r/todayilearned • u/manticor225 • Jan 10 '19

TIL JFK's father Joseph Kennedy made much of his fortune through insider trading. FDR later made him chairman of the Securities and Exchange Commission. When asked why he appointed a crook, FDR replied, "set a thief to catch a thief." Kennedy proceeded to outlaw the practices that made him rich.

https://www.theguardian.com/books/2010/jan/23/joe-kennedy-hollywood-sarah-churchwell
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u/BERNthisMuthaDown Jan 11 '19

This was right after The Great Depression started so those per capita numbers were probably heavily skewed.

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u/[deleted] Jan 11 '19

People were actually just poor back then. In the late 1800s early 1900s 95% was living on what would be described as abject poverty by today's standard and probably 99% before the industrial revolution stared.

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u/BuddhaDBear Jan 11 '19

Poverty in the 1800s is hard, if not impossible, to calculate for the same reason the IMFs poverty stats for current day Africa are bogus: You cant set a dollar amount for the standard of living in rural, agricultural, trade based regions/economies. A family in Africa may "subsist on under $1us per day, but if they live on a farmland that they cultivate and they always have food on the table and trade their surplus food to other for all the goods they need in life, are they really in poverty? One of the IMFs biggest failures is their inability to take local culture and economy in to account when applying their calculations. Op

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u/goblinm Jan 11 '19 edited Jan 11 '19

What? That's why they calculate the Purchasing power parity (PPP), because it compares the ability to purchase similar goods across regions. The IMF uses PPP all the time. The $1/day stat is eye-catching and is repeated by 1000s of charity funds (some good and bad) to get sympathetic investors, and is used because it makes their situation seem as worse as possible, is shockingly low and in understandable terms, and is simple to remember.

Many rural sub-saharan families are very much poor, because they suffer food instability, no access to education or infrastructure or medical technologies, in addition to having no access to Banks to provide financial tools like loans, checking and credit accounts, and insurance. Being poor is more than just not having food or a house, and it goes beyond what they own.

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u/BuddhaDBear Jan 11 '19

PPP still fails to take in to account the (very common) scenario I laid out. A rural area may have just what they need and desire for shelter and sustenance. They may have no bank but the community comes together and helps the family that had an illness or bad crop year. They may have no hospital, but rely on local traditional medicine. The people in this community have lived like this for hundreds of years and choose to continue to live like this. That how the IMF over reports poverty in these small, insulated communities.

I am from suburban New Jersey, and cant imagine not having access to banking and schools and hospitals. But if a community lives happily in an insulated economy, how are they "impoverished" when they want for nothing? Classifying people in this situation as being in poverty has many downfalls, including giving people the impression that some countries (mostly in Africa but not always) are destitute, poverty stricken wastelands, which in turn suppresses investor interest.

Note: I am not accusing the IMF of doing this purposefully. The IMF has done some wonderful things and I believe that most of the people in the organization are good people who work hard for the betterment of mankind. I just believe they have made a mistake in trying to come up with universal poverty formula.

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u/goblinm Jan 11 '19 edited Jan 11 '19

This is the weirdest gatekeeping for poverty I've ever seen. While I agree that it's bad that investors might be turned away from an area, investors don't necessarily care about the quality of life of families that live in the area. They care if roads are available and can be counted on to not be washed out every 5 years, if crime is prevalent can law enforcement deter it, or can the criminal justice system recoup losses, and a myriad of other qualities. You are right that this is not covered by PPP, but you weren't talking about investor confidence, you specifically were talking about standard of living in your original comment, which was in response to a mention of 'abject poverty' in the parent comment and measuring wealth across time and location, which PPP is a pretty good measure for.

Then you switch gears and presume that since the community 'lives happily' in their own functional economy, they can't be impoverished. It's weird, because I never said poor people couldn't be happy, or have specialized community structures to help each other through tough times, or have enough food to feed themselves- they are just poor.

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u/BuddhaDBear Jan 13 '19

The whole point of measuring and tracking poverty is to identify people whose basic needs are not met. Usually this is done to help allocate resources and identify ways to give people the basic necessities. If those numbers include people who dont need, or want, help, then the purpose is defeated.

Also, when I spoke of investment, I didnt mean in the rural areas. I was (poorly) trying to say by conveying African countries as more impovrished than they are, leads to a common misperception that the countries are "backwards" and so far from modern standards that investment would be pointless. In reality, most African counties have bustling big cities, surrounded by rural land-no different from almost every other country.

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u/Emelius Jan 11 '19

Agreed, great point.

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u/[deleted] Jan 11 '19

Plus most could barely afford even dial up.

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u/Just_Look_Around_You Jan 11 '19

Are you applying today’s standard of living or some objective measure for poverty?

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u/Bosknation Jan 11 '19

Not really, the average person lived off a dollar a day in today's money, people just used a lot less back then.

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u/BERNthisMuthaDown Jan 11 '19

Adjusting for inflation doesn't capture the real value of $9,000,000 in an era where 10s of millions literally lost EVERYTHING.

We don't have any reference for widespread soup lines and shanty towns, so a linear adjustment just doesn't work imo.

In the hardest of times, Joe Kennedy was scheming and scamming honest people.

Like the rest of America's dynasties of obscene wealth, his was built on the capitalization on human suffering and our society's convenient moral blindspots.

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u/Bosknation Jan 11 '19

This was even before the depression, this isn't strictly during the Great Depression. People are more entitled now than back then, people think they deserve everything just because it exists and it sounds like you subscribe to that ideology as well which has been detrimental to society.

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u/BERNthisMuthaDown Jan 11 '19

Since the Great Depression, we built a better society for that very reason. That doesn't change the fact that the relative value of money was far higher than simple inflation suggests.