Poverty issues
In continuation of the topic of global overview more detailed analysis of poverty trends: "There is considerable debate around global trends in poverty and inequality (Ravallion, 2003). For example, there is disagreement about the amount of decline, and a few argue that the data are insufficient to determine whether poverty levels have changed (Reddy and Pogge, 2003).
As described above, according to World Bank estimates, there has been an increase in the number of people in poverty in Europe, Central Asia, Latin America and Africa. In contrast, East and South Asia has seen a decline in the number of people in poverty (using $1 a day). Also,the percent of people in poverty has also increased in Europe and Central Asia, and the Middle East and Africa, while the percent in poverty declined in other areas.
On the other hand, Bhalla (2002) argues that there were large declines in poverty rates, from 37% in 1985 to 13% in 2000. Similarly, Sala-i-Martin (2002 a, b) estimates that poverty rates and counts declined sharply over the last several decades. For example, the one-dollar-a-day poverty rate declined from 20% in 1970 to 5% in 1998 (Sala-i-Martin, 2002 a). Bhalla's and Sala-i-Martin's estimates of recent poverty are much lower than the World Bank estimate, of 23% in 1999.
Many researchers discuss the apparent contradictions in counting world poverty rates and trends. For example, Ravallion (2003) argues that the differences are due to measurement issues, e.g., how poverty is defined, use of absolute versus relative poverty, what levels are used to define poverty, using household or person as the unit of measure and so forth. For example, poverty could be measured using a relative poverty indicator, in which the 'standard' for poverty increases as a country's income increases, or using an absolute poverty indicator, such as "what poverty means in poor countries", or $1 a day (Ravallion, 2003). Ravallion (2003) indicates that any measure is somewhat arbitrary, but if the measure is used consistently, it can still be used to measure change over time.
Ravallion (2003) also points out that poverty data are often questionnaire based, and there are a number of problems in using surveys. For example, questionnaires from different countries may use different definitions (e.g., using income versus consumption to measure well-being) or may ask about different time periods (e.g., last year, last month, etc). All of these variations may result in finding different levels of poverty. Others may also use national accounts to estimate poverty, but these also have problems, for example from higher income people underreporting their income (Ravallion, 2003). Bhalla (2002) compares estimates using survey data and national accounts (table 9.1) and shows that the two methods give similar estimates from 1950 to 1980 but substantial differents in 2000, with national accounts showing much lower percents and counts.
Reddy and Pogge (2003) criticize the World Bank estimates, and argue for a better measure. According to Reddy and Pogge (2003), the main problems with the World Bank estimates are, "The Bank uses an arbitrary international poverty line unrelated to any clear conception of poverty. It employs a misleading and inaccurate measure of purchasing power "equivalence" that creates serious and irreparable difficulties for international and inter-temporal comparisons of income poverty. It extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. The systematic distortion introduced by these three flaws may have led to an understatement of the extent of global income poverty and to an incorrect inference that it has declined" (Reddy and Pogge, 2003, abstract).
In addition, others argue that poverty is a multi-dimensional issue, beyond just income (Deaton, 2004; Kingdon and Knight, 2003; Mowafi, 2004; Rojas, 2005). For example, income does not account for other critical aspects of well being, such as fulfilment of basic needs, social functioning, safety from insecurity (e.g., Kingdon and Knight, 2003), and lack of access to these basic necessities is seen by many as a more important indicator of poverty than just income alone (Mowafi, 2004). In addition, people are more than consumers, so that exclusion of these other aspects of life shows an incomplet picture of well being (Rojas, 2005).
The issue of poverty measurement has not yet been solved, and continues to be examined.
In sum, a decline in poverty would be consistent with other changes among less developed countries, such as improved literacy rates, declines in infant mortality rates, increased political freedom, increased newspapers, televisions and radios per capita, and increase in per capita GDP (Shackman, Liu and Wang, 2003). However, that does not seem to be the pattern emerging, but rather there is decline in some areas and increases in others. In addition, there are a number of problems with data and methods, and conclusions are therefore our 'best guess', but not by any means certain."
Source: gsociology.icaap.org
As described above, according to World Bank estimates, there has been an increase in the number of people in poverty in Europe, Central Asia, Latin America and Africa. In contrast, East and South Asia has seen a decline in the number of people in poverty (using $1 a day). Also,the percent of people in poverty has also increased in Europe and Central Asia, and the Middle East and Africa, while the percent in poverty declined in other areas.
