Poverty is always relative

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This post was sparked by a piece over at The Drum (ABC) by the CIS’s Matthew Taylor.

Taylor’s argument, which is repeated by many others of similar political disposition (such as Adam Creighton) is that relative poverty doesn’t matter, only ‘absolute’ poverty. If the poor are getting richer in real terms, then it doesn’t matter if the rich are getting richer at a faster rate.

Such absolutism on this important social issue is not helpful. This is easy to see with a very brief thought experiment. Imagine a world where half the population of 1 million people live on a loaf of bread and a cup of milk per week, live in leaky shacks, and have generally poor health and short life expectancy. The other half dine on a variety of meats, vegetables and fruits, and live in luxurious mansions.

The poverty line is drawn at 1 lot of bread and 1.5 cups of milk a week. Hence 50% of the people live in relative poverty.

Now imagine that over a period of time incomes rise for the wealthy half of the population. The best estimates put the increase in real incomes around 80% over a 10 year period.

The bottom half are then given an extra 500mL of milk per week and absolute poverty is eliminated.

Strange as it may seem, this is exactly the argument used by Taylor and Creighton (and I’m sure many others) about how absolute poverty is decreasing. They take a relative poverty measure at one arbitrary point in time, and as long as there is an absolute gain from that starting point, absolute poverty is being diminished, and they are happy.

They see no moral dilemma surrounding the distribution of resources in this imaginary society, either in the first instance, or after the income growth, so long as the incomes of the poorest increase over time. But the distribution of resources in society is always and everywhere a moral choice, and poverty is always and everywhere measured relative to standards of non-poverty.

It was a moral choice to construct institutions to allow the great divergence in wealth in our imaginary society, just as it is in reality. Clearly I have in mind something like slavery in my thought experiment. In the Taylor-Creighton world, the poverty caused by slavery would be of no consequence as long as the incomes of slaves increased at any rate greater than zero.

Now, they may appeal to moral arguments about human rights in the case of slavery – that the slaves had no opportunity to determine their own destiny. But the same argument equally applies to arguments surrounding poverty in general; those born into the poorest households had little choice about their own destiny either. Conversely, those born into the wealthiest households benefit from the most opportunities to choose their economic destiny.

As a society we make choices about which institutions to create and enforce in order to get the outcomes we desire. I’ve noted before the moral foundations underpinning these institutions before, specifically in the case of government-supported parental leave schemes. In this case the concept of poverty is always relative, and our policy approach to poverty is always morally grounded, whether people choose to see it this way or not.

Comments

  1. Here are some factors I think we need to keep in mind.

    Firstly, is there “progress” in living standards for all? Are the poorest people living like people in higher quartiles used to, 3 decades or more ago?

    Secondly, attempts by the State to “equalise” society need to take into account that everyone gets tens of thousands of dollars per year “in kind” spent on their behalf by the State (especially compared to the citizens of poorer countries) and most of this cost is already borne by the higher income earners. NZ’s Roger Douglas’ more radical suggestions that never went anywhere, included that many functions of government should be privatised and poorer people given money instead of the services “in kind”.

    Thirdly, there is a crying need to refocus “spite” on zero-sum unearned income and away from genuine creation of new wealth. Mum-and-dad serial property flippers deserve condemnation; Henry Ford and Bill Gates largely do not.

  2. As anyone with kids can’t help but notice, humans are intensely relative creatures.

    Wealth relatively is extremely important for a societies character, safety and liveability. We already see huge amounts of depression and sadness in a world where living standards are pretty much as good as ever there was.

    The relative position does not matter view reminds me of the old ‘it’s all nurture not nature’ gender debate of the 70s. It’s just wishful thinking that flies in the face of evidence.

  3. When it is framed that way an ‘absolute’ measure of poverty sounds extreme.

    Let’s try putting it another way.

    What were the average living conditions of upper middle class people in England in say 1900. Not the Downton Abbey crowd with their butlers etc but the enterprising traders, professionals, master craftsmen etc.

    Or even perhaps the lower middle classes, white workers, clerks etc, technicians. dray drivers, cab drivers etc.

