Sunday, April 26, 2009

Not So Sure About That

One of the many many lies that Sithanen keeps on repeating (or maybe he's trying hard to convince himself that it's not a lie) is that the best antidote to poverty is job creation. That's untrue because it depends on how much the jobs that are being created actually pay. If the jobs you are creating are very low-paying although some people would indeed start to work -- and make the unemployment numbers look better than what they really are -- they would still not have gotten out of the poverty trap.

Income is also not everything. How fast prices of everything increase will also determine whether the income you are earning makes you a poor person. That is why inflation is considered the worst enemy of the poor and politicians in many countries, mostly out of self-interest, have passed laws to announce specific inflation targets -- between 1% and 3% per year -- and have adhered to them. The UK, Canada and Germany are good examples.

Another lie is the fact that he's improved the lot of many people because they've been removed from the tax nets. We've called that one too (see here).


Anonymous said...

And how did China raise 1/3 of its population out of poverty and set the country on economic development path!?
with work and education. not by sitting around complaining.

Sanjay Jagatsingh said...

We're not exactly China where 1/3 of its population was poor although with those dumb Bretton Woods policies 95% of the population has become poorer over the last 5-10 years.

Sanjay Jagatsingh said...

Another reason why job creation may not reduce poverty is that the jobs created are going to the cheap foreign labour that is allowed a bit too easily to work here.