(source, photo by Agnieszka Stencel)
More political graffiti here.
Unemployment is a violation of an individual’s right to work. It stunts her creativity and diminishes her wellbeing, in a material, moral and psychological sense, in many cases even pushing her into poverty, ill health and depression.
For a person with no pre-existing health conditions, losing one’s job increased the chances of reporting a new health problem by 83 percent. Overall, the newly unemployed had a 54 percent chance of reporting fair or poor health. (source, source)
Unemployment is also self-perpetuating because it makes it harder to find a new job – employers prefer candidates who already have a job. In addition, it depresses wage levels, even decades after the end of a spell of unemployment.
Needless to say, these costs don’t affect only the unemployed themselves. Their families and children also suffer:
We find that a parental job loss increases the probability of children’s grade retention by 0.8 percentage points, or around 15 percent. After conditioning on child fixed effects, there is no evidence of significantly increased grade retention prior to the job loss, suggesting a causal link between the parental employment shock and children’s academic difficulties. These effects are concentrated among children whose parents have a high school education or less. (source)
And the ripple effect of unemployment covers the whole of society. Unemployment has a social cost: above and beyond the fiscal pressure – unemployment benefits have to be paid, either through increased taxes or cuts in other public services – it deprives society of valuable input and human ingenuity.
Still, all these costs should not blind us to the real benefits that unemployment can bring. And I’m not talking about those few individuals who are “liberated” from their mind numbing jobs and take the chance offered by unemployment to start a successful business doing something they always wanted to do but never had the chance or guts to do. Neither am I referring to kidults reveling in “funemployment”, staying with their parents well into their twenties or beyond, and taking the opportunity to prolong their childhood. Those are not the majority of the unemployed.
However, some among the majority may also find a silver lining. Maybe unemployment makes them less materialistic and more financially prudent; maybe some of them will use their free time to volunteer and educate themselves; society may become humbler and gentler; maybe concerns for social justice become more prevalent since the unemployed, ex-unemployed and their friends and families have become more conscious of the role of luck in life’s outcomes, as compared to the limited role of desert. Some health indicators may improve:
Interestingly, though high-stress events such as foreclosures and unemployment may hurt the health of those directly impacted, there’s some evidence that recessions have a positive impact on a nation’s health overall. In 2000, Christopher Ruhm, an economist at the University of North Carolina at Greensboro, found that a 1 percent rise in a state’s unemployment rate led to a 0.6 percent decrease in total mortality, looking at mortality changes in the United States between 1972 and 1991. … economic downturns could improve health through “declines in smoking, excessive alcohol consumption and overeating during recessions as people look for ways to save money.” (source)
Of course, there’s no way these benefits cancel out all of the costs. Unemployment is a scourge and a human rights violation, and capitalism doesn’t do itself any favors by maintaining and temporarily inflating its “industrial reserve army“.
This may be the right time for some shameless self-promotion: a few years ago, I published a short book dealing exclusively with work – although that’s not what you would think when reading the title.
A combination of better law enforcement and an economic recession has resulted in a steep decline of illegal immigration from Mexico to the US. One way to measure illegal immigration is to extrapolate on the basis of the number of Border Patrol apprehensions. These went down fast, as is shown by this map:
Here are the total numbers:
I personally regret this since I’m in favor of open borders (see here). If it’s the recession that drives down illegal immigration, then that means an increase in poverty or at least an absence of a decrease. And if it’s border apprehensions that drive it down, then that means a violation of people’s freedom of movement, freedom of association etc.
The recession obliterated more than half of the wealth (assets minus debts) of the average black and hispanic household in the U.S. White households lost “only” 16%. (Assets are houses, cars, savings and checking accounts, stocks and mutual funds, retirement accounts, etc. Debts are mortgages, auto loans, credit card debt, etc.). The main culprit was the bursting of the housing market bubble.
As a result, the average black household had just $5,677 in wealth in 2009; the typical Hispanic household $6,325; and the typical white household $113,149. In relative terms, this means that in 2009, the median wealth of white households in the U.S. was 20 times that of black households, and 18 times that of Hispanic households; this difference is twice the size it used to be before the recession. Also, a third of black and Hispanic households now have zero or negative net worth.
Moreover, since the official end of the recession in mid-2009, the housing market in the U.S. has remained in a slump while the stock market has recaptured much of the value it lost from 2007 to 2009. Given that a much higher share of whites than blacks or Hispanics own stocks — as well as mutual funds and 401(k) or individual retirement accounts (IRAs) — the stock market rebound since 2009 is likely to have benefited white households more than minority households. (source)
Add to that the racial differences in unemployment rate, poverty rate and income, and you have what one could call a “racist recession”.
More on wealth inequality here.
Well, it’s not really a map, or not really a real map, but I found it telling. And this is what the “map” looks like when we use some actual figures about U.S. corporate profits and compensation (but a similar pattern occurs in other developed countries):
Corporate profits are doing just fine, and are even better than before the recession. Workers’ compensation, on the other hand, has at best been stagnant:
Add to that the unemployment figures, and you have a nice downward slope. The “map” hints at “going under water”, and that’s about right for many of us.
More serious and more informative maps about income inequality are here, here, here and here. More on the link between income inequality and human rights is here. More data on income inequality are here. Something in the recession is here, and here are more human rights maps.
I’ve stated before why I believe charity helps to prevent poverty, and why it’s better than government welfare, at least in principle. The welfare state, in my view, is a fallback option when charity fails (as it often does).
The usual argument against this view is that charity is bound to fail because it’s crowded out by the welfare state. People don’t and won’t assist others because they think that they already do enough by paying taxes, whatever the effectiveness or fairness of the tax system. The evidence for the occurrence of crowding out is, however, unclear, and that’s a “charitable” interpretation of the evidence.
Another criticism of charity is closer to the mark:
Charity is counter-cyclical. When the economy is booming and there’s less need, there’s also more capacity. When the [economy] is worse and there’s more need, donations dry up and there’s less capacity. That’s not a criticism of charities: It’s hardly their fault. And nor is it a criticism of the people who donate — or stop donating — to charities. When you’re worried about paying your mortgage, it’s harder to help other people pay theirs. But it’s a big part of why we need a robust, federal safety net that’s immune … from the ravages of the business cycle. (source)
Indeed, as the need for charity rises, the supply diminishes, and vice versa. That is why a theory of poverty alleviation that depends solely on charity is incomplete. However, implicit in this argument is that the welfare state is immune to the business cycle, which is obviously incorrect. A recession means a drop in tax revenues and a simultaneous increase in demand for welfare transfers (there are more unemployed etc.). Hence, a recession means a weakening of the capacity of the welfare system. That’s exactly the same mechanism that makes charity unreliable.
Fortunately, the welfare state can bridge over recessions by going into debt, something that few private charity donors will do. This means that a welfare state can keep its anti-poverty transfers going in times of increased demand for funds and decreased supply of funds.
More on charity here.
More statistical jokes here.
“It’s the economy, stupid“. The famous phrase suggests that economic basics rather than social or cultural issues, politicians’ personal merit, foreign policy successes etc. determine democratic outcomes. People vote against incumbents when unemployment is high and GDP growth low, whatever the causes of the economic downturn. One can accuse George H.W. Bush of many things but he wasn’t by far the sole or main cause of the recession that propelled Clinton to power.
