The world’s rich stay rich while the poor struggle to prosper

http://www.johnkay.com/2014/01/29/9250

by rrgmitchell • 12 years ago

132 130 12 years ago

Sorry, but does this guy not realize that many of the world's richest people gave half their wealth to the Gates foundation, thus forming an engine for human improvement that could have never been attained by distributing their wealth? The wealth divide is not a "real" problem - the real problem is figuring out how to keep everyone employed in a world that is constantly evolving, where most jobs are getting automated or over-seaed (neither of which is a problem in of itself). A real problem is figuring out how to stop corrupt people that enrich themselves by being parasites to the poor/middle class, take advantage of our relatively indifferent government, or our screwed up law system (like patent trolls).

buster• 12 years ago

Many?

gavanwoolery2• 12 years ago

113 at current count. https://en.wikipedia.org/wiki/The_Giving_Pledge

Yes, there are 1,426 billionaires at current count, but that is still a significant number. Many != the majority.

ehmish• 12 years ago

Many did give much wealth to the Gates foundation, but it would be far from most.The wealth divide seems to be a pretty real problem. Concentrating all the wealth of the world in a few people seems pretty sub-optimal, trials[ 1] of directly giving cash to impoverished people demonstrates that if wealth was redistributed more evenly, it would not be wasted.

[1]http://forbesindia.com/article/real-issue/direct-cash-transf...

benched3• 12 years ago

I don't think either wealth disparity or unemployment are themselves direct problems. I think the huge and fundamental problem, which is a problem even in a so-called 'rich' country like the US, is access to the basics of human life, which I think are food, housing, and education of a certain standard. Wealth disparity itself may be ok, but in the US at least it seems to contribute to costs of education and housing rising so as to prevent access by a large segment of the people. Ways must be found to solve that, even if wealth disparity itself doesn't necessarily need solving.

vanderZwan2• 12 years ago

First, I don't understand what you are trying to argue, as that "engine" works by redistributing their wealth.

Second, John Kay's arguments are not contradicting (or even discussing) the main premise of Bill Gates' letter - which is to convince people aid is effective, but one specific argument made within it regarding wealth and the global economy:

I was surprised and disappointed that the data you chose to support your case referred not to the distribution of average incomes across states – the subject of your letter – but to the distribution of household incomes across the world. These are very different things.

If I was an economist, I would also point out that mixing up the data like is disingenuous and probably damaging to the overall argument, even if to lay-people like you and me it makes little difference.

Finally, as far as I can see the author of this article and Gates want the same thing: to help the poorest on the planet. The difference is that Gates focuses on what has worked and what his vision is of what happens when things go right. Kay on the other hand focuses on what has gone wrong and is still going wrong and why, and thus is deserving of being paid attention to by people with the power and intent to change things (like Bill Gates for example). This is constructive criticism.

Avshalom• 12 years ago

Some of the world's richest people have signed a non legally binding pledge to give half their wealth to the Gates Foundation eventually

liquidise2• 12 years ago

People like this grind my gears. Many things go into being rich, but the top of that list is making more money than you give away. Practically by definition, people who continue to do this will continue to get rich.

There is no shortage of humanitarian efforts, funds, and foundations started by the wealthy for the sake of the underprivileged. To suggest these are insufficient because their founders remain wealthy is foolhardy.

vanderZwan2• 12 years ago

Many things go into being rich, but the top of that list is making more money than you give away. Practically by definition, people who continue to do this will continue to get rich.

Except there is this thing called "diminishing returns" that somehow does not apply to being rich. Also, wouldn't "spend" be a more appropriate description than "give away" here?

There is no shortage of humanitarian efforts, funds, and foundations started by the wealthy for the sake of the underprivileged. To suggest these are insufficient because their founders remain wealthy is foolhardy.

