Poverty Changes

£14,000 is quite a large amount of money. Enough for 70,000 Freddos, a decade’s worth of holidays, two new Nissan Pixo’s, several thousand potatoes or a gold standard racing pigeon. However, if you’re trying to live off just that amount in modern Britain, it quickly seems quite a lot smaller. Half of that could easily disappear on rent, whilst the average British family will spend a further £4,000 on food (significantly greater than the European average, for one reason or another). Then we must factor in tax, work-related expenses, various repair bills, a TV license, utility & heating bills, petrol money and other transport expenses, and it quickly becomes apparent that trying to live on this amount will require some careful budgeting. Still, not to worry too much though; it’s certainly possible to keep the body and soul of a medium sized family together on £14k a year, if not absolutely comfortably, and in any case 70% of British families have an annual income in excess of this amount. It might not be a vast amount to live on, but it should be about enough.

However, there’s a reason I quoted £14,000 specifically in the figure above, because I recently saw another statistic saying that if one’s income is above 14 grand a year, you are one of the top 4% richest people on planet Earth. Or, to put it another way, if you were on that income, and were then to select somebody totally at random from our species, then 24 times out of 25 you would be richer than them.

Now, this slightly shocking fact, as well as being a timely reminder as to the prevalence of poverty amongst fellow members of our species, to me raises an interesting question; if £14,000 is only just about enough to let one’s life operate properly in modern Britain, how on earth does the vast majority of the world manage to survive at all on significantly less than this? More than 70% of the Chinese population (in 2008, admittedly; the rate of Chinese poverty is decreasing at a staggering rate thanks to its booming economy) live on less than $5 a day, and 35 years ago more than 80% were considered to be in absolute poverty. How does this work? How does most of the rest of the world physically survive?

The obvious starting point is the one stating that much of it barely does. Despite the last few decades of massive improvement in the living standards and poverty levels in the world in general,  the World Bank estimates that some 20% of the world’s populace is living below the absolute poverty line of surviving on less than $1.50 per person per day, or £365 a year (down from around 45% in the early 1980s- Bob Geldof’s message has packed a powerful punch). This is the generally accepted marker for being less than what a person can physically keep body and soul together on, and having such a huge proportion of people living below this marker tends to drag down the global average. Poverty is something that the last quarter of the century has seen a definitive effort on the part of humanity to reduce, but it’s still a truly vast issue across the globe.

However, the main contributing factor to me behind how a seemingly meagre amount of money in the first world would be considered bountiful wealth in the third is simply down to how economics works. We in the west are currently enjoying the fruits of two centuries of free-market capitalism, which has fundamentally changed the way our civilisation functions. When we as a race first came up with the concept of civilisation, of pooling and exchanging skills and resources for the betterment of the collective, this was largely confined to the local community, or at least to the small-scale. Farmers provided for those living in the surrounding twenty miles or so, as did brewers, hunters, and all other such ‘small businessmen’, as they would be called today. The concept of a country provided security from invasion and legal support on a larger scale, but that was about it; any international trade was generally conducted between kings and noblemen, and was very much small scale.

However, since the days of the British Empire and the Industrial Revolution, business has got steadily bigger and bigger. It started out with international trade between the colonies, and the rich untapped resources the European imperial powers found there, moved on to the industrial scale manufacture of goods, and then the high-intensity sale of consumer products to the general population. Now we have vast multinational companies organising long, exhaustive chains of supply, manufacture and retail, and our society has become firmly rooted in this intense selling international economy. Without constantly selling vast quantities of stuff to one another, the western world as we know it simply would not exist.

This process causes many side effects, but one is of particular interest; everything becomes more expensive. To summarise very simply, the basic principle of capitalism involves workers putting in work and skill to increase the value of something; that something then gets sold, and the worker then gets some of the difference between cost of materials and cost of sale as a reward for their effort. For this to work, then one’s reward for putting in your effort must be enough to purchase the stuff needed to keep you alive; capitalism rests on the principle of our bodies being X% efficient at turning the food we eat into the energy we can use to work. If business is successful, then the workers of a company (here the term ‘workers’ covers everyone from factory floor to management) will gain money in the long term, enabling them to spend more money. This means that the market increases in size, and people can either sell more goods or start selling them for a higher price, so goods become worth more, so the people making those goods start getting more money, and so on.