It seems that people use democratic elections – especially high profile one such as presidential elections – to signal disapproval of the economy, whatever the real responsibility of individual politicians for the state of the economy (it’s silly to assume that individual politicians, even American presidents, have the power to dramatically change the unemployment rate, for better or worse).
This graph shows a clear correlation between incumbent margins of victory in US presidential elections and changes in the unemployment rate:
The unemployment rate in 1980 was 7.2%, up considerably from the year before; Jimmy Carter duly lost his bid for reelection. In 1984, the unemployment rate was actually higher at 7.5%, but was on its way down from the previous year; Ronald Reagan was reelected in a landslide. (source)
Granted, the number of observations is low, too low to be certain about the correlation (and others have expressed doubts about the data).
Some more certainty is given by the fact that it’s not just unemployment but also income that is correlated with election results:
If we assume that the economy does indeed determine democratic outcomes in this way, then we face a problem because some of the traditional justifications of democracy become unavailable. Democracy is supposed to improve the quality of politicians: when a politician has to face popular judgment and has to pass the test of accountability, she will try harder to respect the will of the people, to avoid engaging in corruption and to generally do a good job, because doing so will convince the people that she deserves reelection. Also the freedom of the press is in part justified on this basis. A free press is able to give people the information about politicians necessary to make an informed judgment at the next election. Government transparency combined with accountability as a prerequisite for reelection provides politicians with the necessary incentives to do a good job, or at least a job that is considered good by an informed majority of public opinion.
If, however, democratic election results are determined less by the actual way in which politicians do their job than by the economic basics, then we lose this justification. If a politician won’t be reelected during an economic downturn, even if she does all that’s humanly possible to avoid it or lessen its impact, she has one less reason to do her best. She may still do her best out of a sense of responsibility or public service and remain unconcerned by electoral prospects, but we should not underestimate the motivation provided by the mere fact of having and retaining a position of power.
I’ve mentioned some of the problems with the U.S. system of poverty measurement before, but this is much more eloquent:
More on poverty measurement here.
Although inmate labor is helping budgets in many corners of state government, the savings are the largest in corrections departments themselves, which have cut billions of dollars in recent years and are under constant pressure to reduce the roughly $29,000 a year that it costs to incarcerate the average inmate in the United States.
Senator John Ensign, Republican of Nevada, introduced a bill last month to require all low-security prisoners to work 50 hours a week. Creating a national prison labor force has been a goal since he went to Congress in 1995, but it makes even more sense in this economy, he said. (source, source)
Calculating a reliable number for a segment of the population that generally wants to hide from officials is very difficult, but it’s politically very important to know more or less how many illegal immigrants there are, and whether their number is increasing or decreasing. There’s a whole lot of populist rhetoric floating around, especially regarding jobs and crime, and passions are often inflamed. Knowing how many illegal immigrants there are – more or less – allows us to quantify the real effects on employment and crime, and to deflate some of the rhetoric.
Immigration is a human rights issue in several respects. Immigration is often a way for people to escape human rights violations (such as poverty or persecution). And upon arrival, immigrants – especially illegal immigrants – often face other human rights violations (invasion of privacy, searches, labor exploitation etc.). The native population may also fear – rightly or wrongly – that the presence of large groups of immigrants will lower their standard of living or threaten their physical security. Illegal immigrants especially are often accused of pulling down wages and labor conditions and of creating native unemployment. If we want to disprove such accusations, we need data on the numbers of immigrants.
So how do we count the number of illegal immigrants? Obviously there’s nothing in census data. The Census Bureau doesn’t ask people about their immigration status, in part because such questions may drive down overall response rates. Maybe in some cases the census data of other countries can help. Other countries may ask their residents how many family members have gone abroad to find a job.
Another possible source are the numbers of births included in hospital data. If you assume a certain number of births per resident, and compare that to the total number of births, you may be able to deduce the number of births among illegal immigrants (disparagingly called “anchor babies“), which in turn may give you an idea about the total number of illegal immigrants.
Fluctuations in the amounts of remittances - money sent back home by immigrants – may also indicate trends in illegal immigration, although remittances are of course sent by both legal and illegal immigrants. Furthermore, it’s not because remittances go down that immigrants leave. It might just be a temporary drop following an economic recession, and immigrants decide to sweat it out (possibly supported by reverse remittances for the time of the recession). Conversely, an increase in remittances may simply reflect technological improvements in international payment systems.
Perhaps a better indicator are the numbers of apprehensions by border-patrol units. However, fluctuations in these numbers may not be due to fluctuations in immigration. Better or worse performance by border-patrol officers or tighter border security may be the real reasons.
So, it’s really not easy to count illegal immigrants, and that means that all rhetoric about illegal immigration – both positive and negative – should be taken with a grain of salt.
More posts on this series are here.
I’ve written a few times before about the possible effects of the current economic recession – or of any recession for that matter – on human rights. Now its seems that there’s some proof for the common notion that recessions promote anti-immigrant feelings:
Macroeconomic conditions have long been suspected of increasing hostility toward ethnic outgroups. Integrating prior work on macroeconomic threat with recent threat-based models of prejudice, the current work employs an experimental approach to examine the implications of economic threat for prejudice toward ethnic outgroups. In Study 1, participants primed with an economic threat (relative to a non-economic threat and neutral topic) reported more prejudice against Asian Americans, an ethnic group whose stereotype implies a threat to scarce employment opportunities. In addition, economic threat led to a heightened state of anxiety, which mediated the influence of economic threat on prejudice against Asian Americans. Study 2 replicated and extended these findings by demonstrating that economic threat heightened prejudice against Asian Americans, but not Black Americans, an ethnic group whose stereotype does not imply a threat to economic resources. These findings are discussed in terms of their implications for understanding the role of macroeconomic conditions in potentiating antisocial responses to particular outgroups. (source)
Anti-immigrant hostility as such isn’t a human rights violation, but it can lead to discrimination and even violence. In most cases, it will just make restrictions on immigration more likely, and we know that migration is an important route out of poverty for many. Hence, immigration restrictions exacerbate poverty, and that’s a human rights violation. Not to mention the right to free movement and residence.
Some data on hostility are here.
Article 23 of the Universal Declaration of Human Rights provides a right to work, as well as a right to “free choice of employment and to just and favorable conditions of work”. That right protects us against slavery, forced labor, unfair wages, and unsafe working conditions. The same article offers a right “to protection against unemployment”. That clause can be interpreted in two ways:
It’s the latter interpretation that is made more explicit in another article, number 25, of the Declaration which mentions “the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control”.
