Poverty

Globalization and Poverty

The last forty years have seen a massive and historically unprecedented decline in global poverty.

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Remember the good life during the 1970s? If you do, your experience is not likely to have been a typical one. In fact, the economic liberalization and globalization that started in the late 1970s and accelerated in the 1980s, has led to a massive and historically unprecedented decline in global poverty. Contrary to much of the public perception, liberalization and globalization have not led to an increase in U.S. poverty rates, which continue to fluctuate within a comparatively narrow and, by historical standards, low, band.

Let us look at the global picture first. In 1981, the year Ronald Reagan became America's 40th President, 44.3 percent of the world lived in extreme poverty (i.e., less than $1.90 per person per day). Last year, it was 9.6 percent. That's a decline of 78 percent. In East Asia, a region of the world that includes China, 80.6 percent of people lived in extreme poverty. Today, 4.1 percent do—a 95 percent reduction. Even in sub-Saharan Africa, a relatively under-performing region, the share of the population living on less than $1.9 per day dropped by 38 percent.

Have those advances come at the expense of the American worker? They have certainly led to economic dislocation, but America's poverty rate has remained relatively steady. When talking about U.S. poverty rates, it is important to keep in mind that extreme poverty in America is vanishingly rare. Instead, our poverty rate is determined by the U.S. Census Bureau "by comparing pre-tax cash income against a threshold that is set at three times the cost of a minimum food diet in 1963, updated annually for inflation using the Consumer Price Index. It's also adjusted for family size, composition, and age of householder."

According to both the Nobel Prize-winning economist Angus Deaton and Cato's Michael Tanner (who relied on U.S. Census Bureau data), the American poverty rate has moved between 15.2 and 11.3 percent over the last four decades. On three occasions (1983, 1993 and 2010) it reached over 15 percent of the population. Those were post-recession peaks that disappeared as soon as the economy recovered.

In fact, America experienced her lowest poverty rate since 1974 in 2000, when openness of the American economy, as measured by the Fraser Institute's Economic Freedom of the World index, was at its highest. Since then, America's economy has become less free. Could that be the reason why the American recovery from the Great Recession was so sluggish and why America's poverty rate has not retreated as fast as it did on previous occasions?

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  1. Since then, America’s economy has become less free. Could that be the reason why the American recovery from the Great Recession was so sluggish and why America’s poverty rate has not retreated as fast as it did on previous occasions?

    WRONG. Reason just wants the Koch brothers to get still a BIGGER piece of the pie and the rest of us mere morsels of the economic prosperity that yet heavier regulation would otherwise yield.

    1. I like pie!

      1. No you don’t!!!! Such a freakin liar. You like brains dude. That’s all you do is sloth around muttering BRAINS most of the day.

        Sometimes I hear you yell HEAD while in the wood shed, but isn’t your junk rotted and dead? Or are you riding like imitation Santa who banged Samantha in his sled bed?

        1. Brain pie. It’s like mincemeat but with more neurons.

    2. If Hillary won she would have mandated everyone be dressed in pantsuits. One world pantsuit. North Korea loved the news about the mandate, as that is the style of many a dictator and despot.

      Reason staffers should all wear pansuits pose for a group photo, send the photo, a box of tissues, a piece of glass and a stone to Hillary. The wrapping paper should be made of her e-mails

      1. Hillary has the ethics of Joe Stalin, the mannerisms of Miss Piggy, and the style of Chairman Mao, which is to say about the latter …. not too far from looks of the N. Korean dictator.

        1. Umm, Hillary who??

    3. With a moniker of “Fist of Etiquette”, it suggests your post is sarcasm, but I really can’t tell.

      The government teachers obviously don’t teach it anymore, but nothing is more correlated to prosperity, in its many forms, than freedom, and Tupy makes a strong case for it, even though he doesn’t state it outright. He gets close with “n fact, America experienced her lowest poverty rate since 1974 in 2000, when openness of the American economy, as measured by the Fraser Institute’s Economic Freedom of the World index, was at its highest.”