Luckily, the author of this article isn't suggesting that - he is arguing that in its current form these efforts are insufficient because the poor remain poor, and that he has good reasons to believe they will stay poor if we don't change specific problems not addressed in Gates' letter.

liquidise2• 12 years ago

I'll bite.

there is this thing called "diminishing returns" that somehow does not apply to being rich

Once you hit a certain amount of money, investments begin to drive your income. Unlike salary which is additive, investments tend to be multiplicative in their wins and losses. So you stand to make (or lose, if you are bad at it) money faster.

Also, wouldn't "spend" be a more appropriate description than "give away" here?

Semantics. Credit and debits are all i am referring to.

The author is literally arguing that poor places are not getting richer fast enough. Money alone does not make for better living conditions. There are environmental constraints, infrastructure additions, and countless logistical issues. The author provides no solutions that i saw, and instead spends his time ranting about comparison between developed vs developing countries.

notahacker• 12 years ago

From the original post, emphasis mine

"The major part of my book... was devoted to descriptions of the economic and social institutions that enable some countries to operate near the technological frontier. The failure to establish such institutions, or to operate them effectively, condemns most of the world to levels of productivity and living standards far below what is possible with existing knowledge and techniques. That subject should interest you"

There's nothing about funds and foundations being insufficient because their founders remain wealthy. He's explicitly saying the opposite: that in many countries with plenty of foreign cash flowing in most people will remain poor and very limited in their opportunities to change that due to inadequate institutions, even if they have access to the mobile telephones and antibiotics their parents didn't and shinier public buildings in the capital city. Gates points to oil-rich Gabon's per capita incomes being "nearly" where the US was in the 1960s, but in 1960 the average American had access to running water and had a life expectancy significantly higher than 55... Gabon might have the income of a "middle-income" country but a large proportion of the population lives in exactly the same way as people in a nearby very poor countries. The problem here is that even though there's enough oil money going into Gabon to ensure the average person has an adequate standard of living, that money is so badly distributed there's a fair chance that Bill will have to chip in for people in Gabon to have malaria nets and HIV tests.

In reality, I think they're talking past each other and would probably end up on agreeing on most points that actually matter: I don't think Gates brought up book titles to ridicule the idea that reforms are necessary for poor countries to prosper, and I doubt Kay objects to Gates' current level of spending on malaria nets.

leobelle• 12 years ago

Personally I think this is a public policy issue to be addressed with the government which in democratic nations requires a sea change social movement given that most are pretty conservative. Addressing the issue of wealth disparity to rich people seems entirely pointless to me. Anyway, this more like a publicity stunt not meant to address poverty but to get this guy rich and or famous visa vis plugging his book.

quaunaut• 12 years ago

Y'know, I have seen Mr. Kay talk before, and I wouldn't regard him as an idiot. However, he's seemed to have missed the entire point Bill was making.

So what about China and India? Their recent growth performance has been exceptional, but both are still desperately poor countries by the standards set by Switzerland and Norway. The gap will take many generations to eradicate.

Which Bill completely acknowledges? However, he also makes the point that today, China and India are moving up at considerable speed when it comes to income. They have the abject poor still, no one will disagree, but compared to where they were 20 years ago, even the poorest in those countries are much, much better off, and all signs point to it getting better very quickly.

But you do not have to venture far from the centre of Nairobi or Shanghai, and only round the corner in Mumbai, to see sights unimaginable in Norway or Switzerland.

The appeal to emotions here wasn't needed, nor was it affective. Not to mention, it still misses the same point: Bill isn't saying that things don't suck currently, he's saying that while they're not great, they're considerably better than they were before and that's an ongoing trend.

old-gregg2• 12 years ago

I think their disagreement stems from the difference in how they define "poor". Gates is certainly right (it just takes a bit of traveling to agree with him) that hungry-and-dying type of poor is rapidly disappearing all over the world.

