By Rok Spruk, on November 23rd, 2009
Daron Acemoglu wrote a marvelous article discussing the supportive role of incentives and institutions in global poverty reduction and economic development (link):
“If we know why nations are poor, the resulting question is what can we do to help them. Our ability to impose institutions from the outside is limited, as the recent U. S. experiences in Afghanistan and Iraq demonstrate. But we are not helpless, and in many instances, there is a lot to be done. Even the most repressed citizens of the world will stand up to tyrants when given the opportunity. We saw this recently in Iran and a few years ago in Ukraine during the Orange Revolution.”
By Richard Daughty, on September 30th, 2009
As one more bit of proof that the education system of the United States is a dysfunctional piece of liberal crap, how else to explain the fact the far-leftist moron Michael Moore actually got funding, which assumes an interested audience, for his latest movie, titled Capitalism: A Love Story, which, according to Reuters, “launches an all out attack on the capitalist system, arguing that it benefits the rich and condemns millions to poverty.” Hahaha!
Well, to be fair, it is not capitalism that condemns millions to poverty, but instead the poor are doomed by the destruction of the purchasing power of the little bit of money that they get and things cost too much for the poor to afford them, and which is deliberately caused by a government so stupid (audience shouts out “How stupid, Wonderful And Wise Mogambo (WAWM)?”) that it deficit-spends money on the poor to alleviate their poverty by allowing the Federal Reserve to produce large, persistent expansions in the money supply with which to buy up the government debt, an expansion of the money supply which erodes the purchasing power of the money, so that the little bit of money owned by the poor doesn’t buy as much!
If the education system of the USA were not so egregiously bad, he would know that fact, and everybody would know that fact, and so when he went to some producers and said he wanted them to finance a new documentary about how capitalism is evil and (I assume) communism is good, they would have laughed in his face and said, “Hahahaha! Where did you get such a stupid idea? Are you some kind of moron?”
Or, alternatively, he could have saved a lot of time and just come to me and asked me and I could have told him, “Hahahaha! Where did you get such a stupid idea? Are you some kind of moron?”
Unfortunately, he did not learn anything from all of that, and actually has the movie concluding that, unbelievably, “Capitalism is an evil, and you cannot regulate evil. You have to eliminate it and replace it with something that is good for all people, and that something is democracy.” Hahahahahaha!
The use of the extra-long “Hahahahahaha!” is my clever way of indicating that this is where a Junior Mogambo Ranger (JMR) who has achieved even a glimmer of True Mogambo Enlightenment (TME) starts laughing in Sublime Mogambo Scorn (SMS)! Hahahahahaha! Just like that! SMS! Hahahahaha!
I thought I was calmed down and was reaching for a bottle of something alcoholic so as to deaden the pain of my stomach hurting from so much laughing when I started laughing all over again when my eyes again fell across the idea that democracy replaces capitalism! Hahahahahaha! I never heard anything so stupid! Hahahahaha!
The first thing that comes to mind, of course, is “Did democracy finance his stupid documentary, or some capitalist?” Hahahaha!
Beyond that, the mind reels! While we are at it, why not replace the production of expensive gasoline not with democracy, but with a super-majority voting system? And we could heat our houses with gang rule! And we can replace expensive food with some dictatorship! Wow! There’s no end of what you can do if you are willing to be ridiculous! Hahaha!
The dismal fact is, in case you were wondering, that capitalism in free enterprise is the only hope that the poor have, if not by sheer dint of theoretical argument that creating jobs is vastly superior to government handouts, then by the complete lack of any successful enrichment of the poor by any other method, mostly because they involve the government creating more and more money which destroys the purchasing power of the little bit of money that the poor had.
But since we Americans have decided, with a stupidity that absolutely staggers the imagination, to prove, once again, that exact same, sad, sorry lesson repeated and repeated over 4,500 years of history, then investing becomes easy when another lesson from that same 4,500 years of history is to own gold!
In fact, it becomes so easy that you can’t help but giggle, “Whee!”
By David Barr, on May 4th, 2009
Emmanuel Saez’s work on income inequality has been getting a lot of attention recently, for good reason. He has shown the extent to which inequality has grown rapidly in recent years. The benefit of economic growth this decade has gone almost exclusively to the extremely rich. The top 1% of the population now earn 25% of all income.
