
"There are no causes of poverty. It is the rest state..." - theoneill
http://www.adamsmith.org/blog/globalization/common-error-no.-61-200803151059/
======
1gor
The question is not what creates wealth but what keeps it unevenly
distributed.

There have been experiments (computer simulations) that tried to explain
'Pareto distribution' -- a power law distribution of wealth leading to 20
percent of population having 80% of the wealth. I refer to 1996 Axtell and
Epstein book (google for Sugarcape).

Basically, they created a number of software 'agents' and placed them on a
landscape full of resources. Each agent possessed a 'fitness function' that
controlled its further survival. Having access to resources improved the
fitness function since the agent could replenish its energy and could go on
hunting for resources having some surplus for the rainy day.

What transpired from the simulation is that 'the Rich get Richer' axiom is
basically true. First generation agent might have stumbled on a resource
nearby by accident. It has improved its fitness function and he was able to
successfully compete on the next round.

Meanwhile similarly fit agent who had bad luck in the first round (no resource
nearby) was left chronically under-fit and his chances of 'making it to the
top' diminished with every round.

This piece of empirical knowledge makes two important points about the society
and the wealth.

Firstly, even in the free market society people always have unequal
opportunities because this is an emergent quality of the system, not the
result of some corruption, inability, personal passivity etc. The best and the
brightest will stay poor unless they stumble on a resource which is not taken.
(A new internet business idea for example).

Secondly, revolutions have their merits. They re-shuffle fitness landscape.
Even when people do not directly 'expropriate' somebody's wealth by simply
levelling the playing field revolutions create competing chances for the
talented and the hard-working who would otherwise be forever destined to be
relatively unfit comparing to those who already have access to resources.

Looks like extreme pro-market views are as primitive as extreme 'left' views.
Social science really becomes fascinating when aided by computer science,
doesn't it?

~~~
wumi
"The best and the brightest will stay poor unless they stumble on a resource
which is not taken. (A new internet business idea for example)."

Where does this data include for the fact that resources have been forcefully
extracted from certain people groups for centuries?

Need not look further than look at Central and South America, and the entire
sub-Saharan African continent. (Also of course, several areas in Asia)

it is no surprise then, that the wealthiest nations and societies are those
who extracted the resources (in this case ranging from gold, diamonds, oil,
rubber, ivory, even crops such as fruit, coffee beans, and cocoa beans) by
means of blatant corruption, deceit, and thievery.

Secondly, many have remarked on this site that ideas in and of themselves
don't have much value -- it is the execution on the idea that makes it
powerful.

That being re-hashed constantly on this site, how then does a new internet
idea count as a resource? Without the ability, or the actual resources to
execute on the idea then there is absolutely no value of that idea to the
person. (say, if a poor person has little or no access to a computer or the
internet, it seems a bit ludicrous a new internet business idea is a resource)

"First generation agent might have stumbled on a resource nearby by accident.
It has improved its fitness function and he was able to successfully compete
on the next round."

Not by accident, but by intent.

~~~
sethg
The Sugarscape models are interesting because they show that you are likely
have a "rich get richer" accumulation _even when_ there is no coercion.

~~~
wumi
point taken, but surmising about how a society would operate in a fictitious
world is a bit pretentious -- what real world value does that create?

------
jk4930
Short blog entries on complex topics most often won't tell the entire story.
There's more on getting out of poverty than not resting or asking the wrong
questions. This is not about dumb wealth redistribution but social
institutions and technical infrastructure. Instead of such intellectual fast
food better one reads something useful like the (free) first chapter of "The
Birth of Plenty": <http://www.efficientfrontier.com/ef/404/CH1.HTM>

After that one should look for 'new institutional economics' and 'complex
adaptive systems' to better understand how social institutions, path
dependencies, and (general) environmental conditions drive or constrain a
society and how that influences social stratification and mobility (and
indirectly poverty).

This posting isn't meant to be an arrogant indoctrination. But saying "there
are no causes of poverty" is simply (and sometimes fatally) wrong. But to
understand this one should switch from polemics to empirics.

It even has some direct relevance to hackers: Being busy and producing
something other people want is not enough to generate wealth. When you think a
supporting social and technical environment has no influence on the
probability of success, then go and try to run your startup in (obviously
restful) North Korea.

------
mattmaroon
He's half correct. Poverty is the rest state, but there is significant
artificial inertia in many parts of the world keeping people from accelerating
beyond it.

It's hard to understand this when you live in a first world nation. We have
that problem but to a very minor degree relative to much of the world.

------
willchang
If I were a criminal defense lawyer, murder would cease to be a crime. After
all, there are no causes of death; it is the rest state, that which happens
when you do nothing ...

In fact there are plenty of causes of poverty -- war, corruption, disease,
overpopulation, debt, ecological destruction, etc.

~~~
DanielBMarkham
The correct analogy would be suicide -- stop eating, drinking, and breathing,
and you enter the "rest state"

Murder, because it involves another actor, misses the point.

That is, unless you believe that some people "make" other people poor during
the course of regular life -- an odd and unsupported statement.

