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The Welfare State has Destroyed California’s Economy

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California is back in the news. On Saturday, Governor Jerry Brown announced that the state’s budget deficit would exceed the original estimate he made in January of $9.2 billion. The new deficit is projected to be a remarkable $16 billion. With state spending still through the roof, unemployment at 11 percent, and poverty on the rise in the Golden State, hope is diminishing that California’s finances will ever return to normal with anything short of a declaration of bankruptcy.

So how did California get in this ugly predicament? The same way the federal government did; by interfering with free market forces by erecting a massive welfare leviathan. The only difference between the caretakers in Sacramento and the caretakers in D.C. is that the latter have the political luxury of printing money to forestall the inevitable day of reckoning. Sacramento does not have that same luxury and unless something drastic happens, it faces insolvency right now.

The five features of the welfare state that have brought the current financial calamity upon California are overregulation, bureaucracy, high taxes, social welfare programs, and unionization.

Overregulation and bureaucracy go together. It has been said that the fastest-growing entity in California is government and its biggest products are bureaucracy and regulation. California’s environmental regulations have always been legendary, but little noticed is the enormous bureaucracy built to regulate most other areas of life. Maintaining these ever growing monstrosities costs a fortune. Additionally, their onerous regulations are one reason that for the seventh year in a row Chief Executive Magazine’s survey of 500 chief executives ranked California as the nation’s worst state to do business in.

Besides regulations chasing business from the Golden State, there are also high taxes. Statists claim that California’s budget deficits have been caused by an ever-shrinking tax base. This is the old chicken before the egg argument.

The reason the tax base continues to shrink is precisely because taxes are so high. California has the 48th worst business tax climate. Workers who earn more than $48,000 a year pay a top income tax rate of 9.3 percent, which is higher than what millionaires pay in 47 states. Its sales tax is one of the highest in the nation, at 8.25 percent. Rounding out the levies that rank among the highest in the country are its capital gains taxes, gasoline tax, and vehicle license taxes. High taxes are a big reason why the state has seen a net loss of four million citizens to other states in just the last two decades. When government raises taxes, the astute find ways to avoid them. The industrious cut back their enterprises and in the case of California, many simply left for lower tax states.

Lastly, Californians have voted for and built a huge social welfare system that puts an enormous strain on the state treasury. The state has about 13 percent of the country’s population but 33 percent of its welfare recipients. Add to that the union contracts of state workers and it is no wonder California is a sinking financial ship. Her prison guards and public school teachers are the highest paid in the country. As of 2009, the average pay and benefits package for a firefighter was $175,000 per year.

California is not alone. For decades, the United States, Greece, and Spain have created welfare states that have choked the lifeblood out of the free market. All face grave financial circumstances today. The free market’s great revenge is that welfare states cannot last forever. Their inevitable collapse comes because they are not self-sustaining. They grow by feeding off the labor of hard working citizens either through higher taxes or inflation. At some point either those sources dry up or the social programs become so large that no amount of money could ever be raised to keep the scheme going. Like Spain and Greece, California is facing immediate financial insolvency. The only thing keeping the United States from the brink is Bernanke’s printing press.

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About Kenn Jacobine

  • http://www.squidoo.com/lensmasters/IanMayfield Dr Dreadful

    “The free market’s great revenge is that welfare states cannot last forever. Their inevitable collapse comes because they are not self-sustaining. They grow by feeding off the labor of hard working citizens either through higher taxes or inflation.”

    Kenn, NO system is self-sustaining. A free market still requires “the labor of hard working citizens” to produce and consume.

  • Igor

    Actually, Californias main problem is “Prop 13″, the Jarvis bill, that in 1978 froze property taxes, and also required a 2/3 vote in the legislature to raise any taxes.

    Property taxes can only be raised a very small percent,or when the property changes hands. So clever lawyers split the property from the business and incorporated it separately. Thus, when the owner wanted to sell the business the land continued to belong to the same holding corporation and the tax never goes up. The land title never changes even when the holding corp is sold. So most businesses in CA pay 1978 level property taxes for the land they sit on.