But if you look at living-hand-to-mouth poor, I can understand John's reasoning. Yes, average incomes (productivity) have gone up but you also see how prices on commodities are rapidly raising in the developed countries to make up for that. [1]

This makes me wonder if the universal basic income is ever going to work. Look at insane costs of healthcare/education in the US - no doubt caused, in part, by "free money" either through government-assisted programs or employer-sponsored insurance.

Perhaps it's an inherent property of capitalism: some things always end up barely within reach of a lower class.

[1] Hence the need for things like http://en.wikipedia.org/wiki/Big_Mac_Index

bsbechtel8• 12 years ago

Perhaps it's an inherent property of capitalism: some things always end up barely within reach of a lower class.

I wouldn't say that's true, we just need to figure out ways to produce those things cheaply enough (through automation, other technologies) that everyone can enjoy them. Take a look at agriculture in the US...even the poorest people here have access to (not very healthy) food whereas just under 100 years ago many were starving in the Great Depression. This is because agricultural technology has led us to an abundance of cheap food that everyone can afford at some level or another.

specialist2• 12 years ago

"Look at insane costs of healthcare/education in the US - no doubt caused, in part, by "free money" either through government-assisted programs or employer-sponsored insurance."

Huh?

Even with the modest ACA reforms implemented to date, the growth of healthcare costs has already slowed down. First time since the 90s.

Medicare, which is most akin to single payer in other countries, is the most efficient guarantor (highest medical loss ratio). Long term cost reduction requires extending Medicare to all and embracing the capitation model. Bonus points for resuming prior levels government funded basic R&D.

Tuition costs are rising as subsidies have been removed and student loans have been privatized. The combination created a bubble. Which happens often enough when deregulation and privatization co-occurs, that my hunch is it's casual.

So while universal basic income may prove to lead to inflation, your two examples do not support that argument.

tn13• 12 years ago

When it comes to development rhetoric I think it is totally influenced by western thought. India is poor by western standards no doubt. But if India is poor and malnourished then how come its population continues to explode ?

We need to realize that what people think of "prosperity" may not be same everywhere.

Kluny• 12 years ago

I'm not sure which way you're trying to argue, but Bill Gates's letter also did a great job of explaining why poor and undernourished populations continue to explode. The short version is that when each child has a low chance of surviving to adulthood, parents have more to hedge the chance the one of their offspring will make it. In addition, in poor countries where adults can't count on social security, they have children instead of a retirement policy.

FD3SA• 12 years ago

I've always been baffled by the investment choices of billionaires. If you accept an empirical view of the universe, no matter what you do, you will eventually die. Your experiences of the world will cease to exist. Therefore, the only rational investment would be in life extension technologies (SENS, advanced prosthesis, etc.).

At first, this might sound repulsive. The idea of a group of elites discovering and hoarding the fountain of youth for themselves while the masses suffer is dystopian. However, upon closer examination, it becomes clear that the money invested in achieving any significant life extension will have a massive public benefit. This is because combating aging requires curing almost every known disease at its source. Any progress made in this front will have massive benefits to healthcare worldwide.

So the question is, why do billionaires invest so irrationally? Why do they buy yachts and invest in hedge funds and social media companies? From the comment below, 113 billionaires out of 1426 are current members of the The Giving Pledge. What are the rest doing with their money?

P.S. I must be clear that I don't consider members of Bill Gates' Giving Pledge part of the group of "irrational billionaires". The Gates Foundation funds an incredible amount of basic research for a philanthropic organization.

nostromo• 12 years ago

Having kids is the old-school form of immortality. I imagine many of those other billionaires are thinking about their dynasty.

xenophanes7• 12 years ago

Their kids will need SENS ~30 years after they do.

