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April 07, 2005

Comments

dearieme

"What matters to me, though, is whether people are the victims of injustice or of misfortune which they were unable to insure against." Well said.

Franco

"The lesson here is simple. The official poverty measure is meaningless."

A single number summary is often very useful and no one thoughtful would ever assume it told the whole story. If income distributions could be truly all over the map (like some of your contrived examples) then perhaps it would be (nearly) meaningless. However, actual income distributions fall in a relatively limited range of shapes and so "the poverty line" surely conveys some information, and might even be quite informative for a single number.

Think of it this way, if a commenter told you that they were below their country's poverty line that would not be a meaningless statement. Even without knowing where they were from, you would surely judge that they weren't doing great.

Of course, policy should not be based solely on reducing the number of people below this line. But, if your goal is improving the plight of the least well off, the effect of a policy on the people below the poverty line would be a pretty useful first approximation of effectiveness.

Ian

Wasn't it Bill Clinton who said "it's the growth, stupid" ?

Any calculation of inequality of this kind fails simply because the growth of the lower end of the scale compared to the upper end has to exceed the ratio of the inequality for the gap to close, which hardly ever happens, even though the lower end can be growing at a faster rate than the upper end, which in reality is closing the gap.

As long as the upper end continues to grow, at whatever marginal rate, the inequality will seemingly get bigger, dispite the fact that a small percentage growth of a large income has hardly any difference to that person whereas a large increase in income for a poor person is of major significance.

The "old left" all too readily accept the view that it's okay for everyone can be poor in order to eliminate inequality, and it's easier to take money away from people than to generate more of it. The notion of poverty being related to inequality is to suppress the capitalist solution to poverty, i.e. make everyone rich whilst actually increasing inequality (like Thatcher's infamous "trickle down" policy).

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