    CA also has no oil extraction tax even though it’s a large oil producing state.

    In general CA has very low business taxes.

    Plus, it’s almost impossible to pass a tax law with the 2/3 requirement since there’s a small republican minority that blocks all tax bills.

    Basically, working residents are carrying the tax load for business.

  • Kenn Jacobine

    Igor, did you actually read the article?

    Doc, free market systems are self-sufficient because they produce goods and services the consumer wants. Governments produce nothing on their own. They extract from workers the means to provide services that the productive citizens don’t need or necessarily want. That is the difference – free markets cause prosperity, governments leetch off of them.

  • http://www.squidoo.com/lensmasters/IanMayfield Dr Dreadful

    Kenn, the free market produces many goods and services, such as, for example, xylophones, which astonishingly enough I neither need nor want.

    I can live with that, however, because I recognize that, well, it’s not all about me.

  • http://frivolousdisorder.com/ Frivolous D

    “Governments produce nothing on their own.”

    This is a completely irrational comment. The tax money gets spent and it does participate in the economy. Billions on everything from jet fighters to school books and roads. It provides national security, social safety nets and had stabilized the economy. Libertarians think that the tax money somehow just “poof” disappears when, in fact, it participates in every aspect of our economy.

    Of course there is waste and fraud in the system. So what. There is waste and fraud in every aspect of life. Here’s an idea, why not just try to improve the system rather than embrace a naive fantasy of scrapping it all believing that everything will be great.

    Those government programs you hate so much arose because the private industry failed miserably to provide adequate solutions. What changed so much that things will be different this time?

    I just don’t want to live in a live-and-let-die country. Go to Haiti for a dose of laissez-faire capitalism.

    BTW – CA is, in reality, about 1-2 points higher in overall taxes based on national averages. And, like the rest of the country, our state and fed taxes are at a 40 year low.

  • Zingzing

    We already give shit loads of breaks and benefits to business and rich people, and guess what? It obviously doesn’t work. Where are the jobs this is supposed to create? So then we throw money at the poor, but there just isn’t enough money to make a real difference in their lives… Many are still poor.

    Tax the rich. Invest in the middle class. The middle class will create demand, which will help the poor by giving them jobs, and the rich will benefit as well because more people will be able to participate in the thing that makes them rich, which is a strong middle class.

  • Kenn Jacobine

    You’ve got it backwards. You have to produce and earn a medium of exchange before you can consume. That is how it was done in the good old days before Keynes. This is one reason why all the trillions in spending these last few years in an effort to stimulate the economy hasn’t worked.

    The reason people are poor has nothing to do with the meager amount of money they receive in welfare. It has more to do with their disposition to working and supporting themselves. There is practically no poverty in the U.S. compared to the rest of the world because of our economic system or what’s left of it. To say Haiti is laissez-faire is ludicrous. But, I’ll tell you that the U.S. is turning into a Haiti with its cronyism and attitude that we all deserve what others own.

  • http://www.RosesSpanishBoots.com Christopher Rose

    “There is practically no poverty in the U.S. compared to the rest of the world”? Say what?

    Are you sure that’s what you meant to say?

    Although poverty is actually decreasing everywhere in the world, despite our current economic challenges, there are almost more poor people in the USA than in the whole of Europe, which has twice the population.

    The fact that there are far more, although diminishing totals, seriously poor around the world shouldn’t blind people to the serious problems the USA is facing.

    I think Kenn’s dogma is clouding his reason. How ugly would life get if those people struggling to survive weren’t getting some help?

    We humans don’t live by the laws of the jungle in which the strong and the fit survive at the expense of the weak and the sick.

  • http://frivolousdisorder.com/ Frivolous D

    That is how it was done in the good old days before Keynes.

    Ah yes, the good old days. I remember reading about them in “The Jungle” and “Germinal.” They even wrote songs to celebrate the beauty of life in the good old days…

    You load sixteen tons, what do you get
    Another day older and deeper in debt
    Saint Peter don’t you call me ’cause I can’t go
    I owe my soul to the company store

    I could go on but I have to drop off my kid at the coal mine.

