Armchair Economists, Unite!

[Kodokami]

I don't claim to be part of the poorest one-fifth here in America. I am most definitely in the middle class, which I am fortunate for. I only asked the question because I find that statement very difficult to believe, but if I can be proven wrong I would be glad to change opinion.

[tushantin]

I don't claim to be part of the poorest one-fifth here in America. I am most definitely in the middle class, which I am fortunate for. I only asked the question because I find that statement very difficult to believe, but if I can be proven wrong I would be glad to change opinion.

Ah, don't worry. It's not about changing opinions. Frankly, your opinions matter. I asked those questions because I believed that survey would help determine the "wealth gap" between people, and if it could help you get some answers then well and good.

[Lord J Esq]

You were talking about the upper fifth, Kodokami. In most countries, including India, the upper fifth does quite well for itself, although the resolution doesn't capture the disparities between somebody sitting in the 80th percentile versus somebody in the 99th percentile. Nonetheless, America's poorest cannot claim to live better than India's richest. Tushantin's original statement and his follow-up were inaccurate and irrelevant, respectively. The only gray area is that the U.S. has a great deal of civic infrastructure in place that creates a higher level of socioeconomic accessibility; for instance, the U.S. has superior water regulations, security services, and public libraries. These benefits do trickle down, to an extent, to the poorest. When they do, and when India does not offer a comparable quality of infrastructure, it is possible for some among America's poorest to surpass, on some particular point, the quality of life some among India's richest. But those aberrations are not as common as some on my side of the political spectrum claim, and they are not representative of the broader trends. American poverty, despite America's high level of technology and economic affluence, is still quite brutal.

[tushantin]

Ah! Josh, please do detail on the poverty life in America. I admit I've never been there, but I've sensed the despair of a few friends due to their situations, but I don't seem to have a full story.

[Lord J Esq]

On a different note:

I've been following the evolving story with Greece. After arranging a deal with EU economic leaders (mainly Germany and France) for a massive bailout of the country, and 50% losses to investors, the Greek prime minister Papandreou decided that he would hold a vote of no confidence in his leadership, and then a public referendum on the question of the bailout itself--which carries with it huge austerity measures to be imposed on a country that has already had to accept huge austerity measures, resulting in strikes and riots.

The news outlets, either ignorantly or unscrupulously, are framing this story as one of irresponsibility on the prime minister's part. That's a very murky move all by itself, without any context, simply because it implies that the Greek people should not have a say in how they want their country to proceed in dealing with the crisis. Such an implication is an affront to their national sovereignty.

But there's a more insidious aspect to that viewpoint: Greece bears very little responsibility for what has happened to it. The news media often repeat claims of massive government overspending, Greek misrepresentation of Greece's finances prior to joining the Euro currency zone, and too affluent a lifestyle for employees in the Greek civil service, as having caused the country's economic collapse. That's not strictly untrue (although the criticisms focusing on the affluence of public employees are mostly bunk), but these things are not why Greece, is in such dire straits. Indeed, this is mostly Germany's fault--not Greece's.

What happened is that when Greece joined the Eurozone, it gave up sovereign power to control its inflation rate. Meanwhile, the European Union has never had the central authority to take matters into its own hands. The true economic powers controlling the Euro--namely, Germany--did not act to avert this crisis because they were profiting immensely from cheap access to the Greek market. It was German greed, an unfettered desire for profits today and consequences tomorrow, that created the circumstances by which a fairly routine economic downturn in Greece now threatens to collapse the European Union and trigger a global recession.

Austerity measures are all the rage these days, but they don't fix recessions. Ironically, deficit spending fixes recessions (and must be coupled by higher taxation in the good times to create long-term fiscal sustainability). That's why each successive round of austerity measures has only worsened Greece's economic situation, making its debts all the more daunting and requiring even more bailouts. Only powerful and well-performing economies can sustain austerity measures during a recession, and Greece was not in nearly such a favorable position going into this.

Some people are talking about the demise of the Euro, and a few are even saying this is a death knell for the European Union itself. Alternatively, a few are saying that this crisis will cause the EU's evolution from a quasi-confederate entity into a much more centrally empowered federation, not unlike the United States.

