Archive for the ‘Inequality’ Category

Talk the talk – but not walk the walk

1 December, 2008

That’s the way Larry Elliott in The Guardian sums up the donors lack of urgency in meeting the MDGs. Commenting on the just released UNESCO Education for All report, he writes:

“… donor countries can talk the talk but not walk the walk. According to the Unesco study, the aid required for even the most basic primary education provision in poor countries is US$11 bn (£7.2bn) a year. In 2006, spending amounted to around $4bn, leaving a funding gap of $7bn. To put that figure into context, it is around 10% of what Britain spent this autumn recapitalising the banking system”.

Maybe they will walk the walk at the UN Financing for Development summit now underway in Doha. But I wouldn’t hold your breath. “When financial systems fail, the consequences are highly visible and governments act,” concluded UNESCO’s Director-General Koïchiro Matsuura. He added “When education systems fail the consequences are less visible, but no less real”.

I would add that education is the only investment you can be sure of getting at least some return on – provided it’s of good quality and children complete a minimum of 4 years primary education. Well-educated people earn more in the labour market, and find it easier to absorb new technologies and methods when they run micro-enterprises and farms. Education is a means to break the inter-generational transmission of chronic poverty (see this CPRC study for Bangladesh).

And even if it didn’t raise income much – which might be the case in economies that are growing only slowly – it certainly improves health status, especially of children, when mothers are educated. Educated mothers are 50% more likely to immunize their children than mothers with no schooling (go here). Gender inequality in education has high costs for both the family and society (see this IFPRI study).

So the chronic underfunding of education reminds me of that old quotation: if you think education is expensive, try ignorance.

Parks for the Poor

11 November, 2008

Yes, having some greenery around you can improve your chances in life. A new study in the Lancet finds that living near parks or woodland improves life expectancy and health, regardless of income class. People living in poorer areas are more likely to die earlier and to suffer more ill-health than the UK average. This income-related inequality in health is less pronounced in populations with greater exposure to green space, according to the study by Richard Mitchell and Frank Popham from the universities of Glasgow and St Andrews (see this BBC report).

Victorian Britain saw great efforts to bring green space to the poor. The first children’s playground was created in a Manchester park in 1859. Many of Britain’s inner city parks went into decline from the mid-twentieth century, and their regeneration began in earnest in the late 1980s. Manchester’s St Michael’s Flags and Angel Meadow Park is an example. The area became notorious in the 19th century for the mass burial of the poor whose families could not afford a proper funeral.

The charity GreenSpace is now working to improve parks and green access in the UK. We also need more efforts in the mega cities of the developing world. On a recent trip to Dhaka I was struck by the lack of accessible greenery. Much appears to have been illegally built over – including one green space now occupied by a truly hideous ‘pleasure park’ which charges for admission.

Green space is also exceptionally important to managing the impact of climate change on urban areas, a theme in Manchester University’s research on sustainable cities (check out John Handley in the School of Environment and Development). So get planting.

Get Fair on UK Poverty

19 October, 2008

The UK has got a lot richer over the last twenty years – we are the world’s fifth richest country – but not fairer. Inequality has risen, and 12.8 million Brits live in poverty (30% of children, and 17% of older folk). That’s the message of Get Fair – a national campaign calling for an end to poverty in the UK by 2020.

The coalition now consists of more than 50 organizations. They work on poverty right across society, including among children, older people, refugees, and the disabled. Get Fair includes housing groups, as well as faith and community groups.

Two at least of their recommendations could help Britain dig itself out the recession, namely invest £4bn measures to halve child poverty by 2010 and improve the take-up of existing benefits (they estimate that this would help 500,000 pensioners out of poverty).

On 4 October, Britain’s biggest ever event to end child poverty was held in Trafalgar Square, London, organized by End Child Poverty. And Poverty Action Week takes place 31 January to 8 February 2009, organized by Church Action on Poverty.

3.9 million British Children in Poverty

30 September, 2008

That’s one in three children, according to the Campaign to End Child Poverty, a coalition of more than 130 organisations including Barnardo’s, Unicef and the NSPCC. The BBC has reproduced their map of child poverty hot spots here.

