World Poverty: Shotdown by Greed & Co.

One would have thought that the Great Recession 2008 to the present, would have sobered the World Bank and partners up after a heavy lunch and dinner, but no, they still plug the same innocent tale of eradicating or severely reducing world poverty by 2030. People with bad hangovers do work in mysterious ways.

The Banking Crisis that engulfed the World in 2008 did not have to be, a bit of foresight, a similar curb on greed and jealousy and the flood of the poor house may have been avoided. Those who pointed out the dangers were screaming into a deluge but a finger could not hold the dam.

Read the story of the boy and the dam.

http://www.pantheon.org/articles/l/little_dutch_boy.html

Angelo Mozilo, in an email pointed out that the subprime loan was, “… the most dangerous product in existence…” and the most toxic (Spring 2006). All the Devils Are Here.  McLean & Nocera p.219 He was a leading light in Countrywide Financial and would later agree to pay $67.5m fine. Go back a few years to Dick Pratt’s earlier warning “… the mortgage is the neutron bomb of financial products…”  He was the former Chairman of the Federal Home Loan Bank Board. Prof Nouriel Roubini began to warn that the bubble will burst in 2004. Chasing Goldman Sachs, Suzanne McGee p.218/9.  Some economists such as Paul Krugman were warning the bubble may burst as early as 2002.  Steve Eisman – hedge fund manager, “…witnessed the subprime market blow up in 1990s and was convinced the same would happen again.” www.economist.com/node/15716869  Michael Burry       “ …was convinced the housing market was going to crack…” 2005 McLean & Nocera.

th[3]Printiss Cox – Minnesota ’05 “This whole thing is going to collapse…” At a meeting of a group of Attorney Generals’ Cox pointed out that it was not in anyone’s interest to give loans that people couldn’t pay back. That as far back as 2002 they had seen the problem develop. However, they were looking at it from a consumers point of view whereas the ‘big boys’ saw only the $ sign.  “Greed has taken over”   David Rubinstein, cited in McGee p177

There was money to be made and they cared little for the consequences.

 ‘“They’d cut your ear off for a nickel, rip your throat out for a quarter, sell your grandmother for a penny, and sell two grandmothers for two pennies”’

quoted in  McLean & Nocera p.153 an opinion of Goldman Sachs.

If that was not shocking enough, Suzanne McGee, writes,

“Compensation policies across the Street rewarded bankers and traders for turning a blind eye to the needs of the money grid; regulators – agencies charged with ensuring that utilities operate in the public interest – ended up catering to Wall Street rather than trying to rein in its worst excesses”.

These two quotes are the essence of what happened in Wall St. that pushed the world into recession. Some parts of the world are still reeling from the impact and recovery will take some years yet. The banking crisis also opened a festering sore called the European Union (EU) that had been covered with a hospital load of plasters. Now it seems that the EU is significantly weak and may require emergency surgery.

 

We have had recessions before but this one exposed the extent of greed across the globe and therefore affected the long term development of several nations. Some economists, notably the Dallas Federal Reserve think the banking collapse may have left ‘permanent’ damage in its wake.

Millions more have been shovelled into poverty and with the prospects of recovery less than bright those millions will remain in dire straights. This fact alone spells the death knell of the World Bank’s desire to reduce the numbers in poverty to 3% or below. Yet, the WB purports to be able to achieve its goal. It reminds me of an old adage “Whom the gods would destroy, they first drive mad” Euripides (484 BC – 406 BC)

In 17 years the WB will perform a miracle or is it far more devilish than that? Their thCAF3KI0Vadherence to a $1.25 a day threshold is nothing more than a cheap gimmick, a conjurers trick; now you see it, now you don’t; a deceiving card trick. By keeping the threshold artificially low they ensure that most people over a set period will, by the aegis of economics, earn more. It is a cruel methodology to apply, every bit as callous as the bankers of Wall Street.

Without significant change in thinking and thus culture the future is every bit as bleak as the present. Yes, more people have more material goods and millions have a television that ensures their passivity. Nonetheless, poverty has not diminished, if anything the scale of it has increased. Poverty walks in many guises and inflicts pain in various degrees. It infects the poor with a pernicious virus that eats at the soul by ravaging their self-esteem and then pisses on their dignity.

In over 2000 years we have not progressed very far:

“Men decide far more problems by hate, love lust, rage, sorrow, joy, hope, fear, illusion or some other inward emotion, than by reality, authority, any legal standard, judicial precedent or statue”

Cicero (106 BC-43 BC). The Leaders Guide to Influence. Mike Brent and Fiona Dent.

We are the true cancer and we seem powerless to find a cure. We have witnessed greed abandon all moral ceremony in pursuit of the ‘fast buck’. As exemplified by the big guys of Wall Street.

“… there was no evidence that any of the institutions felt the slightest bit of remorse or any need for increased supervision or regulation”. McLean & Nocera

In March 2007, Fabrice Tourre the only ‘one’ charged and prosecuted for fraud sent an thCASYM14Semail that suggested the subprime bubble was about to burst:

“According to Sparks that business is totally dead, and the poor little subprime borrowers will not last long”. He went on to predict, “…the complete explosion of the industry” McLean & Nocera p.281. He worked for Goldman Sacks who were fined $550m  in 2010 but no guilt clause was attached to the verdict.

Goldman Sachs were the most criticized for selling their clients down the river. They were not alone in allowing clients to flounder in the rapids without a paddle; Merrill Lynch sold a package known as Norma, in early 2007. All three ‘rating’ agencies gave 75% Norma’s tranches a triple A rating. Before the deals were done, Norma had lost 20% and was worthless by December 2007. McLean & Nocera Therefore the ‘rating’ agencies are as much to blame as any one for their lack of supervision.

 How cheerfully he seems to grin,

How neatly spreads his claws,

And Welcomes little fishes in,

With gently smiling jaws.

Alice’s Adventures in Wonderland ch: 2

They were all at it, a guy named, John Paulson, at the time a little known hedge fund manager in January 2007 was to make $4bn gambling that the market would collapse. Magnetar, a company based in Chicago played a similar game. These guys made mega bucks predicting people’s misery.

A year after the bubble burst Goldman Sachs, “…reported the largest quarterly profit in its history in the summer of 2009…”.  Only weeks earlier they had paid back $10bn received in a Government bailout. By the third quarter of 2009 both, Goldman Sachs and J.P. Morgan Chase had posted profits of $8billion.