  • http://www.squidoo.com/lensmasters/IanMayfield Dr Dreadful

    Kenn doesn’t seem to want to address Igor’s and Frivolous D’s factual responses to his criticism of California, which suggests to me that California is just an excuse and that this article is really just another iteration of his blinkered libertarian idealism.

    Poverty is relative and although most of today’s poor in the United States (at least if they are lucky enough to have a roof over their heads) have a high standard of living compared to the poor of the Victorian era, so does everyone else. A comfortably well-off middle class 19th century family would be regarded as living in squalour today.

    Social programs are to be thanked for much of the improvement in living standards for the poor, so I’d say they were working. It doesn’t by any means follow that a generous social welfare system inevitably leads to economic collapse, as is plain to anybody who can see past Kenn’s cherry picking.

    The bottom line is that Kenn sees taxation as theft. Most people who are right in the head see it as part of citizenship.

  • Igor

    Most of the USA infrastructure that provides opportunity for business has been built by the Government (both federal and municipal) and paid for by US taxpayers. Those projects were built with public money when private sources were unable or unwilling to finance them.

    For example:

    the interstate highway system
    the canals
    the railroads
    ports and waterways
    agricultural and residential water projects

    This country would be poor indeed if it were not for these great public projects.

    Without the huge government projects this nation would be no better than than the many South American banana republics that are constantly in turmoil and poverty, thanks to the laissez faire governments that they have.

    It has been the unmatched willingness of Americans to unite together in cooperative major projects, financed by citizens and lead by government agencies, that has lifted us above other nations.

    It is because of the commercial environment base established by American government and it’s ordinary citizens that American businesses have been nurtured and grown.

  • roger nowosielski

    @10

    If I’m not mistaken, D. H. Lawrence may as well be added to the list.

  • http://www.squidoo.com/lensmasters/IanMayfield Dr Dreadful

    It’s worth noting that every South American nation, with the arguable exceptions of Venezuela and Bolivia, now has a stable, democratic system of government, and that the prosperity of those nations has increased dramatically in recent years as other countries and corporations feel more comfortable doing business on the continent.

    Weak central government in South and Central America meant constant instability and the seizure of power by the strong (almost always the military) at the expense of the weak. Charles Darwin, whose ship H.M.S. Beagle visited Argentina when it was still wild frontier country, noted in his journal that in the year 1820 there had been fifteen regime changes in less than nine months just in the single province of Buenos Aires. And this was in an era when armies could not be mobilized at a speed faster than walking pace.

    I just wonder how long Kenn thinks a minimized, weakened federal government would last before being replaced by generals of the most powerful armed forces in the history of the planet.