So it seems we have a right to unemployment insurance or unemployment benefits. The obvious justification for this right is material wellbeing: the absence of poverty is also a right. For a link between unemployment insurance and poverty reduction, take the case of the U.S.:
However, there are some other types of justification of unemployment insurance. Some call UI an “automatic stabilizer” in times of economic hardship: Keynes taught us that both unemployment and falling wages lower consumer demand and can lead to even greater unemployment. Stingy or absent unemployment benefits lower demand even more. In that view, which does sound plausible, unemployment insurance isn’t just a good in itself and for the individuals concerned (as well as for those who may someday suffer unemployment and who can suffer some amount of stress because of the risk), but is necessary for the periodic regeneration of capitalism and for the smoothing of the business cycle. Benefits are also efficiency enhancing because of another reason:
One of the possible advantages that is touted for more generous UI (including by Mike Konczal) is the idea that it allows for better job matching—people can wait to find the right long-term job opportunity instead of taking the first job that becomes available. (source)
It’s better to have people perform the jobs they prefer because they’re likely to be most efficient there. Hence, it’s better to give them more time to find the right job, and to give them unemployment benefits so that they have the time.
Others, however, call this right a foolish invention because it destroys incentives to work at the level of individuals, and reduces incentives to create wealth at the level of companies (because of the relatively high tax rates that come with the welfare state, that in turn comes with benefits such as unemployment insurance). It doesn’t enhance efficiency at all, on the contrary. But the evidence for this view is not so strong:
Evidence suggests that individuals do prolong their job search when they receive unemployment benefits, partly because they are looking for the best possible job. But the magnitude of this effect is likely to be small.
A recent study … compared lengths of unemployment among those eligible for unemployment insurance with those who were not eligible. Their statistical analysis suggests that extended benefits accounted for only four-tenths of 1 percentage point of the nearly 6 percentage point increase in the national unemployment rate over the last few years. (source)
Still others call the right to unemployment benefits a foolish invention, not because of reasons that have to do with overall economic efficiency, but because they believe that the unemployed have no one else to blame but themselves for their misfortune, and therefore can’t demand help from others. Those others can voluntarily decide to help the unemployed, in a spirit of charity that extends even to self-inflicted misfortune, but the unemployed don’t have a right based on moral concerns to demand such help. And indeed, there may be some logic to such a view: if we all believe strongly that we deserve what happens to us, we are likely to work hard, show discipline and self-control and hence achieve success. Conversely, those who think that the causes of their misfortune are always outside of their control, are not likely to invest much effort in their lives. However, morality and life are much more complicated than that. The best efforts can lead to disaster, and apathy can lead to success. People who are not the sole authors of their success can be required to help those who are not the sole authors of their misfortune.
More on unemployment.
First, if you’re wondering why unemployment benefits are a human rights issue, go here. In a previous post, we discussed the relative stinginess of unemployment benefits in the U.S., compared to other developed countries, both in terms of duration, amount and eligibility (the majority of Americans out of work do not qualify for unemployment insurance, and the average weekly payment is 36 percent of the individual’s average weekly wage).
Unemployment insurance in the U.S. is a complicated affair involving both the federal government and the states. The total number of weeks of benefits available in any particular state depends on the unemployment rate and unemployment insurance laws in the state where the person worked. In case of a recession, the duration of benefits is extended.
I mentioned before that capital punishment could be one of the unintended victims of the recession. Governments spend enormous amounts of money on capital punishment, and dwindling budgets could convince some of them to abolish capital punishment.
To avoid executing an innocent person, the death penalty process is long, complicated, and expensive. Each prosecution seeking death costs approximately $1.1 million more than a trial seeking permanent imprisonment, and with more than 700 inmates, California’s death row is by far the largest and most costly in the nation. In total, California’s death penalty system costs taxpayers $137 million per year. Contrast that with just $11 million per year if we replace the death penalty with permanent imprisonment. … Today, if Gov. Arnold Schwarzenegger were to convert the sentences of all those on death row to permanent imprisonment, the state would save $1 billion over the next five years without releasing a single prisoner. (source)
Of course, the high cost of the death penalty isn’t the only or the most important reason to stop it. If it could be done at no expense, it still shouldn’t be done. More here. More human rights videos here.
Contrary to what I claimed in a previous post – which, I have to say in my own defense, was written in the middle of the recession – it now seems that the recession did have a negative effect on charitable giving:
individual charitable giving was down 4.9% percent in 2009. … On the positive side, people may give more because they empathize with those with increased need in a bad economy. On the negative side, people may give less because they are anxious about their own, their families’ and perhaps their workers’ financial well-being. (source)
If you’re wondering about the link between charity and human rights: poverty is a human rights issue (see here and a lot of other places on this blog), and I believe charity is the best way to help the poor (see here and here).
I’ve discussed the negative effects of the current economic recession on human rights several times before on this blog. I’ve focused on the right not to suffer poverty, because that’s obviously one human right that is particularly affected by the recession, but I also mentioned other rights (see here, here and here for instance). (I even found an example of how the recession can be beneficial for human rights; see here. Unfortunately, that’s the exception and not the rule).
Coming back to poverty: remittances – money sent home by migrant workers – are an important part of many people’s income in developing countries. (In some countries, the total amount of remittances received even surpasses the amount of official development aid received). It’s no surprise that remittances are going down because of the recession. What is surprising is the phenomenon of reverse remittances. From the NYT:
MIAHUATLÁN, Mexico — During the best of the times, Miguel Salcedo’s son, an illegal immigrant in San Diego, would be sending home hundreds of dollars a month to support his struggling family in Mexico. But at times like these, with the American economy out of whack and his son out of work, Mr. Salcedo finds himself doing what he never imagined he would have to do: wiring pesos north. …
With nearly half its population living in poverty, Mexico is not well placed to prop up struggling citizens abroad. … Still, poverty is a relative concept. It is easier to get by on little in Mexico, especially in rural areas, allowing the poor to help the even more precarious. … In other cases, the migrants are returning home, as the many passengers who hop off the bus that runs regularly from northern California to a gas station in Miahuatlán make clear. “There’s nothing up there,” said a young man with an overflowing suitcase who returned one recent night. (source)
It’s not a surprise that poor people have lower life expectancy than others. Poverty, after all, means less resources to spend on healthcare, means more obesity, less health insurance coverage, more stress, more depression, unhealthy labor conditions etc. What is surprising – at least to me – is that the difference between life expectancy for the rich and poor has been growing, even before the outbreak of the current economic recession:
I’ve discussed the effects of the current recession on human rights several times before on this blog. Regarding the right to food (art. 25 of the Universal Declaration), it’s obvious that the economic crisis is having a big impact on those already struggling to feed themselves.
The number of chronically hungry people in the world will rise from 913m in 2008 to 1.02 billion this year, a sixth of the global population, says the UN’s Food and Agriculture Organisation in its annual report on food insecurity. Food prices that are 17% higher than they were two years ago, and big falls in remittances and investment are contributing to growing hunger. The economic slump has meant a growing share of the world’s population is going hungry, after a steady decline since 1970. And the FAO notes that global food output will have to increase by 70% to feed a population projected at 9.1 billion in 2050. (source)
Another one in our series on intended and unintended mistakes in statistics. Take for instance unemployment or employment rates. (We’ve talked about this before in this series). Employment statistics usually measure the number of people at work or unemployed, the number of people claiming unemployment benefits, the number of jobs that are created or lost, etc. Especially during an economic recession, like the one we have now, people look anxiously at those statistics. However, during a recession, companies that are struggling may be unwilling to lay off people, either because they feel responsible for their employees, or because – less altruistically – they don’t want to lose valuable experience which they will need when the economy recovers. Many companies therefore choose to convince their people to work less hours, work part-time etc. Rather than dismissing some people, the burden of the recession is equally spread over all employees.