The net result of this is that in an ‘expensive’ economy, everyone has a relatively high income and high expenditure, because all goods, taxes, land, utilities etc. cost quite a lot; but, for all practical purposes, this results in a remarkably similar situation to a ‘cheap’ economy, where the full force of western capitalism hasn’t quite taken hold yet- for, whilst the people residing there have less money, the stuff that is there costs less having not been through the corporation wringer. So, why would we find it tricky to live on less money than the top 4% of the world’s population? Blame the Industrial Revolution.

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Losing

I have mentioned before that I am a massive rugby fan, and I have also mentioned that I’m not that brilliant at it and have much experience of losing. I also support England, which has left me no choice other than to spend the past ten years alternating between moments of joy and long periods of frustration over what could have been, whilst continually living in the shadow of ‘that drop goal’ (apologies for non-rugby fans, for whom this will make little sense, but bear with me) and trying to come to terms with our latest loss (although… any New Zealanders reading this? 🙂 ). The team I support have spent the last few seasons living through a similar shadow of former success, and many losses have subsequently ensued. As such, I am very well acquainted with the practice of losing, and in particular the different kinds of loss that can occur (and the emotions inspired thereof). The following list will not be exhaustive, but I’ll aim to cover as many as I can.

The most obvious variety of loss has also perhaps the most potential to be depressing; the thrashing. An entirely one sided affair, where all concerned tried their best but simply weren’t good enough to even come close to standing up to the opposition, a thrashing can serve as a message saying “People might tell you to try your best, but your best isn’t good enough“. This is a terribly depressing thought, suggesting that all of one’s hard work, effort and training matter for nought in comparison to one’s opponents; or, the thrashing can be taken in a positive vein, a sense of “hey, they are just better than us, but we did well and there’s no shame in it”. Which way one goes really depends on the opposition concerned and one’s way of handling failure (refer to my back catalogue for more details) but a good example of the latter course occurred during the Rugby World Cup in 2007 when Portugal, never noted as a great rugby side, lost to the rugby powerhouse that is New Zealand by 108 points to 13. That was a definitive thrashing, but Portugal had nonetheless scored a try against the world’s best sides, hot favourites to win the overall competition (although they subsequently didn’t) and had played with pride and tenacity. The sight of their side, chests puffed out and eyes flush with emotion, singing the national anthem at the start of that game was a truly heartwarming one.

Subtly distinct from, but similar to, a thrashing is the collapse, the different being whose fault the scale of the loss is. A thrashing is very much won by the winners, but a collapse is caused by the losing party allowing everything that could go wrong to go wrong, performing terribly and letting the result tell the story. The victim of a collapse may be the underdog, may be expected to lose, but certainly should not have done so by quite so spectacular a margin as they do. This generally conjures up less depression than it does anger, frustration and even shame; you know you could and should have done better, but for whatever reason you haven’t. No excuses, no blaming the ref, you just failed- and you hate it.

Next in the order of frustration is the one-aspect loss, something generally confined to more multifaceted, and particularly team, occasions. These centre on one individual or aspect of the situation; one’s left back failing to mark his man on numerous occasions, for example, or a tennis player’s serve letting him down. Again the predominant feeling is one of frustration, this time of having done enough and still not won; in every other aspect of one’s performance you might have been good enough to win, but because of one tiny aspect you were let down and it was all for nought. The one-aspect loss is closely related to the ‘kitchen sink’ loss, such as Spain experienced at the hands of Switzerland at the football world cup two years ago. Spain were clearly the better side in that match, and but for one lucky goal from the Swiss they surely would have won it, but after that Switzerland holed up in their own penalty area and defended for their lives. Spain might have thrown everything they had and then some at the Swiss after that, might have struck shot after shot, but no matter what they did it just didn’t come up for them; luck and fate were just against them that day, and for all their effort they still managed to lose. A kitchen sink loss is also characterised by frustration, often made doubly annoying by the fact that the one aspect of one’s performance that has let you down has nothing to do with you, but can also summon depression by the seeming irrelevance of all the hard work you did put in. A match you should have won, could have won, often needed to have won, but no matter how much effort you put in fate just didn’t want you to win. Doesn’t life suck sometimes?