      This is also a strong case for free trade, unlike what Trump and economic populists want. Does anyone here know the economic results of the Smoot-Hawley Tariff Act of 1930? The US GDP fell by almost half within 3 years, before the act was repealed and both Smoot and Hawley (maybe I should call them Hoot and Smalley, but it wasn’t funny) who were Republicans, both lost their offices. Trump may very likely lead us into disaster (not sure the country can survive this kind of contraction given the promises regarding Social Security, Medicare and to pay the official debt).

      Perhaps I should just engage in the wishful thinking of Hope for Change, and Hope Trump was lying about his trade policies to get elected. It wouldn’t be much different than the majority of the country in 2008 and this election.

  2. I preferred my early 80’s steel mill job making seamless pipe for $30,000 + per year. Fuck Reagan. He changed Pittsburgh into poverty/divorce/crime central and America into a police state.

    1. Reagan didn’t do that to Pittsburgh.

    2. And fuck Hinckley for being a poor marksman.

      1. gaoxiaen, your hatred seems to be preventing you from using your reason. And why should the country favor people in the steel industry by increasing tariffs on steel, which then would result in the manufacturers that use steel in the products, from losing their jobs to overseas competitors who don’t have to pay as much for their steel?
        There are far more people employed manufacturing products using steel, than those who produce it.

        And frankly, Regan’s record wasn’t one of free trade. Go read cato.org/pubs/pas/pa107.html which is Regan’s record on trade, and just search for “steel” in the article. Also useful object.cato.org/sites/cato.org/files /serials/files/cato-journal/2011/10/cj3n3-4.pdf

        One can make a case that Nixon’s anti-free trade intervention the steel import market, is what set up the steel industry, plus other steel using industries, for losses later.

    3. Yeah bro, Reagan closed your steel mill down single handedly! He kicked in the door, waved the 44, and said you punk ass workers won’t be makin’ steel here no more! On the way out he called some dude’s mother a dirty whore and said he banged her on the bathroom floor of some run down candy store.

      1. I didn’t have that much of a problem with the steel mill shutdowns. I went to college and emigrated. The WOD to distract the media from Iran-Contra was just the icing on the cake.

      2. Vampire, you give good rhyme.

    4. “He changed Pittsburgh into poverty/divorce/crime central”

      That was the the other Johnson.

      1. I voted for Ed Clark in 1980. I could accept “free trade” if it included free trade within and with the USA and other countries. It didn’t.

  3. For many people, the problem with globalization is that it offers many more Joneses to keep up with.

    1. What if the Joneses are Jonesing??

    2. I wish globalists would get together and try to keep up with Jim Jones.

  4. Focusing on material well-being neglects spiritual well-being. What profiteth it a man if he gain the world but lose his soul? It’s a shame you’re applauding the crass struggle to literally rape Mother Gaia for a bologna sandwich and a pair of pants rather than encouraging the noble savages to die with dignity and thereby serve as a moral lesson for the rest of us about what’s really important in life.

    Those people who were living on less than $2 a day? They were living as one with Nature. Sure, a lot of them died of dysentery or mosquito bites or starvation at a young age but I’m sure they died happy knowing they served their function as an example of somebody the rest of us should be grateful we’re not. And isn’t that what’s really important, knowing your life has had some meaning? Look at how many of us are still struggling to find our meaning and purpose in this world and there’s millions of lucky little starving orphans all over the world that don’t have to spend a single moment dealing with that philosophical anguish. Oh, how I envy them their peace and contentment, secure in the knowledge of their place in the world.

    And you heartless bastards want to take that away from them by exposing them to the evils of things like clean water and plentiful food, electricity and indoor plumbing.

    1. “What profiteth it a man ”

      About 3-fiddy.

  5. +1 mob of Somali adolescents with AK-47’s

  6. So in fact what the data shows is that while poverty rates have been decreasing around most of the world, in the US it bottomed in 74 and has been elevated from that 74 minimum since.

    40 years without improvement in poverty rates in the US.

    Make America Great Again.

    1. They keep changing the poverty definition. The chart is meaningless eye-candy.

  7. Reason knows why the caged bird sings. What with wifi and health care advancements, it’s better off, really.

    Dude. There’s an actual goddamned homeless guy posting in the commentariat. And these over-educated jobbed-up TITS just won’t stop banging that drum about how fucking wonderful everything is if you just consider how many third-world people have access to cell phones and running water.

