Absolute poverty is a terrible thing, it’s a negation of that right for a human being to live a valued and valuable life. Most Americans will spend at least one year below the poverty line at some point between ages 25 and 75. And yet we must be rather careful about how we define poverty itself.
All too often we are told that some symptom of inequality, or perhaps even a signal that not everything is quite as we may wish, is a market of that absolute poverty. And no, poverty is a very real thing but it’s also something which, absent severe mental health or addiction problems, simply does not exist in the rich nations today. Thankfully – for that absolute poverty is indeed a dire state.
How much is made by can collectors in San Francisco ?
Canners are a common sight in the city with one of the highest rates of inequality in the country. Elderly Chinese men and women sort through trash cans in downtown San Francisco, wearing aprons, gloves, and protective sleeves to keep their arms clean, pulling neatly sorted carts behind them.
“This is my job,” said Carlos Peraza, a homeless man who had walked to One Planet Recycling center with a shopping cart full of bottles, the same center in San Francisco’s south-east corner where Mr Wong was going. “I never go to shelters. I never go the hospital. I survive by myself.”
“It is sufficient,” said Sergio Deviante, a homeless man who lives under the highway overpass near the recycling center. He said that he declines government assistance, preferring to survive on the $40-$50 he can make each day collecting containers.
There is undoubtedly inequality in San Francisco. But $40 to $50 a day is not poverty. It is, for example, about the same as the average wage (without adjustment for price differences) in Poland, only a couple of hundred km from where I sit now. That number looked high to me too but it seems that it’s a reasonable one:
There are undoubtedly problems in the San Francisco economy. The incredible cost of renting somewhere to live for example. That would be best solved by simply building some more dang places to live but that solution seems to be beyond the wit of the local political classes. There’s undoubtedly inequality there too. Any place which is world headquarters for the world’s most innovative and wealth creating industry is going to have that. It’s also true that neither you nor I would like to be homeless and living there on $40 a day.
However, it’s very difficult indeed to say that this is poverty by any rational global or historical standard. And we do have a standard by which to measure that real, absolute, poverty. Which is the World Bank’s definition of $1.90 per day. This is a purchasing power parity number, meaning that we’ve already taken account of the difference in costs in difference places (as that Polish wage number does not). And what we mean by $1.90 is that this is per day, per member of the household. And this is to pay for everything. Housing, clothing, heating, cooking, food, washing, health care and the pension you’re unlikely to live to collect. There’re some 850 million people out there living on this sort of sum. There’re not all that many people on greatly below this sum because those who try are dead fairly rapidly. This is also the historical living standard of near all of humanity all through history. This is what everyone means when they talk about subsistence level poverty – and it’s something that wasn’t the fate of everyone except the priests and the warriors only after capitalism started to take root.
Note again that this is a PPP adjusted number. So we really do mean walking into a Walmart in California and trying to provide all of life for a day on $1.90 per person.
This is something rather different from $40 a day from collecting cans. It’s about 20 times different from absolute poverty in fact.
We can also look at this in another manner. Assume that you get that $40 a day for 250 days a year. You take weekends off. That’s $10,000 a year in income and using the Global Rich List we can see that this puts you well inside the top 20% of all incomes globally. Yes, that is again a PPP adjusted number.
There is a deeper importance to making this distinction too. It tells us that there’s nothing essentially wrong with our system. Sure, we might want to clear it up a bit around the edges (I certainly think that SF should be building more housing to aid the homeless in being housed, we might well want to have a look at the details of the welfare system) but this oddity of free market capitalism does in fact work. And it’s the only economic system that has ever managed this, a sustained and substantial rise in the standard of living of the average person. Thus it isn’t the basics of that system which need to be over turned. It’s the trimming around the edges we might need to look at, not the roots of the system that have put a homeless can collector in San Francisco into the top 20% of all global income earners.