The even loss also records significant frustration levels, particularly due to the nature of the games it often occurs in. An even loss occurs between two closely matched teams or individuals in a close contest, and where portents at the start say it could go either way. Sadly, in most sports a draw is rare, whilst in many it is impossible, and in any case such a situation satisfies nobody; there must be a winner and, unfortunately, a loser. Such a loss is always hard to take, as one knows they are good enough to win (and usually have done so in the past; such occasions are often repeat fixtures against local rivals, meaning the prospect of a year’s gloating must also be considered) but that, on the day, it went the other way. On other occasions, a sense of anticlimax may be present; sometimes losses just happen, and do not inspire any great emotion (although the near-neutral loss is a category unto itself), and after a tight game in which you played alright but were fair beaten there’s sometimes not too much to get emotional about.

And then, we come to perhaps the strangest form of losing- the happy loss. It’s often hard to be comfortable about being happy with a loss, particularly in a tight game decided only by the narrowest of margins and that one could have won. There are some people who will never feel happy about a loss, no matter how good the game or the opposition, constantly striving for the concrete success a victory can show; but for others, there is still comfort to be found in losing. There lies no shame in losing a match against a good, deserving opponent, no shame in losing when you could not possibly have given more, and no shame in doing far, far better than you were expected to. I have talked before on this blog on the value of learning to fail with grace; just as important, in life as in sport and such, is learning how to lose.

3500 calories per pound

This looks set to be the concluding post in this particular little series on the subject of obesity and overweightness. So, to summarise where we’ve been so far- post 1: that there are a lot of slightly chubby people present in the western world leading to statistics supporting a massive obesity problem, and that even this mediocre degree of fatness can be seriously damaging to your health. Post 2: why we have spent recent history getting slightly chubby. And for today, post 3: how one can try to do your bit, especially following the Christmas excesses and the soon-broken promises of New Year, to lose some of that excess poundage.

It was Albert Einstein who first demonstrated that mass was nothing more than stored energy, and although the theory behind that precise idea doesn’t really correlate with biology the principle still stands; fat is your body’s way of storing energy. It’s also a vital body tissue, and is not a 100% bad and evil thing to ingest, but if you want to lose it then the aim should simply be one of ensuring that one’s energy output, in the form of exercise  exceeds one’s energy input, in the form of food. The body’s response to this is to use up some of its fat stores to replace this lost energy (although this process can take up to a week to run its full course; the body is a complicated thing), meaning that the amount of fat in/on your body will gradually decrease over time. Therefore, slimming down is a process that is best approached from two directions; restricting what’s going in, and increasing what’s going out (both at the same time is infinitely more effective than an either/or process). I’ll deal with what’s going in first.

The most important point to make about improving one’s diet, and when considering weight loss generally, is that there are no cheats. There are no wonder pills that will shed 20lb of body fat in a week, and no super-foods or nutritional supplements that will slim you down in a matter of months. Losing weight is always going to be a messy business that will take several months at a minimum (the title of this post refers to the calorie content of body fat, meaning that to lose one pound you must expend 3500 more calories than you ingest over a given period of time), and unfortunately prevention is better than cure; but moping won’t help anyone, so let’s just gather our resolve and move on.

There is currently a huge debate going on concerning the nation’s diet problems of amount versus content; whether people are eating too much, or just the wrong stuff. In most cases it’s probably going to be a mixture of the two, but I tend to favour the latter answer; and in any case, there’s not much I can say about the former beyond ‘eat less stuff’. I am not a good enough cook to offer any great advice on what foods you should or shouldn’t be avoiding, particularly since the consensus appears to change every fortnight, so instead I will concentrate on the one solid piece of advice that I can champion; cook your own stuff.

This is a piece of advice that many people find hard to cope with- as I said in my last post, our body doesn’t want to waste time cooking when it could be eating. When faced with the unknown product of one’s efforts in an hours time, and the surety of a ready meal or fast food within five minutes, the latter option and all the crap that goes in it starts to seem a lot more attractive. The trick is, therefore, to learn how to cook quickly- the best meals should either take less than 10-15 minutes of actual effort to prepare and make, or be able to be made in large amounts and last for a week or more. Or, even better, both. Skilled chefs achieve this by having their skills honed to a fine art and working at a furious rate, but then again they’re getting paid for it; for the layman, a better solution is to know the right dishes. I’m not going to include a full recipe list, but there are thousands online, and there is a skill to reading recipes; it can get easy to get lost between a long list of numbers and a complicated ordering system, but reading between the lines one can often identify which recipes mean ‘chop it all up and chuck in some water for half an hour’.