I get that the typical plan is to have a dynasty via grand kids, great grand kids, etc, but it's dumb to ignore SENS.

sliverstorm2• 12 years ago

That might seem rational, until you ask how far away effective life extension technologies might be. If you are a 75-year-old billionaire, those technologies would have to be really close over the horizon. So it probably looks like a non-option to many.

xenophanes7• 12 years ago

If they care about their kids, that's plenty of reason to fund SENS!

dror• 12 years ago

"Your experiences of the world will cease to exist. Therefore, the only rational investment would be in life extension technologies (SENS, advanced prosthesis, etc.)."

No. You make a false assumption that everyone's main goal in to live as long as possible. Different people have different goals, and Gates clearly cares about making a major impact on other people.

enraged_camel2• 12 years ago

If you live longer, you can make a bigger impact. Especially if you're someone like Bill Gates.

Imagine if the great thinkers and inventors of past times were still alive today.

Imagine if someone like Elon Musk could live forever.

edit: gotta love it when drive-by downvoters just cast their vote without adding anything to the discussion.

eli_gottlieb• 12 years ago

Because apparently even billionaires haven't managed quite the same form of sophomoricism as you, in which you trick yourself into believing that one cannot actually value things outside of one's own subjective experiences and personal lifespan.

They're not irrational, they just care about things outside themselves.

mturmon• 12 years ago

Fascinating. I will have to perform significantly more logical introspection to understand this peculiar phenomenon.

xenophanes7• 12 years ago

Big SENS fan here. Good question.

A lot of the reason is that people do philanthropy to gain various types of status and reputation. It's often a social action. Investing in SENS wouldn't impress their friends in the right way, while various other causes optimize for social signaling.

Yachts and social media companies are a bit different. The yachts are for fun in addition to being a social signal that impresses some people. The social media companies are usually either to make money or to hang out in certain circles, but they do also have some signaling possibilities (you can tell your old stodgy rich friends that you're involved in more hip investments than them).

streetnigga2• 12 years ago

Yachts are also good for committing manslaughter[0]. This is coming from the wealthy man who thinks focus on the wealthy means a Kristallnacht.

"Writing from the epicenter of progressive thought, San Francisco, I would call attention to the parallels of fascist Nazi Germany to its war on its 'one percent,' namely its Jews, to the progressive war on the American one percent, namely the "rich," Perkins, a founding member of the venture capital firm Kleiner, Perkins, Caulfield and Byers, wrote in a letter to the editor in The Wall Street Journal on Friday.

[0] http://talkingpointsmemo.com/dc/5-things-to-know-about-the-k...

exratione• 12 years ago

Jason Hope is demonstrating that you can generate status from funding SENS. More of this would be a good thing:

http://www.jasonhope.com

pistle2• 12 years ago

A couple people do philanthropy because they care. But the rest are just trying to impress friends.

namenotrequired• 12 years ago

I wish this was how all billionaires thought. I hope it's how I would think, if I were a billionaire. They probably think[1] however that there's realistically little they can do even with their billions to significantly lengthen their life within their lifetime. So they'd rather make their life better instead.

There might also be some (perhaps cultural) selection bias - people who want yachts try to become billionaires, people who want to improve the world focus on improving the world themselves rather than on becoming rich.

[1] I wrote "realise" first, but I have no way to know if they are right or not.

api• 12 years ago

Interestingly, living forever is not a common desire among humans. As we age, our desire for longevity generally diminishes. Having children also seems to satiate some kind of internal biological self-preservation instinct, reducing the fear of death. (Which makes biological sense.)

The simple fact is that we only fear death because our genes want to survive. Once that is accomplished -- or once we pass the age of reproduction -- the alien goddess of biology stops whispering that terror into our hindbrains. Myths of hells and grave-monsters and rotting corpses cease to haunt us so deeply. The desire to just be here becomes less intense.

I would like to extend my life, but not because I fear death. I have children. It doesn't scare me all that much, really, though I would of course be afraid if it were staring me in the face. But I'd like to extend my life so that I could experience a kind of extended late-life in order to pursue intellectual ventures of high value and long-term focus. I'd love it if after kids, after ordinary biological life, I could basically become a monk-academic-entrepreneur and dedicate a century or two to art, science, philosophy, etc.

