Coyote Blog

The reduction in world poverty.

The global population living in extreme poverty has fallen below 750 million for the first time since the World Bank began collecting global statistics in 1990, a decline of more than 1 billion people in the past 25 years.

In a report released Wednesday, the World Bank said the extreme poverty rate had dropped to 10% as of 2015, the latest comprehensive data, and they estimate that the decline has continued over the past three years....

The report highlights the extent to which global poverty has shifted geographically. In 1990, nearly 1 billion of those living in extreme poverty were in East Asia, but decades of rapid economic development in China and other East Asian economies has brought that figure down to 47 million, a decline to a 2% poverty rate from 62%.

South Asia, with most of its population in India, Pakistan and Bangladesh, has seen the number living in extreme poverty fall to 216 million from more than 500 million, to 12% from 47%.

Sub-Saharan Africa has made less progress. Its poverty rate has fallen to 41% from 54% since 1990, but population growth has been so rapid that the number of people in extreme poverty has climbed above 400 million, from 278 million in 1990.

The interview is fairly short but covers the most common questions about Recreation PPP's and private operation of public parks.  It is on the World Bank blog here.

Handshake Magazine, a publication of the International Finance Corporation (a branch of the World Bank), has a series of interviews on parks and PPP's.  It has an article by Len Gilroy of the Reason Foundation on Park PPP's on page 32, a case study about our company and its operations on page 36, and an interview with me starting on page 38.

Via Watts Up With That:

In another example of vital statistics being grossly distorted by a combination of poor record keeping and possibly people with a selfish agenda, it is being reported in the Guardian and elsewhere that possibly hundreds of thousands of people over age 100 in Japan are actually dead, but unreported. Investigations are now underway to determine how much of this problem is due to record keeping problems and how much to family members failing to report the deaths of their elderly relatives in order to continue to collect their pension benefits by fraudulent means.

There are more than 77,000 Japanese citizens reported to be over age 120, and even 884 persons AGED OVER 150 YEARS OF AGE, who are still alive according to government rolls.

While we in the US wouldn't bat an eye if we heard this story coming out of the Chicago area of Cook County, Illinois, given the number of dead people still actively voting in elections there, there are at least 230,000 people in Japan over age 100 who simply cannot be located by any means. This large centenarian population is largely responsible for the very high average life expectancy in Japan (currently listed by the World Bank as 82.6 years, more than four years greater than the US average of 78.4 years (this is including dead voters in Chicago)), as well as any senior citizens under 100 who are actually dead but have not been reported as such on government records.

At least, that is, when the government is managing the ice supply:

Venezuela's economy is in trouble despite the country's huge oil reserves. Blackouts plague major cities. Its inflation rate is among the world's highest. Private enterprise has been so hammered, the World Bank says, that Venezuela is forced to import almost everything it needs.....

This is not the way it was supposed to be. Venezuela is one of the world's great energy powers. Its oil reserves are among the world's largest and its hydroelectric plants are among the most potent.

As Obama pushes the US into a corporate state model like those in Europe, here is one cost we will face: increases in long-term unemployment.  Already we see higher structural barriers being created to employment (preference for preferred unions, higher minimum wage, reduced internships) combined with increasing incentives to remain unemployed (extension of unemployment benefits, subsidized medical services).

Most countries who move to this model experience very high long-term structural unemployment.   The costs to add an employee in Europe are really, really high, meaning that it is only done reluctantly and the preference is for highly skilled workers  (who is going to give a job for life to an untested, unskilled young worker?)  Further, these states are run by a troika of large corporations, unions, and government insiders who protect each other from competition.  Young unskilled workers are a competitive threat to established unions.  Since these unions workers get above-market wages, they are protected from younger workers who are willing to offer their admittedly less skilled labor much cheaper.

I was playing around with data released from the World Bank, and compared the US to a number of other industrialized countries on this metric.  Even in past recessions, long-term unemployment has remained low in the US (click to enlarge).  The metric is percent of total unemployed that are unemployed for longer than 1 year.