Yet I fear that this work may underestimate the true nature of inequality in our society. One of the flaw of much of the work on income and wealth distribution is that it fails to account for age. For example, my income is currently below the median household income; yet as a 23 year old with no dependents I am financially better off than the average American. The way that income and wealth distribution vary throughout the lifecycle of an age cohort is an important area where further research is needed.
In a perfect world everyone would start at the same place, as time passed differences would emerge due to talent, hard work and other elements of the meritocracy. Of course, that is not the world that we live in. Children born in wealthier families start life with a huge head start.
Marion Nestle recently noted that half of the children in America are currently eligible for government food aid. It is no secret that fertility rates in America are negatively correlated with income and education. Given the stark level of inequality present in America today, it stands to reason that inequality is even greater among newborns and young children than among the population at large.
This reality could have severe consequences for the future of the American economy and society. Numerous studies have shown how growing up in poverty can adversely affect a persons prospects for life. Is the future generation of Americans going to disproportionately suffer these consequences. Will the relative scarcity of Children from affluent backgrounds give those fortunate few an even larger advantage than the well off currently enjoy. Or will new opportunities open up to the children of the poor.
More research needs to be done to uncover the rates of inequality among households with young children, and to see how this rate has changed over time. A cohort based approach to income and inequality studies would provide a better understanding of how our society and economy is likely to evolve.
While more research is needed, I think it is clear that a significant commitment needs to be made to ensure that our future generation does not disproportionately grow up in poverty.
By Antony Adolf, on February 11th, 2009
Poverty and affluence may be relative concepts, but they are absolute experiences. A striking and dangerous feature of the recent global economic downturn is the ways in which it has blurred, if not reversed, the relativity and absoluteness of these two historically imminent psychosocial and economic conditions on individual, corporate and international levels. The focus here is the first: the new economics of poverty and affluence on a personal basis.
Sharp declines in housing and stock markets, new lifestyle choices being made because of commodities and luxury prices coupled with unprecedented access to consumer credit and corporate capital, have it seems brought about a significant shift not only in what is meant by rich and poor, but also in every intermediary position on the spectrum.
What distinguishes the relationship between poverty and affluence today from those more recent and distant past? The new, evermore challenging senses of these two old states can be illustrated by their experiential dissociation both from their precedents and each other on the three interrelated levels put forth above. On individual or family scales as on the others, being rich or poor is no longer tantamount with feeling rich or poor — until it’s too late.
The thick black line creating the age-old dichotomy between rich and poor has, in the popular and academic imagination alike, been drawn between them in this way: First are the “haves” who possess the means, knowledge and connections to survive or thrive in nearly any given economic environment. Second are the “have-nots” who sometimes even in the most prosperous conditions find it difficult or impossible to survive due to lack of such resources, let alone thrive. Of course, we are far from in prosperous conditions now, which in theory should only accentuate, rather than revolutionize, the situations of haves and have-nots.
The French Revolution (1789), pitting rural peasants and urban poor against their well-to-do overlords, graphically exemplifies the differences and disasters the absoluteness of having and not having can cause when exacerbated by unusually difficult conditions and/or radical mindsets. Likewise, To Have and Have Not, Ernest Hemingway’s lackluster 1937 novel set during the Great Depression, dramatizes these differences by narrating the slippery slope slide of its main character from fearless fisherman to human trafficker as he and his family increasingly finds it difficult to make ends meet. Having or not having thus become ethical and/or moral in addition to socio-economic positions and problems. What of buying and not buying?
Having or not having as the defining, dividing line between poor and rich has recently been displaced by the power to buy or not to buy in developed economies such as that of the U.S. The key difference is that having depends upon resources that are already one’s own as means of subsistence and prosperity; on the contrary, buying can depend on resources that are borrowed or devalued and be either a means of further enrichment or a road to further destitution. Terrorist economies such as that of the present, whose perpetrators ought to be so charged, paradoxically expose this distortion and make it less visible by bringing much wider trends closer to home.