The phenomenon is called “labor hoarding” and it is attributable to the costs of finding, hiring and training new workers and the costs in terms of severance pay and morale when firing workers. Jeffrey Frankel (source)
However, a simple unemployment statistic composed of numbers of jobs or job losses will fail to notice this. In times of recession, such a statistic will underestimate real unemployment because it won’t include the partial unemployment in the companies that increase part-time work. So you think you are measuring unemployment, but actually you’re not, at least not completely or accurately. A better dataset is the average weekly hours worked. Or you could include the numbers of people who are involuntarily part-timers in the numbers of unemployed:
Attitudes to income inequality in the U.S. differ widely.
Note: these 4 views aren’t necessarily incompatible. One and the same person can, as I see it, hold at least 3 of them at the same time. (E.g. you can believe that there isn’t much inequality, that what is left will soon be gone, and that you hope it will be back one day).
I think only the third view has some relation to the truth. Regarding the first view:
See also some data here, here, here and here. Regarding the second view: I object to it not because I don’t want to reward people or because I think justice has nothing to do with merit. On the contrary. I object to it because it assumes that different people and different activities can be placed on a single scale of merit and reward. It’s impossible to compare activities and say that one deserves a $10.000 per year reward (i.e. income) and another activity, compared to this first, is 10 times more deserving and hence deserves a $100.000 per year reward. Merit isn’t just a financial or quantitative thing, and hence it cannot – at least not exclusively – justify income inequality. Moreover, the income inequality that we see in the real world has little or nothing to do with merit. Most people aren’t paid according to any definition of merit. In the best case, they are paid because of their talents, which isn’t anything anyone deserves. In all other cases – and in the large majority of cases – people’s pay or income is determined by factors such as luck, family, networks, playing on the stock exchange etc., and none of these things are even marginally related to merit. In a society that rewards people for their creativity and productivity, you expect to see high levels of social mobility, and that’s precisely what you don’t see in the U.S. (see here, here and here).
Regarding the third view, I do believe that it is essentially correct, but it obfuscates many of the problems caused by income inequality. Hence, even if economic efficiency doesn’t justify efforts to limit income inequality, other things do.
The fourth view would seem to make sense intuitively. A lot of the income of the very wealthy comes from the stock markets, and the recession has pushed these markets down.
Professor Saez concludes that “the most likely outcome is that income concentration will fall in 2008 and 2009.” But, he follows this conclusion by stating that in the absence of significant policy actions such declines will be temporary: “Based on the US historical record, falls in income concentration due to recessions are temporary unless drastic policy changes, such as financial regulation or significantly more progressive taxation, are implemented and prevent income concentration from bouncing back. Such policy changes took place after the Great Depression during the New Deal and permanently reduced income concentration till the 1970s. In contrast, recent downturns, such as the 2001 recession, lead to only very temporary drops in income concentration.” Bruce Judson (source)
Moreover, the poor are also suffering as a result of the recession, not in the same absolute measures as the rich, but that is because they have less to lose in the first place. However, what they do lose as a result of the recession is for them relatively more important. See here and here.
Recent data show that income inequality hasn’t actually decreased in 2008. Maybe in 2009… The recession only got started late in 2008.
Read more on income inequality.
Strange as it may seem to some, unemployment benefits are a human right, and rightly so in my opinion. Poverty makes rights impossible, and unemployment benefits save many from poverty, especially during a recession in which unemployment isn’t just a phase between two jobs. Read for instance art. 22, 23 and 25 of the Universal Declaration:
Article 22: Everyone, as a member of society, has the right to social security.
Article 23: Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.
Article 25: Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
Three times! They must have meant it.
Compared to many other industrialized countries, the U.S. usually adopts a very critical attitude towards social and economic rights in general, and hence also to the right to unemployment benefits. Which is apparent from its relatively stingy system, something I already discussed here. Some more evidence of this in the graph below:
At just under $300, the average weekly benefit is less than half the average private-sector wage. Mississippi’s maximum benefit of $230 is not much more than the federal poverty threshold of $200 for an individual. (source)
And it’s not just the total amounts of the benefits:
Compared with the systems in other industrialised countries, the American unemployment-insurance (UI) scheme pays lower benefits for less time and to a smaller share of the unemployed. … States often require beneficiaries to have worked or earned an amount that disqualifies many part-time and low-wage workers. They also disqualify people seeking only part-time work – even though many people now work part-time for family reasons. Benefits typically last for only six months, more than enough time to find a new job in normal times but not in recessions. (source)
This isn’t only a human rights issue. Especially in a recession it can mean making things worse. When people lose their jobs, you don’t want them to lose a large part of their purchasing power since economic recessions are made worse by falling consumer spending.
However, making the system of unemployment benefits more generous would almost certainly require higher taxes. And although the U.S. is a low-tax country (compared to other industrialized countries, see graph below) that seems pretty utopian right now (given the already hysterical fears about the fiscal consequences of the healthcare proposals).
Unemployment benefits are about “spreading the wealth around“, and we know that, for many Americans, this phrase sounds worse than “you have cancer and you only have 6 months to live”. So little hope of having a bit more of that.
The Economist called it the “unsurprising research finding of the day“, but I think it’s a useful confirmation of an existing intuition: this paper finds that the recession can have a beneficial effect on the health of some people who lose their job because of it, namely those people spending their new leisure time in a healthy way. Other people, however, spend their leisure time cultivating some of their pre-existing unhealthy habits, or find themselves depressed and without employer-provided healthcare (especially in the U.S.). Because their healthcare has become more expensive now that they are unemployed, they decide to go without treatment or tests.
Results showed the body mass of the average laid-off food-lover increasing by the equivalent of more than 7 pounds for a 5-foot, 10-inch man weighing 180 pounds during unemployment. Similarly, frequent drinkers on average doubled their daily alcohol intake after losing their jobs and before finding another one. (source)
Elsewhere in the world, and especially sub-Saharan Africa, it seems that the health consequences of the global recession are more dramatic:
The financial crisis will kill between 28,000 and 50,000 babies in sub-Saharan Africa this year, according to this paper. The reasoning here is straightforward. For people on subsistence incomes, a fall in GDP can be fatal. The paper’s authors, Jed Friedman and Norbert Schady, estimate that a one percentage point fall in per GDP across sub-Saharan Africa is associated with a rise in infant (defined as under-ones) mortality of between 0.34 and 0.62 per 1000. If we multiply this increase by the number of births this year and by the 2.4 percentage point difference between GDP growth this year and last (a reasonableish estimate of the effect of the crisis), we get a figure of between 28,000 and 50,000. … Of course, you can quibble with the numbers. But the general story holds. For the poor, income is a matter of life or death. Which brings me to my question. If one-in-seventeen British babies were to die this year because of the financial crisis, it would be the biggest media story for years and there’d be rioting in the streets until the government did something. So, why the silence? Chris Dillow (source)
Since health and life are human rights, we have another human rights problem thanks to the recession. Previous posts on the (possible) impact of the recession on human rights are
Whereas many economists undoubtedly have encouraged wrong policies and harmful trade practices, I think it’s unfair to criticize them for failing to predict the future. Contrary to the natural sciences, human sciences (or social sciences) such as economics are constitutionally unable to predict the future. The reason is their subject matter: human beings. Contrary to celestial bodies, atoms or DNA, human beings have free will, which means that we can decide to change our goals and plans. And this kind of decision cannot be foreseen because the decision is our own free choice, a choice therefore that isn’t determined by other factors. Moreover, because we live in society with others, there’s necessarily interaction between people’s goals. Other people have different goals which interfere with our own goals. And because of their own goals, they often do not wish to cooperate with us or even actively oppose us.