  • Wolfman

    Mexifornia

    I have lived and worked here for 32 years. I work in what is left of the California Aviation Industry. Companies like. North American, Convair, Douglas, Northrop, and Lockheed were once the worlds best aviation companies. California was an aviation powerhouse. In WW 2 no other State or Country built more airplanes then California, and the US. I started to work with McDonnell Douglas building DC-9-80’s. At its best, we had over 60,000 people working at our plant, now the plant is mostly gone, and the final assembly hangers have sat empty for years. The only plant left has only a couple thousand people still working, and if no more orders come in, it will be closed in 2 years. California once had a auto plants and a steel mill, both long gone. The idiots from up in northern California have done their best to chase them all away. And talk about a Illegal Immigrant friendly state, California is the place. All the Hispanic lawmakers and many Whites pander to the Illegal Hispanic Vote. The LA mayor really sucks up to them, as does the LA Times. If you are not Hispanic, you are a minority in California. The fight is over, WE LOST THIS STATE. To many areas here look like some of the Shithole areas of Mexico. The Hispanic gangs have taken over areas that once were black. Our prisons are mostly Hispanic. And English in starting to become a second to Spanish. I am still here, same as you. So what is your Answer? We are politically outnumbered, and to much has already been lost. I am not a racist, I have many Black, Hispanic, and Asian friends. But each and everyone of my friends are American’s, and proud of it. My Hispanic friends served in the military, and grew up with the AMERICAN DREAM. They love this nation, just as I do. And surprising, some are not any more happy about all the Illegal’s here, either. This is not Mexico, this is the United States, paid for, and with the blood, and work of many, many, many generations of hard working American’s. Look at Mexico, during this same time period, What Have They Done, or Created? A world class Third World Nation, that wouldn’t be shit, if not for what the United States provides for them, and to them. For information on this issue, go to IMMIGRATION COUNTERS.COM, and check out the Numbers, Plus go to You Tube, and watch IMMIGRATION GUMBALL’S. This will really wake you up about immigration. Also look at our history, check out OPERATION WETBACK, a US Government Program in the 1950’s, in which the US GOVERNMENT. Deported record number of Illegal’s. They took them as far as southern Mexico, on ships, so they wouldn’t be back in a week. Also check out the Mexican-American War, the US actually captured Mexico City, Mexico was ours for the taking. In the Treaty of GUADALUPE HIDALGO, we bought the Southwest areas of the United States from Mexico for $18 million dollars, that is like $400 million today. Plus we, the US forgave Mexico of $3.25 million in Debt that they owed us, that would be like $87.3 million today. So when Mexicans say, the US stole the southwest form them, tell them to learn how to read, IN Mexico, Not here. And see how close they came to being a bunch of US States. If it wasn’t for the Racial Hatred of the southern states back then, “Remember, The Civil War was The Next Big US WAR”, not wanting a bunch of Mexicans now as US citizens, Mexico would have been part of the US.

  • Igor

    Wolfman

    Your instructions to ‘go look up’ something or another will not take hold here.

    Your comment is too effusive. You need to concentrate on one or two ideas and present compelling arguments and supporting data to prevail here.

  • Igor

    @3-Kenn: Yes, I read the article. Every word of it. Did you actually write it?

  • George

    California deserves to be renamed mexifornia. White politicians sold out the white man who built this paradise. Thx to scum like Sacto Politicians and pandering filth like certain politicos, Calif. is now the shithole of the western world. Too bad we can’t make an example of the poliiticians responsible for destroying California by puttint them in front of a firing squad for committing the crime of treason. That would be an example to all other pandering politicins to back off or they will face the same fate. Of course, we would be merciful with this scum begore pulling the trigger. Due process demands we blindfold the dirtbags first, but let them peak out the corner just a leeeeeedle bit.

    • Tax Payer

      California is being eroded by darrell steinberg. Have lots of kids and ask the people that support the society to pay for it. Have no skills and reproduce when you cant support your unskilled offspring.

  • Igor

    It seems to me that every business in America is indebted to the great public projects that government and the citizens paid for and built.

    Where would we be without the Boulder Dam and Grand Coullee? How about TVA, the Panama Canal?

    Without the big wonderful government projects that the US citizen and taxpayer took on voluntarily and enthusiastically, this would be a pitiful and dreary nation!

    Almost all the benefits that go to American business are rooted in US Government projects.

  • roger nowosielski

    Are you certain you’re not from Orange County or Simi Valley, George? Sure sounds like it.

    Since the Mexicans and the Niggers are all to blame, I have a suggestion for you. Why don’t you move to Arizona where the climate will be much more congenial to your liking?

    And keep us posted by all means.

  • http://www.squidoo.com/lensmasters/IanMayfield Dr Dreadful

    Before he moves, though, I must send him a link to my lucrative, California-based knuckle bandage business. Sounds like he needs to place an order.

  • Kenn Jacobine

    Christopher,

    There is practically no poverty in the U.S. compared to the rest of the world – Africa, Asia, and Latin America. In most of the countries on those continents 70-80 percent of people live in poverty. The poorest of the poor outpoor the poorest in the U.S. hugely.

  • Glenn Contrarian

    Doc –

    The bottom line is that Kenn sees taxation as theft. Most people who are right in the head see it as part of citizenship.

    AMEN! Taxes are the price of admission to live in a nation. If you don’t want to pay those taxes, then give up your citizenship and all the rights and privileges that go with it.