Y'all may have already seen these -- being on vacation, I am a little late to the table on both.  The first is a report on the Missouri state ethanol mandate:

A report from a Missouri-based research organization
debunks the claim that Missourians are saving money through a state law
requiring that retail gasoline contain a minimum of 10% ethanol. The
report is in reaction to an assertion by the Missouri Corn
Merchandising Association (MCMA), alleging that Missourians will save
more than US$ 285 million through the E-10 mandate in 2008, and nearly
US$ 2 billion over the following decade.

The MCMA arrived at these numbers by taking the price
difference between pure-grade gasoline and E-10 blended fuel, and
multiplying it by Missouri's projected annual consumption.

However, the report by the Show Me Institute reveals two fundamental flaws with this calculation. One
is that it fails to take into account the fact that E-10 blended fuel
is cheaper because ethanol producers receive tax credits and other
subsidies.

"Government officials cannot simply take tax dollars from
the public, give those tax dollars to ethanol blenders, and then have
ethanol supporters tell the public that ethanol is saving them money
with cheaper fuel as though the subsidy never existed," write the
report's authors, Justin P. Hauke and David Stokes.

The MCMA also does not take into account that E-10
blended fuel is about 2.5% less efficient than pure-grade gasoline,
meaning that Missourians will be filling their tanks more often.

When both of these factors are taken into account, the ethanol blending mandates are shown to be costing Missourians about US$ 118 million per year.

The second is a World Bank report on the effect of ethanol mandates on food prices:

Biofuels have forced global food prices up by 75% - far
more than previously estimated - according to a confidential World Bank
report obtained by the Guardian.

The damning unpublished assessment is based on the most
detailed analysis of the crisis so far, carried out by an
internationally-respected economist at global financial body.

The figure emphatically contradicts the US government's
claims that plant-derived fuels contribute less than 3% to food-price
rises. It will add to pressure on governments in Washington and across
Europe, which have turned to plant-derived fuels to reduce emissions of
greenhouse gases and reduce their dependence on imported oil.

Senior development sources believe the report, completed in
April, has not been published to avoid embarrassing President George
Bush.

"It would put the World Bank in a political hot-spot with the White House," said one yesterday....

[The report] argues that production of biofuels has
distorted food markets in three main ways. First, it has diverted grain
away from food for fuel, with over a third of US corn now used to
produce ethanol and about half of vegetable oils in the EU going
towards the production of biodiesel. Second, farmers have been
encouraged to set land aside for biofuel production. Third, it has
sparked financial speculation in grains, driving prices up higher.

Other reviews of the food crisis looked at it over a much
longer period, or have not linked these three factors, and so arrived
at smaller estimates of the impact from biofuels. But the report
author, Don Mitchell, is a senior economist at the Bank and has done a
detailed, month-by-month analysis of the surge in food prices, which
allows much closer examination of the link between biofuels and food
supply.

The report points out biofuels derived from sugarcane, which Brazil specializes in, have not had such a dramatic impact.

All this stuff was known long before Congress voted for the most recent ethanol mandates.  Why is it that the media, who cheerled such mandates for years, is able to apply any institutional skepticism only after the mandates have become law?  Are we going to have to actually pass some awful version of carbon trading before anyone will consider its inherent problems?

For quite a while, I have been arguing that cap-and-trade schemes are inferior to straight carbon taxes because of their susceptibility to rent-seeking and manipulation.  At the top of the list of problems is the carbon offset issue, the notion that someone can create and sell an offset to cap limits by reducing CO2 emissions in some novel way.  The offset products that exist to day are tremendously suspicious, as I wrote here and here.  In particular, the ability to resell the same emission reduction multiple times is a real danger.

The Guardian has an interesting look at the offsets being created by that bastion of good governance and management science, the United Nations.

The world's biggest carbon offset market, the Kyoto Protocol's clean
development mechanism (CDM), is run by the UN, administered by the
World Bank, and is intended to reduce emissions by rewarding developing
countries that invest in clean technologies. In fact, evidence is
accumulating that it is increasing greenhouse gas emissions behind the
guise of promoting sustainable development. The misguided mechanism is
handing out billions of dollars to chemical, coal and oil corporations
and the developers of destructive dams - in many cases for projects
they would have built anyway.