In 2010, Jamie Dimon of J.P. Morgan was paid $20m in wages and told people to get off his case. Meanwhile, Lloyd Blankfein of Goldman Sachs told a reporter of the Times in London that he was “doing God’s work”.  (McGee) In another case, Stan O’Neal, CEO of Merrill Lynch, walked away with a golden handshake of $161.5m only to get a job the following year at the Bank of America. Guardian .co.uk 2012

The government of America spent in excess of $700bn to bail out the banks. This was titled the Troubled Asset Relief Program (TARP). They certainly threw a tarpaulin over that fire. Unsurprisingly there was nothing for the poor, nothing for those facing foreclosure.

Since the banking bubble burst some 3 million families have suffered foreclosure; communities have been devastated, such as Jamaica New York. A local lawyer, Elizabeth Lynch suggests:  “These neighborhoods won’t come back for decades.” McLean & Nocera These people will take the pain for the lack of thought and foresight of the bankers; not forgetting the compulsive greed that fuelled their fire. Unemployment in the USA remains very high. In pre-crisis 2008 unemployment stood at 5%, in March 2013 it’s almost 8% or 12 million and 5.5 m added to the disability roll.

Europe is just as bad with unemployment reaching record levels in 2012. It fell for the first time in two years in June 2013 but: “…is still at a record high” Jonathan Loynes Capital Economics.  The economist, Wei Yao opines a slight upturn in the Eurozone but suggests that it: “…is still far too modest to suggest a clear upward trend”.  www.telegraph.co.uk/finance/economics

Therefore there is little light at the end of the tunnel. People in the developed nations are stuck in the darkness of that tunnel. Meanwhile governments’ have introduced austerity measures to curb their spending. In such a situation there is little hope that those in the developing economies will receive much business and thus unemployment and hardship will continue for them too.

To add to the misery, several commentators are predicting another recession quite soon. Nouriel Roubini, who warned about the subprime debacle in 2004, is now advancing a theory of a ‘global storm’ in 2013/2014. Jim Jubak at money.msn.com is also seeing a deep crisis around the corner. Economist, Martin Wolf tells us that the present austerity measures can lead to a recession and Paul Krugman shares that outlook.

Suzanne McGee, in her book warns that now the banks see the crash as behind them, “…the odds that another crisis will rock the financial system to its core are creeping higher again”. Her analysis is given credence by, Leo Tilman, a risk management specialist when he suggests that: ‘“Déjà vu is just around the corner”’.

The brokers sucked in the little guys by offering them mortgages they couldn’t afford. These ‘Ninja’ deals, in sector parlance mean: no job, no income applicants, hooked people in with wild promises and assurances that they could pay. The rationale was based on an interest rate of 1% and that house prices would continue to rise. When it all went belly up interest was 4%, while incomes started to decrease dramatically. House prices fell 30% and remain at that level. Folks couldn’t sell; trapped, they had to accept foreclosure.

According to the Dallas Federal Reserve the crisis could cost $14 trillion and continue to affect the economy for years. www.huffingtonpost.com/2013/07/30/financial  Government attempts to control the situation have been characterized as: pathetic, fundamentally flawed, terrible, and already watered down. Only one prosecution yet there is evidence that, “…prove bankers knew they were selling their clients garbage”. Stephen Grandel at www.finance.fortune.cnn.com/2013/08/02

Ordinary people are left with the dilemma of who they can rely on:

“Trust is the glue of life. It’s the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships”.

The Speed of Trust, Stephen M.R. Covey cited in, The Leaders Guide to Influence by Mike Brent & Elsa Dent. Who can we rely upon?

I believe it is clear that the World Bank and cronies cannot achieve their target of reducing or eradicating ‘extreme’ world poverty by 2030. The world economy is as fragile as a new born; it requires good succour and realistic parental guidance. However, as long as Wall Street adheres to the principle: “…me first, me foremost, and only me”.  McGee p354 Then we are all in for a double-edged white water rafting experience whether we like it or not. Can we rely on the politicians? Ha, ha, ha.

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.

 

World Poverty: America.

When studying the extent of world poverty one of the last places you might think to look is America.  Widespread poverty does exist in the USA; it may not have the same consequences as it would in an African nation but people feel it nonetheless. The other important point about America is that this is where both the United Nations and the World Bank are situated and from where they get the dominant philosophy that forms their thinking.

thCA99CH3UWest Side Story a film produced in 1961, was rightly a smash hit. It was a modern re-enactment of the Shakespearian play Romeo and Juliet with a twist that highlighted the predicament of immigrants and gang culture. One of the principal songs was ‘America’.

 

Girls: “I like to be in America. Ok by me in America. Everything free in America.”

Later:

Anita: “Life can be bright in America.”

Boys: “If you can fight in America.”

Girls: “Here you are free and you have pride.”

Boys: “As long as you stay on your side.”                                                                                                        www.filmsite.org/

The American dream: come to America and get rich. Everyone can be rich in America or that’s how the picture was painted and millions desperate to better their life chances followed that dream. Still today millions flock to the country with their hopes and aspirations tied in their Dick Whittington knapsack.

As with all dreams some turn sour and some remain a pipedream. For others the dream was realised and that fired continued hope. That is America, the most successful capitalist country in the world and likely to be for a long period to come. George Friedman: The Next 100 Years. There is always a ‘but’ because with every bright side there is a dark one and poverty fills the latter slot.

The Roaring Twenties gave way to the Great Depression of the 1930s when the reality of poverty haunted many American hearts. With the advent of the Second World War, th[9]an industrial surge spread optimism throughout the land and Americans thought they had defeated the blight of poverty. The hope did not last; in 1964 President Johnson, announced the ‘War on Poverty’. From that point on, by fits and starts the fortunes of the poor fluctuated.

Today, Americans wake up to one of the highest rates of poverty in the country’s history:  46.9m, the fourth consecutive increase, and a trend likely to continue. www.worldhunger.org quoting from www.census.gov/  As with everywhere else on the planet the recession brought about by the banking collapse of 2008 has added greatly to those seeking work and in need of welfare. However, poverty numbers have been growing for years.

“Five decades ago, we accepted Harrington’s thesis that the idea of poverty in a prosperous nation such as ours is a moral outrage. Today, poverty isn’t on the radar of our elected officials and few seem concerned that poverty is returning to levels not seen in decades.” Randolph T. Holhut, www.american-repoter.com/

  • Michael Harrington: The Other America: Poverty in the United States.