  • Glenn Contrarian

    Kenn –

    There is practically no poverty in the U.S. compared to the rest of the world

    You’re comparing apples and oranges, because there’s a LOT of poverty in America compared to the rest of the FIRST world nations. Or haven’t you been to Canada or Australia lately?

  • Kenn Jacobine

    Glenn,

    Who has a choice about living in a nation or not? Is there a place I can go and not be subject to taxation?

    Glenn,

    What percentage of the world’s population does Canada and Austalia possess? The fact is that more humans than not live in poverty worldwide. The poorest of the poor in America are still much better off than the poor of those countries in Africa, Asia, and L.A.

  • http://www.RosesSpanishBoots.com Christopher Rose

    Yet more dogma from Kenn. Although I love libertarianism in principle, taking it too literally makes people sound just as stupid as other belief systems, secular or spiritual.

    Kenn, there are quite a few places you can go and not be subject to taxation and it is even possible not to live in a nation if you really want that.

    It is also not true that “more humans than not live in poverty worldwide”. Around 1.7 billion people are living in absolute poverty.

    Bad as that figure is (and despite the economic and political challenges facing us), the number of people living in poverty is falling steadily and has been for over 20 years…

  • Kenn Jacobine

    Christopher,

    You criticize my worldview but offer no specifics. Where can an American go to avoid taxes legally?

    Can you provide a source for your claim that most humans do not lve in poverty?

  • Glenn Contrarian

    Kenn –

    If we listened to such ‘logic’ that we shouldn’t try to improve the lot of our poor, then in 1933 we would have continued the austerity measures that Hoover was using to “fix” the Depression rather than implement the New Deal. Problem is, the “fix” that Hoover wanted would have only entrenched the New Deal further. Oh, he finally jacked up the tax rate in 1932, but he never – repeat, never – used any real stimulus. FDR did, and by 1936 we were almost out of the Depression until the Conservative Coalition forced austerity back on the nation, and down we went back into the Depression until the taxpayer-funded stimulus we call WWII came along. That’s precisely what happened, and that’s what Austrian-school supporters such as yourself always ignore.

    But I’m getting off track. As to your questions:

    Who has a choice about living in a nation or not? Is there a place I can go and not be subject to taxation?

    Actually, yes there is. I’m sure you already know that there’s quite a few places in Africa where there is no effective government. Of course you’ll need to pay bribes to the local warlords to leave you alone, but hey – you’re not paying taxes, right?

    But the key to the argument, Kenn, is that YOU GET WHAT YOU PAY FOR. If you pay for not much government, then you’ll get a government that is not able to do what every first-world nation does as a matter of course. If you want to live in a first-world nation, then you must pay the price of admission. If you don’t want to pay that price of admission, there’s lots of other places that would be glad to take you.

    Besides, Kenn, you know as well as I do the old saw about death and taxes. You will die someday, and you will pay taxes until you do so. You can gripe all you want about both, but they’re going to happen…and all the whining in the world about taxes does nothing except to raise your blood pressure and hasten your death. At which time you’ll finally stop paying taxes. Try the Serenity Prayer sometime, Kenn – it would do wonders for you.

    What percentage of the world’s population does Canada and Austalia possess? The fact is that more humans than not live in poverty worldwide. The poorest of the poor in America are still much better off than the poor of those countries in Africa, Asia, and L.A.

    Ah. So since our poor are already better of than most of the poor elsewhere, we should stop trying to make things better? A wise man once said that “Good enough is the enemy of better”. Google the phrase and you’ll get Soviet admiral Gorshkov. But the philosophy of his phrase is also at the heart of something called “Deming Management”, the production management system (designed by American W. Edwards Deming) that Japan used to bring “Made in Japan” from a worldwide joke to the envy of the planet.

    You see, Kenn, the third world’s poor and destitute are also largely better off than what the third world’s poor and destitute faced a hundred years ago, or five hundred years ago, or a millenium ago. Does that mean that we should stop trying to improve their lot? That’s precisely where your logic leads.