There is therefore an uncertainty and unpredictability inherent in our goals. This seems to be an unavoidable fact of social life. An action causes reactions, and that is why the consequences of the action are often different from the ones we intend, expect, predict or desire. Consequences are often unknown beforehand, or at least uncertain. You never know if the result of your action matches your intentions, if you will reach your goal and if things turn out as planned, as foreseen, as initially desired.
That is also why you cannot and should not be held legally or criminally responsible for all the possible consequences or results of your actions. Only for those consequence which could reasonably have been foreseen. Part of the legal definition of a mentally ill person and one of the reasons why such a person’s criminal actions should be punished in a different way (if at all) is this person’s inability to judge the consequences of his or her actions.
Reality often does not live up to expectations. Events are not always anticipated events. Many events escape the power of those who have initiated them or wish to guide them.
“Siramnes the Persian replied to those who were amazed that his enterprises turned out so badly, seeing that his projects were so wise, by saying that he alone was master of his projects while Fortune was mistress of the outcome of his enterprises . . . What he undertakes is vain if a man should presume to embrace both causes and consequences and to lead the progress of his action by the hand”. Michel de Montaigne
We all have the experience that the future is not completely determined by the will of an individual or a group. The unexpected and unwanted is part of social history because history, and even many different parts of history – many “stories” – are the result of both action and reaction, of a game of action and reaction over which no one has complete control. This is the inevitable result of the plurality of social life. Demanding prediction and predictability – as is now done of economists – means neglecting plurality. Only in the absence of plurality can predictability be conceived, because only when there is one goal will there be no action and reaction.
Hannah Arendt has lambasted the equation between history and production. History is not made by man in the sense that an artifact, a cultural object or a technological application of scientific knowledge is made by man. It is not written beforehand like a blueprint or a production procedure. History, and every social story involving different actors, is written afterwards, in retrospection, and often not even by those who act in it but by an outsider. Everybody is the author of his own actions or reactions, but not of the complete story. The complete story – all interconnecting actions, reactions and consequences – becomes clear only when it is more or less finished, afterwards, when we can know how it was and what the reactions and consequences have been.
In the words of Hegel: the owl of Minerva, the symbol of wisdom, only flies out at dusk. The actor, contrary to the author, looks forward or better tries to look forward, and by definition knows less than the author of history. It was Kierkegaard who said that life can only be understood backwards, although it must be lived forwards.
Of course, history is not entirely unpredictable. We can guess. We can try, on the basis of the past, to identify some trends, patterns, regularities etc., and hope that they will hold for the future. Some guesses are better than others. Also, contrary to the criticism of Arendt, there is sometimes creation or “production” in history. Some actions do not encounter reaction and unfold as planned beforehand. These stories do not result from the game of action and reaction or from a plurality of separate and contradictory desires. They result from one desire and one goal. In some instances, people have a goal, a desire, and can realize it in a predictable and controlled manner, without or notwithstanding reactions. Life would not be worth living without such stories. Sometimes, people have a grip on the future. Politics is also impossible without a consensus on a purpose.
Suppose we think of ruling as being an exercise of power. For someone to exercise power is for their wishes to be effective. So someone is a ruler if it is the case that what happens happens because it is in accordance with their wishes. If, then, the people rule, this means that the people’s wishes are effective.
Somebody who is in power has a desire and realizes this desire. Otherwise it cannot be said that this person has power.
However, such kind predictability is probably the exception. History in its entirety and many parts of it can never be a creation, a simple purpose or the realization of a plan, a process or an evolution. History and most of its parts are the result of different and contradictory actions, reactions, desires and goals interfering with each other. Therefore, the idea of progress has to be limited. There may be fields of progress, but these evolutions are counteracted by reactions and other evolutions. Progress is never global or certain or predictable.
Not even one’s personal history is written or produced entirely by the person in question. And since our identity is perhaps the same thing as our personal history, our identity is not entirely the product of our own actions and decisions either. It is also the product of the things that happened to us and of the actions and reactions of others. We act, we strive to achieve goals, but there is a plurality of goals. The single, uniform goal, either in overall history (e.g. the overall goal of progress, communism or democracy dragging people along) or in many small or personal histories, is a pipe dream. Plurality results in things happening to us, things that we cannot control or foresee but which shape our lives, histories and personalities irrespective of our will.
History and most of its parts are not made by man, but they are not made by any other force either. I do not believe that God or Fate or the Economy or whatever makes history. History is to a large extent if not entirely the result of consciously chosen human actions and reactions. Consequently, people remain responsible for their actions, although not for all the consequences of their actions. They cannot claim that things happen because God or Nature (the genes for example) or Race or Culture (the unconscious national character) or Fate or whatever wants these things to happen or causes people to make them happen. People are relatively free. Most of their actions are not caused by some necessary force outside of them (or inside of them, for that matter, but beyond their power).
In order to remedy the defects of plurality – uncertainty, unpredictability and the powerlessness which this implies – one can try to eliminate plurality. Reactions and contradictions are excluded (and maybe “reactionaries” are persecuted) and all actions are focused on one and the same goal. Instead of the plurality of individual projects, we get a collective project. Individuality disappears.
“Le groupe en fusion” (Sartre) or “la volonté générale” (Rousseau) implies that the individual individual is absorbed by the community. Everybody’s individual goals or desires must be harmonized with the collective one. Every action is forced into a coherent whole. The individual will is discredited. It is egoistic, focused on the short term, subjective, reactionary; it is useless and powerless because of the contradictions with other individual wills; or it is futile because contrary to the trend of History or the forces of Biology etc. If the individual is only a part of a whole, then he can be sacrificed for the whole. Individual rights become less important. At best, people are interchangeable, specimen instead of unique individuals; at worst, they are eliminated.
As many successful dictators have shown, eliminating reaction will indeed make it possible to control the future, to remain in control of an action, to enforce certain consequences, to realize goals, to make history like an artifact or to write history like a novel. It makes it possible to know the future, to know how things will turn out, to put a clear purpose in history, a plan which unfolds exactly as it was contemplated beforehand, a clean process rather than a volatile and uncertain multi-directional chaos. If there are no reactions and only one general will, then all actions go in the same direction and toward the same goal, and only nature or inactivity can thwart our plans (hence the dictatorial need for “mobilization”). We can with much greater certainty predict the future and the realization of our plans. The expected consequences are the actual consequences. We are masters of the consequences and we control the future.