That’s a very brief touch on the issue, but now I want to move on and look at energy going out; exercise. I personally would recommend sport, particularly team sport, as the most reliably fun way to get fit and enjoy oneself on a weekend- rugby has always done me right. If you’re looking in the right place, age shouldn’t be an issue (I’ve seen a 50 year old play alongside a 19 year old student at a club rugby match near me), and neither should skill so long as you are willing to give it a decent go; but, sport’s not for everyone and can present injury issues so I’ll also look elsewhere.

The traditional form of fat-burning exercise is jogging, but that’s an idea to be taken with a large pinch of salt and caution. Regular joggers will lose weight it’s true, but jogging places an awful lot of stress on one’s joints (swimming, cycling and rowing are all good forms of ‘low-impact exercise’ that avoid this issue), and suffers the crowning flaw of being boring as hell. To me, anyway- it takes up a good chunk of time, during which one’s mind is so filled with the thump of footfalls and aching limbs that one is forced to endure the experience rather than enjoy it. I’ll put up with that for strength exercises, but not for weight loss when two far better techniques present themselves; intensity sessions and walking.

Intensity sessions is just a posh name for doing very, very tiring exercise for a short period of time; they’re great for burning fat & building fitness, but I’ll warn you now that they are not pleasant. As the name suggest, these involve very high-intensity exercise (as a general rule, you not be able to talk throughout high-intensity work) performed either continuously or next to continuously for relatively short periods of time- an 8 minute session a few times a week should be plenty. This exercise can take many forms; shuttle runs (sprinting back and forth as fast as possible between two marked points or lines), suicides (doing shuttle runs between one ‘base’ line and a number of different lines at different distances from the base, such that one’s runs change in length after each set) and tabata sets (picking an easily repeatable exercise, such as squats, performing them as fast as possible for 20 seconds, followed by 10 seconds of rest, then another 20 seconds of exercise, and so on for 4-8 minute) are just three examples. Effective though these are, it’s difficult to find an area of empty space to perform them without getting awkward looks and the odd spot of abuse from passers-by or neighbours, so they may not be ideal for many people (tabata sets or other exercises such as press ups are an exception, and can generally be done in a bedroom; Mark Lauren’s excellent ‘You Are Your Own Gym’ is a great place to start for anyone interested in pursuing this route to lose weight & build muscle). This leaves us with one more option; walking.

To my mind, if everyone ate properly and walked 10,000 steps per day, the scare stats behind the media’s obesity fix would disappear within a matter of months. 10,000 steps may seem a lot, and for many holding office jobs it may seem impossible, but walking is a wonderful form of exercise since it allows you to lose oneself in thought or music, whichever takes your fancy. Even if you don’t have time for a separate walk, with a pedometer in hand (they are built into many modern iPods, and free pedometer apps are available for both iPhone and Android) and a target in mind (10k is the standard) then after a couple of weeks it’s not unusual to find yourself subtly changing the tiny aspects of your day (stairs instead of lift, that sort of thing) to try and hit your target; and the results will follow. As car ownership, an office economy and lack of free time have all grown in the last few decades, we as a nation do not walk as much as we used to. It’s high time that changed.

Money- what the &*$!?

Money is a funny old thing- the cornerstone of our way of existence, the bedrock of modern-day life, and the cause of, and solution to, 99% of all life’s problems. But… well, why? When you think about it, money doesn’t actually mean anything- it is an arbitrary creation brought in for convenience’s sake, and yet it as an entity has spiralled into so much more than a mere tool. Now how on earth did that happen?

