Combating Poverty: Hope for the Future?
Combating Poverty: Hope for the Future?
We will spare no effort to free our fellow men, women, and children from the abject and dehumanizing conditions of extreme poverty.
—UN Millennium Declaration, New York, September 2000
How effective has the international community been in combating global poverty throughout and since the twentieth century? The answers—for there are many—are varied and surprising. Some experts estimate that society is well on its way to achieving the United Nations' Millennium Development Goals, which, among other things, strive to cut extreme poverty rates in half by the year 2015. Others say those estimates are overblown and the reality is far more grim. In the early twenty-first century certain natural and man-made events—including earthquakes, hurricanes, and wars—have put poverty at the forefront of international consciousness, while television and the Internet have allowed everyone to witness the experiences of the poor like never before. New anti-poverty campaigns have been developed, some headed by renowned business people or celebrities. Charitable giving reached record highs, especially in the wake of the natural disasters of 2005. Nevertheless, poverty persists in every country in the world. As explained in Chapter 2 of this book, the reasons are complex and the questions are at times unanswerable. However, to fully understand the problem of poverty, we must see where we have been to determine where we are going.
POVERTY IMPROVES … OR DOES IT?
Overall rates of global poverty dropped in the last few decades of the twentieth century. Notably, the rate between 1990 and 2001 fell from 28% to 21%, according to the World Bank in its overview "Understanding Poverty" (http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/0,,contentMDK:20153855∼menuPK:373757∼pagePK:148956∼piPK:216618∼theSitePK:336992,00.html). The World Bank also notes that human development indicators (which seek to gauge the health, income, education, and security of a population) have also generally improved in low- and middle-income countries. In 1980 the overall rate of infant mortality was eighty-six per 1,000 live births; in 2002 it was sixty per 1,000 live births. Average life expectancy rose from sixty to sixty-five years. In addition, literacy rates improved between 1990 and 2002, from 78% to 83% for adult males and from 62% to 70% for adult females.
All of this has come as good news to those who work to fight poverty. More and more international efforts have been organized in recent decades to address the problems of the poorest among us. Individuals with widely varying backgrounds and interests have joined together in support of both governmental and nongovernmental actions that may improve the living conditions of the poor and, indeed, eventually eradicate poverty altogether. However, while the world certainly has seen an overall improvement in rates of poverty and poverty-related issues, success has been uneven and hampered by serious setbacks. One devastating disease, such as AIDS, can obliterate the economy of a low-income country. One violent conflict can crush any human development advances that might have been achieved. Even in the United States, one catastrophic event, such as Hurricane Katrina, can bring social and economic devastation to an entire region for years or even decades.
In his 1964 State of the Union address, President Lyndon B. Johnson declared war on poverty in the United States. At the time, the U.S. poverty rate was about 25%. Johnson hoped to introduce a massive social welfare program that would be the hallmark of his administration's "Great Society." Congress passed the Economic Opportunity Act (EOA) later in 1964, one the few remaining legacies of which is the early childhood development program Head Start. By the 1980s public resentment against those who received the welfare benefits created by Johnson was beginning to rise, and the EOA was slowly being dismantled. In the 1990s President Bill Clinton declared an end to "welfare as we know it" when he signed into law the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (also known as "welfare to work"), which critics argued signaled the official abandonment of the war on poverty and the beginning of the war on the poor in the United States.
Internationally, the adoption in 2000 of the Millennium Development Goals by the United Nations (UN) as a way both to track progress and to set expectations on poverty and human development appeared to mark another shift in thinking on the subject. With their clearly outlined goals and target date of 2015, the Millennium Development Goals were viewed as a commitment to improving the lives of the poor and marginalized around the world. According to some observers, if poverty rates continue to decline at the pace they have since 1990, the Millennium Development Goal of halving extreme poverty and hunger by 2015 will have been achieved.
Others disagree, however. Jan Vandemoortele argues in Are We Really Reducing Global Poverty? (July 2002, http://www.undp.org/poverty/docs/arewereally-reducing-gobal-poverty.pdf) that the apparent decline is deceptive because of the dramatic drop in poverty rates in China and India, which skew the numbers for the entire developing world. Vandemoortele points out that poverty rates have not declined in the regions of sub-Saharan Africa, Latin America, and the Caribbean or in the Middle East and North Africa. Vandemoortele states that "when excluding East Asia, the average proportion of income-poor in developing countries declined less dramatically—to 33 per cent in 1998, down from 35 per cent in 1990. At this pace, poverty will not be halved by 2015; it will only be one-quarter below its level in 1990."
