalistic since they both depend on the idea of private property.
Feudalism is not capitalist. Capitalism depends on a liberalized market for *alienable* private property, including land and labor. In the days of feudalism, lords had all sorts of restrictions on the sale and purchase of the land they “owned” by title, and labor, in the form of land-bound serfs, was not at all market driven. The liberal market is central to capitalism–or at least how capitalism sees itself–but not to feudalism.
Would someone please explain why we now have neofeudalism rather than fascism. Seems to me the corporations are writing the laws that the government enforces and that is just outright FASCISM. Please explain to me why this is not the case. Thanks,
“Seems to me the corporations are writing the laws that the government enforces and that is just outright FASCISM…”
And that could eventually make the corporations the new feudal lords.
Hear Hear! I get the idea that the very rich rentiers & neo feudalists laugh at the majority for not being able to find them and hurt them.
It as if they look forward to a serious revolt, so they can watch it on TV as their enforcers beat and shoot and imprison people.
It’s not so much the $2 a day existence there, but more like the $12 a day existence here-that grows ever larger, as the profits on the other end grow ever larger, in this game we call capitalism.
The economist, once again, spills ink shouting its delusions from atop its gold plated rooftop. Thanks for debunking this egregious use of cherry picked data and statistical sleight of hand to obscure what’s obvious with nothing more than a cursory glance at the socioeconomic reality in many countries: the gluttonous emperor (capitalism) is wearing no clothes.
We all know Soweto, Alexandria and their like are the equivalent of Santon.
However, in the Southern United States there are hovels worse than living in a Basuto Hut.
Re: Soweto and Alexandra being equal to Sandton. Unless “equal” has some other meaning i’m not yet privy to because Alexandra, while only 10 minutes away from the multi million dollar (yes USD) homes in Sandton, might as well be on another planet….
It is always the richest people who exclaim from on high about how well the poor are doing. I had a financial advisor who did that; ditched her pretty quick.
‘According to the Credit Suisse Global Wealth Databook 2016, the median wealth of the world’s adults is $2,222, down from $3,248 at the end of 2007.’
Oh, is that so? The Credit Suisse report runs 158 pages, and the author doesn’t deign to disclose where this stat was cherry-picked. Let’s do a little cherry picking of our own, from page 18 of the pdf document:
Well, that’s a wholly different picture ain’t it? But we’re not done yet. Proceed to pages 138-141, which present the grand summary for seven regions of the world. Without exception, every one of the seven charts shows that wealth per adult at constant exchange rate is higher now than in 2007.
Thus, while the source of the italicized quote has yet to be pinned down, in light of these further citations we can provisionally call bullsh*t on this flagrant data deception.
“Wealth per adult” sure sounds like an average. You know about averages, right? Throwing the 60% of Americans who have less than $1,000 in savings into group with Jeff Bezos and Bill Gates and then dividing isn’t likely to tell you much of anything worth knowing.
Your comment would seem to be a good example of what the title of the piece refers to.
I quickly checked the figures in the report. See table 2-4 for instance:
2000 (end) p. 34
wealth per adult: 31’651
median wealth per adult: 1’286
2007 (end) p. 62
wealth per adult: 52’504
median wealth per adult: 3’248
2016 (mid) p. 98
wealth per adult: 52’819
median wealth per adult: 1’222
Thus, 2000-2007 was a period of general rising wealth. The period 2007-2016 saw a collapse of the wealth for the vast majority of the population (as indicated by the median), to a level even lower than in year 2000, while the upper classes continued to get richer — though at a reduced pace overall.
Table 3-1 on p. 109 explains why. Worldwide, 73.2% of people have a wealth of less than 10’000, and the global wealth GINI index is 92.7 — which is very, very, very high. While inequality within countries is often less than that, globally it is crushing (9% of the world population has even negative wealth, table 4-1 p. 125).
As for the graphs on p. 138, they indeed represent the evolution of the mean wealth per adult; charting the median wealth per adult would have painted a radically different picture.
diphterio is right, and the analysis by Paul Buchheit stands.
At USD $1.82 per hour for a CrApple slave, and a ten percent increase in those wages every year, how many decades are required to reach USD $20 per hour?
About 5 years ago there was a program on China that Ted Koeppel did and it was interesting, and one of the most salient parts, was when they showed a Chinese gent in his early 30’s, breaking up reinforced concrete with a sledgehammer to get to the rebar within, and he’d earn $4-5 a day doing it, but what really hit home, was he was smiling and seemed happy.
Asian rates of pay will eventually even out with ours, but not anytime soon.