The Greek public looks likely to reject the referendum, which will probably cause the nation to go bankrupt. By defaulting on its debts, Greece can prioritize its domestic spending, so that might not be any worse than the current austerity program, and at least the Greeks will be able to feel some sense of self-control. As for Papandreou's vote of confidence, I don't know how that'll turn out. His socialist party didn't create this mess. They only came into power as the crisis was beginning, after years of conservative rule. But his party, and he himself, will take a lot of blame.

What frustrates me is that Germany is not being forced to accept more responsibility for this mess. They're playing themselves as the victim, and I don't approve of that.

[Lord J Esq]

Ah! Josh, please do detail on the poverty life in America. I admit I've never been there, but I've sensed the despair of a few friends due to their situations, but I don't seem to have a full story.

I won't prioritize such an effort right now. You can find this information from other sources. My apologies.

[FaustWolf]

tushantin, as far as references on poverty in the U.S., the best place I can dig up right now is this CNN report, and I don't even know how old it is. I suspect you'd be thoroughly unimpressed by any descriptions you could find online, or any we could give you. There's certainly a segment of America's bottom 5th that have no roof over their heads whatsoever, I will say; I'll never forget walking around Washington, D.C. at night, and seeing an alarming number of folks crowded around heating vents to sleep. If virtually all of India's top 5th at least have a roof over their heads, it seems difficult to argue that our poorest necessarily have it better off than India's wealthiest. I think this is where Kodokami was coming from when he questioned the claim.

When we split society into 5ths or other large percentages to begin with, we're talking a pretty wide range of outcomes though. I can definitely see where someone making $10,000/year in the U.S., but single with no kids, could be loads better off than a family in the lower range of India's top 5th that has lots of kids to support.

tushantin, your Macbook vs. college tuition question piqued my curiosity -- do those two things cost the same where you live, or is that not what you meant? If we're talking bottom 5th over here, I'd say it's realistic to suppose that 6 years' income would have to be devoted to a fairly good private college if you're paying the tuition out of pocket, whereas one to two months' income could get you enough for a Macbook (judging from Amazon's prices). I'd be curious to know what the results are in your neck of the woods. Measuring purchases in terms of amount of labor traded for them, instead of dollars to rupees, could be eye opening!

[Sajainta]

I completely agree with J, FaustWolf, and Kodokami.  There are Americans who are extremely, extremely poor.  I have known some of them.  Many poor Americans do not have access to food, or clean water, or a stable living environment.  Many are homeless.  You would be surprised how many Americans are illiterate.

Don't forget, tushantin, that I grew up in an extremely impoverished nation, where there is an almost non-existent middle-class.  According to research I've done, the Philippines is only slightly richer than India.  The richest people in the Philippines are extremely wealthy, and they basically control the government and the police and use the police as personal militia.  Whereas the vast majority of the country are starving to death.

There is no way in hell that those impoverished Americans are richer than the wealthiest Filipinos, or the wealthiest Indians.

[tushantin]

Thank you for your response time, FW! Going back to my original response, I actually misread what Kodokami quoted (sorry about that, Kodo; damn, dyslexia!) and my question was based on the percentage of poverty and lifestyle of the middle-class family compared to the same classes in America; in the case of extreme "roof-less" poverty, the Americans aren't necessarily better off than Indians. But what's the percentage? Where's the math? Do you have any information about farmers in the USA, or is agriculture handled by corporate? I'm also troubled by the fact that the numbers are higher in African side. However, in terms of middle-classes, apparently ones in America are almost on par with the wealthiest in India if not more so, and thus the reason why many dream to work in the USA at least for a year before going back home.

But then the point of perception can shift. I live in the good city of Pune, but outside my area especially where industrialization still hasn't reached (and especially in South India), majority of cities are still rural where a "cigarette" is too expensive for the general population to consume. The "middle-class" are outright poorer than the poorest in my area, and are incapable of affording anything beyond their basic necessities. So obviously, they're satisfied with the lives they already live (they don't know what's beyond) and don't find any use for anything "technological", such as a computer (an old Pentium 3 costs as much as 6 months of salary for them). Sell them a KFC, even at a discount, and they'll revolt due to the outrageous price. Take them from their place of comfort and abandon them somewhere in Maharashtra, say Mumbai, and they're suddenly homeless.

Just let me clarify that when I say "poor" I don't mean "homeless". The latter is much more horrifying a life than the former. When Tarak Mehta wrote the background story of his character Iyer, the first village kid in South Indian poverty who studied hard and became a successful scientist, I almost cried. Did I mention that the majority are illiterate folks in places such as Kerala?

