Over at The Economist some musing on whether there really is a poverty trap that developing economies can get stuck in. and the answer is yes, of course there is: but also that it’s potentially possible to escape such traps.
DO POVERTY traps exist? Academics seem to think so. According to Google Scholar, so far this year academics have used the phrase “poverty trap” 1,210 times. (Paul Samuelson, possibly the greatest economist of the 20th century, was mentioned a mere 766 times). Some of the most innovative work in development economics focuses on how individuals’ lowly economic position may be perpetuated (geographical and psychological factors may be important).
But, says a new paper by two World Bank economists, the idea of poverty traps may be overblown. They focus on national economies and present some striking statistics. In the graph below, a country that manages to get to the left side of the line has seen real per-capita income improvement from 1960 to 2010.
So that’s the empirical evidence. But there’s also a basic logical point that we can make.
Three hundred years ago all countries were poor. Now some countries are not poor and some countries still are. It’s thus logically certain that it is possible to escape whatever poverty traps there are. For some places have done it. It’s also equally true that there must be things that prevent that economic growth from happening for some places haven’t had that economic growth. Thus we can assert, without possibility of contradiction, that sure, there are poverty traps but there’s nothing inevitable about them at all. It is possible to escape for some have done so.
New estimates of future population size have only been out a day and already they’re being misunderstood. Firstly they’re being misunderstood by the people who actually made them:
Rising population could exacerbate world problems such as climate change, infectious disease and poverty, he said. Studies show that the two things that decrease fertility rates are more access to contraceptives and education of girls and women, Raftery said. Africa, he said, could benefit greatly by acting now to lower its fertility rate.
Piffle, stuff and nonsense. It’s a well known finding that access to contraception drives, at most, 10% of changes in fertility. It’s the desire to limit fertility which, unsurprisingly, drives changes in fertility. And the education of girls and women, while highly desirable, is a correlate, not a cause, of declining fertility. Economies that are getting richer can afford to educate women: economies that are getting richer also have declining fertility. It’s the getting richer that drives both.
But that’s not enough misunderstanding. We’ve also got The Guardian displaying a remarkable ignorance on the subject:
Many widely-accepted analyses of global problems, such as the Intergovernmental Panel on Climate Change’s assessment of global warming, assume a population peak by 2050.
That’s not just piffle that’s howlingly wrong. The IPCC assessments do not assume any such damn thing. For example, the A2 family, which is the family that the entirety of the Stern Review is based upon (and yes, it’s one of the four families used by the IPCC) assumes a 15 billion global population in 2100. That is, it assumes a significantly larger population at that date than even these new estimates do. But you can see how this is going to play out, can’t you? Population’s going to be larger therefore we must do more about climate change: when in fact these new estimates show that population is going to be smaller than the work on climate change already assumes.
As we might have said here before a time or two we don’t mind people being misguided in their opinions and thus disagreeing with us. We pity them for their mistakes of course, but that’s as nothing to the fury engendered by people actually being ignorant of the subjects they decide to opine upon.
Some say that the nationalist leader, Alex Salmond, has got what he really wanted – a continuation of subsidies from England, but the promise of more power for his Parliament in Edinburgh’s Holyrood. The truth is, he wants a lot more ‘devo max’ than the main parties are offering, with wide powers over taxation and spending.
And this is likely to happen quite fast. Former Labour Prime Minister Gordon Brown predicts there will be an official paper on new power-sharing arrangements in October. A White Paper, setting out the government’s proposals, will be published by St Andrew’s Day, at the end of November. A draft Scotland Act will be published by Burns Night, at the end of January 2015, though it will not make it through the legislative process until a new Westminster Parliament is elected in June 2015.
The three main parties, spooked by the apparently narrowing polls just before the vote, signed a pledge, all promising more devolution, in the hope of buying off a seemingly strengthening Yes vote. (In fact, the polls had been very consistent, forecasting a strong No vote, over 23 months. Perhaps the last minute narrowing was just Scottish electors trying to give the Westminster politicians a fright. Which worked.)
The Labour Party wants to give Holyrood power to vary income tax by 15p, meaning that the top 50p rate could be restored – something they dream of, but which would see quite a number of top Scottish executives quietly moving their domicile south. The Scottish Labour Party also wants to devolve attendance allowance (a benefit to carers of disabled people) and housing benefit (so it can scrap the so-called ‘bedroom tax’).
The Conservatives want income tax completely devolved, meaning that the Scottish Parliament would raise roughly 40% of its total budget through devolved taxes, and they would devolve housing benefits and attendance allowance too.
The LibDems want Scotland to have more power over income tax, inheritance tax and capital gains tax, to create a new ‘federal’ relationship between the nations of the UK, and to move the block grant from Westminster to Scotland on ‘needs based’ principles.
It always comes as something of a shock to us to see public policy being decided upon the basis of information that simply isn’t true. We expect a bit of political argy bargy, of course we do, for different people weight different outcomes, err, differently. Equity and efficiency, inequality and economic freedom, we might agree or disagree on those weights that different people place upon them but can still regard such opinions (for opinions they are and no more than that) as being valid. But that’s very different from our being told pure porkies, having supposed facts deployed, facts which just are not a reflection of reality. As the Original Tax Dodger in Chief himself pointed out, comment is free but facts are sacred.
And so it is that we come back to a favourite subject of ours, the relationship between the prevalence of obesity and the costs of it to the NHS.
Mr Stevens, who took up post last April, said: ‘Obesity is the new smoking, and it represents a slow-motion car crash in terms of avoidable illness and rising health care costs.
‘If as a nation we keep piling on the pounds around the waistline, we’ll be piling on the pounds in terms of future taxes needed just to keep the NHS afloat.’
The problem with this is that it simply is not true. Obesity does not cost the NHS money: on balance it saves it. This is something we’ve been pointing out for a number of years now. The source is here and the finding is:
Obesity is a major cause of morbidity and mortality and is associated with high medical expenditures. It has been suggested that obesity prevention could result in cost savings. The objective of this study was to estimate the annual and lifetime medical costs attributable to obesity, to compare those to similar costs attributable to smoking, and to discuss the implications for prevention.
Although effective obesity prevention leads to a decrease in costs of obesity-related diseases, this decrease is offset by cost increases due to diseases unrelated to obesity in life-years gained. Obesity prevention may be an important and cost-effective way of improving public health, but it is not a cure for increasing health expenditures.
When someone’s arteries explode at the age of 60 from that 15 cheeseburger a day habit then the NHS doesn’t have to pay for another 25 years’ worth of hip replacements. This saves the system money as a result of the shorter lifespan.
This is well known: and yet we have the CEO of the NHS telling us the opposite. And further, he’s demanding public action that he should know will make his financial problems worse, not better.
All of which leaves us with that essential question: how did we end up being ruled by the ignorant?