Trickle Down vs Trickled On, was Re: When it rains it pours(GE rich children for high intelligence)

From: Michael M. Butler (butler@comp-lib.org)
Date: Tue Dec 18 2001 - 16:54:24 MST


Chris Hibbert whispered from behind the arras...

> On whether the rich get richer when new technologies become available:
>
> I'd like to underscore Mike Lorrey's point. Nearly all technologies
> trickle down eventually, and as the pace of change has gotten faster, it
> has seemed to me that the trickle down has happened faster as well.
>
> One of the points that Julian Simon constantly emphasized was that his
> intellectual opponents constantly stressed how far the poor were behind
> the rich in various measurements of access to wealth. (longevity,
> access to health care, susceptibility to various diseases, for example)
> If you instead focus on the changing statistics over time, what you'll
> see in nearly any time series is how much the poor are catching up. The
> same is true over time in access to technology.

A hard recent wrinkle due to the anti-development-as-usual camp is to try to factor in
the "lost wealth" per capita in these un(der)developed lands due to exploitation.

See the appended article. I haven't actually read the paper, nor even tried to.
But I think I can see a couple of problems with their seeming approach, one
being their possibly not having offset the worth of the resource in putative market dollars
by the amount of effort (overhead) which a company would have to invest in order to
bring the goods to market. Another point is that stuff just sitting there does not
"participate in the economy"; one can't make a profit on it; rather like equity
in a house. That can sound rather Ferengoid.

Me, I'm concerned about what the mortgage is _for_, rather than _that there is_ a mortgage.

MMB

Public release date: 17-Oct-2001
Contact: Karen Emerton
karen.emerton@esrc.ac.uk
44-1793-413122
Economic & Social Research Council

World poverty is far worse than standard measures indicate

The problem of world poverty is far worse than is indicated by standard measures of the quality of life, such as GNP per
capita and the
United Nations' Human Development Index (HDI). Indeed, measures of the true wealth of nations - their productive base of
physical,
human and natural capital - reveal that something like a third of the world's population have become even poorer over
the past three
decades. And in a cruel paradox, it may well be that contemporary economic development is unsustainable in poor
countries because
it is sustainable in rich countries.

These were some of the conclusions of Professor Partha Dasgupta of the University of Cambridge, delivering ESRC's 12th
Annual
Lecture on Wednesday 17 October. Dasgupta argued that while GNP and HDI indicators suggest steady improvement over the
past
thirty years in much of the developing world, they fail to take account of what really matters for a society's
prospects: its productive
base of institutions and capital assets, including natural resources. And it seems clear that in the Indian
sub-continent, sub-Saharan
Africa and China - countries and regions that together encompass half the world's population - this has been declining
relative to their
populations.

Dasgupta's rough and ready calculations of per capita wealth show how misleading the assessment of long-term economic
development can be by simply looking at GNP per capita or HDI. For example, Pakistan's GNP per capita grew at a healthy
2.7 percent
per year, implying a more than doubling of living standards in the period 1965-96. The per capita wealth measure shows
that living
standards actually almost halved for the average Pakistani over this period.

For sub-Saharan Africa, the picture is even worse according to per capita wealth measures, with living standards halving
after only
twenty years. The ills of this continent are well known but they are rarely depicted in terms of such a massive decline
in wealth. It will
take years for the region to recover, if it is able to do so at all.

At the heart of Dasgupta's lecture was the idea of sustainable development, signalled by an increase in a country's
wealth over time
and signifying an increase in economic well-being. Given that, properly measured to include environmental degradation, a
vast swathe
of the developing world is growing less wealthy in per capita terms while countries like the UK and the US are growing
wealthier, it
might be cruelly inferred that poor countries are consuming beyond their means while rich countries are not consuming
enough. But
the issue is far more complex than that.

Key features of the depletion of these countries' productive base are the resources that make up natural capital:
commercial forests, oil
and minerals, water, fisheries, soil, biodiversity, the atmosphere as a sink for carbon dioxide, etc. And owing to
imperfect systems of
property rights, these are typically under priced or free to those who use them. This means that countries exporting
primary products
(and they are often among the poorest) may well be subsidising the consumption of the importing countries (typically the
richest).
This suggests that contemporary economic development may well be unsustainable in poor countries because it is
sustainable in rich
countries.

###

For further information, contact ESRC Media Consultant Romesh Vaitilingam on 0117-983-9770 or 07768 661095 Email:
romesh@compuserve.com

Or contact Lesley Lilley or Karen Emerton in ESRC External Relations on 01793 413119 or 413122.

NOTES TO EDITORS
1. The ESRC is the UK's largest funding agency for research and postgraduate training relating to social and economic
issues. It has a
track record of providing high-quality, relevant research to business, the public sector and government. The ESRC
invests more than
46 million every year in social science research. At any time, its range of funding schemes may be supporting 2,000
researchers
within academic institutions and research policy institutes. It also funds postgraduate training within the social
sciences, thereby
nurturing the researchers of tomorrow. The ESRC website address is http://www.esrc.ac.uk
2. REGARD is the ESRC's database of research. It provides a key source of information on ESRC social science research
awards and all
associated publication and products. The website can be found at http://regard.ac.uk
3. Partha Dasgupta delivered ESRC's 12th Annual Lecture - 'Is Contemporary Economic Development Sustainable?' - on
Wednesday 17
October 2001. Dasgupta is Frank Ramsey Professor of Economics at Cambridge University and a former President of the
Royal
Economic Society.

-- 

MMB is reachable via butler at comp dash lib dot o r g * My moronic mnemonic for smart behavior: "DICKS" == * * diplomacy, integrity, courage, kindness, skepticism. *



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