Lindy Davies on "Economic Growth"

Lindy Davies, at The Progress Report, presents an excellent challenge to the kind of vulgar libertarian who points to rising GDPs or average incomes as proof that "globalization" (falsely identified with free trade) reduces poverty. As I've said before, a lot of the increase in nominal GDP may only reflect the monetization of activity previously carried out through informal subsistence, barter or gift economies--with a reduction in real standard of living.

Economic freedom for the world's poorest people is unquestionably all about the land. Let's say a peasant family has a goat and a garden, and, working carefully, can grow enough to feed itself. Occasionally a good harvest will yield some surplus which can be sold -- there isn't much of that, but let's say it brings in an average of two dollars a day. With thrift, enough for school clothes, maybe even books.

Now, let's imagine that the family loses their land -- perhaps an injury or some other disaster makes it impossible to keep farming it -- and they have to go to the city, where they manage to find a combination of odd jobs, yielding an income of $10 per day. Now, they must somehow buy their food and every other necessity out of that $10, and they have to live in a miserable shack, with open sewage running in unpaved streets.

Yet, in terms of development numbers, their income has increased by $500%.

As I said before, the Kenyan GDP no doubt exploded upward when the native population was evicted from the most fertile fifth of the land by British settlers and turned into hired laborers, and many other subsistence farmers were forced into the wage labor market by a poll tax.