According to David Victor, a
leading carbon trading analyst at Stanford University in the US, as
many as two-thirds of the supposed "emission reduction" credits being
produced by the CDM from projects in developing countries are not
backed by real reductions in pollution. Those pollution cuts that have
been generated by the CDM, he argues, have often been achieved at a
stunningly high cost: billions of pounds could have been saved by
cutting the emissions through international funds, rather than through
the CDM's supposedly efficient market mechanism.

The key problem, as I have pointed out before, is how do you know the reduction is truly incremental?  How do you know that it would not have occured anyway:

The world's biggest carbon offset market, the Kyoto Protocol's clean
development mechanism (CDM), is run by the UN, administered by the
World Bank, and is intended to reduce emissions by rewarding developing
countries that invest in clean technologies. In fact, evidence is
accumulating that it is increasing greenhouse gas emissions behind the
guise of promoting sustainable development. The misguided mechanism is
handing out billions of dollars to chemical, coal and oil corporations
and the developers of destructive dams - in many cases for projects
they would have built anyway.

According to David Victor, a
leading carbon trading analyst at Stanford University in the US, as
many as two-thirds of the supposed "emission reduction" credits being
produced by the CDM from projects in developing countries are not
backed by real reductions in pollution. Those pollution cuts that have
been generated by the CDM, he argues, have often been achieved at a
stunningly high cost: billions of pounds could have been saved by
cutting the emissions through international funds, rather than through
the CDM's supposedly efficient market mechanism....

One glaring signal that many of the projects being approved by the
CDM's executive board are non-additional is that almost three-quarters
of projects were already complete at the time of approval. It would
seem clear that a project that is already built cannot need extra
income in order to be built.

LOL, yes that might be a good indicator something is amiss.  The other problem, beyond the staggering amount of outright corruption one would expect from any UN-operated enterprise, is this oddity:

Any type of technology other than nuclear power can apply for credits.
Even new coal plants, if these can be shown to be even a marginal
improvement upon existing plants, can receive offset income. A massive
4,000MW coal plant on the coast of Gujarat, India, is expected soon to
apply for CERs. The plant will spew into the atmosphere 26m tonnes of
CO2 per year for at least 25 years. It will be India's third - and the
world's 16th - largest source of CO2 emissions.

So nuclear plants, the one proven economic and scalable power technology that is free of CO2 emissions is the one technology that is excluded from the program?  But 4,000MW coal plants that can proves they are marginally more efficient than they might have been are A-OK?

Bill Clinton is at least honest to some extent in saying that cutting back on CO2 emissions will requires us to throttle back the economy:

In a long, and interesting speech, he [Bill Clinton] characterized what
the U.S. and other industrialized nations need to do to combat global
warming this way: "We just have to slow down our economy and cut back
our greenhouse gas emissions 'cause we have to save the planet for our
grandchildren."

But how much?  Activists try to make the average person feel like the amount is "not much" by spinning out rosy stories of 3rd graders fighting global warming by recycling.  But in fact Bill's wife Hillary makes the degree of cuts clearer:

...[Clinton's] plan would reduce greenhouse gas emissions by 80 percent from 1990 levels by 2050 to avoid the worst effects of global warming...

And recognize, this is the typical figure being cited by global warming catastrophists for "necessary" US cuts.  So how much is 80%?  With current technology, an almost unimaginable cut.  Its hard to get good Co2 data, but here is a chart from some place called the Carbon Dioxide Information Analysis Center that purports to show US historic CO2 production from man-made sources:

The chartsmanship sucks here, but 1990 looks like about 1.35 billion metric tons.  20% of that would be 0.27 billion metric tons.  That appears to be the level we hit in about ... 1905.  So, apparently without using nuclear power (since Clinton opposed nuclear expansion in one of the debates, I think in Nevada)  she wants us in the next 42 years to get back to the energy production of about 1905.  Now this is a bit unfair, since efficiencies and GDP per ton of CO2 have improved substantially since 1905.  So to be fair she may only want to take us back to about 1930.

