GDP PPP is a near worthless reference for countries like China and India. India has a billion people living in extreme poverty, with the word extreme not doing the context justice. China still has about half a billion people living in that type of poverty as well. Both of those are semi-masked by the fantasy PPP figures.
PPP is a way of pretending that just because you can afford a Starbucks cup of coffee in Beijing, you're economically equivalent to someone earning $60,000 per year in Frankfurt. Back in reality, there are vast objective economic differences of reality that go with comparing China vs highly developed nations on PPP. Can you afford to travel to Paris or Toronto? Can you afford a BMW or Mercedes (cheap Chinese cars are death boxes on wheels)? Can your savings or income get you out of cities with extreme pollution so you can live better? Do you have access to the kind of healthcare available in Finland or Denmark? What kind of social safety net does your nation provide?
Once you get much beyond comparing hamburger prices, the value of the PPP premise collapses when comparing highly developed nations vs eg China.
In 2012 extreme poverty in India was 20%, bit less than 10% in China. And shrinking each year.
“At the outset of the reforms in 1978, China was poor. It had a GDP per capita level similar to Zambia – lower than half of the Asian average and lower than two thirds of the African average. China experienced an average GDP growth of close to 10% per year until 2014, raising per capita GDP almost 49-fold, from 155 current US Dollars (1978) to 7,590 US Dollars in 2014, lifting 800 million people out of poverty – an unparalleled achievement. In urban centres in China, poverty has been virtually eliminated.”
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At market rates China's economy will be the biggest in the world sometime in the mid-20s. I have never seen anywhere that PPP† is a worthless metric. Point me to a decent source that corroborates your opinion.
> In 2012 extreme poverty in India was 20%, bit less than 10% in China. And shrinking each year.
Saying that extreme poverty in India is 20%, is grotesquely absurd. As recently as 2014, half of India's population (58%, or ~750 million people) was living on about $3 per day. Pretending that $1.25 is extreme poverty, but $3 per day isn't, is the obvious absurd part. That just demonstrates again how worthless PPP is. $3 per day is objective extreme poverty no matter how one attempts to hide from that fact.
I stated my reasons for why I believe PPP is worthless, numerous times over. Let's see you refute what I said. There are blatant objective economic lines involved in the standard of living gap between China and highly developed nations - which PPP as a fantasy attempts to ignore - and I listed several of them.
Going from $1.25/person/day to $3/person/day might do nothing for you in Manhattan, but in Nairobi it makes the difference between a shack in a shanty town in the first instance, and indoor plumbing, locked doors, and an electricity supply in the second.
Source: I’ve visited a home in Nairobi whose rent was in the order of $1,000 per year including bills, and housing 4 people.
Next line in the 4th paragraph of the Wikipedia article you quoted, “According to the Modified Mixed Reference Period (MMRP) concept proposed by World Bank in 2015, India's poverty rate for period 2011-12 stood at 12.4% of the total population, or about 172 million people; taking the revised poverty line as $1.90.” (And that's already two years out of date and India's economy is growing at ~7% annually.)
I'm not arguing with you any more because you use phrases and terms like "grotesquely absurd", "near worthless", and "fantasy" which are all both hyperbolic and uncharitable. I'm not arguing that there isn't poverty in India and China, I'm arguing that though there is poverty, and some of it extreme, both countries are raising millions out of poverty annually. Only this month India announced the world's largest electrification scheme† to electrify the remaining population. And GDP PPP is a way to measure that change, economists agree on this to the best of my knowledge. I'm not taking your word for it, show me a source that disagrees.
For many location-dependent services, which are a major part of modern economies, PPP GDP is a more appropriate measure than nominal GDP. Thai food in a decent restaurant in Thailand costs less than a comparable meal, Thai or another cuisine, in the States. Basic healthcare in many developing countries costs a fraction of the same services in the US with similar quality.
You're bringing in quality of life issues, which it's true are very different between the developing and developed countries today, and not accounted for in PPP.
But that being said, it's a huge exaggeration to say 1 billion are living in extreme poverty in India, much as it would be inaccurate to say that the 30% of the Indian population categorized as the middle class has the same quality of life standards as their analogues in the developed world.
During the time of the greatest industrial development in the US, working class people had to cope with very extreme environmental hazards that diminished their quality of life, i.e. in Gary, Indiana:
PPP is a way of pretending that just because you can afford a Starbucks cup of coffee in Beijing, you're economically equivalent to someone earning $60,000 per year in Frankfurt. Back in reality, there are vast objective economic differences of reality that go with comparing China vs highly developed nations on PPP. Can you afford to travel to Paris or Toronto? Can you afford a BMW or Mercedes (cheap Chinese cars are death boxes on wheels)? Can your savings or income get you out of cities with extreme pollution so you can live better? Do you have access to the kind of healthcare available in Finland or Denmark? What kind of social safety net does your nation provide?
Once you get much beyond comparing hamburger prices, the value of the PPP premise collapses when comparing highly developed nations vs eg China.