How much does a dollar a day buy in Malawi may show you what is poor in America and other parts of Europe is rich in parts of Africa, Asia, and other countries in the Middle East or South America.
I most often wandered whether it made any sense to give the percentage of people living under one dollar a day in UNICEF's State of the World's Children Report. I advocated that in addition it would be more meaningful to also show the percentage of people living below the national poverty line, which I consider would make more sense than the dollar-a-day ratio. Measuring poverty in a relative sense also has its problems. For example, millionaires among billionaires would make the former look poor, in comparison but not in absolute terms. The question is what is poverty? If folks have money for some basic necessities such as food, clothing and shelter, then not having a TV or refrigerator does not mean poor? In social circles there is a much used phrase, that you become poorer no sooner your brother-in-law begins to have more money than you. Poverty is a moving target as other get richer or poorer. It may make more sense to think of poverty is absolute terms as well.
Dr. Jadish Bhagwati in his best selling book - 'In Defense of Globalization' thinks that the preoccupation with inequality measures is lubricious at best unless the economist has bothered to put them into social and political context. What sense does it make he says to put a household in Mongolia alongside a household in Chile, one in Bangladesh and another in the United States, and still another in the Congo?
From my international travels, I know how far a dollar would go in the US versus a poor developing country. True, that official exchange rates are not reflective of the purchasing power parity of currencies. Then again the dollar-a-day/ratio also cannot equate the same basket of identical goods and services across nations, especially poor vs richer nations.
In some respects Dr. Bhagwati is right about the social and political context. For example, a ratio of the percentage of a country's social spending, and of that, what spends on the benefit of children for health, education and welfare support should surely be of interest to UNICEF. Social spending may also not tell the story unless one gets into the details, whether social spending was an "investment" or "misspent" instead.
The problem is that that are wide gaps between intentions and reality when large sums of money flow through governments from international aid. UNICEF, rightly promotes primary education because education can bring people out of poverty. On the other hand, see what has happened in Cuba, rich in education but yet so poor. Or the lands of Africa, rich in oil, diamonds, beaches, wildlife but yet so poor. So, in a political context we can conclude that these countries are rich in natural resources but money poor because of the rampant corruption, deficient infrastructure and political instability. The UN is no doubt paying a high price for diplomacy where moral goodness may sacrifice political correctness, which accounts for people poverty in the developing world. Politics rules after all and the UN does not openly denounce that a country's bad politics or economic policy should blame for its people poverty. By 2015 the UN may conclude that the MDGs (Millennium Development Goals) were joyfully inefficient if they are not reached even half way.
I invite comments to this post since I do not form any personal opinion of the issue.
Comments