    Could we use their standard of living as a measure of absolute poverty?

    Lets look at some features of their lives.

    * No electric lighting
    * No modern appliances
    * Horse and cart if lucky
    *. Education to age 14 – maybe
    *. No indoor toilet
    *. Basic diet of vegetables, meat, dripping/tallow, diary

    Should they be considered to have been living in poverty?

    If we do does that start to make the definition of poverty meaningless?

    Having regard to some of the consequences of modern life on human happiness one might be tempted to consider our forebears wealthy in some respects.

    This does not mean that a more equal distribution of income or wealth is not desirable but it does question whether everyone with less than others are living in ‘poverty’.

    • When it is framed that way an ‘absolute’ measure of poverty sounds extreme.

      You need an extreme example to get the point across to some people that poverty is a relative measure.

      Consider a less dystopian variation on the Elysium example.

      Let’s say the “poor” live like a solid middle-class family today: units, townhouses or standalone houses on small blocks, food on the table, healthcare (at contemporary levels), two cars in the household, kids get to go to school, parents go to work every day, etc, etc.

      Doesn’t sound so bad.

      But then look at the “rich” in our hypothetical: they live in large, luxurious houses filled with (robotic) servants, their far more capable healthcare means things like cancer is eliminated, and life expectancy is 5x higher, they have automated personal flying vehicles, knowledge can be injected straight into the brain Matrix-style (eg: it takes an hour in a “learning chamber” to qualify as an Engineer), etc, etc. Ie: they live for hundreds of years with every need (excessively) catered for and have essentially 100% leisure time.

      Are the “poor” “living in poverty” ? I would say yes. The quality of life difference between the two scenarios is massive. Further, the likelihood of being able to move from one group to the other is tiny.

      EDIT: That last point got me thinking a bit more – is poverty basically an inverse measure of class mobility ?

      • “Consider a less dystopian variation on the Elysium example.”

        I think your example was more dystopian.

        The choice was between Truman Show and Truman Show on steriods.

        Yikes.

        But I like your last point.

        We may be at cross purposes if ‘poverty’ is considered a synonym for class or as class immobility.

        I would not dispute that there may well be a growing divide between classes but I am not sure that I agree we should be calling the lower class (or classes) as poor or in poverty.

        Underprivileged might be a perfect fit for societies of abundance like Australia.

      • I think your example was more dystopian.

        The choice was between Truman Show and Truman Show on steriods.

        Well, whatever floats your boat, I suppose.

        But most people I know would much rather spend time on the things they want to do than they things they have to do.

      • “But most people I know would much rather spend time on the things they want to do than they things they have to do.”

        Well if that is the criterion than “underprivileged” would seem a much better description than ‘poverty’ for many (but not all) in Australia who have less choice about what they spend their time doing.

      • Or to put it another way.

        I don’t think it helps to attempt to appropriate a powerful and resonant word like ‘poverty’ in order to give greater force to arguments about reducing income differentials.

        All that does is devalue the term and encourage cynicism when people start to appreciate that poverty no longer means what they understood it to mean and instead it is now some ‘relativistic’ pomo concept adopted by academics to make their campaigns for income redistribution sound more impressive.

        I do not like wide income differentials any more than I suspect you do – quite possibly more so.

        The difference is what is the most effective way of achieving that outcome.

  4. Given that happiness is a function of the gap between desires and reality, inequality will always have a detrimental effect on happiness. This isn’t a function of inequality persay, but rather of the visibility of inequality. If you don’t know how much better others have it, it won’t make you unhappy.

    This is shown in the studies about perceptions of inequality where people are biased towards believing they are closer to the middle by virtue of their associations which contain, give or take, an equal number of richer and poorer people.

    However, there will always be a “bleeding” of absolute visibility into peoples daily lives through the media, pop culture etc. This absolute visibility creates desire and hence seeds unhappiness and social unrest.

    “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.” –Plutarch.