For example, according to the old paradigm of poverty and affluence, have-nots became rich by coming to have (that is, own in full) what they did not before: properties, luxuries, cash, investments, lifestyles, etc. Within the new economics of poverty and affluence, however, it is precisely by being able to buy what the poor and moderately affluent alike did not have before that they can become even poorer. The culprits, credit cards, store financing, lines of credit, first through third mortgages and other forms of consumer credit have turned have-nots into buyers, making them poorer in the process. But the same does not go for the haves.
In contrast, within the old paradigm the affluent could use what they have to survive even the severest recessions, whereas now those who can leverage their holdings can go so far as to increase their wealth during such periods by buying more for less than they could have in more prosperous circumstances. Foreclosures are traumatic events in the life of struggling families, but for indifferent investor they are wellsprings of profit. This is not to say that an ethical problem is poised on the part of such investors; rather, it arises with the original lenders to the families who enabled them to become buyers despite being have-nots.
In the past, loan sharks used to break your legs if you failed to pay a loan. Now, lenders have broken their own legs to lend you money, are running to the government for crutches, but both institutions are still expecting you to pay their medical bills. For those who have and have-not, the concepts and experiences of poverty and affluence are directly correlated; for those who buy and buy-not, they are inversely correlated, as illustrated in the following graph:
As the buying power of the poor goes up, their actual wealth goes down. As the buying power of the rich goes down, their actual wealth goes up. Credit crises like the current one or that of 1999 are in this way both corrections and continuations of a problem: the poor realize just how poor they have become (the correction) and the rich realize they have a rare opportunity to get richer even quicker, often at the expense of the poor (the continuation). Of course, these traits are to some extent perennial in socio-economic history, but recent and drastic augmentations in purchasing power and the cost of certain goods make it clear that their dimensions and degrees have been significantly intensified.
At the heart of the mortgage crisis was that lenders like banks, relishing in a criminal lack of regulation maintained in the name of free markets, turned have-nots and modest haves into nightmarish homebuyers in the name of the American Dream. To paraphrase an instigator of the French Revolution, Jean-Jacques Rousseau, markets are born free but are everywhere in chains — and it’s a good thing too, as our current crisis makes painfully clear. Another metaphor must now be added to that of “card houses:” paper mortgages. The buyers who suffer, and haves who profit, most from the mortgage crises are quite literally living in it. In the immediate present, the choice between buying groceries or a new computer doesn’t have to be made because, thanks to consumer credit, both can be done right now. But because of this very situation, it is those who buy not who end up being those who have, while those who buy end up being those who have not. Retailers, desperate for sales, have begun slashing the prices of luxury goods: good news for the haves, bad for the buyers, even if the latter may think otherwise for the time being. More so than in decades, it is possible to live it up by buying it down, and vice versa. The crown jewels of global markets, American consumers, have begun to lose their half-century long luring shine; whether they were faux to begin with has yet to be definitively determined, though the magnitude of our depression-in-denial is an indication.
Consumer credit, originally used to facilitate transactions on a temporary or emergency basis, has in becoming available on standing and widespread basis allowed the poor to drift into an imagined affluence and the affluent to drift into actual poverty. Stagflation, once seen as rather rare and precarious, can be seen as the norm in contrast to which economic growth and inflation are exceptions. If mortgages are the first thing people can’t afford, then their credit card and student loans may be tied for second with their gas tanks. To stress the point: being able to buy more by access to consumer credit only artificially stimulates the economy and in actuality make consumers poorer precisely because they have more. What Karl Marx called false class consciousness has become a false class conscience.
The proposed newest round of “economic stimulus” packages may be fueling, rather than extinguishing, the financial fires burning up retirement and college savings, home equity, and physical and mental wellbeing. As the Associated Press reported:
The Fed program for consumer debt will lend up to $200 billion to the holders of securities backed by various types of consumer loans such as credit cards, auto and student loans. The goal is to provide greater demand for these securities as a way of lowering interest rates consumers are paying and to make these loans more available.
“Rich in debt” sounds like a paradox because it is one, but it accurately describes the basis upon which more and more people, corporations and governments make their daily and momentous decisions, which a passing thought about posterity would prohibit.