On the other hand, Bhalla (2002) argues that there were large declines in poverty rates, from 37% in 1985 to 13% in 2000. Similarly, Sala-i-Martin (2002 a, b) estimates that poverty rates and counts declined sharply over the last several decades. For example, the one-dollar-a-day poverty rate declined from 20% in 1970 to 5% in 1998 (Sala-i-Martin, 2002 a). Bhalla's and Sala-i-Martin's estimates of recent poverty are much lower than the World Bank estimate, of 23% in 1999.
Many researchers discuss the apparent contradictions in counting world poverty rates and trends. For example, Ravallion (2003) argues that the differences are due to measurement issues, e.g., how poverty is defined, use of absolute versus relative poverty, what levels are used to define poverty, using household or person as the unit of measure and so forth. For example, poverty could be measured using a relative poverty indicator, in which the 'standard' for poverty increases as a country's income increases, or using an absolute poverty indicator, such as "what poverty means in poor countries", or $1 a day (Ravallion, 2003). Ravallion (2003) indicates that any measure is somewhat arbitrary, but if the measure is used consistently, it can still be used to measure change over time.
Ravallion (2003) also points out that poverty data are often questionnaire based, and there are a number of problems in using surveys. For example, questionnaires from different countries may use different definitions (e.g., using income versus consumption to measure well-being) or may ask about different time periods (e.g., last year, last month, etc). All of these variations may result in finding different levels of poverty. Others may also use national accounts to estimate poverty, but these also have problems, for example from higher income people underreporting their income (Ravallion, 2003). Bhalla (2002) compares estimates using survey data and national accounts (table 9.1) and shows that the two methods give similar estimates from 1950 to 1980 but substantial differents in 2000, with national accounts showing much lower percents and counts.
Reddy and Pogge (2003) criticize the World Bank estimates, and argue for a better measure. According to Reddy and Pogge (2003), the main problems with the World Bank estimates are, "The Bank uses an arbitrary international poverty line unrelated to any clear conception of poverty. It employs a misleading and inaccurate measure of purchasing power "equivalence" that creates serious and irreparable difficulties for international and inter-temporal comparisons of income poverty. It extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. The systematic distortion introduced by these three flaws may have led to an understatement of the extent of global income poverty and to an incorrect inference that it has declined" (Reddy and Pogge, 2003, abstract).
In addition, others argue that poverty is a multi-dimensional issue, beyond just income (Deaton, 2004; Kingdon and Knight, 2003; Mowafi, 2004; Rojas, 2005). For example, income does not account for other critical aspects of well being, such as fulfilment of basic needs, social functioning, safety from insecurity (e.g., Kingdon and Knight, 2003), and lack of access to these basic necessities is seen by many as a more important indicator of poverty than just income alone (Mowafi, 2004). In addition, people are more than consumers, so that exclusion of these other aspects of life shows an incomplet picture of well being (Rojas, 2005).
The issue of poverty measurement has not yet been solved, and continues to be examined.
In sum, a decline in poverty would be consistent with other changes among less developed countries, such as improved literacy rates, declines in infant mortality rates, increased political freedom, increased newspapers, televisions and radios per capita, and increase in per capita GDP (Shackman, Liu and Wang, 2003). However, that does not seem to be the pattern emerging, but rather there is decline in some areas and increases in others. In addition, there are a number of problems with data and methods, and conclusions are therefore our 'best guess', but not by any means certain."
Source: gsociology.icaap.org
2 Comments:
This is an interesting piece of information, thanks for sharing out.
The Problem:
This is an attempt to state it simply, because if you understand the problem, then you're going to see the solution clearly as well. If it doesn't make sense the first time you read it, try reading it again. Eventually, the whole picture will sink in...
A quick history of money
1) Once, gold and silver were considered the only ''real'' money, but it was heavy and risky to carry around...
2) So people paid goldsmiths to store the money, and got paper receipts for it...
3) After a while, people used the receipts like money, and left the gold in the bank most of the time. So the bankers got clever and came up with a scam...
4) The banks printed off receipts for more gold than they actually had, and ''loaned'' those receipts out to charge interest on it. They kept their fingers crossed, hoping that not more than a few people would come in asking to redeem receipts for real gold at the same time. This let them make a lot of money charging interest, because they could charge interest on MONEY THEY DIDN'T HAVE.
An analogy can be made using property and titles. Here's the scam in another way:
Step 1: Acquire a vacation home.
Step 2: Sell the title to the home to one person.
Step 3: Sell the title to the home to ANOTHER person.
Step 4: Hope both of them don't show up on the same weekend!