Other researchers concur. Revisiting some of the issues covered in Chapter 1 of this book, Sanjay G. Reddy and Thomas W. Pogge of Columbia University write in their unpublished paper "How Not to Count the Poor" (October 29, 2005, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=893159), "The World Bank's approach to estimating the extent, distribution and trend of global income poverty is neither meaningful nor reliable." One of the greatest controversies over the question of whether rates of poverty have actually dropped since 1990 is about the widely accepted method of counting the poor using one dollar a day as the basis. Reddy and Pogge's main argument involves the World Bank's revision of the one dollar a day measurement to $1.08 a day at 1993 purchasing power parity (PPP; see Chapter 1 for further explanation of purchasing power parity). They explain:
In 1999, applying its method with the old ($1/day PPP 1985) IPL [international poverty line], the Bank reported very similar poverty rates for Nigeria and Mauritania of 31.1% and 31.4% respectively. In 2000, applying its method with the new ($1.08/day PPP 1993) IPL, the Bank reported poverty rates for Nigeria and Mauritania of 70.2% and 3.8% respectively. Depending on which PPP base year is used, Nigeria's poverty rate is either slightly lower or 18 times higher than Mauritania's!
The World Bank concedes that there are problems with existing measurements but dismisses the idea that its methodology distorts the number of people living in poverty over time. For their part, Reddy and Pogge maintain that there are better, more accurate ways to decide who is poor and what constitutes poverty, as well as to see trends in poverty over time.
Another trend is highlighted in A Compendium of Inequality: The Human Development Report 2005 (October 2005, http://www.globalpolicy.org/socecon/inequal/2005/10compendium.pdf), in which Jens Martens examines the purpose and impact of the United Nations Development Program's 2005 Human Development Report. Martens discusses a significant finding of the 2005 report: since 1985 fifty-three out of seventy-three countries for which statistics exist have seen an increase in social and income inequality. This phenomenon is occurring in countries of all economic levels, including the United States. Only nine countries, representing just 4% of the world's population, have experienced a narrowing of the gap between rich and poor. The poorest 40% of the global population earns 5% of overall income, while the richest 10% earns 54% of overall income.
In its report Growth Isn't Working: The Unbalanced Distribution of Benefits and Costs from Economic Growth (January 2006, http://www.neweconomics.org/gen/uploads/hrfu5w555mzd3f55m2vqwty5020220061129 29.pdf), the New Economic Foundation (NEF) argues that the world's poorest people in the lowest-income countries bear a disproportionate financial burden for the consumption patterns of the wealthy. In a practical sense this means that global economic growth actually causes environmental degradation, promotes social inequality, and skews the distribution of wealth toward those who need it the least, particularly within low-income countries. Regarding the importance of money distribution, the NEF writes:
Growth calculations take no account of the distribution of income. National accounts treat one dollar of income identically, whoever receives it. This is clearly unrealistic and counter-intuitive: the effect of an additional $100 on the well-being of a household with an income of $100 is clearly far greater than for a household with an income of $1 million. As a result, the effect of a given change in aggregate income on well-being is critically dependent on whose income is increased. This means that from a well-being perspective, the incomes of the rich are systematically over-valued at the expense of the incomes of the poor.
Furthermore, the NEF reports, from 1981 to 1990 the share in global per capita growth of those living on less than one dollar per day was just 2.2%; by the period 1990–2001 the proportion had shrunk to less than 1%. From 1981 to 1990 the share in global per capita growth of those living on less than two dollars per day—nearly half the earth's population—was 5.5%; from 1990 to 2001 it was down to just 3.1%. The NEF explains that for every $166 of world economic growth in the 1990s, just one dollar went toward the first Millennium Development Goal of cutting extreme poverty and hunger in half by 2015.
In The Scorecard on Development: Twenty-five Years of Diminished Development (September 2005, http://www.cepr.net/publications/development_2005_09.pdf), Mark Weisbrot, Dean Baker, and David Rosnick of the Center for Economic and Policy Research contend that low- and middle-income countries have experienced an overall decline in both economic growth and human development since the 1980s. The report examines progress in five income quintiles (categories) of low- and middle-income countries in two time periods: 1960–80 and 1980–2005. Overall growth in gross domestic product (GPD) declined for all quintiles except for the bottom one (with average annual per capita income of $355 to $1,225), which saw a slight average annual growth, from 1.7% to 1.8%. Weisbrot, Baker, and Rosnick note, however, that the presence of China and India in this bottom quintile weights the results toward growth; without the growth of those two countries, the entire quintile would have experienced overall decline. The fourth quintile experienced the most dramatic decline in economic growth, from 2.4% annually in the period 1960 to 1980 to just 0.7% from 1980 to 2005.
