Sunday, September 16, 2007

Relative Poverty

Although he rarely responds to my comments there, Tim Worstall remains one of my favorite bloggers because he is well-informed, always interesting and unusually witty. Tim also provides links to gems that I would never otherwise run across, such as this interview with Nobel laureate Robert Fogel interview in the Federal Reserve Bank of Richmond's quarterly publication, Region Focus:

First of all, we are much richer than we used to be. What we currently call the poverty line is so high that only the top 6 percent or 7 percent of the people who were alive in 1900 would be above it. That, by the way, is also true when you compare us to other developed countries.
England is a rich country but we are 50 percent richer, and we do things that seem wasteful to the English. My wife came down with pneumonia in 2001 in London. She was treated at one of the city’s top hospitals, Guy’s and St.Thomas’ Hospital, which is directly across from Parliament. Everything there was in wards, whereas in the United States rooms are typically private or semi-private. Americans today are used to having a phone beside their bed and 40 channels of television to watch while they are recuperating from an illness. That is unusual, even in other rich countries. Also, the way the diagnosis of her ailment was conducted was different from the typical procedure used in the United States. The doctors and nurses were very good but they never X-rayed her. They just listened to her lungs and came to the conclusion that she had pneumonia. If she had been in the United States, the doctors typically would have X-rayed her as a precautionary measure. So we make all sorts of investments that the British are not willing to make. They spend $1,193 per person per year on health care, while we spend $3,724.

We can do that because food, clothing, and shelter, which used to be 80 percent of a family’s expenditures, now account for only 35 percent. And a large part of the food expenditures actually go toward services rather than on consuming nutrients — for instance, when you eat at a restaurant or when you buy food at a supermarket that is highly processed. So we have become much richer over time and also compared to the rest of the world.
As Tim points out:

One century, to move 86% of the population from below the poverty line to above it. Pretty good record really, ain't it?

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