by frog
Last week I pointed to New Scientist’s special issue on The Folly of Growth. One of its really compelling articles was Andrew Simm’s explanation of why growth didn’t and couldn’t end poverty as its proponents have often claimed:
THE last line of defence for advocates of indefinite global economic growth is that it is needed to eradicate poverty. This argument is at best disingenuous. By any reasonable assessment it is claiming the impossible.
Here’s why. During the 1980s, for every $100 added to the value of the global economy, around $2.20 found its way to those living below the World Bank’s absolute poverty line. During the 1990s, that share shrank to just 60 cents. This inequity in income distribution – more like a flood up than a trickle down – means that for the poor to get slightly less poor, the rich have to get very much richer. It would take around $166 worth of global growth to generate $1 extra for people living on below $1 a day.
That’s an astonishingly poor return on a investment. To use a timely horse racing analogy it’s like betting on a horse that that’s offering odds of 0.6 cents on each dollar.
To get the poorest onto an income of just $3 a day would require an impossible 15 planets worth of biocapacity. In other words we will have to make Earth uninhabitable long before poverty is eradicated.
Poverty is a crucial problem for the world. Unlimited growth can’t solve the problem but likewise we can’t solve our environmental problems while masses of people live in extreme poverty. So we have to do something.
But we have to overcome knee-jerk reaction of the R word – redistribution. With global growth constrained by the need to limit carbon emissions (remember the poorest will be the first and worst victims of climate change) redistribution becomes the only viable route to poverty reduction.
Published in Economy, Work, & Welfare | Environment & Resource Management by frog on Tue, November 4th, 2008
Tags: andrew simms, economic growth, growth, New Scientist, poverty, redistribution
on the trolls and those who are unable to keep on topic
I’m sure you are leading by example and donating most of your salary to the 3rd world?
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Green policy advocates a rise of ODA (aid) to 0.7% of GDP. But to really tackle worldwide poverty, we need to change trade rules (free them up mostly) which are overwhelmingly designed to benefit the rich countries and corporations.
While I as an individual give to aid organisations, no amount of individual giving will fix poverty which is a structural problem.
I always think of the saying “give a man a fish, and feed him for a day. Teach him how to fish and feed him for life.” Send the fishing fleets to his waters, and send the military to burn his house, and you can have all his fish and his land too!!! Wohoo!!! Why not put his daughters in a factory and make them make cheap clothes, electronics and plastic s**t toys for McDonalds while you’re at it?
That’s how international trade works right now.
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Fortunately India and other poor countries are ignoring your global warming scam and going for growth. More people have been lifted out of poverty over just the last few years than at any time in history, and all thanks to the free market finally getting a chance in China and elsewhere. A spectacular achievement.
Dire poverty remains in countries which lack basic property rights. Yet how many lefties in their cushy NGO offices lobby for such mundane reforms?
The government foreign aid budget should be precisely 0c. All it is is a political slushfund which mostly ends up in the hands of the corrupt local officials. Scrap the aid budget and introduce entirely free trade.
- “Why not put his daughters in a factory and make them make cheap clothes, electronics and plastic s**t toys for McDonalds while you’re at it?”
I don’t think the daughters are “put” in the factories, I think they volunteer.
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Would you volunteer to work in a factory for 18 hour days at 6c an hour? (http://www.pbs.org/independentlens/chinablue/film.html)
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wat dabney said: I don’t think the daughters are “put” in the factories, I think they volunteer.
They volunteer because their families are impoverished, and it is the only short-term option they see to provide support.
“Growth”, which you advocate, wat, is a great idea. But it must be based on things that are renewable or will regenerate within the time we use them.
At the rate we are extracting and using oil, coal, and even uranium, they won’t … oops, get the physics right – uranium won’t regenerate ever, because it is an unstable element and will decay to lead (I think, maybe it’s thallium, I can’t be bothered checking now – it is some heavy metal).
Anyway, they can’t be the basis of growth forever anyway, because they will eventually run out.
If we use up most of the non-renewable resources without moving to the sustainable alternatives, welcome to the Mad Max world! We’ve already seen a preview of with the US invasion and occupation of Iraq.
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Liberalising trade of agricultural goods from the developing world to the developed is essential for eliminating poverty in those places. But also is the right for the developing countries to protect their markets from the developed world’s goods.
Currently the EU can produce food so cheaply (even without the explicit subsidies) that they can flood the food markets of developing countries and deny the farmers there access to the markets that allow them to develop.