    Conservatives are right that “tax-and-spend” is effectively wealth redistribution…but conservatives are also not objective enough to look deeper, to see that if one improves the lot of the middle class and especially the poor, then such are less likely to engage in crime, and that such are much more likely to not only buy the goods that the rich have to sell, but also to start businesses of their own. Why? Because all economies are NOT supply-driven – they’re demand-driven. It does NOT matter how many tax breaks that the so-called “job creators” are given, they will NOT open up new factories to produce goods until the people have enough money to buy those goods. “Top-down” is never the way a successful economy works – it is always, always, always”bottom-up”. With few exceptions (like the oil-rich nations of the Middle East), the poorer the poor are, the less successful the economy as a whole will be. Screw the poor and leave them to their own devices, and you’re screwing the nation as a whole.

    And all your protestations that “it shouldn’t oughta be that way” won’t change that fact.

  • Clavos

    Taxes are the price of admission to live in a nation. If you don’t want to pay those taxes, then give up your citizenship and all the rights and privileges that go with it.

    Following Eduardo Saverin’s lead (and before him, Swedish musical group Abba), that idea may actually develop into a mini-trend in the months and years to come…

  • Glenn Contrarian

    Clavos –

    Nothing’s stopping you – go for it! And you can find out just how personally fulfilling “going Galt” really is!

  • http://www.RosesSpanishBoots.com Christopher Rose

    Kenn,

    I believe before spouting a world view it is incumbent on the spout to have actually first found out what it is spouting and you clearly haven’t.

    To avoid taxes legally as an American, you would have to renounce your USA citizenship, as increasing, albeit still low, numbers of people are doing.

    As to poverty, I did what you clearly didn’t, I used my computer and quickly came upon this Wikipedia article about Poverty, to say nothing of many other informative articles.

    There is a graph in the Wikipedia article that clearly shows the steady and continuous fall in the number of people living in extreme poverty, despite increasing overall population numbers. As the graph shows, the percentage of people has fallen from over 40% in 1980 to under 20% in 2010. This rate of decline has not been significantly affected by any of the world’s economic woes in all that time…

    The facts show that, despite all the challenges and problems we as a species face, life is getting significantly better for everybody in the world and there is no real reason to think that won’t continue.

    Indeed, unless we find new ways of messing things up, we may be approaching an age of real abundance and it seems not unlikely that extreme poverty might be practically eliminated well before the end of this century.

  • Herr Professor Igor

    @26 – Kenn: Haiti.

    Where can an American go to avoid taxes legally?

    I know some who have gone there.

    Of course, there are NO medical facilities, so as a protection against disaster you have to keep syringes of powerful drugs like morphine AND a ready ticket to fly back to Miami at any time.

    A simple auto accident can kill you.

    Plus, other requirements, like ready bribe money for local officials who depend on extracting bribes to survive.

    Go ahead. You’ll love it. Living on the edge. I know a guy who LOVES potential disaster and he has a home there.

    There’s nothing like walking out your front door in the morning and seeing a corpse laying in the middle of the road to sharpen the mind.

  • http://www.lunch.com/JSMaresca-Reviews-1-1.html Dr. Joseph S. Maresca

    America’s infrastructure has needed repair for decades. We need to address this issue now perhaps in local bond issues. In addition, we need to tax excess or wasteful consumption at higher rates to lower healthcare costs and continue paying down debt even further.

  • Igor

    California has always gotten a poor deal from the US nation. With 30 million people we still only have 2 senators, the same as Wyoming, which has 600,000 people. It’s about 50 to one.

    The energetic and resourceful people of California have made enough wealth to keep states like Mississippi and Alabama afloat. Yet, in congress they have a rule for siting federal projects: “ABC, anyplace but California” they laugh. And the pipsqueak states have enough senate votes to enforce it.

    And after all the giant projects that California citizens and taxpayers have volunteered for and built, the damn predatory capitalists from out of state are still not satisfied. The huge water projects that made it possible for huge fortunes to be made in California real estate are soon forgotten when it comes time for others to carry some of the load, instead they demand a new $50billion plan to steal even more water from the endangered Delta to ship water south so that there will be green lawns at model homes in the new suburbs for immigrants to imagine they are back in Connecticut, except with better climate. Forget the water running down the gutter from over-watering.