An equally damning point to the ‘moral outrage’ expressed above comes from a study by Dr Amy K. Glasmeier, www.povertyinamerica.mit.edu/ when she suggests that “The United States is a nation pulling apart to a degree unknown in the last 25 years.” The silver bullet of this analysis comes with the time frame, for the work was published in 2006, two years before the banking crisis of 2008. This would certainly make one ponder whether politicians were paying attention! In a qualifying statement she writes, “Families, children and working adults are making less income and enjoying fewer protections today.” The story continues, “Persons in the top 20 per cent of the population earn 19 times more than persons in the bottom 20% of the population.”

If this was an isolated report, you might question its validity and seek to authenticate the data used. Unfortunately for American politicians the report seems well balanced and is indicative of other information out there.

Medium [average] income has changed very little over the past 30 years. Adjusted for inflation, the middle-income family only earned 11% more in 2010 than they did in 1980, while the richest 5% in America saw their incomes surge 42%.” CNN.com

“Since 2000 the poorest Americans have only got poorer.” Huffingtonpost.com 2010/12/21

Further supportive evidence can be gleamed from Paul Osterman, labour economist at MIT;

“Over a period of time, it’s not that the American economy has necessarily performed badly, the country has grown richer but the shift in income has gone to the top.”

This gives credence to an earlier observation in the NY Times, “… growth alone is an insufficient indicator of national well-being.” (2006) World Bank please take note.

With unemployment doubling between 1990 / 2010, from 7,047,000 to 14,825,000, www.census.gov/ surely the most uneducated of politicians and government officials could work out that a steady increase in unemployment automatically generates a similar rise in welfare needs and that hardship is around every corner.  Or perhaps these guys are the ones picking up the fat pay cheques and so turn a blind eye. It certainly supports the view expressed by R.T. Holhut that; ‘…poverty isn’t on the radar of our elected officials.’

An obvious connection with the material above and whenever I have looked at poverty is one of ‘income distribution’. The criterion raises its ugly head every time in places like; Chile, Brasil, Kenya, Chad, and now the most prosperous of all nations, America. To emphasize the point, NBC news highlight an important fact, that nearly 25% of those considered to be living in poverty are in work. Their problem is  low wages, so low they fall below the poverty threshold. Inplainsight.nbc.com/

Another tantalising little statistic worth a mention is that 33% of the poor work in the service sector which is notorious for poor wages and part time work. A more damning statistic on income distribution comes from the ‘economist.com’ (Nov: 2012) when it reports that in the last three decades, “…hourly wages rose by a paltry 0.2% annually.” And from 2007 to 2011, wages fell for the bottom 70% of US workers. It would be interesting to know the inflation rate for that same period, though I doubt that wages kept pace.

Hopefully for many, poverty is a temporary phenomenon and soon they will find a better job or get a job. Sad to say, but for many others it goes from bad to worse. In a study by the university of Indiana it states that 4million have reported being out of work for 1 year or longer. (guardian.co.uk). It is extremely difficult to get back on the road again when you haven’t got a grub stake.

A face of the 1930s Depression

A face of the 1930s Depression

There are those who cannot help themselves such as children and mothers left with a growing brood. In 2010 it was reported that 16.4m children lived in poverty. npc.umich.edu/poverty/ . The economist.com gives a more depressing picture when it informs us that child poverty rates in America are higher than those of: Japan, Europe and Canada. There are a number of reasons for this, chief among them being ‘income distribution’. However,

 

Deteriorating family structure among the poor threatens to trap poor children at the

Modern day

Modern day

bottom of the income ladder for life.”

This chilling statement has been brewing in America for a long time and is supported by significant data from educational sources. A timely warning comes from, Timothy Smeeding, Institute for Research on Poverty, University of Wisconsin;

“We’re risking a new underclass.”

CNN.com brings some clarity of a ‘trap’ that the poor may stumble into with a set of figures on poverty rates;    couples:6.2%

single mothers: 31.6%                    single fathers: 15.8%

Today as always

Today as always

Such figures have been latched onto by one group; “By increasing work and marriage, our nation can virtually eliminate remaining child poverty.” www.heritage.org/  If only the world was so simple! While the statistics tend to lend a modicum of understanding to their view, with the high incidence of single parents; the figures cannot tell the whole story. We don’t know if a partner has died or just ran off because they could not handle the responsibility.

Moreover, it would be cretinous to suggest a mother become dependent on another man and furthermore, where do you find someone to take on that kind of responsibility? The second point made regarding ‘increasing work’; I am sure that there are a large number of people out there who would jump at the chance of a job, problem is, there’s not that many about. Fat cats have farmed them out to places such as China; are the boys at ‘heritage’ going to demand they are brought back?

A further observation must be made here on the epoch-making solution to ‘child poverty’. Imposing an illusion from a bygone era; no matter how much you hanker after it, is not a solution that will save tomorrow. It is reminiscent of chasing a rainbow’s end.

Suburbs are perhaps an unlikely place to find poverty as opposed to in rural areas and the ghetto but that is what is happening. A study, by the Brooking Institution, brought to our attention by Emily Badger, has shown that poverty is spreading deep into the suburbs. The Urban Institute are mapping the spread of the poor in many cities. www.businessinsider.com/poverty-in-america

The Economic Policy Institute have carried out a survey of 615 communities and found the cost of living to be more than double the threshold set by the government, based on a family of four.

Family of four: $23,497                  Single person: $11,172   (2012)                   www.census.gov/

Billions of dollars are spent trying to help people stand still. Food stamps alone are estimated to have cost $76bn in 2011, more than double the 2008 figure. More than $350bn is spent annually on programmes serving low income families. www.econlib.org/  Add the loss of revenue through tax receipts. Buying less and saving less. The cost of crime and medical care, all add up to a substantial sum. Who’s picking up the tab? Can such vast amounts of money actually hold back the economy from growing or do we just pile up the debt?

Looking up from the bottom of the ladder the United States does not seem as ‘united’ as some would like to think.  Poverty is making America into a divided society. That poverty is now nesting in the suburbs should act as a warning, for here resides the potential leadership of revolution. Politicians can pay heed or continue to camp out in the woods with their friend Bigfoot.