No they won’t. You will have large-scale automation and robotics before that happens.
It also ignores US history especially from 1880-1920 through which there was nearly constant and often violent encounters between labor & capital. There is no recourse for organized labor to make incremental improvements in China through the political system.
There also isn’t the bogeyman of the Soviet Union/spread communism either to frighten capitalists either.
The pay could even out in the sense that US goes pay goes downward until they are level.
As for large scale automation and robotics…yeah, that will come even when those things do not work as advertised or perform better. People will just have to be convinced they do…
(See debate over Level 4 vs Level 5 debate over autonomous cars)
Buchheit was very clear that the statistics he cited were medians. Your argument would be more forceful if you offered the same clarity. “Wealth” is not a statistical measure. And while you duly noted the references to pages you cite, you do not indicate that you are also citing medians, so the reader must check your references to know if you are comparing apples to apples or not. Many of us are too lazy (or unconcerned) to do that.
Now, to speak of a global median is problematical in itself. Does such a measure have any meaning given that there is no “global marketplace” offering the same goods at the same price to everyone? The whole reason we use statistics is because we know our intuitions are unreliable. But while Buchheit’s and your competing statistics may “confirm” different intuitions about the world, neither case, in my opinion, is sufficiently developed to allow us the comfort of abandoning our intuitions and standing on firm ground.
I would like to believe that the world, as a whole, is better off each year. I have seen other presentations, such as the TED talk by Hans Rosling, purporting to show statistically that we are all better off as time passes, but my intuition (and competing knowledge from ecology, environmental science, and our current unequal distribution of resources) tells me to be skeptical. The thing about statistics is, they have to be interpreted. The meaning of a statistic in not in the numbers themselves. And the thing about “wealth” and “poverty” is that they are relative. There are no absolute measures of them this side of death.
So even if I take your point that Buchheit misrepresented the report he cites, what conclusion should I draw? How do the numbers you cite inform me about the world any more than his?
There are two ways (at least) to look at statistics. One is of course in absolute terms such as ignoring what a dollar buys in Uganda compared to Ohio. But I think that Paul’s article was really focusing on the change using the same metric – which in this case is a drop vs an increase.
The story also echoes what we are learning from the Paradise Papers, that our oligarch problem is a global one, and way too many of them now work for the administration.
George Harrison – Piggies, see and raise you.
Have you seen the little piggies
Crawling in the dirt
And for all those little piggies
Life is getting worse
Always having dirt to play around in.
Have you seen the bigger piggies
In their starched white shirts
You will find the bigger piggies
Stirring up the dirt
And they always have clean shirts to play around in.
And in their styes with all their backing
They don’t care what goes on around
And in their eyes there’s something lacking
What they needs a damm good whacking.
The Beatles enjoyed their fame and fortune, but never forgot their roots.
I’m a little confused.
Section 6 of the databook keeps making reference to constant exchange rates which it calculated as “average USD exchange rate for the period 2010-2016” (section 6.1). However I can’t seem to find any information with regard to what the USD is paired with in this exchange rate… GBP, EUR, CHF, some kind of currency basket? Or am I fundamentally misunderstanding what constant exchange rates are?
Sorry if this is a newbie question, but very curious.
See table 3-1 on page 108: median wealth per adult USD – world – 2,222.
Comparison with previous years is found in the Global Wealth Report 2016. See page 19 (“Trends in median wealth”):
This is in a chapter titled “Global trends in household wealth,” with a preamble on page 14 that reads in part as follows:
So, there it is. I downloaded the PDF and searched on the term “median.” Both the Report and the Databook are available online here .
In the Jacobin versus Reason debate (link) this was the central item of dispute. The Reason folks said the world is getting better and the decline in absolute misery was the proof and the Jacobin folks said those numbers all come from China. Like three times and then I stopped counting and I stopped watching at about the fifty minute mark.
Another big consideration for China is that they have not practiced neoliberalism. If they did, then China would be a nation that never was able to grow.
They are more of a state controlled mercantilism economy than anything else. While the state is not in as much control as say, the Mao era, it has much more control over the economy than the neoliberals would like.
It has largely repeated the mercantilism model practiced by Japan, South Korea, and Taiwan. The government has a lot of control.
They are not perfect, as the rising inequality shows, but they did a way better job than America, which has since the 1970s largely transformed into a plutocracy and frankly, a kleptocracy.
Also note that the US is looking like many of slums now. Many Americans are now homeless and it is a huge problem in the cities where rent costs are extreme. Check out the San Francisco Bay Area for an example.
