A rare foray into economics

[steepholm]

One hypothetical politician says: "We promise to eliminate poverty!" Another declares: "We promise to redistribute wealth so as to reduce wage differentials!"

These sound like quite distinct promises to me, and the rhetorical effect is clearly very different; but if poverty is defined in purely relative terms (as both the UN and EU do), are they effectively promising the same thing? In fact, couldn't one "eliminate poverty" simply by reducing the country's median income, and leaving the actual circumstances of the poor unchanged? Statistics aren't my strong point, but I find this idea kind of bothersome.

[ETA: In fact, I'm wondering whether Robert Mugabe isn't eliminating poverty in Zimbabwe even as I write. After all, he's managed to reduce the median level of income dramatically, thus (presumably) bringing many of his poorer citizens above the 50%-of-median-income level used by the UN in their definition of "poor". The fact that he and his cronies live in luxury won't skew the figures either, since it's a median rather than a mean figure.]

Comments

[hafren.livejournal.com]

The only essential thing to remember is that both their lips are moving, so both are lying....

[shewhomust.livejournal.com]

I suspect that you can't, in fact, eliminate poverty without eliminating wealth - especially, as you say, if you define poverty relatively. The difference between your two hypotheticals is that one of them admits this (though I note that he - it is a he, isn't it? - is hypothetically talking about wage differentials, so as not to alert the very very rich, who don't have anything as petty as wages!).

On a national scale I am perfectly comfortable with this; start thinking worldwide, and I become more defensive...

[hafren.livejournal.com]

A more relevant promise would be something like Henry of Navarre's (make sure everyone could have a chicken in the pot on Sunday)?

[steepholm.livejournal.com]

Indeed - but that would be to define wealth in absolute rather than relative terms, which these insititutions seem reluctant to do.

[mraltariel.livejournal.com]

It has a lot to do with whether your economy as a whole is growing, or not.

To eliminate (or reduce) poverty by this definition in a way *which actually benefits the poor*, without significantly disadvantaging the vast bulk of middle income people, you can give the poor a proportionally greater share of any economic growth, by a variety of means depending on your political persuasion, such as some or all of the benefits system, the tax system, incomes policy, housing policy, state subsidy etc. Of course, you can also choose to disadvantage someone if you want to increase the rate of change. As usual with macroeconomic measures, this often has massive unintended consequences (c.f. the 1970s and the 1980s; both chose different approaches to trying to improve poverty; both were ultimately catastrophic for the poor).

Of course, if the economy is not growing, then you have to disadvantage someone to achieve improvements in relative poverty.

Over the last decade in Britain, the economy has been growing, and, as I understand it, the poor are relatively poorer.