  5. One of the most interesting things that I’ve read on the topic of relative wealth was in a book called ‘The Happiness Hypothesis’ by Jonathan Haidt. It spoke about about the health of people in a community of Italian immigrants in America. The immigrants all came from the same area of Italy and brought their customs and manners across. One of these was to not show wealth. That is, the most well to do in the community went about their day in basically the same garb, the same cars and with the same airs as those who were the poorest. What was interesting was that as the younger generation adopted American customs of advertising affluence the health of the community seemed to suffer. Measurements of stress and heart problems increased and a sense of division entered. So it wasn’t the difference of amount between people it was the display of that difference that was causing the problems. A bit off topic, as it isn’t to do directly with poverty, but another example of how different levels of wealth can potentially have a destructive effect on a community.

    • Good point.

      Though I think it perhaps suggests that even if income distributions and wealth were entirely equal that would not prevent some creating a perception of greater income or wealth through their choice of how they apply their income. Those original migrants ‘chose’ to conceal their inequality as much as they could.

      You choose plain attire, education and a better built house.

      I choose a fancy car, bling, clothes and the attitude to match.

      A strong sense of inequality is likely to remain.

      What next – the prescription of plain attire?

      The idea of policy directed to ‘happiness’ and using that as the justification for trying to eradicate income and wealth inequality is misconceived.

      Better to focus on building a society where competition amongst those fit to compete is not only encouraged – it is enforced.

      Note: This is not about completely ‘free markets’. Few who use that term really mean that. They usually mean freedom of action for themselves to do what they want to manipulate a market place and remove competition.

      People are more likely to accept the results of genuine competition even if the results are not equal.

      • Traditionally this is dealt with through the social compact. If you choose to flaunt your means you would suffer social consequences. If you are seen to be wasting resources that are generally perceived to have better uses, you would also suffer social consequences.

        However, since we now live in communities far greater in size than Dumbar’s number, there will always be sufficient people flaunting their means or wasting resources to build communities and satisfy the social needs.

        I (mostly) agree with your assessment that forcing people isn’t the way to go but i thoroughly disagree with your solution. I suggest that an evolution to, and support for a new social contract is required.

      • Pfh007, Nogen has kindly responded for me. My post, while showing the consequences of actions that result from choices relating from economic transactions (the purchase of bling-things) is not a particularly economic post. It is more a communal and societal post. I don’t think that the discussion of free markets is the most relevant thing in this instance. Perhaps empathy, humility and consideration are the solutions. I admit that these are quaint and unfashionable notions but they are a very nice set of traits whose worths are always underquoted.

      • Nogen

        “….i thoroughly disagree with your solution. I suggest that an evolution to, and support for a new social contract is required….”

        The point of my comments is that the social contract is critical and if that is not taken seriously and values that foster a community compact are not encouraged, no amount of redistribution of material goods will produce the type of society most of us would prefer to live in.

        Those Italian migrant communities suffered when their children no longer followed the social norms of their community and started to flaunt their material possessions – no doubt encouraged by US advertising.

        Having regard to the abundant wealth, compared to previous generations, available to the vast majority of Australians, the problem of “unhappiness” is clearly an unhealthy attitude by many towards the flaunting of material goods and possessions.

        I think we would be better served by attacking the promotion of those attitudes by advertisers and so called celebrities.

        My point about competition is simply that the economy is likely to benefit from people (especially business people) working hard and competing rather than working out complicated re-distributive mechanisms to ensure that everyone, no matter what they do or don’t do, end up with similar incomes or wealth. Some redistribution is essential to ensure everyone has opportunity to improve but the issue is attempting to regulate to achieve equality of income and wealth.

        The development of oligopolies should be resisted. The more participants in a market the better will be the long term health of the market.

        Concentrated markets and industries encourage concentrations of individual income and wealth.

        Contrary to Mr Robbs assertions, competitive markets must be constantly encouraged and promoted as the natural tendency of business people is towards to market concentration, control and pricing power.

        I think that it is simply a better objective to encourage healthy markets and healthy attitudes to income and material wealth than to aim to equalize incomes and wealth through regulation.

      • “Perhaps empathy, humility and consideration are the solutions. I admit that these are quaint and unfashionable notions but they are a very nice set of traits whose worths are always underquoted.”