Proof is in the pudding. In the San Francisco Bay Area, a shining light in technical modernity, the bridges are replete with tent cities. “In its equanimity the law equally forbids the rich and the poor from sleeping under bridges and stealing bread.”
This is quite a sensationalist article. I would recommend people interested in the topic actually read the initial links. The reality behind the headlines is not quite as sensationalist, nor is it the “proof” that capitalism is evil. One small example – the world median is expressed in dollars, so the drop of 1,000 USD median sounds alarming, but given the USD surged (and is a more unequal country than others), that will bias the world median significantly, as stated in the Credit Suisse report. In other words, if you are a poor farmer in Africa, and the dollar increases 50%, it won’t change much to your day to day, except perhaps helping you export more to help feed your family. The report also reminds us that the big country drops were due to population growth in Africa and India surging ahead of income growth. That’s hardly the fault of evil capitalists?
I think there are some genuine inequality issues, but the popular writing on the topic is too alarmist and doesn’t present many workable ideas. It’s easy to pick some easy targets, like factories in Asia where people work long hours, to try to show capitalism isn’t working. I’ve been to Asia to inspect factories and for every bad one (and there are some bad ones), there are also very good ones that treat their employees well. The money generated in the local community also helps other businesses flourish, help children get educated, healthcare, etc.
Fact is poverty of the worst type is down, and there is still a long way to go. Capitalism isn’t the root of all evil, and I would rather be in a capitalist country with some equality, than in a country like Venezuela, where a large part of the population can’t now feed their children.
Exactly. No reasonable person who has put down his Economist and been out in the world could possibly argue that for several billion human beings (not all 6B, noted) , daily life, health and opportunities have grown far beyond the dreams of their parents. The pace of that is of course wildly uneven (and when was that not true, btw?)
Is it growing *more* uneven? Probably. But looked at on such a global scale, as opposed to the lens of anxious white blog readers of the besieged technocratic classes (me too!), is that really so important?
Jeff Bezos’ obscene wealth neither picks the pocket nor breaks the leg of your typical Indonesian farmer (at least until Amazon buys Monsanto and becomes the monopoly buyer and GMO seed supplier of his rice, but that ain’t here yet) . Garment factories on average offer peasant girls a far better living than wading in rice paddies, full stop. They know this, even if all we see are dark satanic mills.
I find far more important questions lie around the sustainability and unintended consequences of our All Devouring, Yield Chasing System, not the horse race politics of What’s He Got?
Can our planet carry the exponentially increasing weight of 4 billion smartphone using, motorbike riding, pill popping, Big Mac eating wage earners?
No and the daily energy resource utilization patterns of not only Americans but Europeans is already unsustainable let alone additionally expanding it to hundreds of millions of Indians and Chinese.
You make it sound as though the forward march of humanity is a product of capitalism alone. Yeah I know, the official line is that without a compelling incentive (aka profit motive) the desire and will to “invest” into pushing the frontiers of science/medicine/humanities (or whatever else drives humanity forward) would be much diminished. But that’s part of the programming/brainwashing isn’t it, as history has demonstrated some of the most important discoveries of our time were made by people not driven by the profit motive (examples of which i’m sure you can imagine without much strain). You seem to be arguing that we should all look around and be thankful that capitalism came along because without it we’d still be stuck in the dark ages. I hear this type of argumement all the time here in Africa that without colonisation my kind (black African) would still be an uncivilized bunch, not true of course, the same way your casting of capitalism as the driver of human progress is without merit. We should be thankful instead that Einstein (and other intellectual giants) never computed a personalised IRR to assess whether the returns on his investment into developing the theory of relativity made “business sense”.
While there’s nothing inherently evil in one profiting from their work, capitalism has bastardized this whole notion and redefined “profit” to be something pursued at all costs (including exploiting others, poisoning the environment etc) so pointing to all the “progress” (which you inexplicably equate to the advent of capitalism) in an attempt to airbrush capitalism’s glaring failures and tragedies out of existence just doesn’t cut it for me.
Umm, strawman much? I wouldn’t bother reading this blog and comments daily if I took that view. I am just saying that just because ‘the rich get richer and the poor get poorer’ has a nice ring to it, doesn’t make it true. Here in the privileged West, our rentier class is eating our middle class, and our kids have to compete with kids in Pakistan, or robots, while groaning under 6 figure debt. Fair enough, Bernie to the rescue or sumfink…
But on a global scale, humanity is just not living in a Dickens novel, or heading there. Material life has improved transformatively for several billion people, and in more limited ways for the remainder. An Albert Einstein can now be born in Ecuador and make him or herself something more than the smartest llama herder on the mountain. Odds are still heavy, where ya get usually depends on where ya start, etc., but it is now nonzero. That is better, macro scale. Alberto wasn’t living in Edenic bliss before
I don’t spend much time pearl clutching about whether the greed of malefactors of great wealth or the farsighted plans of techno-kleptocrats, or both, has made all that happen.