Whether caused by or the cause of the economic decline among poor countries, a parallel decline in development indicators, such as life expectancy and infant mortality, was experienced by most countries. The bottom four quintiles all saw a decline in the rate of increase of life expectancy. In the poorest group, which has an average life expectancy of thirty-one to forty-four years, life expectancy increased an average of 0.4% per year from 1960 to 1980 but dropped to an average increase of 0.24% from 1980 to 2005. The biggest drop came in the second-poorest quintile (with life expectancy averaging forty-four to fifty-three years), where average annual life expectancy increased at a rate of 0.56% from 1960 to 1980 and just 0.03% from 1980 to 2005. Similarly, infant and under-five mortality also decreased at slower rates in all quintiles in the later period, most significantly in the fourth quintile, where the rate of infant mortality fell by an average of 2.6 per 1,000 live births in the earlier time period but was down to 1.3 per 1,000 in the later period.
The organization Social Watch International agrees that the world is not on target for achieving the Millennium Development Goals. In its Social Watch Report 2005 the group maintains that progress is occurring at just half the pace it should to meet the goals. Social Watch states that "three out of four countries for which data are available performed worse in the last fifteen years than they did in the 1970s and 1980s" in reducing child mortality—a trend that extends to almost all human development indicators, according to Social Watch. Despite some of the successes of globalization in increasing overall global wealth, extreme poverty is actually increasing in sub-Saharan Africa, Latin America, the Middle East, eastern Europe, and Asia, although, as with all other groups reporting on poverty, Social Watch points out that the progress in India and China—as well as in Vietnam—makes the overall Asian region appear to be doing better than it actually is.
ANTIPOVERTY CAMPAIGNS CHAMPIONED BY THE RICH AND FAMOUS
In spite of the above evaluations, many people would say that there is reason for hope. While the wealthy have always taken on charitable causes to support, early in the twenty-first century the issue of poverty came to the fore when a rock star and a business couple joined together to pressure the world's wealthiest countries to take action. In December 2005 Time magazine named the rock singer Bono, of the band U2, and Microsoft's Bill and Melinda Gates its Persons of the Year for their work combating poverty and disease. The Time issue, which garnered much media attention, called the trio "the good Samaritans" and noted the unlikely juxtaposition of the three celebrities, who on the surface appear to have little in common.
Long known as the wealthiest man in the world—with a personal fortune of $46.5 billion, according to www.msnbc.msn.com ("Time Names Gateses, Bono 'Persons of 2005,'" December 18, 2005, http://www.msnbc.msn.com/id/10516674/)—Bill Gates, along with wife Melinda, created the Gates Foundation in 2000 with an endowment of $29 billion. Initially, the foundation's focus was on public health and education programs. However, a meeting in 2002 with Bono led to a partnership. Bono had been involved with poverty and AIDS campaigns since the mid-1980s, when he agreed to join Live Aid, the group of singers and musicians who performed to raise money for famine relief in Ethiopia. In a November 2005 interview in Rolling Stone (Jann S. Wenner, "Bono: The Rolling Stone Interview," November 3, 2005, http://www.rollingstone.com/news/story/8651280/bono/), Bono explained the experience he and his wife had when they traveled to Ethiopia after Live Aid:
We worked in an orphanage. We lived in a little tent. The camp was surrounded by barbed wire. Woke up in the mornings as the mist lifted, and watched thousands of Africans, who had walked all night with the little belongings they had, coming toward us to beg for food and their life. We saw the everydayness of despair. People would leave their children in rags, some would be alive, some wouldn't. For a couple of kids from the suburbs, it was a very overwhelming experience…. You promise that you'll never forget … but you do. You get back to your life, to being in the band. But something in the back of my mind told me there's something here I don't fully understand—but that I will, at some point in my life, be able to help those people.
Part of the solution to ending poverty, according to Bono and others, lies in canceling the international debts of poor countries. With that end in mind, he founded the organization Debt, AIDS, Trade Africa (DATA) and joined in the international ONE: Campaign to Make Poverty History, which was founded by nongovernmental organizations including Oxfam International, DATA, CARE, Save the Children, and the International Rescue Committee. A hallmark of the ONE campaign was a 2005 public service announcement that featured celebrities and public figures as varied as Brad Pitt, Mos Def, and Pat Robertson.
