Is global poverty falling or
rising? Realistic estimates calculate that there are over 4 billion
people in poverty in this world, or two-thirds of the population. And
yet, in their latest ‘public letter’ to us all, Bill and Melinda Gates, the
richest family in the world, issued last month, were keen to tell us that the
battle against global poverty was being won, as those living on less than $1.25
day had been cut by half since 1990. How do we reconcile these two
estimates?
Back in 2013, the World Bank released
a report that there were 1.2bn people living on less than $1.25 a day,
one-third of whom were children. This compares with America’s poverty
line of $60 a day for a family of four. But, according to the World Bank,
things are getting better, with 720m less people on this very low threshold for
poverty compared to 1981. And Nobel
prize winner Angus Deaton has emphasised that life expectancy globally has
risen 50% since 1900 and is still rising. The share of people living on
less than $1 a day (in inflation-adjusted terms) has dropped to 14 percent from
42 percent as recently as 1981. A typical resident of India is only as
rich as a typical Briton in 1860, for example, but has a life expectancy more
typical of a European in the mid-20th century. The spread of knowledge, about
public health, medicine and diet, explains the difference.
However, when we delve into
the data more closely, there is a less optimistic story. Martin
Kirk and Jason Hickel were quick to take the Gates’ to task on
the arguments in their letter. The Gates “use figures based on a $1.25 a
day poverty line, but there is a strong
scholarly consensus that this line is far too low…..Using a poverty
line of $5 per day, which, even the UN Agency for Trade and Development suggests
this is the bare minimum necessary for people to get adequate food to
eat and to stand a chance of reaching normal life expectancy, global poverty
measured at this level hasn’t been falling. In fact, it has been increasing –
dramatically – over the past 25 years to over 4bn people, or nearly two-thirds
of the world’s population.”
The World Bank has now raised its
official poverty
line to $1.90 a day. But this merely adjusts the old $1.25 figure for
changes in the purchasing power of the US dollar. But it meant that
global poverty was reduced by 100m people overnight.
And
as Jason Hickel points out, this $1.90 is ridiculously low. A
minimum threshold would be $5 a day that the US Department of Agriculture
calculated was the very minimum necessary to buy sufficient food. And
that’s not taking account of other requirements for survival, such as shelter
and clothing. Hickel shows that in India, children living at $1.90 a day
still have a 60% chance of being malnourished. In Niger, infants living at
$1.90 have a mortality rate three times higher the global average.
In a 2006 paper, Peter Edward
of Newcastle University uses an “ethical
poverty line” that calculates that, in order to achieve normal human life
expectancy of just over 70 years, people need roughly 2.7 to 3.9 times the
existing poverty line. In the past, that was $5 a day. Using the World
Bank’s new calculations, it’s about $7.40 a day. That delivers a figure of
about 4.2 billion people live in poverty today. Or up 1 billion over the past
35 years.
Now other experts argue that
the reason there
are more people in poverty is because there are more people! The
world’s population has risen in the last 25 years. You need to look at
the proportion of the world population in poverty and at a $1.90 cut-off, the
proportion under the line has dropped from 35% to 11% between 1990 and 2013. So
the Gates’ were right after all, goes the argument. But this is
disingenuous, to say the least. The number of people in poverty, even at
the ridiculously low threshold level of $1.25 a day, has increased, even if not
as much as the total population in the last 25 years. And even then, all
this optimistic expert evidence is really based on the dramatic improvement in
average incomes in China (and to a lesser extent in India).
In his paper, Peter Edward
found that there were 1.139bn people getting less than $1 a day in 1993 and
this fell to 1.093bn in 2001, a reduction of 85m. But China’s reduction
over that period was 108m (no change in India), so all the reduction in the
poverty numbers was due to China. Exclude China and total poverty was
unchanged in most regions, while rising significantly in sub-Saharan Africa.
And, according to the World Bank, in 2010, the “average” poor person in a
low-income country lived on 78 cents a day in 2010, compared to 74 cents a day
in 1981, hardly any change. But this improvement was all in China. In
India, the average income of the poor rose to 96 cents in 2010, compared to 84
cents in 1981, while China’s average poor’s income rose to 95 cents, compared
to 67 cents. China’s state-run, still mainly planned, economy saw its
poorest people make the greatest progress.
Poverty levels should not be
confused with inequality
of incomes or wealth. On the latter, the evidence of rising
inequality of wealth globally is well recorded and it’s the same
story. If you take China out of the figures, global inequality, however,
you measure it, has been rising in the last 30 years. The global
inequality ‘elephant’ presented by Branco Milanovic found that the 60m or
so people who constitute the world’s top 1% of income ‘earners’ have seen their
incomes rise by 60% since 1988. About half of these are the richest 12% of
Americans. The rest of the top 1% is made up by the top 3-6% of Britons,
Japanese, French and German, and the top 1% of several other countries,
including Russia, Brazil and South Africa. These people include the world
capitalist class – the owners and controllers of the capitalist system and the
strategists and policy makers of imperialism.
But Milanovic also found that
those who have gained income even more in the last 20 years are the ones in the
‘global middle’. These people are not capitalists. These are mainly
people in India and China, formerly peasants or rural workers have migrated to
the cities to work in the sweat shops and factories of globalisation: their
real incomes have jumped from a very low base, even if their conditions and
rights have not. The biggest losers are the very poorest (mainly in
African rural farmers) who have gained nothing in 20 years.
The empirical evidence
supports Marx’s view that, under capitalism, an ‘amiseration of the
working class’ (impoverishment) would take place, and refutes the
Gates’ Letter that things are getting better. Any improvement in poverty
levels, however measured, is down to rising incomes in state-controlled China
and any improvement in the quality and length of life comes from the
application of science and knowledge through state spending on education, on
sewage, clean water, disease prevention and protection, hospitals and better
child development. These are things that do not come from capitalism but
from the common weal.
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