    This may be the Reason topic that makes me most cross-eyed contrarian.

    Someone page me when these staffers get tired of preaching how wonderfully everything’s turned out for the better, taking the long aim and one thing with another and all in all and assuming all humanity is just one big collective wherein no single individual experience truly counts and shit.

    *mutters darkly*

    *goes to fetch another cuppa*

    1. Your comment reminded me of J sub D and how much I miss him. Now I’m getting all verklempt; Thanks a lot Hamster.

    2. I’m also a contrarian on this subject. I’m in favor of people having roofs, food and water. But I wonder how much of this is actually wealth derived from human labor (the only source) and how much is debt ( i.e. quantitative easing). What percentage has equity in anything like real property, precious metals, machinery or anything other than depreciating assets. What percentage can leave their children with anything except debt. Do they have anything that can’t be stolen from them in the next legislative session, or by the local sheriff, or by the neighboring tribe or by the local hospital or the next wall street bubble?
      “Economic dislocation” is a euphemism for a lot of people who have to face the fact that decades of their labor have turned into dust because Top Men decided to move them to the next square on the global chess board. If a 70 year old coal miner in Kentucky dies in poverty while a 2 year old in Africa gets an opportunity to survive into adulthood it might be worth it in the macro. But in the end they’re both owned by the World Bank, The WHO, the UN, the EU and the rest of the globalist elite.
      “mutters darkly in assent”
      “opens another Huber Bock”

  8. My mothers neighbour is working part time and averaging $9000 a month. I’m a single mum and just got my first paycheck for $6546! I still can’t believe it. I tried it out cause I got really desperate and now I couldn’t be happier. Heres what I do,

    ……………… http://www.Nypost55.com

    1. Yet another example of the historic decline of poverty. Good for your Neighbour and you Mum.

  9. Funny line just heard on the radio: “The democrats haven’t been so upset (over Trump’s win) since the Republicans outlawed slavery. “

    1. Another line: “Because of the way the left has behaved since the election, if we held the election today, Trump wouldn’t win by the skin of his teeth, he would win in a massive landslide.”

  10. ” Since then, America’s economy has become less free. Could that be the reason why the American recovery from the Great Recession was so sluggish and why America’s poverty rate has not retreated as fast as it did on previous occasions? ”

    No, of course that’s not what it is.
    We need to tax the wealthy more and force multinationals to manufacture their products here. Insularity has been superb for the North Korean economic model. We need American Juche Bitchez!

  11. I miss the Carter gas lines, and the 3 jobs I had. Pretty much like now but without the gas lines. Thanks small oil!

  12. Material wealth and comfort as the sole indicator of improvement.

    The Last Men stand among us.

    1. Sex, drugs, and rock & roll are the indicators of improvement. And hot-rod Harleys.

  13. $1.90 in 1980 had the same buying power as $5.86 in 2016

    1. I got that from the innertubes.

      1. That’s where gold helps.

    2. I’m pretty sure that $1.90 is inflation adjusted to 2016 or 2015 dollars.

      Not that many years ago the “extreme poverty” amount was one dollar a day, which shows you that inflation continues apace.

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  15. “The last forty years have seen a massive and historically unprecedented decline in global poverty.”

    And not one mention of Borlaug’s green revolution that nearly doubled food production rates across the globe from the 1960s onward.

    FFS. Stupid is as stupid does.

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  17. Gawdallfreakingmighty.

    Yeah America may be stagnant but at least India and China are doing better. And hey – Somalia’s coming along too. So buck up serfs!

    our poverty rate is determined by the U.S. Census Bureau “by comparing pre-tax cash income against a threshold that is set at three times the cost of a minimum food diet in 1963, updated annually for inflation using the Consumer Price Index. So – hmm – as long as the poor are targeted to spend 33% of their income on food, adjusted for political purposes using bogus stats; then they are obviously not REALLY poor even if they now have to spend 40% of their income on rent because we are blowing housing bubbles and pretending that that is ‘growth’

    Question – Does anyone really wonder why libertarians get characterized as tools on economic issues?

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