I'll never forget walking around Washington, D.C. at night, and seeing an alarming number of folks crowded around heating vents to sleep. If virtually all of India's top 5th at least have a roof over their heads, it seems difficult to argue that our poorest necessarily have it better off than India's wealthiest. I think this is where Kodokami was coming from when he questioned the claim.

I can definitely see where someone making $10,000/year in the U.S., but single with no kids, could be loads better off than a family in the lower range of India's top 5th that has lots of kids to support.

Wait a minute, how much would $10,000/year be to you exactly? Because that amount here would change the lives of my whole family! That's almost 35 grand a month, aka over 10 times the amount I make, and 5 times the amount my parents make together.

tushantin, your Macbook vs. college tuition question piqued my curiosity -- do those two things cost the same where you live, or is that not what you meant?

Ah! That reminded me of Kodo's dilemma regarding UNT. Anywhos, while education is relatively cheaper here in India compared to the USA, it's still largely unaffordable. As for college, I wouldn't be able to pay for it from my own pockets, that's for sure, but my other friend seems to be able to afford it (i.e., his brother works in Dubai). Universities, on the other hand, are just as expensive as you can imagine (6 years? make it 12), but the Indian government has institutionalized cheaper government-standard opportunities for the masses. Problem is, these institutes are only available in few industrial areas, which means that the majority of the population in India (especially from rural areas such as Kerala, Bihar, Rajhasthan, etc.) need to travel, pay a hefty amount and still can't guarantee their admission opportunity. It's an all-or-nothing attempt. While Open Universities are available here, and distance studying is an option, those from the rural areas can't even afford a computer, let alone an internet connection.

EDIT: Just one thing to add to the above paragraph. It's usually because the fees are so high that, if you're unable to pay the college again, when a student fails it usually drives him/her to commit suicide.

Anywhos, getting back to your question, it all comes down to "who" wants attend "what" college. In the case of a doctoral degree in science, and pertaining to the general middle class who probably have somewhere around Rs. 15,000 income (in a family), the university fees would actually be Rs 1,00,000+ (yes, it's more than that, but I don't know how much). Someone like me who earns Rs. 3,000 a month can't hope to pay that much, but did anyway (thank my wealthy Australian uncle) for my Animation Institute fees. A Macbook costs roughly Rs 70,000, an iPhone costs Rs. 50,000, and a Macbook Pro costs Rs. 1,20,000.

And here's a funny deal: a lot of people from other areas of India, Nepal and Bangladesh come to Pune not just to join in universities or stuff; the majority actually come here to find admission in police forces, Armed Military Training and Education, or simply to be Military Doctors. It's relatively cheap to join in, and they earn plenty. The catch is that they're always living a life of discipline, and are selling themselves for the service of the nation.

Don't forget, tushantin, that I grew up in an extremely impoverished nation, where there is an almost non-existent middle-class.  According to research I've done, the Philippines is only slightly richer than India.  The richest people in the Philippines are extremely wealthy, and they basically control the government and the police and use the police as personal militia.  Whereas the vast majority of the country are starving to death.

That's it. I want economy and capitalism destroyed. I want money burned. I want greed to crumble beneath my feet.

[Sajainta]

Wait a minute, how much would $10,000/year be to you exactly? Because that amount here would change the lives of my whole family! That's almost 35 grand a month, aka over 10 times the amount I make, and 5 times the amount my parents make together.

The difference in what money can buy in places like the Philippines and India vs. the US is astounding.  With the equivalent of $10,000 in the Philippines, one could easily live an extremely comfortable lifestyle.  However, that is not the case in the US.  An income of that is considered to be below the poverty line in the US.  You would probably not be able to afford rent, unless you chose to live in a very dangerous area where rent is cheap.

Let's say that D makes $10,000 a year.  I don't have a job, so $10,000 is all we have.  Our rent is about $675 per month, and that does not include utilities.  That's $8,100 a year for rent, without utilities.  So we have less than $2,000 left.  If we're extremely lucky, we can get groceries for as cheap as $40 a month.  That's almost $500 a year for groceries.  I have to pay $45 a month for medication in order to stay alive and stay sane.  That's $540 a year.