They have data on every parliamentary constituency in the UK. Their new figures show that 174 constituencies have 50 per cent or more children living in (or on the brink) of poverty. Their report says:

“Birmingham Ladywood tops the list of the grim league table with 81 per cent – or 28,420 – of its children in struggling families. And within Ladywood one ward, Aston, has 87 per cent of its youngsters struggling to get by. But this is still not the most concentrated area of child poverty. An estimated 98 per cent of children living in two zones in Glasgow Baillieston – Central Easterhouse and North Barlarnark and Easterhouse South – are either in poverty or in working families that are struggling to get by”.

This might focus politicians minds, as we move towards a general election by, at the latest, mid 2010. But will there be any cash left in the treasury after bailing out Britain’s feckless banks, we wonder?

Who to help in the current financial crisis?

29 September, 2008

Who to help in this financial crisis? On the FT web site I argue that the 37 million Americans in poverty (about 12% of the population) should be first in line for help (for US poverty statistics go here).

Many Americans on low-incomes have been sucked into loans that they cannot now service as house prices collape. African Americans will be hit hard (their poverty rate, 24.5%, is twice the average). And the relentless rise in US inequality will continue (see the graph here). The financial services industry feasted for years on selling mortgages to people who wanted to own the roof above their heads. The scandal of teaser-rate mortgages will run and run.

And the financial crisis is causing unemployment to jump. As Ken Rogoff in the FT says:

“A large expansion in debt will impose enormous fiscal costs on the US, ultimately hitting growth through a combination of higher taxes and lower spending”.

The history of financial crises demonstrates two common outcomes. First, bank crises almost always become fiscal crises – as public money has to be used to keep the credit wheels turning. Second, capital gets help first, and labour last (see for instance Mexico’s ‘peso’ crisis of the mid-90s). Will history repeat itself?

Happiness is the Peruvian Amazon

29 September, 2008

This week’s Expat Lives in the FT features José “Pepe” Alvarez, a former Spanish friar who moved to the Amazon 25 years ago. He worked with poor people on the outskirts of Iquitos city and with remote Indian communities, and is now based at the Peruvian Amazon Research Institute, helping to protect the forest and its wildlife. He won the 2006 Parker/Gentry award for conservation biology.  There are some wonderful photos here.

His philosophy of life is summed up as follows:

People in the US and Europe generally have more possessions but also more worries and less peace and happiness than many people who live a simple life here in the jungle. I have learnt some of the most important lessons of my life. People here are some of the happiest I have ever met even though they have nothing but a small hut, a wooden canoe and a paddle. Although they have many, many problems, they are happier than most of the people I know from Europe and the US. The key is enjoying simple things and every moment as it comes, and not worrying too much about the past or future”.

Peru has deep poverty, and very high inequality. Over half of Peru’s population is poor and about 20% are extremely poor, according to the World Bank. People in the Amazon and the Andes are worst off. People born in Lima can expect 20 years more of life than those born in the southern highlands, on average (go here).

Peru’s development has been highly unequal. The mining boom of recent years is not distributing enough of its benefits to the poor (if at all). However, Peru’s social movements are trying to rectify this.  In the recent BWPI working paper, Mining and Social Movements, Tony Bebbington and co-authors discuss the fight-back by Peru’s communities.

US Financial Crisis Hammers the Poor

18 September, 2008

Former IMF chief economist, Ken Rogoff worries that the dollar is headed for another dip in today’s FT (go here). He says:

“If the US were an emerging market country, its exchange rate would be plummeting and interest rates on government debt would be soaring”.

Instead the dollar has strengthened over the last month. But he doesn’t think this will continue. Rogoff is worth listening to: over the summer he said a major US financial institution would fail before the end of the year (reported here). And this has now come to pass (with more on the way?).

What does the financial crisis mean for the poor? Earlier in the year we commented on the big rise in the number of people using America’s food banks (see our February and US archives). The US government buys surplus food for distribution through organizations like America’s Second Harvest — and these are facing heavy demand in areas worst hit by the house-price collapse.

Given the US slowdown, unemployment will rise further. With few if any savings, plus the cost of health care (and the fact that many Americans are uninsured), unemployment can quickly push people into poverty. The US prides itself on social mobility (the rags-to-riches story that all those self-help books play upon). But only 6% of children born to parents with a family income at the very bottom move to the very top (see the Economic Mobility Project here). It’s actually a very static society, especially for African Americans.

Unemployment is, in turn, pushing up the default rate in the already hard-pressed mortgage market. This adds to pressure on mortgage-bonds and the balance sheet of the financial sector.