This has always been the great selling point of authoritarian government. Compared to the chaos of democracy, the “strong man” can be very efficient. I’ve refuted this here. Democracy indeed doesn’t offer predictability, precisely because it guarantees plurality. The common will of a democratic majority can be undone by reactions of the minority, by the reactions of a future majority, or by some outside force. Predictability requires unanimity rather than majority, if possible global unanimity (dictatorships are therefore often imperialistic). Only a unanimous group can have power as it was described above: power means that wishes are effective, that things happen because they are in accordance with wishes. A majority can only have limited effectiveness, effectiveness limited by future majorities and by the reactions of minorities (in a democracy, minorities have some power, e.g. their rights cannot be violated by the will of the majority). Of course, unanimity is often obtained by force: reactions are forcibly suppressed because unanimity of convictions and goals is a rare occurrence. Force then produces power, although Arendt, again, has something to say about the confusion between these two terms.
A democracy does not try to suppress or eliminate reactions and contradictions. On the contrary, it fosters them. But it does try to ritualize and soften them, take the violence out of them, because they can take a nasty turn. Democracy needs conflicts, opposition, criticism, plurality etc. It is the game of action and reaction institutionalized and accepted as an inevitable fact of life in a community with different people and different goals. It cannot exist without events initiated by some and reacted upon by others. Hence democracy embraces uncertainty and unpredictability, however unpopular and perhaps ineffective this may be.
However, democracy also needs some level of predictability. It wants to be certain of its own survival and that is why it accepts only opposition within the system. It tries to eliminate anti-democratic reaction and opposition and asks people to promise respect for democratic values. Promises produce some certainty, a certainty and predictability based on freedom and free choice, which is not the case with certainty produced by the elimination of reaction. In a tyranny, everybody is certain that the regime will survive because nobody can or dares to react, or because indoctrination and propaganda have conditioned people in such a way that they do not even contemplate reaction. In a democracy, there is relative certainty because enough people keep their promise to respect the regime. This is the rationale behind the so-called “pledges of allegiance”. Promises are based on freedom, because a promise is only valid if it is voluntary.
Of course, this does not mean that everything in a democracy is free and voluntary. Although a democracy wants to limit coercion as much as possible and tries to secure its future by way of promises, education, persuasion, judicial review etc., there has to be some coercion because some people will not make or keep the necessary promises. There will be coercion, not of promises, but of actions. Promises cannot be coerced. Coercion in this case is the use of force against anti-democratic reaction.
An anti-democratic reaction is a contradiction in terms. It is because of democracy that reaction is possible. If reaction becomes an activity without risk, as is the case in a democracy, then reaction blossoms. Reacting against democracy is not only ungrateful, it is self-destructive.
But apart from this predictability of the institutions necessary for unpredictable political life, it is clear that the focus of democracy is on conflict, contradictions, opposition, reactions, unpredictability and uncertainty. Those who want to limit the game of action and reaction are necessarily anti-democratic. More freedom and more democracy means more reaction, more plurality, more kinds of actions which can interfere with each other, and therefore more unpredictability, less control over the future, and less certainty that goals will be achieved. Democracy does not only accept the game of action and reaction as an inevitable fact of social life. It also promotes this game, as long as it remains a game and does not become violent or a threat to democracy or to people’s rights and freedom.
Counter-intuitively, freedom does not always go hand in hand with control, although on an individual level this may be the rule. An individual is free if he controls his life. But a society is not free if people try to control consequences and the future. Unpredictability does not mean that people are not free to choose their future. They are just not certain that the future will be the one they have chosen. It’s when they want this certainty that they are tempted to destroy the freedom of society. When people want to be certain of their goals and want to be in control – when, in other words, they want to be free – they need to eliminate interference from other people and other goals. Other people with other goals become a nuisance, and their freedom has to be sacrificed. However, this may not result in control. It is far from certain that the elimination of reaction is possible. It may be counterproductive and create more reaction than initially anticipated. Plurality is probably unavoidable.
Median household income declined 3.6 percent in 2008 after adjusting for inflation, the largest single-year decline on record, and reached its lowest point since 1997. The poverty rate rose to 13.2 percent, its highest level since 1997. The number of people in poverty hit 39.8 million, the highest level since 1960. (source)
Since the recession only started mid-2008 and became much worse in 2009, the data for 2009 - and perhaps 2010 - will probably be even worse. Unemployment is one of the main causes for falling income and rising poverty, and unemployment is a “lagging indicator“, meaning that employment only starts to pick up long after a recession has officially ended.
Poverty levels have been on the rise since a number of years.
The rise in poverty in 2008 followed a disappointing performance during the economic expansion that started in late 2001 and ended in December 2007. Poverty, which rose during and after the 2001 recession, never dropped back down to its pre-recession level. This was one of the worst records for poverty reduction of any economic recovery in decades. … The disappointing performance of the last economic expansion reflects, in part, the fact that the fruits of the economic growth during that expansion were heavily skewed to people high on the income scale rather than being broadly shared. Economists Thomas Piketty and Emmanuel Saez have found the top 1 percent of households received two-thirds of the growth in national income that occurred during the recovery, a larger share than in any other economic expansion since the 1920s. (source)
The child poverty rate rose to 19.0 percent, leaving nearly 14.1 million children under 18 (nearly one in five) below the poverty line. The percentage of all children who live in families below half the poverty line also rose, to 8.1 percent. Both the percentage of children in poverty and the percentage in deep poverty* reached the highest point since 1997. (source)
Compare this to other developed countries:
I made some critical remarks on the “poverty line” as the poverty measurement system in the U.S. here. If those remarks are correct, the picture would be even bleaker.
One could claim that declines in household income result from declines in household size. While it’s true that households are somewhat smaller now than 10 years ago, this doesn’t explain the drop in income. See here.
* “Deep poverty” = cash incomes below half of the poverty line
The U.S. Department of Housing and Urban Development issued its 2008 Annual Homeless Assessment Report. This report explores changes in homelessness nationwide (housing is a human right and has an impact on other human rights such as the right to property and privacy). HUD’s assessment concludes that while overall homelessness in America held fairly steady from 2007 to 2008 (in number of individuals), the number of homeless families seeking shelter, particularly those living in suburban and rural areas, increased (by 9% overall, and by more than 50% in suburban and rural areas). 516,700 families were homeless in 2008.
HUD estimates that approximately 1.6 million persons experienced homelessness and found shelter between October 1, 2007 and September 30, 2008 (this means that 1.6 million persons used shelters or transitional housing programs at least once during this period). This population has the following characteristics:
Almost 20% of homeless people are chronically homeless.
However, useful as they are, 2008 data aren’t recent enough to measure the full impact of the current economic recession on homelessness, but given that the recession started in the housing market, one can assume that the high number of foreclosures has had a negative impact on homelessness. Rising unemployment should make things even worse. However, first estimates for the first quarter of 2009 only show a small increase.
I often see graphs that contain a time series of some sort, but the numbers are just plain numbers, not normalized by population. Here’s an example of a graph from the Bush-era, flaunting the supposedly beneficial effects of Bush’s labor policy on job growth (green line, “jobs on the rise”, number of jobs in thousands):
Just presenting the numbers of job without relating them to the population, is meaningless. Maybe the population grew faster than the number of jobs, in which case the growth exhibited here is in fact a decrease. Or the population shrunk, in which case the growth in the number of jobs was even bigger.