Edit:

In addition, through Gates' philanthropy, his selfish genes are in fact increasing their fitness. All those people in Africa are walking around with 99.999999% the same genetic material that's inside Bill Gates. He is them from a genetic point of view. So his actions are "genetically rational" from a perspective of selfish-gene self-preservation.

Lots of human behavior makes more sense through this lens. Why, for example, do we exercise moderation in war? Because the enemy carries our genes. The whole point of war is probably evolutionary stimulation from a perspective of selfish-gene logic. My guess is that if we went to war against hostile aliens there would be absolutely no mercy or moderation. It would be all-out war, no holds barred.

I do not disagree with the parent poster though. Such investments would have follow-on benefits and the technology would trickle down to us eventually, so I wish there was more money being put into those areas.

hmsimha• 12 years ago

I wanted to point out that investing in AI research could be viewed by many as more lucrative than investing in anti-ageing research and life extension technology. If we solve AGI, we will have a super-human intelligence capable of solving health and ageing problems for us (and hopefully inclined to do so).

kamaal4• 12 years ago

Plus providing us facilities to upload our minds to the cloud and then live on there forever.

gms7777• 12 years ago

If you accept an empirical view of the universe, no matter what you do, you will eventually die. Your experiences of the world will cease to exist. Therefore, the only rational investment would be in life extension technologies (SENS, advanced prosthesis, etc.).

By claiming that the only rational investment would be life extension, you're making the implicit assumption that your life and experiences are worth something (otherwise, why bother extending your life?). If we agree there, why are hedonistic pursuits that (arguably) increase the quality of your life, any less rational than investments that increase the quanitity of life?

enraged_camel2• 12 years ago

Do hedonistic pleasures increase the quality of life? In my experience, they simply provide temporary distractions from the lack of such quality.

rayiner• 12 years ago

You're defining rationality pretty narrowly. You're assuming that the only thing that is rational is living as long as possible. People invest for the happiness it brings them while they're alive. If I were a billionaire, I would derive much more joy, in the present, from seeing the real reduction in suffering and increase in human joy that can be achieved with my investment, than I would from spending that same money for a marginal chance of extending my own life.

Maybe because it's because I'm only 30, but I'm not afraid of death. Indeed, I find the idea of life extension horrific. It would destroy the vitality of society to have old generations, with their decades of entrenched perspectives and power, cling on in perpetuity. I don't want to hang around consuming resources and overshadowing my children. I want them to have their own time in the sun.

tptacek2• 12 years ago

Give it a few years. Paralyzing fear of death sinks in at age 32.5.

zasz• 12 years ago

Because there are people suffering right now who could use some help.

melling• 12 years ago

Why wouldn't you invest in superior artificial intelligence? Once we create that, it could solve all of our problems.

baddox• 12 years ago

Therefore, the only rational investment would be in life extension technologies (SENS, advanced prosthesis, etc.).

No, the only rational investment would be in things that give you utility, or in loose terms, make you happy.

jonmrodriguez• 12 years ago

I think most billionaires are not scientists and don't realize that life extension is any more possible than magic.

Once some steps toward life extension start happening without billionaire's help, and start to become part of popular culture, then billionaires will realize it's a thing.

Also, inertia. You probably strive to live a similar lifestyle as your parents and your friends, rather than (for example) selling your possessions and spending your life backpacking the world, even if the latter might rationally be a better option if it occured to you.

mmxiii• 12 years ago

Life extension is only rational in a very limited sense.

In the greater scope of the universe, all things must die. The rational outlook is to see our position in this context. Our mortality establishes the constraints in which we look for meaning and purpose, so that we may not be wearied by an incalculable infinite.

