Friday, 12 July 2013

Let's eliminate poverty!

Good morning John! It's Friday and today, I'm going to talk to you about poverty.

First off, is poverty relative or absolute? Is there a certain absolute poverty line below which is poverty and above which is prosperity? Some sort of permanent threshold? I don't think so, I think it's more like that poverty is comparative. As an example I'll talk two different imaginary lower class families. Both are below the poverty line in the UK but both have different outlooks. The first looks out of the window and complains about not having enough, about living in poverty and how hard it is. The second watches the news and reads the papers and looks at third world countries and is thankful that they do not live in such poverty.

I'm going to introduce you (or re-introduce you) to The Bell Curve or Gaussian Distribution.
It figures that the first picture I put in a blog in the past 3 months is a graph.

Before we continue, you must understand that when talking about poverty, about resources, about wealth distribution... this curve is god. Let's say that there are 100 people in the world and they are represented on that graph. We can see that 68 are in the blue area (the areas are separated according to something called standard deviation). These 68 people are neither exceptionally rich, nor are they exceptionally poor. They are the white collar workers. If we step out further from the peak, we come to the red areas, together counting for 27 people. The people in the rightmost red region are the wealthy ones. The lawyers, the doctors, the businessmen. In the leftmost region are the labourers. The builders and binmen. The store staff at Tesco's. Go further afield and we hit the green areas. On the right are the fabulously wealthy. We are getting into the ranks of investment bankers, venture capitalists, CEOs of multinational corporations. On the left we have the unemployed, the people living off benefits etc. If you really want to push it out to the 0.1% tail end we hit both the homeless and the FTSE CEOs.

The economy is a self correcting system. There is a famous quote about the economy concerning an invisible hand and the point is if we raise the income of every one of these 100 people to the same level, the myriad mechanisms guiding the economic system, this invisible hand, would soon re-establish a Gaussian distribution. 

Eliminating poverty is no more possible than eliminating death and disease. Both are laws of nature. The Gaussian distribution is a law of statistics. To eliminate poverty would be to subvert the laws of mathematics. Mathematics is more than just the universal language, it is also the language the universe itself uses to write the rules.

There is one thing that I am sure of. Eliminating poverty within capitalism is impossible. Within another type of societal structure it may be possible, but I lack the knowledge to really say.

Just as some supporting evidence, here is a graph of estimated incomes across the globe.

You can see that not only does each individual sub-population have a Gaussian distribution of income, but the world as a whole (the light purple line) has a Gaussian distribution. How do you like them apples?

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