I would agree that there are plenty causes of people losing what they own.
Seems to me, however, that no matter how much money you have, you cease to be
poor once you move beyond looking to external actors for the source of your
internal pain. Or perhaps that statement is a bit too Zen for the board.
Dunno.

~~~
greendestiny
The murder suicide analogy is perfect, both end in death (poverty) but you can
get their either by youself (suicide) or by the actions of others (murder).
Calling poverty a rest state is to ignore all the outside forces that can be
impairing a persons ability to create wealth. You can indeed make other people
poor, and its not always a crime to do so, nor require them to be complicit in
it. I think most people here find some truth in the idea that food aid makes
farmers in developing countries poor.

~~~
DanielBMarkham
I would suggest we be careful with definitions here. Certainly certain
policies impact certain jobs. My grandfather was a farmer. That is, until the
economy changed. Then he wasn't a farmer any more.The policy may have had
negative impacts on farmers, but it could only have a very limited impact on
my grandfather.

I would also distinguish between "making somebody poor" and "poverty", which
is a state of existence. Likewise, I would also distinguish between internal
poverty, ie, despair, and external poverty -- lack of money.

The definitions always get you on these things. For instance, most people are
familiar with studies that show "the rich get richer while the poor get
poorer" in some western societies like the United States. What readers fail to
gleam from these studies is that while the numbers for the quintiles do show
those movements, people move around between quintiles a lot more than is
acknowledged. So when we say the poor get poorer, we are confusing the
statistical average of a category of random people with actual, real people.
Actual, real people move about in income levels quite a bit. The statistical
bottom fifth of people in general, however, is not doing so well.

Likewise when we talk about poverty, or the economy, or social policy, we're
dealing in large, averaged groups of things, not individual people. It makes a
difference because we are individual, unique people, not statistical clumps.

I'm not saying that the internal attitudes of a person is enough to overcome
any external obstacle. What I am saying is that the way we internalize
external challenges is a better measure of anti-poverty and future happiness
than the amount of money we have in the bank. Therefore, you cannot "kill" me,
make me poor, by taking away my money. My internal wealth is outside of your
ability to change.

~~~
Retric
I create wealth by increasing efficiency and destroying jobs. I have made many
people redundant and gotten them laid off. It's the name of the game hop from
one useful skill to the next or become obsolete.

I don't really care about these lost jobs but saying it's their fault that
they become redundant is missing the point. Luck is a large factor in both the
generation and retention of wealth. The risk of true poverty limits society’s
just as excessive crime by reducing people’s willingness to take risks. Young
people are more likely to do a startup because they have lower risk of
failure. Losing everything at 25 is vary different than losing everything at
55.

Note: I am not saying we need to do anything with the 3rd world but I feel
limited job training and basic welfare help many people bounce back. Spending
a small percentage of GDP on such things is an investment that may or may not
pay off but saying it's useless as an ideological stance is missing the point.
However, the numbers I have seen on wikipedia
(<http://en.wikipedia.org/wiki/Welfare_state>) suggest that we spend 14% of
GDP on welfare which seems insane. Are they looking at SS as welfare?

~~~
sethg
Yeah, skimming the Wikipedia article, it seems that they are classifying
social-insurance programs like Social Security as "welfare", whereas most
people would define "welfare" as programs that are specifically targeted to
poor people.

And one of the reasons Social Security is so politically secure--even at the
height of the Dubya Administration's influence, a proposal to privatize it
went down in flames--is that middle-class as well as poor voters expect to
benefit from it.

~~~
astine
No one benefits from social security.The average payout is below the input.

Members pay so that more senior members may benefit and then hope that newer
member will pay enough so that they may benefit as well. It functions like a
large, mandatory pyramid scheme and only survives because people who have paid
fortunes into it expect to be compensated.

~~~
sethg
The benefit you get from Social Security is that if you retire before you die,
if a spouse or parent who provides your family income retires or dies before
you die, or if you become too disabled to work, you don't have to worry about
outliving your savings, and you don't have to worry about inflation making
your annuity worthless.

~~~
astine
Both of the problems could easily be solved by replacing SS with an ordinary
savings account. Not to mention that Fed loans to SS aggravates inflation
greatly.

~~~
sethg
An "ordinary savings account" can't give you a stream of income for the rest
of your life that adjusts for inflation, even if you have to retire early due
to disability, regardless of the state of the stock market or interest rates.

And right now, Social Security loans money to the rest of the government, not
vice versa.

------
phaedrus
"If you want to experience poverty, just do nothing and it will come."

I know lots of people - the working poor - who are doing a hell of a lot more
than nothing, and poverty still comes.

~~~
mynameishere
_I know lots of people_

Just wondering--do you _really_ know "lots of people" who are among the
"working poor"?

I come from Appalachia and have known--genuinely, no bullshit here--lots of
"working poor" and can't honestly say that there was some systematic
conspiracy to hold them down, rough them up, prevent them from rising, etc.

Fact is: There are a lot of people living in the lap of luxury--luxury
measured by creature comforts--who in any other age would be _lucky_ , yes
_lucky_ , to spend 12 hours a day behind a horse's ass.

The real reason for people staying in the lower ranks is exactly what we
already know: They have some dysfunction. Perhaps a lack of intelligence, or
an excess of impulse, or simply a chronic inability to show up to work on
time. The latter might suprise you, as it hardly matters if programmers get up
at 8 or 9 or 10, but in low-end jobs, one of the big problems among "trouble
employees" is simply their unwillingness to follow a schedule. Who's to blame?

