The Power of Capitalism

Generali

http://www.worldbank.org/en/news/press-release/2015/10/04/world-bank-forecasts-global-poverty-to-fall-below-10-for-first-time-major-hurdles-remain-in-goal-to-end-poverty-by-2030

The number of people living in extreme poverty around the world is likely to fall to under 10 percent of the global population in 2015, according to World Bank projections released today, giving fresh evidence that a quarter-century-long sustained reduction in poverty is moving the world closer to the historic goal of ending poverty by 2030.

The Bank uses an updated international poverty line of US $1.90 a day, which incorporates new information on differences in the cost of living across countries (the PPP exchange rates). The new line preserves the real purchasing power of the previous line (of $1.25 a day in 2005 prices) in the world’s poorest countries. Using this new line (as well as new country-level data on living standards), the World Bank projects that global poverty will have fallen from 902 million people or 12.8 per cent of the global population in 2012 to 702 million people, or 9.6 per cent of the global population, this year.

So not only is the proportion of people living in absolute poverty collapsing, the number of people in absolute poverty has also fallen massively: down 22% in just 3 years.

The reason? Economic growth caused by globalisation coupled with a small welfare state enough that a set-back such as sickness in the family doesn't just pitch a family back into absolute poverty.

Kapow!!! Take that doomsayers!

princeofpounds

I think it's utterly incredible and unprecedented in history.


And it's the main reason I have never understood the anti-globalisation movement which is so trendy on the left.


It is betrayed as simply a crude protectionism.

Generali

princeofpounds wrote: »

I think it's utterly incredible and unprecedented in history.


And it's the main reason I have never understood the anti-globalisation movement which is so trendy on the left.


It is betrayed as simply a crude protectionism.

Yup, 100% correct and if you look at the incomes and standards of living of the very poorest in the UK then they have risen in anything but the very shortest term.

The vast majority in the bottom 10% in the UK and across the world have seen their incomes and living standards rise over the course of their lives and can look forward to getting richer still.

princeofpounds

I do think it's fair to say that the impact on the UK is mixed. Overall, almost certainly beneficial - it's why clothes are cheap, electronics are cheap, food is cheap.


On the other hand, there are pressures on low-wage, low-skilled jobs. And the pressure on higher-end jobs is starting to ratchet up and will probably be the story of the next couple decades.


That's not good for the person suffering it, but it's actually just a reflection of how much better everywhere else is getting.

cells

Those in the dollar a day counties live in true capitalist states where you can buy and sell anything guns drugs peopel and government control and regulation and red tape don't exist.

Graham_Devon

Referring to the UK only, I think we have to take into consideration the welfare system.

Other countries have them too, but I can't say I know enough about them to comment.

The welfare system in the UK at least is making up for low wages in the form of tax credits. It's making up for high property prices through housing benefits.

Just taking those two benefits in isolation, the UK is funding around £55bn to people in order they they can live within the UK.

Without this, how would capitalism fare in the UK? Personally, I think it would take a huge hit if we were to remove these items overnight.

kabayiri

princeofpounds wrote: »

I do think it's fair to say that the impact on the UK is mixed. Overall, almost certainly beneficial - it's why clothes are cheap, electronics are cheap, food is cheap.


On the other hand, there are pressures on low-wage, low-skilled jobs. And the pressure on higher-end jobs is starting to ratchet up and will probably be the story of the next couple decades.


That's not good for the person suffering it, but it's actually just a reflection of how much better everywhere else is getting.

For me the issue is the process of change.

The workers at SSI reflect this well. They and associated businesses are impacted by what is pretty much a seismic change in their living.

What would a capitalist response to this event be? Probably to move elsewhere for work.

It's an easy thing to say, but I should imagine pretty difficult if you are one of those affected.

I guess it's why the government is throwing £80m at it; I wonder how successful this investment will be?

cells

cells wrote: »

Those in the dollar a day counties live in true capitalist states where you can buy and sell anything guns drugs peopel and government control and regulation and red tape don't exist.

To add to this it shows that at the beginning of development capitalism doesn't work all that well as clearly the dollar a day ultra capitalist nations are in poverty

There needs to be some sort of state seed investments. Maybe a poor country should set up conscription and use this labour force to build out the enabling infrastructure. Roads ports power stations railways etc.

All the now rich nations had some state building at the beginning

kabayiri

We should also remember that the globalisation project is really an experiment which should be measured over a few generations.

It's pretty much undeniable that there were millions of Chinese peasants with a very poor life working the fields of China.

Many of them are now working hours and conditions in massive factories which we in the West would see as unacceptable.

I guess they do it to achieve the promise of a better life. They are encouraged to save; much of this money ending up being lent to American and Western countries to support consumption.

At what point do they realise they are getting the runt end of the deal? !

michaels

cells wrote: »

To add to this it shows that at the beginning of development capitalism doesn't work all that well as clearly the dollar a day ultra capitalist nations are in poverty

There needs to be some sort of state seed investments. Maybe a poor country should set up conscription and use this labour force to build out the enabling infrastructure. Roads ports power stations railways etc.

All the now rich nations had some state building at the beginning

A lot of what is making a difference is entrepreneurship on the ground resulting from things like the rollout of mobiel phones to facilitie information sharing and micropayments which I am sure are happening much faster and more flexibly under capitalism than if the state tried to provide.

kabayiri wrote: »

We should also remember that the globalisation project is really an experiment which should be measured over a few generations.

It's pretty much undeniable that there were millions of Chinese peasants with a very poor life working the fields of China.

Many of them are now working hours and conditions in massive factories which we in the West would see as unacceptable.

I guess they do it to achieve the promise of a better life. They are encouraged to save; much of this money ending up being lent to American and Western countries to support consumption.

At what point do they realise they are getting the runt end of the deal? !

Whilst the factory work might be considered unacceptable in the west, I bet the rural lifestyle 'alternative' was considerably worse

Generali

cells wrote: »

All the now rich nations had some state building at the beginning

Specifically?

You've been rather busted for making unsubstantiated statements. The Industrial Revolution started in the UK (England then Scotland) and moved to the USA.

Specifically what did the state do in those places that:

1. It hadn't done before
2. On an ex ante basis was designed to produce a surge in per capita GDP growth from ~0% as had been the case for ~10,000 years to ~1% and upwards from there?

I would suggest (as an economist and economic historian) that the answer for the questions combined was, on an ex ante basis don't forget, precisely nothing.