The mountain man and the surgeon

Tuesday, January 24th, 2006

The mountain man and the surgeon offers up “reflections on relative poverty in North America and Africa”:

When Americans hear the words “poor” and “white”, they think of someone like Mr Banks. He has half a dozen cars in varying states of disrepair parked outside his trailer, car-parts everywhere and a pile of crushed Pepsi cans below his porch.

He “draws” $521 a month in supplemental security income (a form of cash assistance for the elderly, poor and disabled). [...] Mr Banks also complains that he cannot draw food stamps. In order to qualify, he would have to sell his truck, which he cannot bear to part with. Mr Banks would probably be surprised to hear that, thousands of miles away in central Africa, there lives a prominent surgeon whose monthly income is roughly the same as his. Mbwebwe Kabamba is the head of the emergency department at the main public hospital in Kinshasa, the capital of the Democratic Republic of Congo. After 28 years as a doctor, his salary is only $250 a month, but by operating on private patients after hours, he ekes it out 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 claim public assistance. Indeed, the reason Mr Banks split up from his wife, he says, is because they can draw more benefits separately. She still lives in the trailer next door.

In more detail:

“Poverty” describes two quite different phenomena: utter penury, of the sort experienced by the billion or so souls who subsist on $1 a day or less; and the situation of people in rich countries who are less well off than their compatriots.

For the first group, finding enough to eat is a daily struggle, and a $2-a-day job hand-washing mineral ore in a river is a lucky break. Shortly before meeting Dr Kabamba, your correspondent interviewed a group of Congolese ore-washers who were delighted to have found such lucrative work.

European countries tend to use relative measures of poverty. A household with an income less than 50% or 60% of the national median counts as poor. This has the perverse result that if the country gets richer, the poverty rate can still rise, as long as incomes at the top and in the middle rise faster than those at the bottom.

America, more sensibly, uses an absolute standard. The “poverty threshold”, created in the mid-1960s, was based on an estimate of how much an adequate diet might cost, multiplied by three. This figure is adjusted for inflation each year, but is otherwise unchanged. So the fact that, according to the Census Bureau, the share of Americans in poverty rose between 1974 and 2004, from 11.2% to 12.7%, ought to be a cause for shame.

But it is not, because American poverty statistics are misleading. For one thing, the poor rarely stay that way. In 1996-99, only 2% of Americans were poor every month over the full four-year period. And life appears, by most measures, to have improved. Poor people today live longer, spend longer in education and are more likely to have jobs. Fewer live in substandard houses, more have cars, fridges, boomboxes and other necessities that were luxuries a couple of generations ago.

How, then, to account for the apparent rise in poverty? It is partly a matter of definition. Some non-cash benefits, such as food stamps, housing assistance and Medicaid, are excluded from the calculation. And the raw data must be wrong. Nicholas Eberstadt of the American Enterprise Institute, a conservative think-tank, notes that while reported annual income for the poorest fifth of households in 2003 was $8,201, their reported expenditure was $18,492. Nobody can explain this vast discrepancy.

All one can say is that whereas the poor in Kinshasa complain about the price of bread, the poor in Kentucky complain about the price of motor insurance. Fair enough—they need to drive to work.

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