So now we have $1,040 left a year to spend on things like gas, which costs almost $4.00 a gallon.  Or for things like car repair, which can cost up to $300.  Let's assume that D only has to fill up the tank every two weeks (which is absurd and completely unrealistic).  That's almost $100 a year for gas.  We have had to spend about $500 this year on car repair, so now we're down $600 for car issues.  And although the public transit to go into the city is good, there is no public transit to get up to D's job headquarters, so we need a car.

We have $440 left.  Utilities are about $30 a month (if we're lucky).  That's $360 a year.

So now we have $80 left a year.  $80 to spend on toiletries, pet care for Draco, and for emergencies like hospital trips, or for fixing D's glasses.

Things are much, much more expensive in the US than in third world countries.  Back home, for instance, you spend the equivalent of $1 to go to a movie.  Here, you spend about $7 or $8.

It IS possible to live with $10,000 a year in the US, but it would be very, very difficult.

[Lord J Esq]

I have done it a few times!

[tushantin]

Just something else I'd like to add. (Again, a reminder that when I say "poor" it doesn't necessarily mean "homeless"; the latter is even more horrifying)

[youtube]FsKNVhYS7oY[/youtube]

The worst part is that while THIS is the majority (in Mumbai; yes, 60% of the population in Mumbai makes Slum-Dwellers), this isn't even the poorest part of the population. Oh no, there are classes much lower than this, their lifestyles even worse than this. Some of those dwellers have been my friends, and I've been to those places they call "home"; experienced their hospitality, of their way of life. And it breaks my heart...

And this isn't just in India, mind you. Take a look at the other Third World countries.

[Truthordeal]

Saj, I think that the poverty line is $17,000 for a family of four. I don't know if this would correlate to $10,000 for two individuals, but given your example, it wouldn't surprise me.

[FaustWolf]

Here's a guide thingy for that.
http://aspe.hhs.gov/poverty/11poverty.shtml

Looks like $22,350 USD for a family of four. But they really shouldn't be giving a national number for this IMO; cost of living varies so much that we need to get all this info on a local basis to see where the nation really stands. What's always amazed me is that most of the poor probably live in large cities, and yet those are also the places with the highest costs of living -- that's gotta a be brutal sandwich right there.


tushantin, would you say the people living in India's slums typically work in manufacturing, the local service sector, or can they just not find jobs at all?

[tushantin]

Sorry for the late response, Faust.

What's always amazed me is that most of the poor probably live in large cities, and yet those are also the places with the highest costs of living -- that's gotta a be brutal sandwich right there.

Yep! That's always a sucker punch of life.   Then again, a lot of people require "accessibility" than "affordability"; I'm not sure why, but yeah, and it always backfires.

tushantin, would you say the people living in India's slums typically work in manufacturing, the local service sector, or can they just not find jobs at all?

I'm not really that knowledgeable about India's North-East regions, but about the western and south-western the slum dwellers are usually all three, but mostly the latter. Usually the "Local Service Sectors" themselves aren't reliable and encouraging enough, but some help train poor classes to join into jobs such as that of a watchman, garbage collector, etc. However, due to their massive illiteracy, they're usually employed for manufacturing and even then that's just 26% of the slum dwellers, and only in industrial areas. Most of them simply have no jobs because they are inexperienced, and they are inexperienced because they have no money. Some manage to climb Social Hierarchy ladders, though, and take opportunities to become cheap maids or bicycle maintenance folks, etc. A friend of mine is the son of one such maid and lives in the slums. He today earns seven times the amount I do (his job includes patiently enduring antipathetic swearing from Western countries like America) because his mother worked hard as a maid to educate him, and even then he can't move his family to a new apartment, and he's tired of paying debts.

Hopefully that's informative.

BTW, is it just me or does it seem like most HR's only seem to employ those who even remotely "look" rich, because that would imply the person is successful and competent regardless of their actual talent? And, from what I've learned from the seminar yesterday, it only takes 3 seconds for them to look at you and decide whether to accept you or reject you, and whatever you say or show will be biased from that decision. The reason for this is usually because such jobs have to interview about 300 candidates a day (yes, tedious), which would also explain that there are less jobs than there are actual seekers. This then results in unemployment regardless.

In this case, there are simply not enough "jobs". Hmm, what about entrepreneurship, and how's the status of that in America?