        Indeed. Underquoted because such qualities do not lend themselves to a heightened susceptibility for the temptations of consumerism. Quite the opposite.

        Again, I point to usury as the root problem.

        BTW, outstanding comments Footsore. Wholeheartedly agree with you.

      • pfh007,

        I would argue that the spirit of “competition” needs be replaced with a spirit of “cooperation”.

        Competition fosters increased inequality. Cooperation the reverse.

      • Opinion8red,

        Cooperation is often preferably to competition but I am not sure that it covers every situation.

        Perhaps I am cooperating with my past efforts when I try to do something better than I did before but it feels like competition to me. Likewise when I see the work of a competitor and while admiring it – immediately look to see where I can build on and extend their advances.

        The process of constant refinement and improvement is a type of competition with all that has gone before.

        Perhaps in a sense we are co-operating.

        But “competition” has been given such a bad name by ‘free market’ ideological opportunists that perhaps I should have used a different word.

      • pfh007,

        Fair points 🙂

        For my part, what is important is considering and understanding the motive for (eg) competing with oneself, to improve one’s product/service (or indeed, the quality/output of one’s labour, whether physical or intellectual).

        If the motive is outward focussed — that is, making a better widget, one that lasts longer, is more beautiful, more functional, that measurably improves the life of others vs what came before — wonderful.

        Alas, what I see is that very much of the “competition” in the world — even that of competing with oneself, per this example — only pays lip service (at best) to such outward-focussed motives. The predominant motive is, so it seems to me, simply to get more … market share, profit, (ie) MONEY.

        The reason why is, IMO, hardly the fault of the person doing the competing. It is the fault of the “money” system itself. Because, as oft-elaborated here, doubtless to the annoyance of many, the fact is that we are all born into an economic system that forces us all to compete, to live mostly (if not entirely) for the acquisition — by fair means or foul — of the Almighty (usury-owing) Dollar.

        Our predominant motive is wrong — unhelpful, often harmful, beneath what we are capable of as human beings. But we do not know any better.

        I have nothing against “competition” per se. As you point out, it can indeed be a very real positive, for everyone. I do have a big problem with an unnatural, artificially “competitive” environment that is forced upon everyone, from the cradle, and is in and of itself an enabler of a destructive, “dog eat dog” motive for the act of competing.

        What we can clearly see all around us (Big Picture, global), is that, over time, the outcome of such an unnatural and artificially-stimulated environment is greatly increasing inequality, amongst other ills. Where not just the “best and brightest” competitors are seen to gain the most, but on the contrary, the most depraved, greedy, selfish, immoral, and wantonly destructive.

  6. not only that ‘absolute’ poverty doesn’t matter, but it doesn’t exist at all.

    hunger, cold, … are real, poverty and wealth are social constructs. What’s even more interesting, they are relatively recent constructs

    • In what sense are they recent constructs? They were clearly understood during the Roman republic, for example, and Socrates apparently discussed the same issues under discussion today.

      • Poverty as anticipated today, first appeared during late Roman Republic. Before that (in Greek city states or before), poverty was not issue of social class as it is today. Even people from top social classes philosophers (even Socrates himself), high priests, politicians, were struggling with food and shelter but they were not poor in any way.

        After Rome collapsed, poverty (as understood today) disappeared and it only reappeared with the rise of bourgeois. In some places on the East or in Africa or Oceania it didn’t exist until 19th or even 20th century. There are only few places in this world left where poverty doesn’t exist (although there are people there – even majority, who don’t have basic resources required for life).

        Today, poor people are part of the social class at the bottom of the society (not only in terms of resources like food, money …, but in social status, mental health, education, respect, …). It’s completely impossible today to regard or admire someone who is considered poor – in terms of adequate access to the resources required for life.

        Reason is obvious, today money buys everything (from bread to social status and place in Heaven or History/Media). Lack of it makes people poor.

        So by saying recent, I was thinking in terms of hundreds of years (Old Rome was just previous reincarnation of our own society – reading about Roman history will tell us more about our destiny than anything else).

