The Poverty of Statistics

“The Lie of Global Prosperity – How Neo-Liberals Distort Data to Mask Poverty and Exploitation,” by Seth Donnelly, 2019

Anyone paying attention recently noticed last Friday’s stock orgasm on Wall Street in response to the new U.S. unemployment number, which is now at 3.5%.  This is called the U3 number yet the press does not note the U6 number, which is called the ‘real unemployment rate’.  U6 is not purely based on those collecting or filing for unemployment insurance. It attempts to include people not filing but still unemployed, as well as under-employment and part-time work.  It does not include those on disability, welfare, criminals, those forcibly retired and those in prison.  U6 is usually about double the ‘unemployment rate.’  Nor does it rate the quality of the jobs gained.  Confused?  You should be.

 

Accompanying this was liberal economist Joseph Stiglitz, who criticized the Gross Domestic Product (GDP) as a totally inaccurate way to describe economic progress. GDP only describes the crude production of goods in each country and is the favorite number for capitalist economists.  Another bogus statistic is the official inflation numbers which are based on a ridiculous basket of food goods from the 1950s.  It ignores other sources of inflation like school, medical costs, child care, transport or housing.  Similarly poverty stats in the U.S. are manipulated and inaccurate, based on estimates from the 1960s that ignored everything but food.  If the same methodology was used as in the 1960s, the poverty level would be 3 times higher, according to the Congressional Research Service.  The statistics about world poverty are also deceptive, as this book argues.

What is going on? 

Capitalists play with statistics in order to hide the actual state of the economy because this props up their rule.  There is a reason that every news program touts the numbers on the financial markets every single day, even though just 52% of the population own stocks and 86.4% of these investments are owned by the top 10% of the population.  For the wealthy, market indices are their basic and only economic indicators.

U.N. – World Bank Figures

Donnelly does an analysis of a world poverty ‘victory’ proclaimed by the U.N. and World Bank in 2015.  They claimed that nations and neoliberal methods had halved poverty in the world since 1980.  The Economist and other corporate financial press trumpeted their findings. This figure included the most reductions in China, which is not a fully capitalist country, though that issue is not dealt with in this book.  Nor did class struggle have a role in how the World Bank and U.N. thinks any increase was made, as they assume it is a ‘trickle down’ from GDP.

Donnelly counters their arguments by undermining the many games they play with statistics.   The World Bank now cites $1.90 a day as the global poverty line.  That is $393.50 a year. In the 1960s they originally picked $1.00 a day, using government figures for 6 of the poorest countries in the world and translating that through purchasing power parity (PPP).   So initially no actual independent calculations were made from a broad range of countries.  Donnelly’s on the ground experience in Haiti opened his eyes to how this number was meaningless.

PPP is a convoluted and manipulated number that ostensibly compares prices in all countries, but it does not correspond to international exchange rates.   The PPP is consistently lower than these exchange rates, which should be a yellow flag.  PPP is based on a 2011 traditional ‘basket of goods and services’ that is weighted to prices for services – while in poor countries food is more expensive.  Independent researchers and institutions have shown that the U.N.’s PPP is set too low so that fewer people seem poor. 

  

Probably above $1.90 a day.

Donnelly brings in more accurate estimates of poverty, hunger, inequality, the urban and rural divide, school enrollment, water quality, slum-dwelling and price comparisons, which show all of these are at much worse levels than the 2015 U.N. / World Bank estimates. For instance the U.N.s estimates for hunger come with flawed assumptions about height and calorie intake. These more accurate figures come from the PEW Research Center, Oxford’s Multi-Dimensional Poverty Index (MPI), UNICEF, OxFam, the Maddison Project, various independent researchers, even the Financial Times, Credit Suisse and the Indian Government.  The MPI indicated that about $5.00 a day was more accurately above the international poverty line, not $1.90.  The exception to this dark picture are diseases, since vaccines and inoculations have stopped some deaths from diarrhea, malaria and HIV/AIDs. 

For growth of a middle class, the only increase is in China and India according to Donnelly.  Here again, ‘average’ incomes are deceiving.  You put a billionaire and a janitor in the same elevator, the average wealth in that elevator is a bit above half a billion.  China has the most billionaires in the world now at over 400, with over 100 in the CCP or leading political bodies itself.  The 100 richest people in India are all billionaires.  Outside these global south countries Donnelly claims a real middle-class is not growing.  I would contest that idea, but he does not really go into detail.    

IMPERIALISM behind POVERTY

Donnelly’s second chapter is a short, factual section on the recent development of imperialism since 1944's Bretton Woods agreement through the 1970s Saudi Arabia agreement linking oil and the dollar and on to the various structural adjustment programs of the 1980s.  He shows how capital exploits the global South, something hidden by the World Bank and U.N.  He cites three main economic factors actually creating global poverty:  1. the U.S. dollar standard subsidized by Saudi Arabia and oil, which weakens global south currencies, increases prices of imports and allows the U.S. to control the world-flow of cash; 2. labor and land exploitation by international capitalist corporations that include exporting food; 3. massive national debts by southern countries owed to core imperial banks.  For instance, rural subsistence farmers might have a lower 'monetary' value outside the commodity economy, but actually have access to more food than a slum dweller.  But now small farmers are being squeezed and liquidated.

This creates what Samir Amin called ‘imperialist rent’ and what Marx called ‘surplus value,’ both paid by the proletariat to the core imperialist economies.  Lenin of course named imperialism ‘the highest stage of capitalism’ in the early 20^th century, so the only difference now is the much greater infiltration of capital into nearly every nook and cranny of the world.

For other reviews on this subject below, use blog search box, upper left: “Value Chains,” “Planet of Slums,” “The Long Revolution of the Global South,” “The City,” “The Open Veins of Latin America,” “Famished Road,” “Last Train to the Zona Verde,” “Blood Lake,” “American Exceptionalism,” “The Race for What’s Left.” 

And I bought it at May Day Books, where you will get the greatest discounts in the Twin Cities

Red Frog

December 10, 2019