Combined with the checks by which the government is effectively giving out the taxes our children’s children will pay, such stimuli, although welcome on individual levels, accentuate rather than abate the social incongruities of poverty and affluence in two ways. First by giving some poorer people an artificial, short-term spending spree or debt reduction which allows them to continue buying patterns they may not have been able to afford to begin with. Second: by enabling some richer people to sustain their real or imagined wealth a little longer and/or to increase it in the long-run by purchasing discounted securities and property. The point is that the very pitfalls people are waking up to find themselves in today, corporations and governments are rushing into as if the practice of usury was a step towards paradise.
Antony Adolf, author of *Peace: A World History*, is an independent scholar and creative writer. His blog, “One World, Many Peaces,” is at http://oneworldmanypeaces.typepad.com/.
By Mary Nichols, on November 13th, 2008
Around the world, millions of children are engaged in child labor. The International Labour Organization (ILO) has estimated that up to 1 in 5 children globally are working, with the proportion even higher in some regions of Africa and Asia. Recent estimates of the overall numbers involved range from 158 to 246 million, although the true scale is unknown. Studies have revealed that the majority of child workers, around 70% according to recent World Bank research, are employed in agriculture, followed by services and then manufacturing.
The involvement of children in employment per se is not necessarily a problem. As an ILO report observes, many children combine part-time jobs with their education and gain valuable skills or make a useful contribution to family income in the process. For many others, however, child labor means being exploited by unscrupulous employers, exposed to harmful or dangerous conditions or, at the very least, missing out on an adequate education. The ILO has estimated that in 2000, 171 million workers aged between 5 and 17 were involved in work that was “hazardous to their safety, physical or mental health, and moral development,” and that 8.4 million were employed in the most serious forms of child labor, for example as prostitutes, child soldiers and bonded labor.
The United Nations’ Convention on the Rights of the Child requires governments to protect those aged under 18 from economic exploitation, from performing any hazardous work or any work likely to interfere with a child’s education. However, child labor is an intractable problem that is difficult to eradicate due to its perceived economic benefits at the family and household level. In low-income countries or communities, children are often sent out to work when the expected economic benefits to their family are higher than the perceived economic rewards of education, or when schooling their children is unaffordable for the parents.
Child Labor and Poverty
The links between child labor and poverty have been clearly demonstrated in many studies; there is evidence of a consistent negative association between the extent of child labor in a country and its GDP. The problem of child labor is not confined to the developing world, however. Although the vast majority of working children can be found in Africa and Asia, followed by Latin America, developed countries such as the U.S. also have significant numbers of child laborers, particularly among immigrant communities engaged in agriculture, where extra hands mean extra income. Moreover, countries with similar levels of GDP have differing levels of child labor, suggesting that other factors such as cultural traditions or attitudes and the availability of affordable education also play a role in determining the relative importance of child labor within their economies.
Child labor has an adverse affect on the development of human capital through education and skills development and is therefore likely to hamper economic development in the countries or communities concerned, as well as severely damaging the future prospects of the child workers for escaping poverty. There is a strong positive relationship between the proportion of children working in a country and the proportion not attending school, while not surprisingly, children who do attend school but also work long hours outside the home tend to perform poorly in academic examinations, according to World Bank research.
There is little consensus about the most effective policy options for reducing the prevalence of child labor. It is sometimes suggested that trade sanctions should be applied against countries with particularly high numbers of children working, but UNICEF argue this would make little difference since the majority of child laborers are employed in agriculture and relatively few in export sectors.
The preferred option of the ILO is for the introduction by national governments of “income transfer programs,” like those already in use in India, Mexico and Brazil, which offer financial benefits to low-income families whose children leave paid employment in order to attend school. At the same time, there is a need for adequate investment in the educational sector with the aim of making affordable, high quality education available to all. According to ILO research published in 2004, the long-term benefits of such policies for the countries concerned are likely to be significant; it was estimated that although the overall cost of eliminating child labor would be in the region of US$760 billion, the resultant benefits resulting from improved health and education, concentrated in the developing world, would be around US$ 5.1 trillion.
References
Duran, M.P. (2004). Investing in every child: An economic study of the costs and benefits of eliminating child labor. ILO: Geneva.