  7. poverty is indeed relative. many in the third world would love to be a poor in this country. some people dont see the hypocrisy of blaming global capitalism for their recent relative stagnation when the same capital deployed in the third world is lifting billions out of grinding poverty. perspective is what is needed.

    • Of course. Which leads altogether to more subtle questions about how best to aid the most impoverished in the world. There are layers of social issues to get a handle on – local conflict and competition for power, self-determination and rebellion against externally enforced aid, social and cultural norms that aren’t compatible with those of aid giver etc.

      Sounds like you support transfers from Australia’s richest to the world’s poorest.

    • compared through money only, in global terms even poorest Australians are wealthy but in personal terms they struggle in life more than majority of world population who have much less than them.

  8. You don’t seem to have taken much notice of this very important sentence in the original piece,
    “Of course the bundle of goods that would have been considered sufficient to sustain a family in 1973 is likely to be quite different to that in 2014.”

    Even the absolutists recognise that what is considered “poverty” must change over time as we expect higher living standards for all.

    In your thought experiment, this would mean that the 1 loaf and 1.5 cups of milk determinant changes over time, so as the average income increases by 80% over ten years the poverty line must be re-defined to, say, 1.5 loaves of bread and 2.5 cups of milk (the increase does not need to relate to the 80% figure, it just needs to be an increase). If the line improves and the number people below it reduces, then those at the lowest end of the income spectrum have seen a real improvement in quality of life.

    This is what the absolutists argue for – real increases in the standard of living for the least wealthy, without measuring it against the standard of living of the more wealthy.

    A measure of relative incomes is an important measure of fairness and equity, things that people value to differing degrees, but it is not a good measure of whether we are lifting people out of poverty.

    • I’m sorry, why do we have to redefine the poverty line if it is independent of the living standards of the wealthiest?

      If it’s an absolute measure, then it never needs redefining. They very point you make about the need to redefine the measure is exactly the point I make – we redefine poverty based on the whole distribution of real incomes in society.

      In your example, you seem to reiterate my points.

      “the increase does not need to relate to the 80% figure, it just needs to be an increase”

      Sure. 0.001% will do it? So I’m just rounding then.

      And what if the incomes of the wealthiest dropped to 1.5 loaves of bread and 2 cups of milk? You just redefined arbitrarily and now everyone’s in poverty by your standard.

      • The redefinition of the poverty line is not arbitrary, so your 0.001% reductio ad absurdum is irrelevant. It should be redefined according to what is required to live in society and have basic needs met. For example; in the 1920’s, a car was not required because town layouts and society was set up for people to be able to effectively access services without a car. Now, in most parts of the country, a car (either owned or by accessing a taxi service) is required to perform many basic day-to-day tasks like attending medical appointments. So someone who could not afford a car in the ’20s was not necessarily poor but someone who can’t afford a car (or use of taxis) today would be.

        To extend your dropping income example, what if incomes all equalised at a level of 0.5 loaves and 0.5 cups of milk? Under the relativistic model there is no poverty because everyone’s income is the same, yet everyone is below the original poverty line. Nobody is poor because we are all equally starving. Ridiculous.

        The relativistic model also raises the question; relative to whom? If every salary in Sydney suddenly doubled, does that mean poverty in Melbourne has increased even though living standards haven’t changed? Or should we compare ourselves to the worldwide average, in which case there is virtually no poverty in Australia because even our lowest percentiles are wealthy compared to most of Europe, Africa, Asia and South America?

      • “The redefinition of the poverty line is not arbitrary, so your 0.001% reductio ad absurdum is irrelevant. ”

        It was you, not me who said earlier that

        “the increase does not need to relate to the 80% figure, it just needs to be an increase”

        Are you saying it must relative now?

        “To extend your dropping income example, what if incomes all equalised at a level of 0.5 loaves and 0.5 cups of milk? Under the relativistic model there is no poverty because everyone’s income is the same, yet everyone is below the original poverty line. Nobody is poor because we are all equally starving. Ridiculous.

        You are right, there is no poverty then if everyone’s income is the same. Poverty only a ‘thing’ once we have to compare it to; either previous income levels or current income levels or other people.