Detroit City, once the ‘motor city’ has filed for bankruptcy. (July 2013) Thousands of buildings lie derelict, crime has spiralled, and hope has wandered off. Manufacturing jobs that were the rock for so many breadwinners have been moved abroad to exploit the cheap labour. The once solid citizens must look elsewhere for recompense.

New songs may be sung of peoples troubles. The ‘Blues’ may return as a social force as minorities stagger from the force of the knock of poverty. I can hear the distant sound of Woody Guthrie

This land is your land. This land is my land

thCAQTGBZD From California to the New York island;

From the red wood forest to the Gulf Stream waters

This land was made for you and Me.

As families wake up in their downbeat jalopies; wondering where they can get a free meal and a wash: in some far off place other decisions are being made. The UN and the World Bank delegates having lunch in a 5 star venue***** are deciding how to end world poverty.

 

 

 

 

 

World Poverty: India and the World Bank

thCA3XI2NSIndia is beset with so many problems, it is quite difficult to

"Poverty is the worse form of violence."

“Poverty is the worse form of violence.”

know where to start. The country is a priority for the World Bank (WB) and its target of reducing world poverty to 3% or below by 2030 based on the recorded figure of 33% of the world’s poor living in the sub-continent. The Bank has stipulated that the number of people in poverty has been reduced; the problem is on whose figures do we rely?

Numerous surveys have been carried out on India and its poverty. Looking back to 2004/2005 we can see at first hand the dilemma with statistics and how they can be manipulated to suit a political agenda. The National Commission for Enterprise argued that 77% of Indians lived below the poverty line. In response the National Government revised the figures and as if by magic arrived at a figure of 60.5% in poverty. Around the same time BBC India put forward a 37.2% rate of poverty.

The dilemma is what criterion is used to define poverty and how is it to be measured. There are so many bodies out there each with their own political agenda; we may never get a cohesive response unless people force an agenda upon them.

Moving forward to 2009 the picture is just as confusing:

Official: 328m            Economic Survey: 710m                   World Bank @ $1.25: 488m

The disparity between the sets of figures is alarming. The government line of 328m

I see dignity in colour!

I see dignity in colour!

which it promoted to the people of India is massively out of kilter with the WB estimate of 488m. How can 160m people be lost in the ether of statistical analysis? It is an unequivocal statement from the Government of India that its credibility is more important than respect for the poor. The Economic Survey number may seem completely out of step but keep it in mind.

We now need to take another step forward to 2010 to find poverty at 29.8% UN, CIA, BBC, up to 32.7% for the WB and a 37% for economywatch.com. Don’t you just love those precise percentage fractions e.g. 29.8% – 32.7%. How can they be so precise and yet so different, it can only be a computer generated figure based on input data. So whose data is right? The CIA and the BBC accept the UN number and simply repeat it as gospel. How are we to know any different?

Two of the world’s top organisations UN & the WB and they can’t put their heads together and fathom a procedure that all can agree upon. Or is this a classic case of intellectual property, (measuring stick) being more important than a true understanding of how many poor people there are? Alternatively it could be more adverse; they might not have a clue! Ah, little boys and their competitive nature.

Confusion comes in many colours and in 2011 the picture of India can only be described as modern art. The UN Development Goals Report predicts a substantial reduction in poverty of 320m in India and China by 2015. A reduction from 51% to 22%: Here we go again, making promises that will not be kept. The UN must hope that people read the figures, feel good and quickly forget, without digesting the headline percentages.

It surely was a bad time for the UN office wallah because other indices contradict them:thCA7GXR8D

  • The world recession has plunged another 100 million Indians into poverty.
  • The Global Hunger Index states that hunger levels rose in India but fell in other developing countries.
  • More poor in India than sub-Sahara Africa.
  • Poverty in Orissa and Bihar are among the world’s most extreme.
  • 53% of children are undernourished. 2010/2011.

The list could be larger but carries sufficient information to cast reasonable doubt on the veracity of the UN’s crystal ball.

However, the government of India may give some succour to the UN with their poverty guidelines (2011) of 32 rupees a-day (64 cents) in cities and 26 rupees (52cents) against a $1.25 of the WB. Needless to say, but I must, using these numbers poverty can be quickly reasoned down. Critics do point out that the government figures are equivalent to a ‘starvation line’ and the poverty numbers are ‘cosmetic’. www.onlineindia.com/facts/poverty

Life does not get tougher.

Life does not get tougher.

An article in May 2012 highlighted that 60% of rural India live on less than R35 a-day but that the lowest 10% have to manage on R15 a-day. www.articles.economictimes.indiatimes.com/. From a different angle we are told that between 350 – 400m live below the poverty line and 75% are from the rural districts. When using the WB’s other determinant of $2 a-day the numbers leap to 830m from a population of 1.2/1.3 billion. (onlineindia.com)An inequitable dilemma for these people is that an estimated 40% are illiterate which suggest they have little hope in the short term of changing their circumstances.

Such numbers seem to incredible to be true but if we glance back to the 2009 ‘Economic Survey’ with its estimate of 710m then the figures might not be so fantastical after all. A further study by the, Oxford Poverty and Human Development Initiative, using the Multidimensional Poverty Index (MPI) generates a figure of 650m in poverty, 54% of the population of which 340m are characterized as in ‘severe’ poverty.

  • MPI includes several indicators: health, education, standard of living: access to: good sanitation, cooking fuel and water etc.

The litany of horror continues: in 2009 the United Progressive Alliance Government thCAZRCAA8promised to ensure ‘food security’ for all the people. Sadly they have rolled back the initial commitment and the system is failing. So much for ‘United’ and for ‘Progressive’! This is happening at a time when an estimated “63% of India’s population gets inadequate nutritional intake”. (June 2013) www.guardian.co.uk/global-development/ Note the figure of 53% of kids under nourished in 2010. Add the stink of 50% having no access to toilets, of 1600 dying every day from diarrhoea. Compound that with large numbers who have no access to running water or to electricity. All the figures above should act as a wakeup call to the politicians as to where their priorities must lie!

Is there a solution on the horizon? In 1996 the World Food Summit set a target to reduce undernourishment by 50% by 2015. I don’t know the total figure for undernourishment throughout the globe but by 2010 there were an estimated 925m that fitted under that umbrella. And it would seem they have failed India! In 1990 the World Summit for Children identified two microminerals: iodine and iron, and a micronutrient vitamin A as essential for good growth. “The Summit set goals for the elimination of these deficiencies.” (en.wikipedia.org/wiki/Micronutrient). Politicians love their ‘summits’ it’s just a pity they don’t have an effective follow up.