And then we may understand it is what we do and express about ourselves that imbues life with meaning, and not in the hope a monument may immortalize an empty phrase. For in all finite existence, the most we can say, and what we must say, is "we are here".

drewcrawford• 12 years ago

Your experiences of the world will cease to exist. Therefore, the only rational investment would be in life extension technologies

It is certainly not the "only" rational investment. It might be the only rational investment for a person who shares your views on the importance of staying alive and your optimism for SENS research, but there are plenty of people who fail one or both criteria, and they're not all irrational. They're just optimizing for different criteria.

tsotha3• 12 years ago

If you accept an empirical view of the universe, no matter what you do, you will eventually die.

Perhaps you're overestimating the extent to which billionaires accept that view.

Therefore, the only rational investment would be in life extension technologies (SENS, advanced prosthesis, etc.).

Or maybe the ultra-rich have done enough research to conclude these sorts of technologies won't be mature in time to help them. So why bother?

pizza234• 12 years ago

Well, first of all, research attemps to extend life are not like solving engineering problems - it's not somthing clear cut.

Minimal advances for example may take years and years.

And especially, how do you know that those advances are going to apply to the person who's founding the research?

What if one is at risk of heart attack? Should he still invest in life extension?

The concept of "curing [almost] every known disease" doesn't make any sense.

In this perspective, investing in life extension looks more like gambling to me, because we're dealing with non-deterministic contexts. So much for rationality.

Luxury commodities are an entirely different thing. As people pointed out, they satisfy some different needs.

izzydata• 12 years ago

Seems like the point this guy is trying to make is that being poor is relative. So while poor countries are now better off than they were 50 years ago they are still about as poor as they were 50 years ago in comparison to other countries that also become better off.

I don't know if this is a good or a bad way to measure a country.

Would there not be any poor countries if all countries had about the same wealth distribution? Perhaps all countries would be poor then.

tsotha3• 12 years ago

So while poor countries are now better off than they were 50 years ago they are still about as poor as they were 50 years ago in comparison to other countries that also become better off.

That seems like unambiguous progress to me.

lmg643• 12 years ago

Bill Gates would have to believe his efforts were worthwhile in order to keep himself motivated to try. He's essentially "all-in" on the Gates Foundation. His pronouncement on eliminating poverty is an aspiration he phrases as a "fact" and we are taken aback by the audacious claim, primarily because he's been wildly successful before, so hey, lightning might strike twice.

What if? And why discourage him?

It doesn't seem likely to me, but I don't have billions to spend proving my theories. When I think in terms of probably outcomes, it seems more likely that the US will regress towards the global mean, rather than remaining as a permanent statistical outlier.

I also keep in mind that "poverty" has a way of becoming a dynamic definition. In the US, it's becoming that anyone below the 33rd percentile is poor by that definition. So poverty is always with us in that frame of mind.

winfred• 12 years ago

When I think in terms of probably outcomes, it seems more likely that the US will regress towards the global mean, rather than remaining as a permanent statistical outlier.

I'm not sure what metric you are using to compare the US to other countries that make you think it is a statistical outlier, but unless your key metric is military spending, I have some news for you...

jacalata• 12 years ago

In the US, it's becoming that anyone below the 33rd percentile is poor by that definition. So poverty is always with us in that frame of mind.

I think you are conflating the measures of Relative Poverty and the Supplemental Poverty Threshold [0]. Relative poverty is a measure of inequality and is explicitly labelled as such. The supplemental threshold is people whose entire income is less than the 33rd percentile of spending on necessities, and it is not intrinsically true that this group must always exist.

[0] http://www.census.gov/hhes/povmeas/methodology/supplemental/...

acd• 12 years ago

We need to reform the banking sector, the too big to fail banks that creates credit out of nothing and gets saved by the state when they make misstakes. When the 1% superrich can't create money out thin air we will have a better middle class.