Also if a country is not to remain poor for ever it must develop service industries around agriculture. The same principle applies. If unlimited investment from developed economies is allowed the developing service industries will not form.
This is *fair* trade, as opposed to “Free Trade”. Without such arrangements being possible do not expect any sympathy from developing countries regarding global environmental issues. Given such arrangements there is a good chance that agreements can be reached to allow recently developing countries to develop using western technology, controlled locally, in a different (read sustainable) way than the developed world did.
peace
W
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What’s needed is a massive pandemic to kill off a VAST number of people, there’s just the small problem that I don’t want my family and friends to go down.
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alexking,
- “Would you volunteer to work in a factory for 18 hour days at 6c an hour?”
That would really depend on the alternatives. If this was the best option available, I’d take it.
Toad,
- “They volunteer because their families are impoverished, and it is the only short-term option they see to provide support.”
Quite so.
- ““Growth” … must be based on things that are renewable or will regenerate within the time we use them. At the rate we are extracting and using oil, coal, and even uranium, they won’t …”
Oil and coal are resources to be used until they are no longer economically viable. You seem to be advocating that, since they are not infinate – that they are not “renewable”, they should never have been used and should have been left in the ground. That’s ridiculous.
- “We’ve already seen a preview of with the US invasion and occupation of Iraq.”
And there you go and spoil it with your self-indulgent conspiracy theories.
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bliss, good post. We need fair trade.
samiam – we don’t need to kill anyone off, simply use our earth fairly and we’ll all be better off.
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I suppose a factory worker in China freely chooses to work 18 hours per day for low wages in the same way an animal caught in a trap freely chooses to bite off its own leg
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Has anyone seen Wall-E? Some good graphics about the future of uncontrolled growth and its consequences.
Melamine in milk and eggs is not a spectacular example of free and unfettered trade either.
Good post, Bliss.
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I learned this very morning that Wall·E is written with an interpunct.
One does indeed learn something every day.
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Janine Says:
November 5th, 2008 at 4:27 pm
>> Melamine in milk and eggs is not a spectacular example of free and unfettered trade either.
what do you mean? I think it is quite a spectacular example of what free and unfettered trade can lead to.
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One of the reasons less people live in poverty in China is because of their One Child Policy. If most countries started limiting population growth then there would be less people living in poverty, mainly because there would be less people. But then again it is a lot easier to wait for a pandemic or start one than to try and get people to stop having kids.
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kahikatea, I think it is quite a spectacular example of what free and unfettered trade can lead to when there are
communists 
involved.
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Samiam. The world had a massive pandemic that killed off a VAST number of people in 1919. problem solved!
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You think the poor are doing badly now? just wait till socialism wins and growth becomes negative.
For this planet to become sustainable we need to reduce the legislative logjams that the Greens are helping to create so that the private sector is set free to do the things it does best, increase efficiency, develop new technology, be innovative.
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China is creating huge future problems for herself with her One Child Policy, 70 million bachelors for lack of young women, and a working age population that soon will be too small to support her elderly.
The West has achieved the same reduced population growth rates in a more “holistic” way through the reduced birth rates that occur with increased wealth.
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Kevyn
No… it is what happens when capitalism is given a free hand. The executions that follow are what happens when communism meets it head-on. Don’t confuse this.
An epidemic would be a good thing? Please….
Andrew…. Growth is going to go negative for at least a year in the USA, seriously negative. Growth is likely to go to zero for most of the planet. That’s a result of excesses of unregulated markets and a seriously broken debt-based fractional-reserve currency model. It isn’t related to socialism, capitalism or any other foolishness. More to the point, over a trillion dollars of “wealth” has been wiped off the board… and is being replaced by theft from future generations.
As for China, it is making less trouble for itself than the alternative. Considering what unrelenting population growth would have done to them, is this really worse?
The thing the private sector does best *if completely unregulated* is concentrate wealth. It is not even particularly good at choosing where the wealth gets concentrated.
Perhaps you never played a game of “Monopoly”? Do you recall how the game ALWAYS ends (if played through?) and how most people will not play it through to the end? …and why? It only works for the winner. There is only one. That’s an unregulated capitalist economic model at work. No middle class exists, or can co-exist with the wealthy… and the middle class in the USA is getting wiped out as we speak. In 20 years it will be a memory unless the democracy there manages to reverse the massive sucking up of money into the pockets of the wealthy.