Mates

Mates

The story is taken up again in May 2012 in the city of Copenhagen in Denmark. Only 22 years later. The conference, named the Copenhagen Consensus had a panel of experts that included four (4) Nobel Prize winners in economics. Several research papers were commissioned to ascertain the most cost effective way to promote welfare. The premise was that they had a total of $75bn to spent on a given research piece. Sixteen studies warranted investment and the top of the list was micronutrients to include a zinc supplement as a treatment for diarrhoeal disease. In consequence a Micronutrient Initiative was set up based in Ottawa, Canada to research and bring forward a programme. We wait with bated breath.

India’s ability to help the WB to achieve its objective of reducing poverty to 3% or below is in jeopardy. Since 1981 the population of India has increased by over 500m. Economists argue that population increase by and of itself does not cause poverty but then there may be circumstances whereby it does. If you are born into a society that places barriers such as: illiteracy, caste system and a government that denies your existence; then it is hard to understand how a huge increase in population stymied by such cultural dams does not affect poverty.

The burden of poverty is not a state of mind that one can step out of. It is not a walk-in, walk-out spectrum; for many it is a cultural straitjacket. This is certainly the case with

Even the poor have self respect!

Even the poor have self respect!

India. If India is to progress in the 21 century then barriers, such as those mentioned above need to be smashed asunder.

Illiteracy and other cultural barriers have a further long term effect on the nation’s development that being the creation of a viable home market. With a population of 1.2/1.3bn a domestic demand could prove crucial to long term economic stability. The country has exhibited a real ingenuity from those already educated thus the prospects are enormous. At present India loses many of its highly educated to more enterprising nations

A significant barrier that may take longer to eradicate is corruption. India’s institutionalised predilection for corruption does not augur well for the future.

“From an individual’s point of view, time and capital are better spent making political connections and offering bribes, both of which are more lucrative and efficient than making an honest living.” Jayant Bhandari, www.proactiveinvestors.com. The light cannot be more focussed or more revealing and thus more damning than that statement.

On a positive note, Jagdish Bhagwati, an economics professor writes:

Economic growth fuels demand for labor, so low wages in developing countries are bound to rise, as they have in China.” www.news.columbia.edu/global/3180

It is a point of view that would sit well at the table with WB dignitaries. However, putting all your eggs in one basket is not always a good idea. India has had an industrial spurt and little has changed. Output is now slowing down: in 2007 GDP was 9% presently it stands at 4.5% and inflation is running at 9% (CIA). Of course the drop in performance coincides with the world recession and that will account for some of the fall. Bhagwati’s analysis does not answer the question as to why India lags behind China in investment when wages in India are a quarter of what they are in China. One would have thought that the big companies keen to make a killing would cause a stampede. Unfortunately for India, “It will be a mediocre-at-best investment destination for the next decade.” (proactiveinvestors.com)

Equally damaging to the reputation of India is the extent of ‘black money’ brought to the fore by the Central Bureau of Investigation, (Feb: 2012). The issue was raised in the supreme court that the CBI believe a sum of $500 billion is being stashed away in tax havens by the rich and or corrupt rather than invest in their own country. Not much encouragement for foreign investors.

thCAEWBOHOIndicators suggest that India is not in a position to lead the field when the world economy picks up. Change is required. Top of the agenda is ‘corruption’ which can have a fatal effect on planning and development. Second comes ‘infrastructure’ which has reached breaking point and improvement seems a long way off. “Infrastructure investments are dominated by political manipulators corruption runs so deep.” Jayant Bhandari. The third partner in the transformation is education which is a prerequisite for a vibrant economy. All of which requires a massive cultural shift and a government strong enough to implement necessary change.

Two decades of an industrial spurt and many were talking of an emerging superpower. The WB and its acolytes were singing hallelujah as though they had discovered the ‘Holy Grail’: then came the world recession.

There is such a farrago of figures that no one is quite sure what is happening in India. The World Bank’s desire has come up against India’s cultural backwardness and the alchemy will not work. World poverty is as stubborn as a politicians statistical spin.

 

 

 

World Poverty: And Latin America.

thCAW6GJQ3Latin America is a land of extreme contrasts. According to thCARS9HJEthe World Bank (WB) poverty in Latin America has dropped significantly. The United Nations (UN) joins the flag waving celebrations for a major reduction in poverty between 1990 and 2010, down from 48% to 31%. That means there are only 177 million poor people in Latin America now. Figures of a similar nature allow the WB to claim, “Today we can safely say that moderate poverty in Latin America has dropped by 73 million since 2003.” The figure is significant and should be celebrated but with a dash of caution.

A few issues can be raised here; we already know that the $1 a-day threshold is, (upped to $1.25 in 2005) by the Bank’s own admission a ‘very frugal’ means of measuring poverty and, some would say quite unrealistic. Unfortunately, until we have a universally agreed criterion for measuring poverty all figures issued by the various bodies are suspect, or to be blunt, unbelievable. The second point to be raised here is the use of the term ‘moderate’. This differs from the WB usual catchphrase of ‘extreme’. The drop in poverty is good news and the Bank it would seem just wanted to join the party.

What constitutes ‘moderate’ poverty?  By the WB own definition anyone living on less than $2 a-day, which contrasts with the less than $1.25 a-day threshold of ‘extreme’ poverty. The difference between the two figures is such a pittance that it is a concern that they are used to measure a person’s place in society. I am sure that in the ‘favelas’ of Brasil there are folks living side by side, sharing the desperate struggle to survive on slightly different incomes. I would surmise that in every shanty town and slum throughout the developing world and in slums everywhere a similar situation prevails. Does the extra few cents mean that those who have it get better access to health, education and a higher standard of living? They share the slum but statistically one is in a superior position vis-à-vis the other? Should I laugh or cry?

In Brasil the annual cost of living increase in the minimum wage contrasted with the static $1.25 a-day threshold raises a serious question:

2009 – R$ 465                 2010 – R$ 545,      2012 – R$ 622,                    2013 – R$675.