~~~
david927
There are lots of examples of poor people who are hard working and still poor,
and lots of examples of wealthy people who fell into it. There is no moral
value to wealth and to say so not only insults our intelligence but attempts
to justify terrible injustices.

~~~
Prrometheus
At the same time, many people (we'll call them "left-wing") claim that there
is no agency behind wealth or poverty, and that therefore we should punish the
"lucky" rich people to help the "unlucky" poor. This attitude is utterly
simplistic and destructive in a society when taken to the extreme (the left-
wing tends to be extreme).

~~~
aquateen
"punish the rich"... "the left-wing tends to be extreme"; this is just blatant
partisanship. There is nothing to support, just opinion... what productive
conversation could start this way?

This is why politics here is dangerous.

------
TrevorJ
This is insightful. One should point out however, the inverse does not hold
true. Poverty is not a universal sign of laziness or inaction. You can become
poor in spite of working very hard. It is important to keep this in mind lest
we become completely unsympathetic to those less fortunate, who, in some cases
work very hard and yet have nothing.

Also, as an aside I'd like ot point out that material wealth is something that
isn't universally pursued. Some people a happy investing in other things
instead once their very basic needs are met.

------
meat-eater
In some situations and places, wealth can be harder to create. On the
individual level, it would be hard to refute the fact that somebody with an
Ivy League college education has more wealth creation opportunities than a
farmer from a 3rd world country. Same thing also applies to poor countries and
rich countries. So even though poverty is the rest state, it really doesn't
help that some people are taking advantage of other people to create it.

~~~
pchristensen
This just shows that there are forms of societal wealth, without which there
is just another form of poverty. Things like a legal system, low crime,
enforceable contracts, public safety, etc are all forms of wealth that enable
new investments and more wealth. Falls in the same category as seaports,
natural resources, an educated populace, etc.

------
bz
When analyzing systems, we typically look for a transient response and the
initial conditions. Extending this analogy, it would seem natural that even if
we knew the characteristics of a system, the behavior of the system would be
largely controlled by the inputs.

I'm not sure either element can be excluded when trying to solve this - my
guess is that it's the need to fit things into our own frameworks and
understanding that pushes people to grossly oversimplify.

------
ckuehne
Maybe a bit more enlightening (if you read further than the opening quote)
<http://www.techcentralstation.com/article.aspx?id=120302A>

------
run4yourlives
In other words, Poor people are just lazy.

Sorry, but it's been my experience that people who submit that argument have
know neither people nor poverty well enough to speak as an authority to its
causes.

------
stcredzero
In other words, capitalism is a treadmill!

------
Spyckie
This is a woefully ignorant article that fails to include any piece of
evidence to back up these claims.

Take, for instance, many countries in Africa. What prevents these countries
from not rising in the poverty ladder is not the lazy, dumb people of these
countries.

First, they can't sell products to other countries because the majority of
countries are land-locked, meaning they have no way to ship their goods out at
a reasonable price. They don't have any ports in their country and the
neighboring countries with ports are hostile or unsafe.

Second, wealth is not a stable commodity in these countries due to coups and
constant political restructuring and military action. Even if you were a very
hard ambitious worker, there is nothing you can do about external forces
(read: rebels invading your home/shop and stealing all the wealth you have
built up).

Third, little of Africa is actually arable, and Africa can't even become an
agrarian society because there isn't really the resources for them to do so.
And the resources that are valuable to the rest of the world that could
generate money for African countries - like, oil and diamonds, become hotly
contested and a source of conflict and instability, furthering reducing the
value of storing wealth.

Take some time to learn about the world if you have a strong opinion on this
matter.

~~~
pchristensen
You're totally agreeing with the article's premise that poverty is a lack of
wealth. Seaports, navigable rivers, stable, friendly neighbors, political
stability, and arable land are all forms of wealth. Just because they aren't
owned by an individual doesn't mean they aren't wealth. Most people in Africa
lack these things and therefore they are poor. If these things existed, then
there would be an infrastructure that would let individual, hard working and
industrious Africans become wealthier.

If you compare any rich country with any poor country, you can make a similar
list of things the poor country is lacking that make it poor. Those things are
all forms of wealth. Whether it is natural or man-made doesn't matter.

~~~
Spyckie
My mistake - I read the first two lines and that set the tone for the rest of
the article. Those first two lines, though, have no relevance to the rest of
the article. You can in no way argue that the lack of wealth (the definition
of poverty stated in the article) is caused by a 'rest state of doing nothing'
(also a definition of poverty in the article), which is what the first two
lines imply.