At the end game in THIS game though, there is no more growth available to be had. Gains in efficiency are seldom better than linear improvements where thermodynamics are concerned. Energy available per capita is going to hit peak oil constraints and sink for quite some time while new sources are brought on-line, and those will not be as cheap as oil was. Not for many years at best.
At the end game in THIS game the climate gets ugly and wipes whole cities off the map. Starvation, War and Disease are nature’s answer to human unwillingness to exert a little self-control… and that’s if it doesn’t turn into a more toxic climate than even your worst nightmares can encompass… Back in the Permian die-off 95% of life on the planet was erased, possibly by changes in ocean chemistry. That’s the OTHER drawback of the enhanced CO2 atmosphere.
No… we do NOT want to continue this experiment with the only habitable planet we own.
BJ
BJ
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BJ, the workings of the free market had to create that trillion dollars – and much more – in the first place.
As with AGW, don’t condemn the validity of a long term trend on the basis of a short term reversal.
“The thing the private sector does best *if completely unregulated* is concentrate wealth.”
Oh, I’d argue that there’re a few other systems that are better at concentrating wealth in the hands of a few.
We’ve not seen a completely unregulated free market, so not easy to judge, often those who’ve become wealthy in so called free markets have benefitted from political largess.
Personally to reduce the trend towards the rich getting richer I’d dump all general taxes and just have a flat rate assets tax. But people should be free to practice whatever hobbies they like, for some thats accumulating wealth, so what, they can’t take it with them and if that wealth were given to others it would soon be squandered, how often do we hear the rags to rags stories of lotto winners?
You’d probably prefer the wealth to be held in trust by the state or some-such, such a policy is always an economic disaster, and those in charge of the state typically become the new rich AND powerful.
BJ, Monopoly is a board game.
“At the end game in THIS game though,…”
I’d rather see solutions brought on-line before disaster strikes, this is hard to do because government is the problem, the RMA deters many from developing renewable energy schemes.
“At the end game in THIS game the climate gets ugly and wipes whole cities off the map….”
I’m in favour of more mitigation, your claim that whole cities will be wpied off the map assumes either an unwillingness or an inability to built sea walls at the rate of ~2cm/year, if it’s an inability it’ll be because of other more pressing problems.
“No… we do NOT want to continue this experiment with the only habitable planet we own.”
Pretty much agree, but if peak oil f**ks us first, causing an economic collapse, ecological devistation will be even worse, and if enough people die those cities will be empty anyway.
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Andrew W – that three trillion dollars never actually existed, not until the point where a chunk of it became a burden upon the taxpayer. The free market didn’t “create” that money; like all “money” it is simply magicked into existance.
I’m beginning to believe those who say that energy is money, and as we get to the point of limits, then money will start to get screwed too. The infinite growth on a finite planet conundrum.
And when I say limits, I am referring to practical limits brought on by the real world, for example the impending power shortage the UK will have if it doesn’t get its finger out and build a shedload more generation before the existing stuff rots into the ground.
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Andrew
Until someone who was seconded to a government job from Goldman-Sachs managed to persuade a bunch of ignoramus congresscritters to hand out taxpayer dollars to cover the bare-assed investment bank problems with derivatives and in particular CDS paper, the money did not really exist. Now it exists as debt drawn against the long-suffering-US-taxpayers of 2020.
DBuckley is beginning to believe me. Energy is money… actually WORK is money, which is fair enough, it is supposed to represent my work in exchange for stuff… but the economic system of the world is built on the concept that DEBT is money. Fractional-Reserve Fiat currencies based on debt are what are offered as legal tender. The system as formulated CANNOT work without 3-5% growth in perpetuity. If the growth falters the money system collapses. The Austrian school of economics (A favorite of libertarians) explains this very well.
Moreover, the economic collapse is already happening. You ain’t seen NOTHIN yet… it has only started and the bear that Greenspan grew as he tried to grow his way out of trouble is going to turn the bulls into so much mince.
Finally, mitigation has limits. I am an Engineer. I know that if I build a city and I put a wall around it to keep out the sea I can COUNT on the sea eventually getting into the city. Maybe not in my lifetime but as the ocean rises and weather events grow more “interesting” and human frailty takes its toll on fail-safes and safety margins, it will eventually get in.
If I wanted to recommend a method to alter the outcomes at that level I would put controls in space to manage the solar income of the planet.
Maybe incidentally collect a boatload of energy to send back to us as well.
The problem is that we have JUST this planet and growth is no longer good for it or for us. The age of the zero sum game is upon us.
respectfully
BJ
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