Arnold Kling  

Poverty vs. the Moon Mission

What Took You So Long?... Gas Price Variance Up!...

A classic rhetorical question is "If we can put a man on the moon, why can't we end poverty?" Russ Roberts attempts to answer.

Putting a man on the moon is an engineering problem. It yields to a sufficient application of reason and resources. Eliminating poverty is an economic problem (and by the word "economic" I do not mean financial or related to money), a challenge that involves emergent results. In such a setting, money alone—in the amounts that a non-economic approach might suggest, one that ignores the impact of incentives and markets—is unlikely to be successful.

To really get what he is saying, you have to read the entire essay, which I strongly recommend. The key point is that economic processes emerge out of the decentralized actions of many individuals, while engineered processes are centrally designed.

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CATEGORIES: Income Distribution

COMMENTS (7 to date)
Ronnie Horesh writes:

I think we have found the elimination of poverty impossible because there are no financial incentives to those charged with eliminating it. Typically these are government offiicials, whose financial rewards are totally uncorrelated to their success in eliminating poverty. Indeed, the objectives of the organisations they work for seldom even have this explicit, quantifiable goal. Instead, they are rewarded for distributing funds to other agencies, employing certain groups of people, or indulging in certain vague activities - anything, that is, except reducing poverty. And if poverty miraculously were to be eliminated, their existence would be threatened. With that sort of incentive system, no wonder we still have poverty in rich countries.

I suggest instead that we contract out the elimination of poverty to the private sector. Government can still raise revenue and define and set the poverty elimination goal - these are things that government does well. But it is terrible at actually achieving this sort of objective, and for that we need the private sector. Government can reward private sector bodies in way that are strictly correlated with their success in reducing poverty. My website has more details.

AJ writes:

Also consider the relative magnitudes. What did we spend getting to the moon in the 1960's? $22 billion (???) That's nothing compared with the trillions spent on poverty and low-income programs.

Pancho Villa writes:

Aren't 'macro-'economic processes a function of 'centralised' political decisions, are they?

Adam writes:

An excellent read. Thanks for the recommendation.

rafinlay writes:

And when we DO eliminate poverty, we redefine poverty up.

Ajay K. writes:

Exactly, rafinlay, the poverty line has been redefined upwards so many times that if it were used for practically any another country in the world, you would find that that country was completely filled with poor people. On the other hand, these space programs have very limited utility; their opponents are right in pointing out that the money would be better spent elsewhere, if somewhat misguided in thinking that NASA's current budget is a significant share of the national budget. There are other budgets (Warning, large diagram!) that deserve more attention.

El Presidente writes:

Poverty? Seriously?

We should indicate whether we are talking about absolute or relative poverty here. If it's absolute poverty then ya'al are correct that the line keeps moving. Wealth effects are constantly altering what we consider absolute poverty to be as well as inflating the price of sustaining that sort of subsistence. If it's relative poverty, then the finish line never moves. What's more, we never pursue it. Capitalism depends upon inequality. It requires relationships of dominance and subordinance between participants. Last time I checked, capitalism had hijacked democracy. Call me a pinko commie if you want but I think we'd be idiots to pretend that "we" want to end poverty. "We" could care less because we aren't concerned in the least with the inequality between ourselves and other nations nor with the unconscionable disparity in the distribution of wealth in our society. We preach laissez faire like dogma and ignore the monstrous complexity of the rules of the game which dictate trickle-up economics. Relative poverty is a measure of disparity in incomes (I know, duh). That means we are gauging a relative measure of equity. An increase in relative poverty has serious negative implications for the system which abides rules that have the effect, intentionally or accidentally, of consolidating wealth (in relative terms). We may curtail the rate of the transfer of wealth from time to time but I'll be damned if we'll ever seriously undertake elimination of inequitable distribution of income (and wealth by extension). I think I'd be interesting to try equalizing incomes but I don't know if it's sound policy. It would only make greedy people angry. And greedy people are usually mean too. What I'd like to know is, who's idea was it to go to the moon again and when do we get to vote on it? See what I mean about democracy?

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