Here’s the correct graph, showing that employment did increase under Bush, but decreased during the last years of his presidency:
“Population” can mean actual population (i.e. people or residents), but can also mean any other relevant basis of comparison. For example:
The following statistics suggest that 16-year-olds are safer drivers than people in their twenties, and that octogenarians are very safe:
As the following graph shows, the reason 16-year-old and octogenarians appear to be safe drivers is that they don’t drive nearly as much as people in other age groups:
Another example is the national debt statistic. Often the graph shows just the national debt in dollar, without relating it to GDP. Whereas the absolute amounts do have some relevancy, it’s better to express the debt as a percentage of GDP because a bigger economy can carry a bigger debt (a poor household may go bankrupt with a debt of $10,000, whereas a rich household can live with a debt of perhaps $100,000).
Take this graph for instance:
Now compare it to this one:
Or this, slightly more recent one, including the latest recession:
And a final example: looking at the relative safety of air travel and road travel and the probability of dying in either a road accident or a plane accident, you can also find divergent data depending on how you divide: number of casualties per trip, per miles traveled, per hours traveled etc.
As I’ve mentioned several times before, the current economic recession has several and almost entirely negative consequences for human rights. One of the human rights that is affected most severely is the right not to suffer poverty (or, positively, the right to a certain standard of living). The causal link between the recession and poverty passes through several “channels”. The most obvious one is rising unemployment; a dampening of charitable giving is potentially another one.
However, data from The Economist show that there is (as yet) no such dampening, despite the recession:
Among the 500 British and American individuals with at least $1m of investable assets, … 28% of Americans say they are giving less money compared with 18 months ago, though 26% are giving more.
I’ve posted several times about the human rights consequences of the current economic recession. One of the human rights that is affected most severely is the right not to suffer poverty (or, positively, the right to a certain standard of living). The causal link between the recession and poverty passes through several “channels”. The most obvious one is rising unemployment, but another important one is diminishing remittances (migrant workers sending money home to developing countries).
The Economist now reports on the evolution of remittances. Remittances actually rose in 2008, the year the recession started - totalling $328 billion, 15% up from 2007. But this is a lagging indicator, meaning that it follows the ups and downs of other indicators with some delay. Because remittances mean sending money home to dependent families, migrant workers will try to keep the level of remittances as high as possible even during difficult periods. The year 2009 will likely be much worse for remittances.
The Economist gives the example of Mexico, where most of the remittances come from Mexicans working in the U.S. construction economy:
Some more information on the impact of the current recession on global poverty (picking up where this previous post left off). By the way, if you want to know why I believe this is a human rights issue, look here.
From The Economist:
New research by the United Nations’ standing committee on nutrition gives a first estimate of how the crisis has hurt the group of people most affected by the crash: the very poorest.
In 1990-2007, the number of hungry people rose by about 80m, though this was, by and large, a period of rising incomes in developing countries (and a huge increase in population). In 2008 alone, the number rose a further 40m, to 963m – half as much in one year as during the previous 17. In other words, lots more children and pregnant women are not getting the food they need. The report reckons that the number of underweight children will rise from 121m to 125m by 2010, assuming no change in the size of the world economy (in fact, it is expected to shrink 2% this year). The World Bank has already estimated that until 2015 the crisis will lead to between 200,000 and 400,000 more children dying every year.
The poorest face two crises: the world recession and the resumption of food-price rises. Food prices had been falling but even then, the global price fall did not translate into a comparable decline on local markets in most poor countries, so the poor did not benefit much. World prices bottomed out in December 2008 and have since risen 26%. In the poorest countries, a rise of 50% in the price of staples pushes up the family food budget from 50% to 60% of household income.
I’ve written about charity or caritas many times before. In fact, I see charitable giving to the poor as a way to honor one’s duties arising from the social and economic rights of the poor (more here). In my view, government redistribution on the basis of taxation is only necessary when individuals fail in their duty of charity. (I also believe that this kind of understanding of economic rights can debunk the big state criticism which is often leveled against these rights).
One of the rules governing charity is “ought implies can“: only those who can give have a moral duty to give. Another rule is that “can implies ought“: those who can do more, should do more. Which means that wealthy people are expected to give more, not just “more” in absolute terms, but also in terms of a higher percentage of their wealth. Giving more in absolute and relative terms may still leave them better off than those who engage in charity starting on a lower level of wealth.
Now, it turns out that in real life, the opposite is true: the less wealthy you are, the more you give in relative terms:
This is quite shocking in a sense. And it means that the current recession, which doesn’t only affect Wall Street types but the poor as well, will probably reduce charitable giving substantially.
I made a general point here about the consequences of the recession for human rights. One consequence is obviously increased unemployment (unemployment being a violation of the right to work). Just thought that these graphs would be a nice illustration (U.S. data):
One more way in which the recession affects human rights. From William Saletan:
Will the global recession push more people to sell their organs? Apparently, the answer is yes. … You don’t normally think of selling your body’s parts or products. But bad times can make you think hard. One reason you might not have thought of selling something from your body is that the idea felt unnatural or somehow made you uncomfortable. But for $5,000, with bills to pay and no other income prospects, you decide you can get over those feelings.
In an older post I mentioned some of the negative effects of the current economic recession on human rights. One of the human rights likely to be effected is the right not to suffer poverty. The recession will cause an increase in poverty (see here and here), and people will be forced to use extreme tactics to counter this problem, especially if they can’t benefit from a social safety net. Not only can they decide to sell their organs (this would still be called a “donation”); they may also be tempted to participate in risky medical tests, rent their skin for commercial tattoo’s, sell their body for sex, become a surrogate mother etc.
What to do about it? Again William Saletan:
What’s driving the market is scarcity. Americans, Britons, Israelis, Japanese, and South Koreans are going abroad for organs mostly because too few of their countrymen have agreed to donate organs when they die. Some have religious objections. Others are squeamish. Many figure that if they don’t supply the organs, somebody else will.
They’re right. Somebody else will supply the organs. But that somebody won’t be a corpse. He’ll be a fisherman or an out-of-work laborer who needs cash and can’t find another way to get it. The middlemen will open him up, take his kidney, pay him a fraction of the proceeds, and abandon him, because follow-up care is just another expense. If he recovers well enough to keep working, he’ll be lucky.
The surest way to stop him from selling his kidney is to make it worthless, by flooding the market with free organs. If you haven’t filled out a donor card, do it now. Because if the dying can’t get organs from the dead, they’ll buy them from the living.
In an older post I mentioned some of the negative effects of the current economic recession on human rights. One effect I didn’t mention but which should have been too obvious to miss, is anti-semitism. The recession started as a financial crisis and a crisis of the banks. Given the historic association of anti-semitism with conspiracy theories about Jews and banks, it’s no coincidence that some will see “the Jews” as the cause of the current recession (the links between Madoff and the Jewish community didn’t help either).
