World Poverty: Too Little Too Late.

A trinity (not the Holy) of influential bodies:  the World Bank (WB), United Nations (UN) thCAO34NGVand the International Monetary Fund (IMF), aided by an army of bureaucrats have set a goal of seriously denting the sheer number living in ‘extreme’ poverty by 2030. Ending world poverty is an admiral aim which deserves acclamation and thoughtful support.

A High Level Panel of the UN met recently, April 2013, to look back at the achievements of the Millennium Development Goals, (MDG’s) set in 2000. According to the blurb, “…the panel met with a sense of optimism and deep respect for the Millennium Development Goals.” They applauded:

  • The fastest reduction in poverty in human history. (China & India)
  • 0.5bn fewer living below the $1.25 threshold.
  • Child deaths down 30%

The panel set a new challenge, “Central to this is eradicating extreme poverty from the face of the earth by 2030.” Quite a task they have set themselves. Good luck.

During the course of the meeting they acknowledged the work of the MDG’s and the guiding ‘spirit’ of the organisation. Nonetheless, their objective is to go beyond the previous ‘goals’. In doing so they brought to our attention a few omissions of the previous cohort:

  • They did not focus enough on the poorest.
  • Were silent on conflict and its consequences.
  • Were quiet on good governance – (see later).

“Most seriously the MDG’s fell short by not integrating the economic, social and environmental aspects of sustainable development…” www.pdfownersguide.net  I would call that game, set and match to the new guys. The old guys have probably been pensioned off with a nice golden handshake.

David Hulme, had already savaged the thinking behind the MDG’s when he pointed out that while China and India were hailed for reducing ‘extreme’ poverty they, “…pretty much ignore[d] the MDG’s”. Moreover, the implementation was top-down and in need of better targeting. They may have taken notice of Hulme’s observations.  cpd.org.bd/Post/MDG/OPseries/SVOP2.pdf

Professor Rehman Sobhan was equally blunt when he suggests that the MDG’s,              “…address the symptoms not the causes of poverty”. post2015.files.wordpress.com/2013/04/sv-op/   Thus it would seem that the WB and its partners have pretty much wasted thirteen years!

If we examine the WB’s analysis of the situation June 2013, their target is to reduce ‘extreme’ poverty to 3% or below by 2030. They acknowledge that there are still 1bn people living in ‘deep’ poverty, while inequality was rising in developing countries. Certain restraints are also recognised vis-à-vis the need for ‘rapid economic growth’ and long term ‘structural changes’ and these must be sustainable for their targets to be achieved.

A number of points can be raised here: over the 13 years of MDG’s those in ‘extreme’ poverty declined by 0.5bn. Now the WB are accepting that 1bn people are still in ‘extreme’ poverty, so how many years will it take to ‘eradicate’ that number? There are only 17 years left till target day. Meanwhile ‘inequality is still rising’ in developing countries! The other puzzle is that while the UN wants to ‘eradicate’ extreme poverty, the WB is happy to reduce it to 3% or fewer. Is one being too ambitious or the other too cautious? Alternatively both may be flying as high as a kite!

Achieving their stated aim immediately comes under scrutiny when reminded that Oxfam warned that 100m more people face poverty because of price rises. Incredibly thCAJPIQU2the WB threshold of $1.25 does not include increases in fuel and food in its calculations, according to the charity. Mindboggling! It was such price rises that caused the food riots of 2007/2008. A report by the International Food Policy Research Institute (2011) found that the riots were similar to those of 1972/74 and warned that we can expect more. The causes were identified as: fuel hikes, bad weather, lack of investment and speculation. On that basis I would concur that more food crises will happen.

In 1981 the threshold was $1; it was not revised until 2005, twenty-four years later, to a paltry $1.25 a-day. Therefore it is obvious that no account is taken of inflation; yet inflation can have an unbearable impact on peoples’ lives. It would seem a callous disregard for the ‘nether’ people. Living standards can be grossly affected by continuous increases on goods. A few examples will suffice to make the point:

Kenya: 10%         Nigeria: 12.1%                   Argentina: 25%                 India: 9%         (all 2012)

The recent riots in Brasil are testament to how hard life can be to make ends meet, just to wake up and find the government wasting vast sums on prestige projects.

Those mandarins that quantify the figures and set the targets seem divorced from the reality of a day to day existence. Their only concern is the target; the people are amorphous. I have mentioned in previous posts on world poverty how they disavow the ‘nether’ people; those in the darklands between the $1.25 a-day and the $2 a-day. No one is sure of the number of ‘nether’ people but it is well over a billion. They should carry out a survey in the Kibera in Kenya or a favela in Brasil to ascertain what difference the 75 cents makes.

“…when the Tendulkar Committee was asked to review India’s poverty line, it recommended raising the line from USD 1 a-day to USD 1.25 a-day. As a result 189 million Indian’s moved below the poverty line. This suggests that moving people above and below a poverty line is a fool’s game that tells you little about the nature and sources of poverty”. Rehman Sobhan

Before greed walked the land in the guise of bankers’, success had come easy for the WB, the UN and the IMF. Both China and India had had an industrial spurt which resulted in millions of menial jobs being created and thus lifted millions beyond the ‘frugal’ threshold. An estimated 680 million alone in China transformed the poverty landscape and brought joy to the ‘trinity’; their panacea had been found. Then the bankers froze their assets!

