5 ms·

> what really limits the welfare of your average consumer is the production capacity of the economy A counterpoint: some 795 million people in the world do not

by pg314 10y ago

> what really limits the welfare of your average consumer is the production capacity of the economy A counterpoint: some 795 million people in the world do not have enough food to lead a healthy active life. That's about one in nine people on earth. [1] I do not think that is because of the production capacity of the economy. A little redistribution would go a long way... [1] https://www.wfp.org/hunger/stats https://www.wfp.org/hunger/stats

savanaly 10y ago
Right, and if you redistributed the monetary wealth down to the starving people, they would quickly buy up all the slack in the existing food chain and still not have enough food. If we're lucky and the free market is allowed to operate from there (oops-- hope the government didn't institute a price ceiling for food when the price shot up or this next part won't happen!) then some yacht factory somewhere will be broken down and recreated as a farm to make the now high in demand (and profitable) food and in the end the production capacity of the economy would satisfy those 795 million. So we're not in disagreement, but I think the distinction between redistributing money and reorienting the supply side of the economy to be more egalitarian is very important.
Lazare 10y ago
You're making the mistake that OP was warning of, which is conflating a stock and a flow. If you want to talk about people's purchasing power, do that. If you want to talk about people's wealth, do that. Conflating the two just leads to confusion and erroneous conclusions. And in case it's not obvious, consider: Person A just graduated with a law degree from Harvard; they have negative net wealth. Person B is a retiree who lost their retirement savings in a Ponzi scheme; they still have a fair chunk of equity left in their house, but they've already got two mortgages Which one do you think is going to have trouble buying food? Amartya Sen won a Nobel for helping point out how misleading a simplistic analysis can be here.
nikcub 10y ago
That number is depressing at first sight, and if you chart it you find that in the previous decade it has increased about 10% - in raw terms. But if you want the "glass half full" view - zoom out even further and chart further back into history and measure proportion of global population in absolute povery, poverty, living on $1.25 or less (adjusted) per day, and you get charts like this: http://s3.amazonaws.com/content.washingtonexaminer.biz/web-producers/033015Global-poverty-chart.png http://s3.amazonaws.com/content.washingtonexaminer.biz/web-p... and individual cases like China, which are just amazing: http://iresearch.worldbank.org/PovcalNet/images/ChinaSpecialNoteChart1.png http://iresearch.worldbank.org/PovcalNet/images/ChinaSpecial... and you're more hopeful that we'll solve global hunger and poverty in our lifetimes. It wasn't redistribution that caused it - on the contrary the evidence is that previously planned economies opening up reversed their fortunes (no co-incidence on where that China chart begins to show progress). The major international aid orgs now almost entirely agree that food aid and humanitarian action should be short-term and a stop gap. The solutions are in trade, access to credit, access to markets, food engineering and sustainability, education, empowering the entire population (ie. no sexism, racism, etc.) political stability, etc. [0][1] It's why I completely agree with grandparent OP that the "division" performed is misleading - the economy isn't a fixed size nor is the distribution zero-summed. We can lift the rest of the world up to our level rather than meeting in the middle. [0] https://www.wfp.org/stories/10-ways-feed-world https://www.wfp.org/stories/10-ways-feed-world [1] http://borgenproject.org/10-ways-stop-world-hunger/ http://borgenproject.org/10-ways-stop-world-hunger/

by pg314 10y ago

savanaly 10y ago

Right, and if you redistributed the monetary wealth down to the starving people, they would quickly buy up all the slack in the existing food chain and still not have enough food. If we're lucky and the free market is allowed to operate from there (oops-- hope the government didn't institute a price ceiling for food when the price shot up or this next part won't happen!) then some yacht factory somewhere will be broken down and recreated as a farm to make the now high in demand (and profitable) food and in the end the production capacity of the economy would satisfy those 795 million. So we're not in disagreement, but I think the distinction between redistributing money and reorienting the supply side of the economy to be more egalitarian is very important.

Lazare 10y ago

You're making the mistake that OP was warning of, which is conflating a stock and a flow. If you want to talk about people's purchasing power, do that. If you want to talk about people's wealth, do that. Conflating the two just leads to confusion and erroneous conclusions. And in case it's not obvious, consider: Person A just graduated with a law degree from Harvard; they have negative net wealth. Person B is a retiree who lost their retirement savings in a Ponzi scheme; they still have a fair chunk of equity left in their house, but they've already got two mortgages Which one do you think is going to have trouble buying food? Amartya Sen won a Nobel for helping point out how misleading a simplistic analysis can be here.

nikcub 10y ago

That number is depressing at first sight, and if you chart it you find that in the previous decade it has increased about 10% - in raw terms. But if you want the "glass half full" view - zoom out even further and chart further back into history and measure proportion of global population in absolute povery, poverty, living on $1.25 or less (adjusted) per day, and you get charts like this: http://s3.amazonaws.com/content.washingtonexaminer.biz/web-producers/033015Global-poverty-chart.png http://s3.amazonaws.com/content.washingtonexaminer.biz/web-p... and individual cases like China, which are just amazing: http://iresearch.worldbank.org/PovcalNet/images/ChinaSpecialNoteChart1.png http://iresearch.worldbank.org/PovcalNet/images/ChinaSpecial... and you're more hopeful that we'll solve global hunger and poverty in our lifetimes. It wasn't redistribution that caused it - on the contrary the evidence is that previously planned economies opening up reversed their fortunes (no co-incidence on where that China chart begins to show progress). The major international aid orgs now almost entirely agree that food aid and humanitarian action should be short-term and a stop gap. The solutions are in trade, access to credit, access to markets, food engineering and sustainability, education, empowering the entire population (ie. no sexism, racism, etc.) political stability, etc. [0][1] It's why I completely agree with grandparent OP that the "division" performed is misleading - the economy isn't a fixed size nor is the distribution zero-summed. We can lift the rest of the world up to our level rather than meeting in the middle. [0] https://www.wfp.org/stories/10-ways-feed-world https://www.wfp.org/stories/10-ways-feed-world [1] http://borgenproject.org/10-ways-stop-world-hunger/ http://borgenproject.org/10-ways-stop-world-hunger/