Economics, Literature and Scepticism

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I am a PhD student in Economics. I am originally from South Africa and plan to return there after my PhD. I completed my M. Comm in Economics and my MA In Creative Writing (Poetry) at the University of Cape Town, where I worked as a lecturer before starting my PhD.

Sunday, June 14, 2009

Ehrenreich - Too Poor to Make the News

Posted by Simon Halliday | Sunday, June 14, 2009 | Category: , , , , |

Because of the depths of poverty in South Africa, and many other African & Asian economies, I don't sympathise enough with discussions of 'poverty' in the developed world. I think that the kinds of poverty are different, are culturally embedded, and often reach different depths of privation on different scales. Moreover, and particularly in the US, the persistence of inequality over time is immense, yet still people believe that America is the 'land of opportunity'. The rose-tinted opportunity glasses inure them to the poverty, and they remain enamoured of the systems that entrench it (evidenced by GOP behaviour regularly of late in the furour over health care reform).

Notwithstanding these personal failings, I appreciated Barbara Ehrenreich's NYT op-ed piece, 'Too Poor to make the News'. In it she investigates a phenomenon that has been swept away by the waves of media headlines about 'middle class cutbacks' and 'the super-rich giving up private jets'. She talks to people she met while writing her book 'Nickeled and Dimed' and uncovers stories of people whose ends could not be met before the recession, and are even less likely to be met now with increasing layoffs, foreclosed homes, and unavailable loans. She details the problem well, and provides several sad tales, including one about her own nephew and his family's problems.

She raises a crucial issue. Accepting the ways in which poverty is measured, it seems as though poverty will dramatically increase (105-143 million more poor worldwide, 12-16 million more in Africa) over the next year. We must focus on both those who have entered and will enter poverty and those who remain in poverty as a consequence of the recession. A further question arises, what has the recession done to the chance to exit from poverty? I would suspect that these chances tend to zero.

Additionally, world trends that disproportionately affect the poor should garner more publicity. For example, food prices are increasing again. Increases in food prices often affect the poor more than they affect people with higher incomes. When rent and food take up almost all your expenditure, and the costs of food increase while poverty increases then you know you're in for a bad time. Another question follows, are rents decreasing to a sufficient extent such that they counteract the increases in food prices? I don't know, and I haven't seen any references to such commentary.

Amid the recession clamour and the discussion of its burdens on people across the income distribution a question remains: How do we define poverty? For many people in South Asia, for example, it's pretty clear that if you're starving then you should be classified as poor. If you're in debt and struggling to make ends meet, but you have have a roof over your head (the one you're sharing with several other people) in a small apartment, you have a higher education, and you're unemployed or underemployed, are you poor? Is poverty only a measure of 'income'? Or should we take the approach of someone like Amartya Sen and argue it's about capabilities, it's about what you can do or what you can achieve with the resources at hand? It's a nuanced question and not one I am happy to 'answer' except to put out several opinions. A good place to start is with a review of notions of poverty, like that provided by Banerjee and Duflo in their paper on experiences of poverty worldwide - 'The Economic Lives of the Poor' (on which I blogged previously). The effects of this recession have become daunting.


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