Tag: wealth inequality

Living On One Dollar (now available on Netflix streaming)

Recently I watched and enjoyed the documentary film “Living On One Dollar” (available on Netflix streaming). Four American young men (two researchers and two filmmakers) live in rural Guatemala for a summer, strictly committing to a budget averaging US$7/week per person (randomized day to day to $0-$9 for the group). As you might predict, they have a hard time of it, and suffer from hunger, malnutrition, parasites, fatigue, and demoralization. On the brighter side, they form friendships with the locals, help others and are helped, learn a great deal about rural poverty, and produce a film well worth seeing.

Some things are cheaper in rural Guatemala than they are in the U.S. and Europe, but not by much. The men spent their meager budget on rice, beans, firewood, and transportation to and from the market. Bananas were an occasional treat. After weeks of near starvation the locals taught them to buy a small plastic bag of lard and add some to their mashed beans. They slept on a dirt floor and were bitten by fleas every night. At least one of them contracted both Giardia and E. coli. from contaminated water. For much of the time they were uncomfortable or miserable.

The locals seemed to live a little better. Some had saved up (by way of savings groups) to purchase wood stoves. One man in the village had a janitorial job in a nearby city and had used his regular income to improve his house and help his neighbors. Still, many of the locals suffered from this extreme poverty. One man described how when he had no money he witnessed his children stop growing. Some families had enough money to buy food for their children but not enough to buy them supplies for school. The film reminded me in a visceral way of something I already knew intellectually but had not considered in depth: very poor people have more choices, and much more difficult choices, than the top 80% (about 1 in 5 people around the world live on a dollar a day or less). A wrong decision has more serious consequences (like death); the very poor just can’t afford to take risks the way wealthier people can.

Microfinance

Many of the Guatemalan villagers had benefited from small microfinance loans (the local organization was Grameen). One woman borrowed a small amount of money to start a weaving business, and was thus able to resume her studies (she wanted to eventually become a nurse).

I was left with the impression that microfinance is a powerful and effective tool for alleviating poverty, especially when complemented by local savings groups. Any kind of financial flexibility is a huge boon for the extreme poor.

What Can the Top 80% Do To Help?

The four young men who made this film are big-hearted types, and care about the plight of their neighbors. During their time in the Guatemalan village they teach both English and Spanish (many of the locals speak only a Mayan dialect) and have since committed to continue making films to expose the plight of the extreme poor. This kind of film-making is important because it provides viewers the opportunity to get to know individuals who live in extreme poverty. We tend to feel more empathy when we get to know fathers, mothers, and children by name, people with their own dreams and aspirations, people just like us (as opposed to a monolithic group: people who live on less than a dollar a day).

So what can the rest of us do? At least four things:

1) We can support/vote for safety nets in our own country.
2) We can support/vote for universal benefits in our own country.
3) We can support microfinance organizations like Grameen and Kiva if we want to help internationally.
4) We can buy goods and services from poor countries (“Fair Trade” goods don’t necessarily help the extreme poor any more than goods without that label, but exports in general can truly boost national economies).

Poverty and Priorities in the United States

In the United States, many people are considered to live in poverty. However, we are a rich country, and most who are considered impoverished have a roof over their heads, have enough to eat, have access to emergency healthcare, and own a television.

After the Great Depression, the U.S. implemented safety nets, and they worked. Extreme poverty (living on a dollar a day or less) does not exist in the United States. Some among the chronic homeless in the United States arguably have a lower quality of life than the rural poor in Guatemala, but even the homeless in the U.S. have less food scarcity.

Our challenge in the United States is one of massive income inequality, and poor services for the most disadvantaged (such as the mentally ill). Some of these problems can be alleviated with expanding universal public services (such as preschool, higher education, and healthcare). Though the United States lags in these areas compared to Europe, there is reason for optimism. Oklahoma leads the way in terms of providing universal early education. Utah is solving homelessness with its “apartment first, questions later” strategy (drug and alcohol treatment programs turn out to be more effective if a person has a roof over their head). Even though our healthcare system ranks last among wealthy western nations, many U.S. citizens receive affordable healthcare via Medicare, Medicaid, and other federal programs.

Are we heading in the right direction in terms of social welfare for the poor? Conservative Americans are concerned about the immorality and unfairness of “government handouts,” but investing in early childhood education, making sure everyone can get basic healthcare, and getting homeless people off the streets are no-brainers; such “handouts” raise quality of life for everybody. We should prioritize these kinds of universal benefits; they are the low-hanging fruit in terms of alleviating suffering, investing in our nation’s future, and being the kind of country that inspires pride and patriotism.

Cult of the Individual, Cult of the Free Market

There is a brand of individualism and extreme libertarianism rampant in Silicon Valley, but also in other parts of the United States, fueled by the author Ayn Rand.

Ayn Rand’s books are like Lord of the Rings for conservatives. They are pure fantasy. Utopian political fantasy, but fantasy nonetheless. Ayn Rand’s fiction exalts the power of the individual and the free market and vilifies collectivism to such an extent that residents of the fictional settlement Galt’s Gulch in Atlas Shrugged never even lend things to each other — instead they negotiate a rental agreement. Everyone must pay their own way. Rand’s books fuel the philosophies of dozens of influential U.S. capitalists and conservative politicians, including Peter Thiel, Rand Paul, and Paul Ryan.

I bring up Rand because many people influenced by her actively campaign against social welfare programs that alleviate poverty. If they had their way, safety nets would be abolished and life for the poor in the United States would much more resemble life in rural Guatemala.

The free market creates wealth; few dispute that. What it doesn’t do is distribute wealth, and as it turns out the wealth doesn’t “trickle down” at all. Instead it tends to concentrate at the top. Technology accelerates that process; technology increases productivity and makes most jobs redundant, but that productivity boon only benefits business and capital owners (not workers). The Ayn Rand fantasy of pure individualism and an unregulated free-market, once conceived as a bulwark against totalitarian communism, now does more harm than good.

To hear how the average European perceives this insanity, listen to Tim Ferriss interview British polymath Ed Cooke (I think the Ayn Rand exchange is in part 2 but both parts are worth listening to). If the libertarian conservatives increase their political power (and they might), the United States could see a dangerous acceleration of income inequality, a gutting of social safety nets, and a dramatic rise in homelessness. Cooke deconstructs the “cult of the individual” quite eloquently.

Let Them Eat Cake

Yesterday on my way to the bank I walked through an intersection in Oakland. Every lane divider was occupied by a man with a sign asking for spare change (if you’re curious about the demographics, two were young and white, one was middle-aged and black). Later I drove to San Francisco and saw at least half a dozen people sleeping in doorways.

The local situation is mirrored globally. 80 people now own as much as the world’s bottom 50% (each of those extremely rich people owns as much as about 44 million other people in the bottom half). According to Piketty the situation is heading towards even more dramatic wealth concentration.

How does it end? There are two ways … the wealthy and middle classes find ways to push opportunity and quality of life down the economic spectrum, or …

Take your pick!