The Boston Review has a poll:
In order to assess explicit prejudice toward Jews, we directly asked respondents “How much to blame were the Jews for the financial crisis?” with responses falling under five categories: a great deal, a lot, a moderate amount, a little, not at all. Among non-Jewish respondents, a strikingly high 24.6 percent of Americans blamed “the Jews” a moderate amount or more, and 38.4 percent attributed at least some level of blame to the group. (source)
More on anti-semitism.
In an older post I mentioned some of the negative effects of the current economic recession on human rights. One of the human rights likely to be effected is the right not to suffer poverty. The recession will cause an increase in poverty in several ways, one of which is a possible reduction in development aid, both official development aid (given by governments and international institutions) and private aid (charity, remittances etc.).
Based on previous crises, aid flows to developing countries should be down by 13%. However, donor countries’ pledges may soften the shock this time around. … Shall we expect aid to fall? The past suggests we should. The question then becomes whether donor countries will act as they used to. Given the scale of the current crisis, international institutions and donor countries have already taken actions, or at least made pledges, to tackle its consequences for developing countries. The World Bank has decided to increase its financial support up to $100 billion over the next three years, specifically to help developing countries cope with falling revenue. In December 2008, it unblocked $2 billion for the poorest countries. At the UN Conference on Financing for Development in Doha in November 2008, bilateral donor countries underlined the need to comply with their aid commitments, even amid the current economic slowdown. Whether these promises turn effectively into action remains to be seen. If they do not, then this research provides some indication about what should be expected from aid donors in the following years.
David Roodman made a similar point.
None of this implies that more development aid is always better, and less is worse. See here for a counter-example. However, in general it’s not unreasonable to assume that people who depend on aid face a risk of increased poverty when this aid is suddenly reduced as a result from an outside shock.
In a couple of previous posts, I’ve discussed what can be the impact of the current economic recession on human rights (see here, here, here and here). Especially, and not surprisingly, poverty will increase, and poverty is a human rights violation (see here for an explanation). (Although one shouldn’t underestimate the adverse effects of the recession on other human rights).
But how much more poverty will there be because of the recession? And how much will the decades long trend of decreasing poverty be affected:
The crisis will add 64 million people to the population living under $2 a day… The global poverty rate will fall from 42% to 39% in 2009, while the pre-crisis trajectory would have brought the poverty rate down to 38%.
This study looked mainly at absolute poverty. Relative poverty, or income inequality, is unlikely to increase as a result of the recession, according to the authors:
Past experience suggests that relative inequality falls about as often as it rises during aggregate economic contractions, with zero change on average. This is in keeping with one of the stylised facts to emerge from research on growth and distributional change, namely that economic growth tends to be distribution neutral on average. So the most defensible assumption for the present purpose is that the burden of the crisis will be more-or-less proportional to initial income leaving relative inequality unchanged within a given country. (source)
Both the rich and the poor suffer as a result of the recession. Globally, they all lose a roughly equal share (in some countries, however, the recession may indeed influence income distribution, to the advantage or disadvantage of the poor). Of course, a loss in income of $5,000 let’s say hurts a poor person much more than a rich one. Such a loss puts more people – the nearly poor - in absolute poverty, but relative poverty – income distributions and income inequality – can remain roughly the same.
Via The Economist:
Just over a quarter of the world’s population, or 1.4 billion people, lived in extreme poverty in 2005, according to a report released this week from the World Bank. This has fallen from 42% in 1990, when the bank first published its global poverty estimates. All regions of the world have seen gains. Rapid economic growth east Asia in particular has led to a dramatic decline in global poverty. In China the share of the population getting by on $1.25 a day, or less, fell from 60.2% to 15.9%. But the bank gives warning that the global recession may tip between 55m and 90m back into poverty this year as remittances, foreign investment and trade, vital to the poorest countries, dry up.
Most of the research finds that property crime rises during recessions – albeit only moderately. In a recent review of the literature, Steve Levitt concluded that a five percentage point increase in unemployment rates generates about a five percent increase in property crime rates.
For violent crime, especially for homicide rates, the research findings are more ambiguous. Indeed, some studies find that that homicides decline during recessions (see for example, Raphael and Winter-Ebmer, 2001). One reason may be that alcohol use tends to decline during recessions (another potentially surprising finding), and that the reduction in alcohol use reduces violent crime, as suggested in a 2008 paper by Garrett and Ott.
Such a potential link between economic downturns, alcohol, and crime highlights the fact that crime is not the only behavior that changes during recessions, and there are complicated interactions that can lead to what might appear to be counterintuitive results. Peter Orszag (source)
In this previous post, I talked a bit about the current economic recession and the possible consequences for human rights. One of those consequences could be an increase in crime: property crime could go up because of increasing poverty, hate crime could go up (e.g. against immigrant workers), and riots (e.g. food riots) could cause physical harm.
Physical security, life and property are all human rights, so it seems that the recession will have a negative effect on some human rights at least. Regarding violent crime, I cited a few studies that found no correlation between economic downturns and specific cases of racist violence or homicide, but did find a correlation between poverty and property crime (see here). The quote above corroborates this. In the U.S., the recession could therefore reverse a long-term trend of declining crime rates (see graph below).
With the recession deepening, many states in the U.S. are facing budget deficits. Some highly unusual cost cutting measures are being proposed, and one of them is abolishing the death penalty. It seems, amazing enough, that capital punishment is more expensive than life imprisonment. The ratio is almost 3 to 1. Especially the appeals procedure and the special measures on death row are costly.
In a previous post, I talked about some of the unintended consequences of human rights activitism and how good intentions can go wrong. It now seems that the opposite can also be true: policies that are motivated by reasons that have nothing to do with morality can have morally beneficial results.
In mentioned in a previous post that the current economic recession (or is it a depression already?) has a number of adverse effects on human rights. One obvious effect is an increase in poverty levels. Many people lose their jobs and their homes, and producers and exporters in the third world may be hit by protectionist measures contemplated by developed countries.
We tend to forget that poverty is a human rights issue (see here). And poverty has a knock-on effect on other human rights. When you’re engrossed in the struggle for life you don’t have time for free speech or political participation, your health suffers, your education suffers (see also here) etc.
Hence the importance of unemployment benefits.
These are the best places in the world to be unemployed. In Scandinavia, for instance, you get 80-90 percent of your income for a period ranging — depending on circumstance — from 10 months to four years. Japan gives you 50 to 80 percent of your income for about a year. France gives you 57 to 75 percent of your income for about three years.
The place where you really don’t want to be unemployed: The United States. Here, most of the unemployed don’t qualify for unemployment insurance, and those who do can expect $216.17 a week for 26 weeks. Defenders of the system would say that it’s a spur to get people back to work. Critics would say that it forces people into jobs that present themselves quickly rather than jobs that are actually a good fit, depressing both productivity and happiness. And if you were laid off for no fault of your own and simply can’t find work amidst a sluggish economy — as is the case for many right now — it’s an undeniably stingy benefit. Ezra Klein (source)
Unemployment benefits protect people against poverty, but can also stop the downward spiral of the recession: if the absence or the lack of generosity of unemployment benefits drives people into poverty, they will consume less; hence companies will sell less products and services, which leads to more bankruptcies and more unemployment etc.
Unemployment benefits are both morally necessary (from the point of views of human rights) and economically expedient in times of a recession.