While this is scary, what Clinton and other global warming crusaders want to do to the third world is even scarier.  Right now, close to a billion people who have been in poverty forever are posed, via growth in China, India, and SE Asia, to finally exit poverty.  Global warming crusaders want this to stop.  For example, here is the former World Bank chief economist Nicholas Stern says that India must stay poor:

Mr
Stern, the former chief economist of the World Bank, sends out a very
clear message: "We need to cut down the total amount of carbon
emissions by half by 2050." At current levels, the per capita global
emissions stand at 7 tonnes, or a total of 40-45 gigatonnes. At this
rate, global temperatures could rise by 2.5-3 degrees by then. But to
reduce the per capita emissions by half in 2050, most countries would
have to be carbon neutral. For instance, the US currently has, at 20-25
tonnes, per capita emissions levels that are three times the global
average.

The European Union's emission levels stand at 10-15
tonnes per capita. China is at about 3-4 tonnes per capita and India,
at 1 tonne per capita, is the only large-sized economy that is below
the desired carbon emission levels of 2050. "India should keep it that way and insist that the rich countries pay their share of the burden in reducing emissions," says Mr Stern.

No cars for these folks either!

Via Tyler Cowen:

The Asian
Development Bank presented official survey results indicating China's
economy is smaller and poorer than established estimates say. The
announcement cited the first authoritative measure of China's size
using purchasing power parity methods. The results tell us that when
the World Bank announces its expected PPP data revisions later this
year, China's economy will turn out to be 40 per cent smaller than
previously stated......The number of people in China living below the
World Bank's dollar-a-day poverty line is 300m - three times larger
than currently estimated.

Well, this is a bit sad, as I would hope everyone likes seeing people emerge from poverty**.  But it is really not surprising.  Strongly state-run economies are notoriously hard to measure from the outside, and westerners systematically overestimated the size of the economy of the old Soviet Union.

**  I make this statement because I am an optimistic guy full of confidence in the generally good intentions of mankind.  Because if I were not such a person, and actually judged people by their actions, I would come to the conclusion that a lot of people DO NOT want people in countries like China to emerge form poverty.  Trade protectionism, apologias for looting dictators like Castro or Chavez, anti-globalization riots, anti-growth initiatives, and calls for rollbacks in fossil fuel consumption all share in common a shocking disregard for people trying to emerge from poverty -- often from folks on the left who purport to be the great defenders of the poor.  I tried to explain the phenomenon before, at least among self-styled "progressives':

Progressives do not like American factories appearing in third world
countries, paying locals wages progressives feel are too low, and
disrupting agrarian economies with which progressives were more
comfortable.  But these changes are all the sum of actions by
individuals, so it is illustrative to think about what is going on in
these countries at the individual level. 

One morning, a rice farmer in southeast Asia might faces a choice.
He can continue a life of brutal, back-breaking labor from dawn to dusk
for what is essentially subsistence earnings.  He can continue to see a
large number of his children die young from malnutrition and disease.
He can continue a lifestyle so static, so devoid of opportunity for
advancement, that it is nearly identical to the life led by his
ancestors in the same spot a thousand years ago.

Or, he can go to the local Nike factory, work long hours (but
certainly no longer than he worked in the field) for low pay (but
certainly more than he was making subsistence farming) and take a shot
at changing his life.  And you know what, many men (and women) in his
position choose the Nike factory.  And progressives hate this.  They
distrust this choice.  They distrust the change.  And, at its heart,
that is what the opposition to globalization is all about - a deep
seated conservatism that distrusts the decision-making of individuals
and fears change, change that ironically might finally pull people out
of untold generations of utter poverty.

Over at Climate Skeptic, we can see Nicholas Stern, former chief economist of the World Bank, argue that the only way to really abate CO2 is for all the world's countries to be just like India.  I kid you not.  And, in fact I agree with him that if we really wanted to eliminate CO2 emissions with current technology, exactly this kind of poverty promotion program would be required.  I just don't think it's necessary that we adopt such a goal. 

As a postscript, I take on Mr. Stern's temperature forecasts of 2.5-3 degree C rise by 2050 and show why they make absolutely no sense in light of the last 100 years of empirical data.