Putting in place effective safety nets for those on low-incomes could help establish a floor under house prices (and thereby indirectly help the dollar, which is Ken Rogoff’s concern). Since many low-income families were lured into mortgages they cannot now afford through so-called ‘teaser rates’ (low interest rates to suck them into debt) they deserve as much help as the banks — if not more.

But we fear that any help will be squeezed out by the fiscal costs of the financial crisis itself (not to mention the continued cost of Iraq: see Joe Stiglitz here on the ‘three trillion dollar war’). And it is very likely that the US will exercise even less voice in international development, since its bilateral and multilateral aid commitments will come under budgetary pressure as any new administration (be it democratic or republican) will focus on domestic priorities first. The bottom line: it’s not just America’s poor who are hammered, but the world’s poor as well.

Add another 400 Million People to the Global Poverty Numbers

29 August, 2008

The World Bank has just upped its estimate for global poverty (go here). The Bank now estimates that 1.4 billion people in developing countries — one in four of the developing world’s population — were living on less than US$1.25 a day in 2005. The previous estimate was 985 million — the “bottom billion” (this was based on an international poverty line of $1 a day). The full paper by Shaohua Chen and Martin Ravallion is here.

What all this means is that poverty has been higher from 1981 to 2005 (the period covered by the Bank’s research). Poverty in 1981 is now estimated to have been 1.9 billion people (one in two of the developing world’s population at the time).

So why has the Bank changed its numbers? Mainly because the cost-of-living in the developing world is higher than previously estimated. The International Comparison Project (ICP) has been collecting price data for years, and has released new estimates. This led the Bank to recalculate its poverty numbers. Previously 1993 cost-of-living data was the latest available and was used to generate the 985 million number.

Comparing the prices of goods and services across countries is tricky. Using current exchange rates is unsatisfactory — because currencies move relative to each other for all kinds of reasons. Hence the ICP calculates ‘purchasing power parities’ (PPPs). So the release of new PPPs led to the revised poverty estimates. However, Sanjay Reddy reckons the Bank’s poverty estimates are still too low (go here for his critique). As Duncan Green says: “Pity the Poor Number Crunchers”.

All this is before the recent run-up in food prices which is driving many into chronic poverty. The Bank is taking urgent action in Bangladesh. But expect many more people to join the world’s poor by the end of the year.

Average cop has more integrity than the average professor

29 August, 2008

At least that’s what Harvard-trained sociologist Peter Moskos reckons. And he might know. He joined the Baltimore police force in the high crime Eastern district, after basing himself there for his PhD research into the methods and culture of an American Police department (go here for an interview). It has certainly given him a new view of academic research:

“I think in the Ivory Tower there’s a problem with researching a group without ever talking to them. In academia, it’s all about measuring in quantitative stats. Culture matters. Cops live and work there, so they can see it. It cannot all be explained by money. [Academics] think it’s all about racism and economics”.

His book Cop In the Hood: My Year Policing Baltimore’s Eastern District is out now. One to read before watching the next episode of the The Wire.

Property Refuses to Dance

29 August, 2008

Talking of politics trying to cope with capitalism’s erratic moves (see our last post), UK Chancellor Alistair Darling has come up with another wheeze to try and save Britain’s collapsing property market — now on the floor after a speculative frenzy to the tune of easy credit. Repossessions are dramatically up, not least in Manchester, a city often labeled as the ‘UK’s debt capital’.

First, the Chancellor tried to encourage the banks to clear up their own mess — with a bit of public money. Interesting isn’t it how (private) banking crises always try and turn themselves into (public) fiscal crises? And in both rich and poor countries, too (see Jay Rosengard on East Asia hereWillem Buiter’s blog, and Managing a Bank-Specific crisis: A UK perspective from the Bank of England, no less).

Now, the Chancellor is going to help local authorities and housing associations buy up unsold properties and help people facing repossession with mortgage rescue schemes. We leave it to our readers to figure out whether this is good or bad social policy (it’s good for the banks since the schemes reduce their bad debts: that fiscal connection again). It certainly reflects the political battering the government is taking. Today’s Times — with a nice photo of the ‘Chimney Pot’ regeneration in Salford — sums it all up:

“This latest strategy highlights the increasing influence of Vince Cable, the Liberal Democrats’ Treasury spokesman, a man as deft at articulating the concerns of Middle Britain as he is at the paso doble in the ballroom”.

Meanwhile, the UK property market seems unable to get to its feet. Dance on.


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