On International Living Standards

How often do you see statistics that claim that 20% of the world lives on less than US$1 per day?

Far too often. Here's why.

One of my colleagues grew up in Sri Lanka, where the per capita income was claimed to be only US$100 per capita per year. We sat down together over coffee breaks and lunches, and tried to estimate the per capita income he would have needed in Ottawa to grow up the way he did in Sri Lanka.

To start, his family's actual per capita income was zero! The rural village built their own homes together out of local materials, they grew their own food, they made their own clothes, elders unable to work the fields provided education ... Occasionally a trader would appear, to exchange local things he could sell on the coast for things the villagers wanted - steel tools and nice cloth mostly. Money in our Western sense simply didn't exist!

Yet, he grew up with a roof over his head, clothes to wear, food sufficient to maintain good health, and an education that was sound enough that he eventually earned a Ph.D. from an internationally renowned university.

To summarise our analysis, we judged that the Sri Lankan income of the time was in fact equivalent to $5000 per capita for people living in the city of Ottawa. Fifty times the UNESCO figure.

There are two reasons why this nonsense that people are forced to live on $1 per day continues to be perpetuated. The first has already been mentioned, that most people don't live in a market-oriented society such as our Western one. As judged by money-centered measures, they are worthless.

The second major reason for this mis-evaluation of people is that those who do not produce large quantities of western-style goods are not valued by the western-controlled marketplace, so their currencies are treated as junk. Many countries have been forced to invoke currency control to avoid the enslavement of their people because of this. As I write, Cuba has adopted two currencies - one for tourist areas, the other for the rest of the country - to permit tourism but to avoid warping the whole economy of the country in the process. The current ratio of these currencies is 20:1, pretty close to what my colleague and I calculated for Sri Lanka.

So, when you see a claim that people in this world live on US$1 per day, forget it. It's simply not true.

John Sankey
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