Fractional reserve banking lets a bank say to a depositor that all his money is safe and sound at the bank, while at the same time they get to loan most of it out to someone else and charge interest on it. So there are two people with a legitimate claim to the same pile of money. So whose is it, really? And where is it?
This profitable scam runs the risk of discovery when too many customers ask for what is theirs all at the same time. This is called a run on the bank, and the best the banks can do is call in their loans and see how much money they can cough up, which is invariably far less than what people believed they had deposited.
The story of the vacation home is a good analogy of how banking works today, except for one important thing: there is no home. Because our money is no longer backed by gold, we have all been trading titles to property which does not even exist! Paper backs paper, and all they represent are promises to pay. This is the reality of money, and is quite different from how most of us expect it to be.
What's the result?
1) Loaning money while claiming it is still on deposit increases the money supply, essentially creating more money (otherwise deposits would vanish). In essence, for the bank to have your cake and loan it too, it must create more cake. This increase in money supply is the cause of inflation.
2) Almost every dollar that exists is owed to a bank somewhere, because at some time in history, it was created when it was loaned out.
3) The amount of money owed to banks is more than all the money in existence! So we cannot possibly get out of debt under this system. The bulk of this debt is in the form interest, which is an arbitrary amount of money banks demand in return, but never gave.
4) There is no money, in the real sense. Just checks, data stored on computers, and promises. It is all created by typing on a keyboard, and signing signatures. The only tangible assets in regard to money anymore is the collateral we pledge when we ask for a loan. The money they loan you comes from nowhere, but the assets you lose in foreclosure are real!
5) Because the US government borrows from the Federal Reserve, bankers have the power to influence our society and government by controlling finance. They decide to create (or not create) money depending on who's asking, and for what. They choose what projects get funded, and let other needs wither on the vine by starving them of working capital. This subtle yet immense power is more than enough to undermine democracy, and guide the course of a nation's history.
So what's the solution?
Simple. The public must demand that money must not be created by loaning it into existence. It must be something that is openly and publicly controllable, issuable, accountable, and interest-free. Otherwise, a class of parasites will rise to power in society by cleverly disguising the fact that the money they are creating, spending, and controlling us with is MONEY THAT ISN'T EVEN REAL.
What I find amazing is that here, there, and everywhere people are saying this bank is insolvent, that business is bankrupt... when in reality all the "money" they have or owe isn't real money anyway.
All these crises are not a threat to any person, only a threat to the system. We as a people can simply discard all this mess and start over with money that represents value instead of debt.
They make everything sound so frightening; they themselves are worried that they need more ability to lie, cheat, steal, and coerce to keep their defective house of cards holding together. It will never happen... this system was doomed to fail, and no amount of glue is going to stop that from happening.
The debts Americans have accrued are simply arbitrary amounts of profit the banks demand in return for printing the money we use to buy and sell. There are problems with this:
1. Since money comes into existence by being PRINTED or typed into computers, where do they get off calling it a loan? They never worked for it, they never had it before you borrowed it, and its supply is as unlimited as the willingness to "borrow"... therefore they suffer no risk of loss of ANYTHING they can't replace if you don't "pay" them back.
What they DO risk losing, however, is the ability to decide what we can or cannot do. Using their ability to determine what gets financed, they have in essence the ability to dictate to the public what projects they support and what needs will get neglected and starved of funding. When they decide to “finance” your endeavor, essentially what they are doing is giving you permission. The permission they give you is as scarce and valuable as the paper it is printed on.
The last thing they fear losing is the power to foreclose. When they loan you money, it is created from thin air. But the assets you risk losing in foreclosure are real!
2. The amount of debt owed is more than the total amount of money in existence. How can we be forced into fulfilling any kind of contractual obligation which is by its very nature, IMPOSSIBLE? This bizarre fact comes from the nature of fractional reserve banking and compound interest... eventually there is nothing left but debt in the world, and all the real assets are owned by the bank.
We must understand that WE DON'T NEED THEIR PERMISSION TO PROSPER. Their money is more of a HINDRANCE than an asset. We can create our own!
We must also understand that the banks and government are not the savior to our situation... they are the problem. THEY will never give us what we ask for. We must demand it of ourselves, and DENY them authority to do it anymore.
We MUST:
Make money a thing that the public can create, not private banks. Either way money has to be created somewhere, better that it be a publicly accountable, controllable, and issuable place rather than a secretive, scarce, easily manipulated, and interest-bearing debt as the banks are doing right now.
We MUST:
Deprive the current system of its authority to force a corrupt and destructive system upon us.
We MUST:
Realize that the responsibility lies with US to make the changes, because so long as we trust someone else to do it, they will always use the privilege abusively.
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