There are more important things to worry about now, as our markets’ voting and weighing machines gobble up the planet’s low hanging fruit. And our best and brightest are now busily securitizing it all instead of searching for solutions.
. . . But on a global scale, humanity is just not living in a Dickens novel, or heading there. . .
The working conditions in a Foxconn factory in China is right out of a Dickens novel, and now coming to a corner of Wisconsin.
. . . In other words, if you are a poor farmer in Africa, and the dollar increases 50%, it won’t change much to your day to day, except perhaps helping you export more to help feed your family. . .
Kind of ironic. Farming is an activity whereby the crop produced is sold for cash, and then the cash used to buy food for the family. It used to be, farming was to grow food for your family, and any excess left over could be sold or stored for later use.
Why would any sane human bother with The Economist???
I gave up on that rag years ago when I found I was unable to ever verify any of their numbers (especially that “American jobs offshored” number) and they would never respond to my inquiries for sources provided!
There’s a sound reason why they never sign any of those articles which appear in that rag.
Mr Doom, which rags do you recommend?
The Economist seems to be doing very well despite the loss of your readership it seems. I’m sure you’re right and all 1.5m readers are insane.
PS and here’s why they don’t sign the byline. https://www.economist.com/blogs/economist-explains/2013/09/economist-explains-itself-1
I despise The Economist. The same old song played over and over again – in an unmerited superior tone.
This is depressing: “Growing homeless camps contrast with West Coast tech wealth.“
What is the cause? Rising rents sure, but why? I’ve heard failure to build enough housing but while that seems reasonable enough as far as an explanation for some cities (supply and demand at it’s simplest), so many of them? Noone planned at all for population growth even allowing legal and illegal immigration? If so it almost makes one want to go tin foil and seek out the smoking gun of a real estate industry plot.
Not all the west coast cities are that big tech epicenters so it can’t be fully blamed on that, although people do move to where they hope to find work, so that is some population growth maybe.
I first moved to California (SF) 50 years ago. CA population at the time was 19 million. It has more than doubled since then. I’m back in the Bay Area again. Do not plan to stay.
I then lived in Seattle for 6 years. That now too is off the table.
There are many roads to capitalism but the one we are on now ain’t it. What we have in the States is “Crony Capitalism” at its ‘finest’ and if anyone here can find a “democratic institution” I will work and work hard for that institution.
I grow more cynical as each year ends and we are stuck with yet another “Thief in Chief.” That is all that the office of POTUS is and they certainly proceed accordingly. I am a fervent supporter of the Giant Meteor. Yes, I am laughing as I type this but I did, in fact, write in the Meteor as my preferred candidate.
I like Bernie a lot but I don’t believe that TPTB, a great David Halberstam book, btw, will let him take power if elected. Please folks, prove me wrong. I’d be pleased as punch to be wrong about that.
I don’t know much about finance as I’ve never had any money to speak of but the humanity and kindness that Yves, Lambert, Jeri-Lynn and all of the commentariat here at NC show via the Links pages, Water Cooler and all of the various research and subsequent articles based on that research means so much to me that I can barely find the words to express it. They are my proof that, everyday, people are out there performing random acts of kindness in any way that they can. That the folks at NC care to perform this via the written word is a real boon to the USA. Thanks for covering the all too common state of poverty but mostly thanks for caring that there are many folk who work hard and get nowhere.
Change is coming. Whether it looks like Philadelphia in 1776 or Paris in 1789 is the thing.
Frankly, as one of the billions with the Oligarchy’s boot on my neck, I am increasingly moving toward the position of not particularly caring which one it is.
My self I’m Disability (S.S.D.I.) all of us disabled Americans no cost of living the past 3 years .some of us living with frail elderly parents and some now homeless. When my mother passes away I will not qualify for Medigap benefit until 8 years in the future . I am 58 years old rich people never carried about us . As my priest said poverty is intentional . 1 I have work at grocery chain it is employee owned or self employed if my inheritance is okay. The worse one 2 part time jobs,
We need data, much better data, much better big data instead of anecdotes to figure out whether lives/life standards have been improved or not. You will otherwise always run into a lucky soul or poor soul here and there.