        If all incomes were 0.5 bread loaves and 0.5 cups of milk we have nothing to say unless we invoke incomes from a previous period. If last year all incomes were 2 loaves and 2 cups of milk, we would say we in poverty compared to last year. But if last year each person had 0.4 bread loaves and 0.4 cups of milk we wouldn’t go around calling this poverty, because now we have an even worse state of affairs to compare it to, but no better state.

        “The relativistic model also raises the question; relative to whom? If every salary in Sydney suddenly doubled, does that mean poverty in Melbourne has increased even though living standards haven’t changed? Or should we compare ourselves to the worldwide average, in which case there is virtually no poverty in Australia because even our lowest percentiles are wealthy compared to most of Europe, Africa, Asia and South America?”

        You seem to be getting my point here. It is all relative, and that leads to big questions about our baseline for comparison. Do we care more about local poverty, or do we care about global poverty? Isn’t local poverty actually relatively wealthy compared to many places?

        Which brings us back to the moral foundations of the question – what outcomes are just, what value do we place on equality of opportunity, why do we value Aussies more than others etc.

      • Don’t put words in my mouth. I never said (nor implied) the redefinition was arbitrary, nor did I say that it is relative. I said that it should be positive and not related to the 80% figure. I did say, It should be redefined according to what is required to live in society and have basic needs met.

        Poverty only a ‘thing’ once we have to compare it to; either previous income levels or current income levels or other people.
        I believe this is the core of where our views differ. To me, poverty has nothing to do with relativism or comparisons with others’ income. To me, poverty is defined by whether or not you have enough resources to meet basic needs. It is a state of insufficient resources, not relatively less resources.

        But if last year each person had 0.4 bread loaves and 0.4 cups of milk we wouldn’t go around calling this poverty
        I would. It is poverty because we still have less than we require to meet our basic need of feeding ourselves, even if we have more than last year. It doesn’t matter what the income was last year; this year we don’t have enough, so we are poor. In this sense, I would be willing to remove the “should be positive” part of my previous statement.

        You seem to be getting my point here.
        I understand the rationale behind your point but I don’t agree with it.

        what outcomes are just, what value do we place on equality of opportunity, why do we value Aussies more than others etc.
        These are questions of equality and fairness, not of poverty.

  9. agree – we should all share in economic growth ESPECIALLY those who contribute to it. This is why policies in place that favour rent seekers is so bad. Economic growth comes becasue of the industriousness of ALL who operate in the economy. Yet the price increases this creates in finite or limited assets/resources accrues primarily to those who are already established and own these assets. and worse, when economic growth falters money printing is used to directly transfer wealth to rent seekers via asset bubbles.

    Growth in assets should be taxed at twice the rate of incomes not the other way round.

    • “Economic growth comes becasue of the industriousness of ALL who operate in the economy.”

      I fear we need to remember to carefully define our terms.

      “Economic growth” is simply “activity”. Whether as a result of “industriousness” (productivity?), or something else.

      Over time, with the growth of the usury cancer, most economic “activity” (thus GDP “growth”) is a consequence of the growth of the “money” generation sector. Lenders of electronic digits, in other words.

      These people are NOT “industrious”. They are not “productive”. They are parasites, living off the labour of everyone else.

      • Opinion8red, good point – could have been put better but when I referred to “industriousness” it was meant to preclude rent seeking types. And economic growth was meant to refer to real growth which is why i distinguished it from money printing.

        but we are on the same page. Excessive usury and money printing are cancers whose prime purpose is to transfer wealth from productive members of society to rent seeking parasites and us such is a) immoral and b) bad for the economy in general as it dicourages productivity.

        Any gardener will tell you parasites always exist, but that doesnt mean we should put out the welcome mat and give them free reign.

      • Riddle me this…
        You and I work together. In week one, we make $200 and take $100 home each. You spend your $100 on food and booze. I spend $50 on food and $50 on tools.
        In week two, we both use the tools that I purchased and our productivity lifts, so we make $220.

        How should we split the $220?