How realistic and reliable is the ‘threshold’? Surely over a period of time the minimum wage will surpass the $1.25 a-day?   As the ‘threshold’ will remain constant until 2030, it’s inevitable that most will have moved above the threshold but not out of poverty because prices will have continued to rise. Nonetheless, statistically they will be out of poverty according to the World Bank. Go figure!! A further point needs to be considered and that is inflation; in 2009 you would get 60 centavos in exchange for the US$, in 2013 you only receive 45c.

thCAF7XZLLWealth distribution is a key element of many economies in Latin America. Whilst some nations may lay claim to a reduction in poverty rates the income disparity makes them divided societies. “Latin America is the most unequal region in the world.” (Wikipedia.org). In 2007 the WB itself pointed out that the richest 10% earn 48% of income whilst the lowest 10% manage 1.6% of the regions income.

A case in point is Chile, which according to the statistics is on an industrial surge. Unemployment is reported as 6.4% and the poverty rate as one of the lowest on the continent. Foreign investment of just over $28bn is a 60% increase on previous years. To add to the glowing picture the growth rate between 2003/ 2012 is a healthy 5% annually and inflation is presently at a low of 2.8%. (CIA)

The downside is the income distribution, with the lowest 10% earning 1.5% of the nation’s wealth, while the top 10% have 43% of income. This lead the Organisation for Economic Cooperation and Development (OECD) to remark that the, “severe income inequality ranks as the worst…” of its members. Access to education is just as unequal as the distribution in wealth. These two factors will in the long run prevent Chile from sustaining its growth. To survive the country will have to accept greater equality or widespread intellectual migration and pray that the export market remains buoyant.

In Argentina the situation has already reached catastrophe level for the poor. It is reported that the inflation rate has surpassed the 25% mark. Thus unless wages and other forms of income are keeping pace then survival has just got desperate. “Inflation and import taxes have rendered many goods in Argentina overpriced.” It does not help the situation when the government, “…doctors its official economic statistics.” www.economist.com/blogs/americasview

There is hardly any point trying to analyse economic data if it has been doctored!

Columbia is similar to Chile in its income disparity. The World Bank warns that the country’s Gini coefficient at 0.587 in 2000 and 0.559 in 2010 gives it the dubious honour of being one of the most unequal places in Latin America by wealth distribution. A Gini coefficient of above 0.4 was deemed a dangerous level.

th[10]While Chile is experiencing a growth spurt, Brasil is having a bit of a downturn. The industrial growth rate for 2012 was thCAJC5OGO-0.3%. However, a more telling point economically comes from the figures for GDP, 2010 = 7.5%           2011 = 2.7%        2012 = 1.3%. The trend is notably downward. Another damning figure is the one for people living below the poverty line given as 21.5%. That is a high number by any standards. The situation is chronic in the north-eastern region with a reported 60% in poverty.

Official government figures take a more positive approach by suggesting that only 4.2% of the population live in ‘extreme’ poverty. Furthermore, a study by the Strategic Affairs Secretariat (SAE) in September 2012 maintains that 50% of Brasilians are now middle class. This is based on an income of: R$ 291 – R$1019, with the basic minimum wage running at R$675 it’s hardly surprising.

In contrast, a study by the Department of Statistics and Socioeconomics Studies makes the point that an income of R$2825 or 4 times the minimum wage is the minimum required for a basic living standard in Sao Paulo. It is also pointed out that food and drink prices increased by 13.5% between March 2011 & March 2012. Another increase was reported on the ‘basic basket’ in all but two cities. And to add salt to the wound industrial prices rose by6.8% over the past year. Fuel costs are also up.

Which study would you believe? Herein lies the problem with statistics and with government spin. Politicians can make statistics dance like a puppet at the hands of a master puppeteer. Every country can and do set their own poverty line. Our dilemma is who do we believe? What we can say is that millions of people are still living in poverty in Latin America and it does not look likely that their situation will change any time soon. That leaves the question as to how the WB will achieve its target of 3% or less living in ‘extreme’ poverty by 2030.

Brasil is renowned for the Mardi Gras and its football; both great to watch. Only a few years ago the future looked ever so bright as the country rose to be the sixth largest economy in the world. From the outside there was great expectations of Brasil, now it seems to have floundered somewhat. With such a high poverty level Brasil is going to find it very hard to grow its economy and for that growth to be sustained. Without a strong home base for its goods the country becomes more dependent on the export market.

The riots currently taking place throughout the country, with an estimated 1 million participating indicates just how fragile the situation is. A 20 centavo (6p) rise in bus fare was the decisive slap in the face for the people, who watched R$ millions being spent on prestigious programmes such as stadia for the world cup 2014. In 2007 the government promised that “…not a cent…” of public money would be spent on such projects, then changed tact and tried to force the people to pick up the tab.

It did not take long for the Government to reverse the transport price increase but this has not stopped the protests. The dam has broken and the peoples’ pent up anger lets the government know that the electorate want a better standard of living. There is a panic in the Brasilian government, evidenced by how quickly they responded to the bus fare hike and now promises of better transport throughout the country. More promises will follow if the protesters continue with their action.

Demands for better health care, better education, an end to corruption and greater transparency in government all point to a society of much higher standards of living and a democracy where people count. That is how Brasil will solve its long term economic problems; not by adhering to the narrow vision of the wealthy few. Listen!                       The protesters are speaking for the poor of the world.

The protests fit in with the Gini coefficient of the country which stands at 0.543, which takes it into the danger zone.  Not only is Brasil unequal in wealth distribution but is also a much divided society racially. Of those earning on or below the minimum wage 63% are black and 34% are white, this is also a considerable disparity. Unless significant changes are honed from the present demonstrations then it would seem that the favelas that surround all the major centres will be with us for a long time to come.

Based on the figures that have emerged, Latin America, it would seem, is more likely to explode in revolution than have a massive industrial surge that will slash poverty on a sustainable basis. The World Bank may be hopeful that their figure of 3% or below living in ‘extreme’ poverty can be achieved by 2030 but will life be any better for those in the poverty trap? The demands of the protesters in Brasil are the demands that should be universal for all people and until we achieve that goal world poverty will remain a plague!

World Poverty: Africa and the World Bank

 

Africa has a very distressing history and the future does not look much better. Therefore, the aspiration of the World Bank (WB) to significantly reduce poverty by 2030 would seem an impossible one.

thCA6SYPHQThere are too many agencies, too many do-gooders, each holding a fragment of a giant jigsaw puzzle and that fragmentation makes the overall task incredibly daunting. There is no joined-up thinking, no concerted effort to find a solution; each body, group or church may feel good about their actions but how many of these thoughtful people have thought to ask an African what is needed? Without a co-ordinated approach little will change.