    “More Water!” they scream. Damn the salmon in the delta.

    And then when the budget is pinched by paying off bonds from the projects that made them rich they lean back in their chairs in air-conditioned houses with over-saturated lawns that are killing the native oak trees with their runoff and fungus explosion, and complain that a couple poor wretches up north are pissed about losing their jobs, their savings and their homes to the reckless gamblers of Wall Street.

    • joe

      all states have two senators genius. its part of this thing called the constitution….
      and immigrants don’t come from connectitcut, emigrants do.

  • http://thingsalongtheway.blogspot.com/ Cindy

    Some thoughts on the graph mentioned above in the Wikipedia article, which uses analysis from the World Bank, and why it is not a good basis for assuming ‘facts’.

    World Bank Poverty Figures: What Do They Mean?

    The World Bank’s revised international poverty line of $1.25, which on many counts reveals a negligible difference in reducing poverty since 1981, raises legitimate questions about the assumed success of globalisation, writes Adam W. Parsons. (…)

    The World Bank, as the near exclusive provider of global poverty figures, uses the statistics to support its policies of deregulation, privatisation, market liberalisation, and increased economic growth through free trade as the overruling means to combating poverty. It may acknowledge that inequality has grown sharply since globalisation and the current food crisis will be long-lasting, but so long as poverty is on a downward trend and the Millennium Development Goals remain in sight, then its continued defence of neoliberal policies can be vindicated.

    For several years, however, several academics have challenged the methodology of the Bank’s statistics and claimed that the figures are underestimated by up to 40 percent, and may not prove that global poverty is being reduced at all.[5] The new poverty figures, which on many counts reveal a negligible difference in reducing poverty since 1981 despite the World Bank’s positive bias, raise legitimate questions about the assumed success of globalisation.

    The World Bank’s guideline fo what is an is not poverty is both arbitrary and often meaningless. People who live just above of below their arbitrary line are shown by critics to live in the same circumstances. The World Bank’s decision to make $1.08 its poverty cut-off was recognized by them to be so far off base, even based on their own standards (off by more than 40%) that they ended up creating half a billion more impoverished people in a single change when they–again arbitrarily–changed the absolute poverty rate from US$1.08/day to US$1.25

    Some links for those not familiar with the IMF and the World Bank and their enforced corporation-friendly, anti-poor, anti-indigenous, environment-destroying, neoliberal policies throughout the third world which encourage countries to lower their standards for worker safety and security, privatize property, promote slavery, oppression of indigenous people, and irreparable environmental destruction (they funded the destruction of 25% of the Amazon Rain Forest):

    Top Ten Reasons to Oppose the IMF

    New claims of rights abuses in World Bank-funded ‘land grabs’ from The Bretton Woods Project.

    NGOs criticise World Bank’s new lending plan for poorer countries
    NGOs say Programme-for-Results Lending would allow countries to sidestep tough social and environmental safeguards that recipients of World Bank loans must normally meet

    How to aid destruction
    My former employers, the World Bank, are damaging the planet and punishing the poor

    Joseph Eugene Stiglitz…is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is also the former Senior Vice President and Chief Economist of the World Bank. He is known for his critical view of the management of globalization, free-market economists (whom he calls “free market fundamentalists”) and some international institutions like the International Monetary Fund and the World Bank.

    A better measure of poverty, rather than the World Bank single dimensional discrete and arbitrary $1.25, might be more like MPI. About 1.65 billion people in the countries covered – 31% of their entire population – live in multidimensional poverty according to the MPI. This exceeds the number of people in those countries estimated to live on US $1.25 a day or less using the most recent estimates of the World Bank’s measure of ‘extreme’ income poverty. It is less than the total number of people living on less than US $2 a day.

  • George

    It’s October. I still stand by my earlier comments that California is a shithole. The only difference now is that is a bigger shithole.

  • Igor

    Actually, California is quite pleasant, but it is no cure for the incessantly dissatisfied.

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