In June 2006 Warren E. Buffett, founder of the Nebraska-based insurance company Berkshire Hathaway, Inc., and one of the world's wealthiest people, announced his plans to donate 85% of his $44 billion fortune—$37.4 billion—to charitable organizations. Most of the money was to be directed to the Gates Foundation. At a June 26, 2006, function at the main branch of the New York Public Library in Manhattan, where he appeared with Bill and Melinda Gates to discuss the arrangement, Buffett commented: "I'm not an enthusiast for dynastic wealth, particularly when six billion others have much poorer hands than we do in life," alluding to his own and the Gates's immense financial success in contrast to much of the rest of the world's population (Jeremy W. Peters, "Buffett Always Planned to Give Away His Billions," New York Times, June 26, 2006).
END OF POVERTY?
In December 2005 the renowned economist Jeffrey Sachs, the head of the Columbia University Earth Institute and the director of the UN Millennium Project, published his book The End of Poverty: Economic Possibilities for Our Time. Sachs, who has been described as a "rock star economist," declares that, if all parties cooperate, extreme poverty can be entirely eliminated by 2025. Using a nine-point plan, Sachs proposes that wise investment, in the form of foreign aid, in the health systems and infrastructure of low-income countries is the key to ending poverty. In particular, Sachs claims his goal can be met if wealthy countries at least double their annual aid contributions. In the case of the United States aid would quadruple, from one-eighth of 1% of annual GDP to 0.7% of GDP. This is the increase agreed to by President George W. Bush, who set up a Millennium Challenge Account in 2002 to channel funds to low-income countries. As of 2006, however, the 0.7% goal had not been met.
Critics of Sachs's ideas say that programs emphasizing foreign aid to low-income countries have been ongoing since the 1960s, with few lasting results, and they point out that Sachs does not appear to take into account the widespread government corruption in poor countries that usually prevents aid from reaching the people who need it most. Additionally, Sachs's detractors maintain that his past interventions in Poland and Russia during those countries' political upheavals in the 1990s led to economic devastation, especially in Russia, where Sachs helped to institute what has become known as the "shock therapy" solution to stabilize an economy in transition. Economic shock therapy calls for the sudden end to price supports and trade barriers, which, in the case of the former Soviet Union, was meant to convert the nation from communism to a free market society. In Russia, the sudden change caused widespread unemployment and the collapse of their public health system, among other problems, and critics faulted the therapy as being too harsh or as not having been implemented properly.
Nonetheless, despite the drawbacks of his proposed program to end poverty—some commentators have called him an overly self-confident dreamer—almost everyone agrees that things could hardly be worse for the poor. And most believe it is worth giving Sachs's ideas a try. If Sachs is correct at all, millions of lives could be saved every year. In his book Sachs sums up his hope for ending poverty: "Great social forces are the mere accumulation of individual actions. Let the future say of our generation that we sent forth mighty currents of hope, and that we worked together to heal the world."
Another noted economist, William Easterly of New York University, disagrees completely with Sachs and his admirers. In his 2006 book The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good, Easterly argues that the global program of foreign aid does far more harm than good to poor countries because it is based on a fundamental misunderstanding of the cultures and governments it purports to help. Specifically, according to syndicated columnist David Ignatius's review of the book ("Paved with Good Intentions," May 21, 2006, http://www.washingtonpost.com/wp-dyn/content/article/2006/05/18/AR2006051801085.html), Easterly believes that the biggest mistake made by the governments of industrialized countries who continually provide foreign aid "is that they are 'Planners,' who seek to impose solutions from the top down, rather than 'Searchers,' who adapt to the real life and culture of foreign lands from the bottom up." Easterly encourages this bottom-up approach wherein low-income countries are responsible for creating and running their own self-sustaining programs to address poverty.
A former World Bank development economist, Easterly is harshly critical of that organization's programs, along with those of the International Monetary Fund and other groups that promote increased globalization along with foreign aid. Easterly points out that the most economically successful lower-income countries—China, Thailand, and South Korea—are those that have never been colonized and, therefore, have been allowed to develop political and economic programs naturally.
Still, as op-ed New York Times columnist Nicholas Kristof points out in "Foreign Aid Has Flaws. So What?" (June 13, 2006), many antipoverty and development programs imposed in the top-down approach that Easterly rejects have been enormously successful. "Eradicating smallpox and reducing river blindness have improved the lives of more people for less money than almost any investment imaginable…. So let's not shy away from a conversation about the effectiveness of aid. The problems are real, but so are the millions of people alive today who wouldn't be if not for aid."