Moreover, there is no organisation per se that could take charge; the World Bank, United Nations (UN), International Monetary Fund (IMF), G8 or G20, their approach and history is so rotted by politics that they can’t see the desert for the sand. I don’t have the answers but what I do believe is that a top-down approach will not work.

We must give the people the power and that entails spending big and over an extended period and the priority must be education. You must give the people the power to think for themselves and in doing so give them the power to rid themselves of the corrupt and useless.

Much of sub-Sahara Africa has become dependent on ‘aid’ and it may take several generations to overcome the dependency culture that has been allowed to embed itself. A further consequence of the ‘aid’ culture is the widespread corruption that permeates deep into all facets of government in various countries of the region.

Places like Chad are riddled with problems, e.g. 80% of the population is reliant on subsistence farming and agriculture accounts for 50% of the nation’s production. The main products are cotton, millet and peanuts. The country has a much larger bureaucracy than it requires and corruption is rife. Ongoing problems with instability through factional fighting and various armed groups jostling for power make it difficult to govern. Child trafficking for force labour and sexual exploitation is still common. The government does not have a law that bans such a despicable crime.

A very telling point is life expectancy at just 49 years. This figure clearly points to the thCAWDW0J8depth of poverty in the country. The other factor is the per capita household earnings, whereby the lowest 10% have 2.6% whereas the highest 10% have 31%, quite a disparity. (CIA) The pressure on the poor multiplies when we consider the high inflation rate, currently running at 5% annually.

You may think that Chad has enough problems to contend with; unfortunately the country has to cater for around 400,000 refugees as well. Most of the refugees have been forced out of the neighbouring region of Darfur in Sudan.

A promising development (or is it) is that Chad has oil. However, that has only highlighted the country’s desperate need for a better infrastructure network. It would be so easy to think, oh, Chad has oil, let’s build lots of roads and have thousands of trucks roaring around the country. Alternatively you may take the view that the situation allows for a huge ponder on what is economically and environmentally sustainable. A rail network might be a consideration.

Nigeria too has oil and it could be anticipated that the country would present an illuminating picture but that is not the case. While oil provides 95% of foreign revenue the country has been on the rack over many years due in part to internal squabbles, the struggles for power. The internal strife has prevented the development of beneficial infrastructure and necessary reforms in education and health. Thus 70% of the people live below the poverty line. Such poverty is unlikely to change any time soon due to the stark disparity in income between the top and bottom at 39% and 1.8% respectively. (CIA).

Perhaps because of its oil Nigeria has been bailed out a few times by the IMF. In 2000, the IMF gave Nigeria $1bn to help restructure its debt but they could not pay the loan back and where forced to leave the IMF in 2002. Nonetheless, in 2005 the IMF came back with a new substantial package of $18bn in debt relief and a further $12bn in repayment relief. (CIA)

Untargeted money does not always help. The poor in Nigeria have little hope of levering themselves out of poverty especially when inflation is running at a very high level: 10.9% 2011 but rising to 12.1% in 2012. Poverty entails a constant struggle to make ends meet but with inflation at such a high it must be extremely disheartening. To add to their misery a lack of human resources such as education and health provision makes raising their heads above the parapet a forlorn hope; or so it must seem. View the video. It’s really good!

http://www.globalissues.org/video/765/dumisani-nyoni-poverty-understood

 

Kenya, the largest economy in East Africa is not much better off. An estimated 75% are dependent on agriculture for their livelihood of which around 50% live below the poverty line. The country’s GDP growth has hovered around the 5% mark over the last 3 years. However, with inflation remaining at a high of 10% in 2012, prospects are not bright for the poor. As already stated, it is hard to survive when prices outpace a meagre income.

In 2010, $1 was equivalent to 79 Kenyan shillings by 2012 you needed 86 shillings to the dollar. Therefore the $1.25 a-day threshold of the World Bank becomes increasingly pernicious against such a background. The good news is that oil may have been discovered in 2012, well, we must hope it is good news though it has not brought much joy to the poor of Chad or Nigeria.

The bright beacons of Africa have faded. South Africa, where the freedom fighters overthrew apartheid, now stands accused of failing to look after the poor and of police brutality by their erstwhile supporters. The recent gunning down of striking miners is illustrative of where the new leadership place their priority. President Zuma, has only recently outlined the country’s next development plan, (24 June 2013). Their aspiration is to create 11 million new jobs by 2030. I wish them a lot of luck.

Zimbabwe, once a shining example of African potential now basks in a new glory; that of fast fading star. A clear indication of where unbridled corruption can lead. Where inflation is so high it is practically off the chart.

Several key issues flash there light consistently when looking at the problems that beset sub-Sahara Africa. As noted, poverty is on the increase and corruption is rife in several nations. Education is in need of vast investment over a protracted period as does the infrastructure in most of the countries of the continent. The problem is where to start? Should we operate with the heart or with the head? Can the two comfortably co-exist and how would that affect the distribution of funds into the continent?

Perhaps, we need to think of a today and tomorrow approach. Today, the short-term to consist of disaster relief and tomorrow as the long-term commitment to spend the overwhelming majority of funds on education and infrastructure as both of these can have a considerable effect on the former.Of course any projects would have to be done with indefatigable partners and that must include local people. The World Bank has praised the Chinese industrial development as a prerequisite for ending world poverty, however, there is little or no indication of such development in Africa.

Moreover, we must take cognizance of the points raised by Professor David Hulme, when talking about existing WB and other agency projects, “There is really no consideration given to how these goals and targets would fit into national processes.” Hulme goes on to add a damning summary of the effect of the previous Millennium Development Goal (MDG) that the WB is so proud of. He suggests that the MDG has not reached the elite or middle class of the rich world, but significantly has had no impact on the elite or middle class of the developing countries. If the latter is the case, the WB has a critical barrier to overcome in trying to achieve its latest target. In essence, what Hulme is accusing the WB of is that they are operating in a vacuum.

www.cpd.orgbd/PostMDG/Op

 

Without local leadership to implement and to maintain and continue to stimulate their individual economies, change cannot be fostered. Without change there can be no end to world poverty!

This is the third in a series that challenges the assumption of the WB to cut poverty to 3% or less by 2030!