      • DMC – not sure what your point is. But i would be charging the other person rent to use the tools. So maybe what you are getting at is we should be charging rent seekers more tax because their assets enjoy the benefits of “tools” created by the general economy (eg better infrastrucutre, schools etc)

      • You’ve missed the point somewhat. The people who, “are already established and own these assets,” are generally people who have made sacrifices in order to acquire those assets (or possibly their forebears made the sacrifice on their behalf). Rent is the reward/incentive for making that sacrifice. Without the incentive of rent (via more than 50% share of the $220), I wouldn’t have had incentive to buy $50 worth of tools, I may have bought only $25 of tools (enjoying $25 of booze) and then worked on my own in week #2, earning $110 and leaving you to carry on earning only $100 a week. This would be a net reduction in productivity, so the point is that the ability to “rent-seek” is an incentive for people to invest to improve overall productivity.

        As for charging rent seekers more tax, I agree – if their income is increased due to their rent seeking then, yes, the current system does charge them more tax.

        Where I also agree with you is that where resources are limited (eg: land, but not tools) the tying-up of those resources should be taxed. That’s one reason why I support a broad-based land tax.

      • DMc,

        Someone who buys tools to make future money by being more efficient IS being productive and I dont put that in the rent seeker category. And that person SHOULD charge rent to others who might also be abel to become more productive by using the tools. So i think we agree with each other there.
        Rent seeking is about parking yourself on a finite resource and pulling in increasing income NOT because of producing an additionakl good or service but purely because the economy grows around you putting pressure on finte resources (eg land). And good to see you support a land tax.

      • squirell,
        Seems we agree more than I initially thought. Looking back, Op8’s liberal use of the term “usury” may have led me to believe you were applying “rent-seeking” to any type of rent or return on capital. If you are limiting “rent-seeking” to its more traditional definition then I think we are on the same page.

  10. So, why is it, I wonder, that we so readily assume that any debate about “poverty” should be framed primarily (if not entirely) in terms of the notion of money/wealth, and what can be purchased with it?

    Poverty of spirit? Poverty of morals? Are these not valid frames of reference too?

    Yes, I know this is an economics blog.

    I would argue that (for eg) an increase in poverty of morals leads inevitably to many, if not all, of the various symptoms of “relative” “economic” poverty that capture (almost) all of our focus.

    What is that old saying again?

    “The love of money is the root of all kinds of evil”.

    • Absolutely,

      It is incredible how thoroughly and quickly people have lost the capacity to question communications that are designed with one purpose – to manipulate them into entering a transaction to buy something.

      “You are worth it”

      “You deserve it”

      “You have worked hard”

      “Think how much they will love you”

      “Look at their smiling faces”

      To prohibit the use of such blatant manipulation (psychological warfare might be more accurate) might be too difficult but surely we don’t have to pretend that it is legitimate or respectable.

      Yes – Don Draper – I am talking about YOU.

    • Great point, and goes to the heart of the whole issue of poverty and how interwoven it is with our relativist, consumerist and self-esteem driven world. Our culture is so enmeshed in this horrendous world of marketing falsity that our very definitions of poverty are owned by the marketing world.

      Alain Botton in his Status Anxiety book, has a light-hearted look at meritocracy and dissects it into its fallacies. It is clear that the meritocracy concept shifts the debate to the fact that the poor are deserving, poverty (that is lack of assets) is a result of sloth and laziness.

  11. “Poverty is always relative”

    I am not sure what it means, but if one takes it literally, then the statement is fairly obvious.

    A question such as “Am I poor?” is pretty much meaningless unless compared (at least implicitly) to somebody else’s. I mean, if you were the only person in a remote island, would you even bother to ask such a question?

    Having said that, are we poorer or wealthier than Roman emperors (or any other ancient emperors / kings for that matter)? It is hard to tell since technologies have advanced so much since then. There is little doubt that most of us live more comfortable lives than Roman emperors, with electricity (think of air-conditioning), automobiles, medicine, etc.

    Perhaps personal ‘wealth’ can be measured by energy consumption. I do not know how much energy an ancient Roman emperor consumed in a year, but I bet he consumed much less than an average Australian today.