Credit Suisse report

Even with the worst recession for a century or thereabouts, the amount of 'wealth' in the world has doubled since the turn of the century. Fewer people are 'destitutely poor' than were. However, the report has a sting in it's tail..

And yet if you were to "spread the wealth", we could eliminate world wide poverty and most of the simple diseases associated with poor health and hygiene.

I would like to see that done. Though I doubt our politicians will opt for anything so utopian.

Our's just might, the Americans never would. That's 'socialism'.

Something bugs me,
if there's more money to go around, but stuff is more expensive, surely in the end there's not any more wealth? If anything people who miss out on the extra money being created are even worse than before?

Well to be fair, communism made a billion Chinese dirt poor. Capitalism has lifted hundreds of millions of those out of poverty.

If you look at what has actually been working to lift people out of poverty, conditional payment schemes like the Bolsa Familia program in Brazil are the most effective state driven ones. These pay quite small sums to poor families so long as they get their kids vaccinated and send them to school. It's that nudge principle that some of us hate so entirely. Micro loan schemes that help start up small businesses have also been a huge success. Beyond those, giving stuff to people hasn't been that great. But giving them birth control advice, educational opportunities (especially for girls), and enough calories as children to develop their brains properly - these things make a huge difference.

In contrast, make-work schemes such as India's, which guarantees a set number of days of paid work for the rural poor have been awful. Massive untargeted aid programs (see India again) have been almost universally hijacked for corrupt purposes. The fuel and bread subsidy programs of the third world are without exception pilfered, and and in most cases are rapidly bankrupting the states that promote them. Fuel subsidies in particular benefit the wealthy at the expense of the poor (who rarely own cars) even when not stolen.

What makes the most difference is usually remissions (money from relatives living in rich countries), mobile phones (which make small commerce in rural areas massively more productive, and also facilitate small cash transfers), and good old fashioned government stuff like roads, sewers, electricity, and cities in general. But above all its the skills and investment cash that is brought home by returning migrants.

Among the things we can most usefully do is provide technical assistance to fight corruption, and allow more people from the developing world to come here for work and send money home, and open up our markets for them to sell us things. They have as much energy and will to succeed as we have, and can do the rest themselves.

Stuff isn't more expensive, virtually everything is much cheaper than it used to be, inflation kind of hides that by attaching larger numbers to the prices of things.

But think about this way. You have a small number of ancestors who did anything but farm or forage for a living (this is true even for kings). You own lots of clothes, but most of your ancestors owned a very small number of rags. You think that food is expensive, but most of those guys spent 60 to 70 percent of their income on the stuff and all they got to eat most days was bread.

Sometimes you will see that wages are falling relative to inflation. But if you look at the basket of goods which is used to calculate that inflation you will see that it includes - as daily consumables - items that once would have been unthinkably lavish. Disposable contact lenses are in there for instance. This is because inflation has to be calculated according to the things that we actually buy, so inflation goes up all the time, but the value of the old baskets goes down. If you look at the basket used to calculate inflation in 1973, with its tub of margarine and vacuum cleaner bags, that thing is worthless now.

And that's just the value of little bits and pieces. A 1973 Ford Cortina cost the best part of an annual wage for a skilled labourer. It was made with steel of a certain value and a number of man hours of a certain value, etc. And that gave it a particular cost. A modern car has been made with about the same amount of steel, at a higher price, but of a much lesser value in relative terms. It used far less hours of labour but those are higher in both price and value now, yet the overall product, in spite of being vastly superior as a machine (and of higher value in that regard) is much cheaper as a proportion of the income of the purchaser.

Then you can look at very big things like factories and office blocks. Old ones get torn down, new ones get built. The new ones are more valuable, and so now is the land on which they stand. With intellectual property, the patent for the paper clip has lost a lot of its value, but the ones for new medicines are worth rather a lot.

Ultimately wealth expands because lots of people takes lots of things and make them a bit more valuable. Prices, inflation and wages are rather flaky ways of measuring that in the short term, the process is only really visible from the perspective of a longer time frame. That Credit Suisse report for instance is hugely skewed by currency fluctuations, which accounts for more than all of the Japanese losses it reports.