Borderless Economics: the poor

Finished reading Borderless Economics this weekend, which was excellent. Authored by Robert Guest, the book focuses on the flow of people rather than products across national borders -- an oft overlooked aspect of globalization.  In chapter 7, Guest focuses on why migrants desire to move to the United States, devoting part of the chapter to a comparison of the economic situations faced by a late middle aged man on public assistance in Appalachia and a doctor in the Democratic Republic of Congo:

No American would dispute that Mr. Banks [who draws $521 per month in SSI, less $67 per month due to $3,600 in winnings from the slot machines] is poor. But by global standards, he is not. Shortly before I met him, I interviewed another man with roughly the same income: Mbwebwe Kabamba the chief trauma surgeon at the biggest hospital in the Democratic Republic of Congo. After 28 years as a doctor, his salary is only $250 dollars a month, but by operating on private patients after hours, he stretches it to $600 or $700. 

Given the lower cost of living in congo, one might guess that Dr. Kabamba is better off than Mr. Banks. But the doctor has to support an extended family of 12, whereas Mr. Banks's ex-wife and three sons all claim public assistance. Indeed, the reason Mr. Banks split up from his wife, he says, is because they can draw more benefits separately. Still, he lives in the trailer next door. 

What do Dr. Kabamba's wages buy? He has a four-bedroom house with a kitchen and living room, which would be ample if there weren't a dozen people under his roof. His home would be deemed unacceptably overcrowded in America. Even among the 44 million Americans officially classified as poor, only 6 percent live in homes with more occupants than rooms. 

Dr. Kabamba would quite like running water and a steady power supply. His family fetches water in jars, and the electricity comes on maybe twice a week. Air-conditioning would be nice but "that's only for VIPs," says Dr. Kabamba. In America, 84 percent of poor (emphasis in original) households have air-conditioning. Some 98 percent have a color television (two-thirds have two or more) and two-thirds have a car. 

Dr. Kabama earns enough to feed his children, but not as well as he would like. The family eats meat about twice a month; he calls it "a great luxury." In America, poor children eat more meat than the well-to-do. In fact, they get twice as much protein as their government says is good for them, which is why the Walmart in Mr. Banks's neighborhood sells such enormous jeans.  

A Congolese doctor, a man most of his countrymen would consider wealthy, is worse off materially than most poor people in America. That puts America's prosperity into context. It also helps explain why so many of the world's huddled masses yearn to live there. But it is not only people from poor countries who seek a better standard of living in the United States. Americans are richer than people in other rich countries, too. Income per head in America is about 40 percent higher than the average among the members of the Organization for Economic Co-operation and Development (OECD), a club of rich industrialized nations. 

Among OECD members, only Luxembourg (a tiny tax haven) and Norway (an orderly Scandinavian country sitting on a huge pool of oil) score higher. Compared with other reasonably large rich countries, America is substantially better off: 40 percent richer than France or Japan, 35 percent richer than Germany and 22 percent richer than Canada. 

One can quibble with these statistics. Americans work longer hours for their extra cash. Their health care costs more. And the American average is skewed by very high incomes at the top. It might be fairer to compare median household incomes, but this is tricky, since difference countries define "household" differently. 

...My observation is that a skilled blue-collar worker in America lives as well as an educated professional in Europe or Japan. To take one example of many, I once statyed with a family near New Orleans. The father was a mechanic; the mother a librarian. They lived in a spacious home by the bayou. I couldn't help noticing that it was bigger than the home of the vice president of a medium-sized software company that I used to work for in Tokyo. Granted, the VP's home was more elegant, with more antique woodblock prints and fewer pictures of his daughters riding quad bikes. But the mechanic had two cars, a recreational vehicle, a huge backyard and an above-ground swimming pool. In the American heartland, such luxuries are unremarkable.   

We must always keep in mind how relative the term poor is. There is plenty of talk in the country about the 99 percent versus the 1 percent, but from a global perspective the 99 percent in the US are the 1 percent, or not far off.