See the GDP per capita vs median income development on the link below http://lanekenworthy.net/2008/09/03/slow-income-growth-for-m...

ommunist• 12 years ago

What really drives me crazy is that robots are far more productive and generate so much more wealth than humans. And they are so poor.

gesman• 12 years ago

Poor are not staying poor by their "struggle to prosper".

Poor are staying poor by keeping doing things that keeping them poor, like getting further down in debt, not acquiring new skills, not being productive and not expressing their creativity.

And of course rich have their habits as well.

Give money to poor guy, take all the money from rich guy and see where they are in in 5 years. Chances are they'll be back to their original platoes.

JimmyM• 12 years ago

Very true.

Taking all the money from a coddled, unemployed trust fund child would definitely have no effect on their solvency in the long-term, because money is entirely distributed based on merit.

I mean, thank god, can you imagine if it wasn't?

dwaltrip• 12 years ago

Do you have any evidence for your claims? From what I have read and seen, the effects of poverty are often are a reinforcing, positive feedback loop. Here is a small example: financial struggles alone, irrespective of inherent talent or background, actual reduces one's cognitive ability on a day to day level [1]. How's that for being kicked while your down? And I'm sure I don't need to explain how privilege and wealth benefits those who are born into it.

[1] http://www.princeton.edu/main/news/archive/S37/75/69M50/inde...

benched3• 12 years ago

I hope that someday, saying garbage like this is considered the same as saying that women aren't as good at math as men, or black people aren't as hardworking as the chinese.

john2x• 12 years ago

by keeping doing things that keeping them poor, like getting further down in debt, not acquiring new skills, not being productive and not expressing their creativity.

That's because they don't have the choice, or the chance, to do not do things. At least for the poor people in 3rd world countries. If they don't spend their entire day working for scraps, they (or more likely their children) could die the next day.

gnaritas2• 12 years ago

You have no idea what youre talking about; you're suffering from the just world fallacy, you are simply wrong. Your statement is beyond ignorant.

dllthomas2• 12 years ago

That's one theory. The evidence doesn't support it. Maybe the rich guy can get back to where he was with his track record and connections to build on (more likely if he earned the money in the first place rather than inheriting it), and of course if you just take cash and not other sources of wealth you probably haven't hurt the rich guy all that much. But when we have given money to poor people, they use it to improve their lives.

http://www.ottawacitizen.com/business/Column+Want+help+poor+...

"In Dauphin, Man., the government gave more than 1,000 families a four-year guaranteed income to help keep them out of poverty. Crime rates and hospital visits dropped. Education enrolment surged. Nobody sat around in sweatpants eating Cheetos. They used the extra resources to make plans. "

Focused on children: http://opinionator.blogs.nytimes.com/2014/01/18/what-happens...

"But just four years after the supplements began, Professor Costello observed marked improvements among those who moved out of poverty. The frequency of behavioral problems declined by 40 percent, nearly reaching the risk of children who had never been poor."

Rural poverty in Kenya: http://www.businessweek.com/articles/2013-10-25/want-to-figh...

"Food consumption increased 20 percent, with a 42 percent reduction in the number of days children go without food. Recipients were also able to increase their ability to earn income. Revenue from raising livestock rose by 48 percent; total revenue from self-employment rose by 38 percent."

Again, for emphasis: total revenue from self-employment rose

And lastly, a large one-time payment to long-term homeless men in London (though an unfortunately small sample size): http://www.washingtonpost.com/opinions/free-money-might-be-t...

"A year later, 11 of the 13 had roofs over their heads. (Some went to hostels; others to shelters.) They enrolled in classes, learned how to cook, got treatment for drug abuse and made plans for the future."

You need to update your model of how people work.

leterter• 12 years ago

The American Dream!

tim333• 12 years ago

So Kay says “... rich countries got rich and why poor countries stay poor” and Gates says that's false. I think if you actually look at the data numerically then Gates wins eg. http://www.youtube.com/watch?v=jbkSRLYSojo#t=238

alexeisadeski32• 12 years ago

Inequality whining has already jumped the shark.

quadrangle2• 12 years ago

Because it's got nothing more to say and nothing relevant anymore? The "jumped the shark" reference is to absurd things after running out of ideas. It doesn't apply at all here. Non sequitur.

