Pater Familias

THE RELATIVE POVERTY OF VERY POOR PEOPLE. The new approach I posted on yesterday takes into account concepts of relative poverty in setting the new guideline of $1.25 a day. The authors argue that relative poverty (whether my neighbor is better off than I am) begins to matter when per person consumption rises past $1.95. There are two reasons that I don’t think that “relative poverty” concepts should be used for comparisons among the poor and very poor. Emphasizing relative poverty for the wretchedly poor suggests that being poor is less painful if others around you are equally poor. I just don’t believe that. Second, and more importantly, it suggests that relieving absolute poverty is not desirable (or less desirable) if the improvement doesn’t happen across the board and in lock step. Relieving absolute poverty is too difficult and too important to impose that kind of restriction.

WHY THE ONE DOLLAR A DAY GUIDELINE IS VALUABLE. What I find valuable about a poverty guideline (whether $1 a day or $1.25 a day) is that it focuses attention on the way that many people are living. (I prefer the $1 a day test because I think it grabs more attention). This is how low the poverty line is set in Zambia: “In Zambia, say, a poor person is defined as someone who cannot afford to buy at least two to three plates of nshima (a kind of porridge), a sweet potato, a few spoonfuls of oil, a handful of groundnuts and a couple of teaspoons of sugar each day, plus a banana and a chicken twice a week.” I don’t think that having more than that means that one is not poor. What is important to know is that is how some people are living.

MEASURING “ESCAPES FROM POVERTY.” I don’t think that the new poverty line is of much use in telling us who is poor. When I posted here on studies of how people (twenty to forty per cent of people in the world!) live on one dollar a day, Dick Weisfelder commented: “I wonder whether pundits who measure the percentage living on a dollar a day have controlled for inflation and the buying power of the dollar.” I agreed with Dick then and do now. The Economist article bears out Dick’s point. When the World Bank looked at prices and foreign exchange rates in 2005, “At a stroke, the Chinese economy shrank, in real terms, by 40%.”

LIVING ON $1.25 A DAY. The phrase isn’t as memorable as “LIVING ON $1 A DAY”, is it? This article in The Economist also thinks that “as a slogan, $1.25 just doesn’t have the same ring.” The “dollar-a-day” definition goes back to a World Bank report in 1990. Now one of the researchers has looked at the much better data that is still available and has published a report that proposes a new “international poverty line” of $1.25 a day.

MARXISM AND FARCE (COMMENT). Annalisa here and Dick Weisfelder here expressed surprise that I acknowledged that in some sense I have Marxist tendencies. It is true that I am not a thoroughgoing Marxist or a scientific socialist (or a socialist). I came across a phrase from the historian Hugh Trevor-Roper in an article by Colin Kidd in the London Review of Books for May 22 which describes the extent to which I am a Marxist: I tend to think that historical events have deep economic causes. The complete quote indicates that Trevor-Roper stopped taking a Marxist approach to history: “I used to think that historical events always had deep economic causes: I now believe that pure farce covers a greater field of history, and that Gibbon is a more reliable guide to that subject than Marx.” I have not yet made Trevor-Roper’s leap.