 

World Poverty: We are ALL Digits.

thCAX5TE0TThe World Bank (WB) deals in statistics; people it would seem are a function of the stats. Judgements will be made, decisions will be taken and resources allocated on the basis of the figures. World poverty is but a number and numbers make for understanding, or do they? By its own admission the WB accepts that the poverty threshold of $1.25 a-day is “very frugal”. Nonetheless the WB holds fast on the figure; meanwhile the South Asian Bank promotes a $1.35 a-day threshold as more realistic.

I don’t know how the calculation is done to arrive at either figure but what is abundantly clear is that the higher the threshold the more people that come under its umbrella and thus more are considered to be living in ‘extreme’ poverty. The $1.25 a-day relates to what can be purchased in the USA for that amount. Of course it has no bearing on what can be purchased in Kenya, Chad or in Honduras, for the same daily allowance, unless all prices are the same.

There is a very powerful political agenda being advanced by the WB, one that suits Conglomerates rather than promoting local business. The celebration of the huge drop in ‘extreme’ poverty mainly due to the industrial surge by China seems to have been taken as a panacea to rid the earth of all poverty. Consequently, the WB has sought to impose the China model elsewhere. As we have noted, China is booming and the WB applauds the results but what are the consequences of such rapid growth?

A look at recent film footage from China shows an environmental and human downside to the industrial expansion. Quite visible is the smog that hangs in the atmosphere; whilst behind the closed doors are the poor working conditions that the people are forced to endure. Such is the celebration of the growth that few listen or take heed of the warnings:

“The same is true of other developing countries, for growth in these lands is not environmentally neutral and raw materials are not elastic.”  The Hungry Spirit, P54. Charles Handy,

One light shines and the WB leads us walking blind into a well of human misery and potential environmental catastrophe. One is reminded of the ‘Dark Satanic mills’ of 19th century UK. Are the millions of child labourers, who earn a pittance working in the most hideous, squalid conditions; are they and their families removed from below the poverty line if they earn a cent above the $1.25 a-day threshold? How can poverty be understood on purely monetary terms?

Nonetheless, pleased with its catchpenny statistical endeavours so far, the WB has set its next goal, to reduce ‘extreme’ poverty throughout the globe to 3% or less by 2030. However, it does recognise that more than 1billion people still live in destitution and that inequality is rising in developing countries. The WB offers a caveat by admitting it has, “established ambitious but achievable goals.” They also accept that the target is, “highly optimistic” and requires, “rapid economic growth,” as well as, “long term structural changes.” This is quite an array of caveats and while I wish them well, I cannot muster the same belief that they obviously possess.

My attention was particularly drawn to:

“It will require sustaining high rates of economic growth across the developing world…” and “ social policy changes not seen yet in many poor countries,…” now that is what I call ambitious!

I am intrigued by the “long-term structural changes”
mentioned and by just how long these changes will take and crucially, how they will be implemented? Surely changes of a major kind such as envisaged will require local support and wherewithal to impose them? The time factor is also critical here; the WB has given themselves, 20 years or so; does that constitute long-term? Or is it satisfactory for the reforms to be in the pipeline? Can the WB guarantee the support locally to implement the changes or do they have an alternative method in mind?

What of the “social policy changes not seen yet…”? Is this just wishful thinking on the part of the WB or a necessary prerequisite? Are we to see a health service and an education system manifest themselves overnight? When will they start and do the governments involved fully endorse these mammoth undertakings? Where will the staff for the numerous jobs come from? My advice to the WB is to get their skates on!

The task becomes even more daunting when the foundation from which they start is so unstable.

“In 12 countries in sub-Sahara Africa, the extreme poverty rate is above 60%; in four cases it is above 80%.” A great deal of credit is due for the basic honesty that is displayed. However, when India is added to the picture, with 33% of people globally living below the poverty line then we must start to think in terms of miracles. Their realistic assessment, I believe, condemns the ambitious target set before the engine is started.

Another major criticism of the plan is the one to retain the threshold at $1.25. Introduced in 2005, the threshold is now unrealistic because it does not take into account inflation from then to the present day. To maintain the rate set as a global rate is a false position as price rises are not universal, they differ depending on the economic stability of the individual nations. This, therefore, appears as a game played with numbers and gives credence to the notion that the WB’s main concern is looking good; a policy of self-promotion. It reminds me of a little book I came across in a second-hand bookshop, titled, How to Lie with Statistics, by Darrell Huff, 1954.

An indictment of the $1.25 a-day threshold is exemplified if we consider a threshold of $2 a-day, which raises the number trapped in poverty from 1.4 billion to 2.6bn. Is that why the WB is sticking to the prescribed threshold? If these figures are reliable then we have 1.2bn people living in a shadow place between darkness and light, fighting a constant battle with hunger and hades, yet daring to hope. Therein lies the true miracle of the human spirit. www.prb.org/Articles/

“Torture numbers, and they’ll confess to anything.” Gregg Easterbrook.thCA6407G6

We can all use statistics to promote or defend our argument, and it is very difficult to ascertain the truth or otherwise of facts and figures, as bias is a constant intruder into our thoughts. However, to begin on a false premise would seem to lack moral certitude. Nonetheless, a number of points can be raised here; Oxfam (2008) warned that 100million more people may face poverty due to price increases as the $1.25 a-day does not take into consideration increases in fuel and food. (bbc.co.uk) “In addition in developing countries the informal economy predominates for all income brackets except for the richer, urban upper income bracket population.”

www.en.wikipedia.org/wiki/Gini_coefficient#Gene

In effect money does not play a large part in the lives of these poor people. To add to the downcast mood we have another opinion from Oxfam (2008) when they point out that in sub-Sahara Africa, 50% live in ‘extreme’ poverty and have done for the past 25 years. Elizabeth Stuart. (bbc.co.uk).  The point here, surely, is that poverty in sub-Sahara Africa is endemic and the sheer scale of the task to eradicate it will take more than the 15/20 years allotted to it by the WB. A similar case can be made about India.

A total rethink in terms of approach is vital and it does not help when those who can affect change fail to deliver. In 2005 the G8, (the eight most economically powerful

Agony does not sleep

Agony does not sleep

countries) set a target to double aid to Africa by 2010; that target was never met. Since the mid-1950s donor nations have poured over $1 trillion into the Horn of Africa and yet today these countries are still in a state of perpetual misery. The sadness continues for several of these nations as famine has reared its ugly head (2013) in Somalia, Sudan and South Sudan. Unfortunately the good news that the WB would like us to believe is overwhelmed by the bad.