Inequality whining is just getting started, given that we're on track for the problem to just get worse.

alexeisadeski32• 12 years ago

It never had anything to say, it never was relevant. These two facts are only now becoming obvious to more people, hence the shark jumping.

1stop3• 12 years ago

Can't those poor coloured people just die already, they are disturbing my white privilege! /s

dba7dba• 12 years ago

Wrong title. It should say:

The world's rich get richer while the poor struggle to avoid getting poorer.

Money makes money.

bayesianhorse2• 12 years ago

Which is exactly the kind of attitude that gives nerds a bad reputation for lack of economic understanding...

huherto• 12 years ago

The article was frustrating since it is not clear on what the disagreement is. My guess is that John Kay is referring to the first myth. "POOR COUNTRIES ARE DOOMED TO STAY POOR"

According to Gates, poor countries are making progress.

According to Kay, there is a ceiling on how much progress a country can make.

So really, the positions are not contradictory since there is a big space between the current state of poor countries (which are making progress) and the ceiling that Kay proposes. Furthermore the ceiling it self can move up overtime. And now I hate for Kay for not writing a clear article.

AnimalMuppet• 12 years ago

And, if I understand him correctly, the ceiling is set by the quality of the country's institutions. That's really hard to fix.

Gates may be right that most countries will be out of absolute poverty. (In fact, I hope he is right.) But I suspect that Kay is right that most countries still won't be in the "rich" camp, even by 2014 standards.

tsotha3• 12 years ago

I think it's a mistake to rely too heavily on productivity to explain wealth disparities among countries. Productivity increase, at least the way economists measure it, is mostly a function of rising labor costs and as such is a symptom of wealth and not a driver.

It's not that you get wealthier because you're more productive. It's that your measured productivity increases as increased labor costs make automation pencil out.

downandout• 12 years ago

I have never heard of John Kay, but think it's normally a bad sign when someone believes that a very famous person they have never met or spoken to is talking directly to them through the media. It indicates that he is either a) crazy or b) so full of himself that believes that Bill Gates read his obscure book, and was so disturbed by its content that he decided to launch a worldwide PR campaign against the ideas contained in it. Either way, this is an interesting PR strategy.

xname• 12 years ago

"So what about China and India? Their recent growth performance has been exceptional, but both are still desperately poor countries by the standards set by Switzerland and Norway. The gap will take many generations to eradicate."

-- This is kind of ridiculous. How can you pick an exceptional rich sample to set standards? Seriously? ????????

zvanness• 12 years ago

Not trying to be dismissed as a conspiracy theorist, but how many people have actually heard of the Rothschild Family? Niall Ferguson wrote a book on them called "The House of Rothschild: Money's Prophets". He said their wealth is measured not in the billions but in the trillions. They and a handful of other families have single handily started and funded wars, overthrown governments, chosen presidents and leaders, established central banks in almost every country, bought out the largest shares in every major news outlet, etc.

The problem is that these few that have their hands on almost everything just don't know when to stop. They truly have no mercy.

http://www.amazon.com/The-House-Rothschild-Prophets-1798-184...

bayesianhorse2• 12 years ago

As far as I understood it, Bill Gates was arguing that the worst of poverty is vanishing surprisingly well.

Kay says this is wrong, because the countries with intermediate economies aren't on the top yet.

I think the basic misunderstanding is that economic development - if it works - is a stochastic exponential process. Humans tend to underestimate this function badly. On the one hand it is very fast - after the US went from where Turkey is today to its current economy in "only" 50 years, but in every particular year, looking into the future, progress looks like a painstakingly slow crawl.

The world’s rich stay rich while the poor struggle to prosper

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