Commentary  The best things in life aren’t things

Wealth, poverty, and simple math

What is excess wealth or consumption? Consider this: regardless of where you are in the world, walk into an electronics shop, and you’ll find the cost of an iPhone is the same. True, that cannot be said of all consumables, often the more important ones. However, the iPhone example highlights a few important ideas about wealth, poverty, the global economy, and our environment.

According to the National Council of Welfare, “benefits” for a single Quebecker classified as “employable” were $7,312 per year in 2009. Statistics Canada pegs Quebec’s 2009 minimum wage at $9 per hour, and its average wage at $20.80. A family friend and former partner at a big law firm used to bill out at $625 per hour. For argument’s sake, let’s pretend that’s a gross hourly wage. Using a basic tax calculator, and assuming a fifty-week work year at 35 hours per week, we can estimate the after-tax hourly wages for all these Quebeckers: welfare, $4.18; minimum wage, $8.16; average wage, $16.59; big shot lawyer, $332.85.

Now let’s take a quick look at the globe. The World Bank’s 2008 data indicates 14 per cent of the world “lives” on less than $1 per day (ultra poor), and 80 per cent on less than $10 per day (very poor). Assuming those are net income figures, hourly wages based on our standard work day are $0.21 and $2.09 for the ultra poor and very poor, respectively (weirdness is due to rounding to whole pennies).

Given that the price of an iPhone is just about globally constant, at our standardized net hourly wages and work week, how much time would it take each of our earners to work their way into an iPhone if it costs say, $650? It would take the lawyer almost two full hours of work, the average employed Quebecker a bit more than one work week, the minimum wager almost 2.3 weeks, the welfare recipient about 4.5 weeks, the very poor nearly 9 work weeks, and the ultra poor 1.8 work years. Remember, though, that we’re talking 100 per cent of what these people earn in the listed time. That is, the ultra poor would have to survive almost two years with absolutely nothing but the promise of an iPhone.

One of the key pieces of rhetoric surrounding the idea of “globalization” and “globalized capitalism” is that we can raise the world’s standard of living to our standard. Does this make sense? Let’s assume that it’s reasonable for the average Quebecker to sacrifice an entire week of salary for an iPhone – she can live fine on the remaining 49 weeks of salary. If a very poor person was to sacrifice the same one week per year in to acquire an iPhone, it would take almost nine years of saving to make the mark.

If a globalized “free market” were to remedy this disparity (which you will notice, it has not managed to do) we would expect both wages and the price of the iPhone to change. With a few conservative assumptions, the World Bank’s claim that about five per cent of the world earns the same or more than the average Quebecker, and a bit of arithmetic, all would be fair if both the world’s very poor and the average Quebecker earned about $3.30 per hour, and the iPhone cost about $115.

Now here’s the rub: let’s assume that the roughly 60 million iPhone sales since 2007 came from that five per cent of the world’s rich. Let’s assume further that the same proportion of iPhones get sold to our 5.15 billion nouveau riche as were sold to the original rich. That’s over one billion more iPhones, and we haven’t finished bringing the other 15 per cent of the population up to speed.

Uh oh… what happens when they want no-foam lattes, furniture from Ikea, and a Prius too? Looks like planet Earth is going to run out of stuff mighty fast.

This brings me to an actual point: the developed world has deemed acceptable and normalized what, from a global vantage point, is conspicuous over-consumption by “average” people. It is undeniable that we have maintained our level of consumption by brutally exploiting and oppressing the developing world – if we didn’t, the planet would be out of stuff, plain and simple.

Our culture systematically conflates both “quality of life” and “standard of living” with capacity to consume. Worse, we are justifying our global piracy by deluding ourselves that we can bring our “standard of living” to the rest of the world. If we succeed in globalizing our culture and logic of consumption, we will necessarily destroy our planet. Something’s gotta give. Perhaps we can start by concentrating on the idea that “the best things in life aren’t things.” Ironically, I saw that quote on a bumper sticker.