Fares, J. & Raju, D. (2007). Child labor across the developing world: Patterns and correlations. World Bank Policy Research Working Paper 4119, February 2007. Available from http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALPROTECTION/EXTCL/0,,contentMDK:20254527~menuPK:965612~pagePK:148956~piPK:216618~theSitePK:390553,00.html.
International Labour Organization (1998). Child Labor: Targeting the Intolerable. ILO: Geneva.
International Labour Organization (2002). Every child counts: new global estimates on child labour. ILO: Geneva. Available from http://www.ilo.org/public//english/standards/ipec/simpoc/others/globalest.pdf.
UNICEF (1997). The State of the World’s Children 1997 – Child labour. Available from http://www.unicef.org/sowc97/.
US Department of Labor (1998). By The Sweat and Toil of Children, Vol. VI: An Economic Consideration of Child Labor.
By Mary Nichols, on July 7th, 2008
Globalization of the world economy has increased the flow of goods and services between countries, but it also has a darker side: the growing trade in people. Human trafficking has become one of the most lucrative aspects of international organized crime, estimated by the United Nations to have a total market value of $32 billion.
The real extent of human trafficking is unknown due its clandestine nature and a lack of adequate data collection. The U.S. government has calculated that, around the world, between 2 and 4 million people are trafficked annually, but many human rights and migration specialists believe that this vastly underestimates the true scale of the problem.
Sex trafficking has become the most common form of trafficking in recent years, with young women and children accounting for the majority of victims. But men are trafficked, too, often to be sold into forced labor. Traffickers are often of the same nationality as their victims and commonly consist of organized crime gangs. Their victims may be directly abducted or deceived by promises of well-paid jobs, legal entry into western countries, educational opportunities or marriage. Once in the destination country, they are frequently subjected to extreme mental and physical brutality by their employers and prevented from escaping. If detected by the authorities, they are often themselves treated as criminals for entering or working in the country illegally.
The main source regions for the trade in people are those with less developed economies and high levels of poverty: South and Southeast Asia, Latin America, Africa and the countries of the former Soviet Union. In contrast, the destination countries for trafficked people are mostly in Western Europe, North America, the Middle East and other parts of Asia. Trafficking also occurs within country borders or to neighboring countries, a form which reportedly often involves young children.
International Shortcomings
The United Nations is now leading the fight against human trafficking; its Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children has been ratified by 119 nations to date. However, some 70 countries have not yet signed up while others are implementing the protocol ineffectively. Although overall numbers of prosecutions of offenders have increased in recent years, most escape with relatively minor penalties for their crimes, which fail to provide an effective deterrent to other traffickers. Moreover, there is little evidence that U.S. economic sanctions against countries that fail to cooperate in fighting trafficking, such as Burma, Cuba, Iran and North Korea, have much effect.
Since the economic rewards of trafficking outweigh the perceived risks of prosecution or the severity of the punishment, this inhumane trade is likely to increase. Moreover, in conditions of extreme poverty, potential victims will easily succumb to the promises of a better life or may simply make a calculated decision to try to better their lives by taking a chance on the unknown in a new country.
The lack of reliable data and information on trafficking presents one of the major barriers to the development of effective ways to tackle it. Even among those states that have signed the UN protocol, data collection and knowledge exchange on human trafficking is at best ad hoc. In the developed world, insufficient resources have been made available to improve the knowledge base, and data protection and other regulatory barriers have hindered information exchange between countries. In many of the poorer countries from which trafficked victims originate, resources are simply not available for statistics and research.
See Also
Laczko, F. & Gramegna, M.A. (2003) Developing Better Indicators of Human Trafficking.
International Organization for Migration, Geneva.
Seelke, C.R. & Siskin, A. (2008). Trafficking in Persons: U.S. Policy and Issues for Congress. Congressional Research Service.
United Nations Office on Drugs and Crime (2007). The Global Initiative to Fight Human Trafficking.
United Nations Office on Drugs and Crime (2008). United Nations General Assembly urges stronger action against human trafficking.
U.S. Department of Justice (2007). Nature and Extent of Human Trafficking.
U.S. State Department (2008). Trafficking in Persons Report.
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