A new study of purchasing power parity (PPP) is showing that living standards for the bulk of populations in developing countries are far lower than previously estimated.

Basically, the relative purchasing power of currencies have been miscalculated, giving an unrealistic picture of the living standards of the average person in what is sometimes called the “3rd World”.

It means that poverty and inequality are far higher than under previous estimates:

Suddenly the world has more poor. Incomes declined in emerging economies: down by 40 percent in China and India, 17 percent in Indonesia, 41 percent in the Philippines, 32 percent in South Africa and 24 percent in Argentina. For Indonesia, the decline was far worse than the Asian crisis, and for China and India, the decline was worse than the one experienced by Germany during the Great Depression. Yet hardly anyone noticed.

The event was the release of new estimates of purchasing power parity, or PPP. Measured as part of a large international endeavor called the International Comparison Program, PPP aims to accurately calculate a country’s economic power rather than simply dividing total national output by a country’s population.

It’s hard to see this as anything but a full bore refutation of the facts that the free trade zealots use.