The recession that began in 2008 may be “…the worst in 100years.” www.telegraph.co.uk/finance   It has lasted five years and may take another 5 years before trading makes a good impact on peoples’ lives. Geoffrey Moore, has documented, 3 depressions, 6 sharp recessions and 5 mild recessions in the period 1920 / 2000. The downturns vary in length from six months to 18 months and longer. www.econlib.org/  Based on these figures and the fact that 17 years remain before the ‘trinity’ target date, I would suggest we will experience a few more recessions by the due date.

While developed countries can cushion the hardship of those affected with their welfare system there is still a huge cost to the nation. “However, the size of today’s welfare state, some economists argue, is hindering recovery by piling state debts higher and preventing the economy from realising its full potential.” Telegraph, op. cit.  citing the National Institute of Economic and Social Research.

We have the ludicrous situation whereby big business is making big profits by farming out jobs abroad. Meanwhile, the state is borrowing money by the bag full to pay for the welfare system and the rest of us have to pay ever more tax to pay the debt off. Why don’t we give our tax to big business and they can keep the jobs at home!

Periods of prolonged unemployment can create a severe impediment to those who seek work or who lose the motivation to get back on the road again. The consequence is the gradual development of an underclass which has considerable cost implications further down the road.

The hopes of the trinity rest on the prerequisite of industrial growth and significant political changes. However, the economy is subject to a number of vagaries:

  • The frequency of recessions.
  • Speculation – see food crises.
  • Greed, the cause of the present depression.
  • Saving and spending habits of the people.
  • The influence of government.
  • The extent of monopoly V competition.
  • The environmental impact of unchecked industrial growth.

There seems to be a lack of coherent economic thinking on the part of the trinity: “It is perfectly possible to have economic growth without the creation of new jobs or improvements in working conditions.” www.huffingtonpost.com/michael-shank/  I have a

They will listen!

They will listen!

noted in World Poverty: America the NY Times of 2006, “…growth alone is an insufficient indicator of national well-being.” Meanwhile, it is hoped that India will be a major contributor to the eradication of extreme poverty; however, “…it will be a mediocre-at-best investment in destination for the next decade.” Proactiveinvestors.com

As the ‘trinity’ do not have the power to dictate the world economy, their scheme is as much at the mercy of the market as are the rest of us. Even with periods of sustained growth, poverty has persisted and will continue to, until the world economy is governed by a more visible ‘income distribution’. This is not simply a case of giving people money; wages will have to rise and profit margins will have to be lower.

A more credible income distribution on a world scale should be the prerequisite that the trinity promote. This can be achieved by an insistence on a minimum wage in each society. I’m sure the UN can pass a resolution of that nature and have enough bureaucrats to monitor the compliance to it. Or is that politically unfeasible?

In terms of political change / structural change required; that could take a whole lot longer than envisaged. We are dealing with base human traits. When selfishness and greed walk hand in hand the rest of us better watch out. Corruption is so embedded in several nations that it will take time and a high degree of sophistication to rid it from the land.

The WB must pay more heed to its own guidelines and drive them home with as much vigour as can be generated:

World Governance Indicators

  • Extent of democracy.
  • Political stability
  • Quality of public services
  • Private sector development
  • Rule of law
  • Control of corruption

These are building blocks to a better future and as such need to be forcibly applied where appropriate. However, the adherence to the principle of free trade is illogical in the interim as local industry needs a head start as it cannot compete with the conglomerates of the developed economies. As this could lead to countries becoming net importers which compounds poverty, does not relieve it or eradicate it.

How feasible is ‘sustainable development’? Can we have every nation working to full capacity making goods for sale? How many more cars, trucks and chimneys spouting out their muck can the environment endure? Is the end to extreme world poverty wishful thinking on a large scale? For 50 years and more the problems of poverty have been fought and there seems no end in sight. All the questions and answers are tied together, like a bunch of flowers, with a pretty ribbon, on which is inscribed, politician.

“Nearly a billion people entered the twenty-first century unable to read a book or sign their name.”             www.globalissues.org/article/26/poverty

Now here is a travesty; it is unconscionable that in the modern era a problem of such magnitude exists. “… now’s the time for your tears.” Bob Dylan: The Lonesome Death of Hattie Caroll. This is a prime cause of poverty and as such should be tackled with the utmost haste.

I came across a shellshock of a fact: “Schoolgirl absenteeism could be cut in half by simply providing free sanitary towels.”  en.wikipedia.org/wiki/Poverty#   It is too staggering for words.

We have a problem Houston. A problem identified by Charles Handy: “Group-think is dangerous because like-minded groups have like- minded ideas and find it hard amongst themselves to re-frame any situation.” The Age of Unreason (1989)

Even rock stars are not immune:

“…extreme poverty has been cut in half the last 20 years, and the facts show that we can get it to virtually zero within a generation-but only if we act.” Bono, U2

We have a host of organisations for by the ‘trinity’ who are trapped by the $1.25 a-day threshold and the spiel that accompanies it. Perhaps they need to be reminded:

“Minds are like parachutes. They only function when they are open.”  James Dewar, 1842-1923.

“Half the harm that is done in this world is due to people who want to feel important. They don’t mean to do harm-but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves.”  T.S.Eliot

World poverty will not taking the high road just yet.

 

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