Before about two and a half thousand (ish) years ago, money just about not exist. To the best of my knowledge, coinage only became commonplace in Europe with the rise of the Roman Empire- indeed, when they left Britain in the 5th century AD, much of the country went back to simply bartering- trading goods and services for other goods and services. This began to change as time went on however, and by the time of William the Conqueror’s invasion, the monetary system was firmly established across Europe. Coins were a far more efficient system than bartering- trading stuff for one another is a highly subjective process, and it can be hard to get a sense of value and to what extent you were being ripped off. By giving everything a fixed, arbitrary value (ie a price), everything suddenly had a value relative to one another. More importantly, this allowed for goods and services to be traded for the potential to buy more goods and services of equal value in coin form, rather than the things themselves, which was both easier and more efficient (there was now no risk of carrying a lampshade to the supermarket to exchange for a pint of milk, because a wallet is far easier to carry). The idea of money representing the potential to buy things can be seen by anyone looking on a British note, where it reads “I promise to pay the bearer on demand the sum of…” however many pounds (this is in fact a callback to the days when banks stuck to the gold standard, when you could theoretically walk into the Bank of England and ask for five pound’s worth of gold for your fiver).

However, with coins representing potential to buy things, they instantly took on a value of their own, and here things start to get confusing. Because, when money itself takes on a value, it instantly becomes a commodity just like any other- just as people trade in gold bullion, oil and bits of companies, so people trade with money itself. And this… actually, I’ve got ahead of myself- let me take a step backward.

The input of human effort can be used to increase the value of various bits of the world we live in. For example- a heap of planks may be bought for £50 from a sawmill, but once you have gone home and spent 6 hours swearing at a hammer, you may now have a bench or something worth £500 or more. The materials themselves have not changed, but since a bench is more useful, better looking, and is better appreciated by people than a few planks, people set more value by it. Because more value is set by it, so it is worth more money.

This, at a base level, is how the economic system works- human effort is used to turn raw materials, which we don’t want, into products, which we do. Because people want these products, they pay money for them, and because they need this money to pay for them, they get a job. Because they are providing human effort to their boss (which itself has a value for its ability to raise the value of raw materials), their boss pays them the money they need. The boss gets the money he uses to pay his employees from selling things to people, which makes money because the human effort put in to make his final product raises the value of his final product above that of the raw materials he bought in order to make it- and thus we are back at the beginning of the cycle.

If we study this process, we can see that the only way the boss can make any money out of it is if the value of his final product (F) is greater than the value of its raw materials (M) plus however much he pays his employees for the effort they input (E)- ie, F>M+E. However, pretty much by definition, F should equal M+E- thereby the only way he can make money is by paying his workers less than their human effort is actually worth in the context of the product (A communist would seize on this as evidence of corporations exploiting the masses, but I refuse to go into this argument here- it is far too messy). This is the only way that any money actually gets produced in an economy, and the result is inflation. If inflation did not exist, then the only way anyone could make any money would be by spending less- but this automatically means that somebody else will not be getting your money, and so will be losing some. Thus inflation is vital to ensure that everybody in an economy gains money, and although this does lead to the gentle devaluation of currency, it allows the human race to stay one step ahead of a potential vicious cycle of decline- and inflation can only be generated by an economy manufacturing things.

But why do we need our level of money to continually rise? Well, imagine you have a steak worth £5 (It’s just an example, don’t judge me on my figures). When you eat that steak, something of value £5 has been turned into the contents of your gut, and ultimately into what comes out the other end- which is clearly worth a lot less than the steak. Thus, the human race consuming resources  reduces the overall value of planet earth, just as making stuff increases it. Nature in fact has an inbuilt system to prevent this from turning into a cycle of endless decline- reproduction. If the cow you ate your steak from had had a calf, then nature has ensured that your consumption of the steak has not, in the long run, decreased the overall steak value of the world due to the steak potential existing in the calf (I’ve just realised I’m making all these terms up on the fly- my apologies). I could go into the whole energy from calf <- energy from grass <- energy from sun <- universe in general etc. thing here, but this is extrapolating the economic problem somewhat. However, suffice it to say that ensuring our overall monetary value continues to rise via inflation is our version, from an economic perspective, of reproduction, balancing out our consumption of finite resources in terms of value.

Phew- this is getting longer than I anticipated. My apologies once again for it turning into a semi-coherent ramble, I only hope you could follow it. There is still quite a lot more to get through, so I think I’ll try to wind this all up on Wednesday (after another Six Nations post Monday- COME ON ENGLAND!). If you have been able to follow all of that then congratulations- you now understand core economics. If you haven’t then also congratulations- you are sufficiently normal to not understand my way of thinking.