by Jason Hickel
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There is yet another sleight of hand at the centre of the poverty story that is often overlooked. Remember that the Millennium Development Campaign moved the baseline year back to 1990, which allowed them to claim China’s gains against poverty. What happens if we take China out of the equation? Well, we find that the global poverty headcount increased during the 1980s and 1990s, while the World Bank was imposing structural adjustment across most of the global South. Today, the extreme poverty headcount is exactly the same as it was in 1981, at just over 1 billion people. In other words, while the good-news story leads us to believe that poverty has been decreasing around the world, in reality the only places this holds true are in China and East Asia. This is a crucial point, because these are some of the only places in the world where free-market capitalism was not forcibly imposed by the World Bank and the IMF. Everywhere else, poverty has been stagnant or getting worse, in aggregate. And this remains evident despite the World Bank’s attempts to doctor the figures.
What Happened to Hunger?
The good-news narrative of the MDGs seeks to direct all our attention to the question of poverty. But what about hunger – the other big goal of the Millennium Declaration? For a long time we didn’t hear much about the hunger issue, probably because the world’s governments were clearly failing to achieve this goal – the number of hungry people in the world had been steadily rising during the MDG period. When heads of state first pledged in 1996 to cut hunger in half before 2015, there were 788 million hungry people in the world. In 2009, there were 1,023 million, or about 30 per cent more. This trend has long been a thorn in the side of the powers that be. After all, one of the best ways to test the success of an economic system is to assess progress against hunger. If the hunger numbers are static – or, worse, on the rise – it is difficult to argue that something isn’t fundamentally wrong.
Of course, when the Millennium Campaign pushed the base year back to 1990, the hunger trend appeared to get a little better. And diluting the goal to focus on proportions instead of absolute numbers helped a little bit too. But even with these changes, in 2009 the hunger headcount was still 21 per cent worse than it was in 1990. The UN was forced to concede defeat, publishing a report admitting that the hunger goal was going to be impossible to achieve: instead of decreasing, ‘hunger has been on the rise for the past decade’.
It seemed a disaster. But then, out of the blue, in 2012 the UN agency responsible for calculating the hunger numbers, the Food and Agriculture Organization (FAO), suddenly began telling the exact opposite story. With only three years to go before the expiry of the MDGs, the FAO announced an ‘improved’ methodology for counting hunger. And the revised numbers delivered a rosy tale at last: while 23 per cent of people in the developing world were undernourished in 1990, the UN was pleased to announce a reduction to 15 per cent. The goal still hadn’t been accomplished, of course, and in terms of absolute numbers there wasn’t much to write home about: over twenty-five years they had managed to cut hunger from 1 billion people to 800 million. And almost all of this reduction had happened in Asia; in Africa, the number of undernourished people had increased. But at least now the UN could at last claim some progress on a global level. The 2013 report of the MDGs announced: ‘Progress in reducing hunger has been more pronounced than previously believed, and the target of halving the percentage of people suffering from hunger by 2015 is within reach.’
How did they pull this off? How did they turn a story of crisis into a story of progress? It all had to do with the new methodology. The new model was designed not to reflect the impact of economic crises, so the numbers did not show the massive spike in hunger that followed the food-price crisis of 2007 and the financial collapse of 2008. In addition, the FAO revised their estimates of countries’ food supplies, and ‘relaxed’ their assumptions about people’s access to calories. They also adjusted the hunger threshold downwards, and in such a way that the trend appeared to improve more rapidly than under previous measurements. All of this made the hunger story look much better than it had before. Media outlets ran the new story without scrutinising the methodological changes.
Methodological twists aside, the other major problem with the UN’s hunger numbers has to do with the definition of hunger itself. The UN counts people as hungry only when their calorie intake becomes ‘inadequate to cover even minimum needs for a sedentary lifestyle’ (i.e. less than about 1,600 to 1,800 calories per day) for ‘over a year’. The problem is that most poor people don’t live sedentary lifestyles; in fact, they are usually engaged in demanding physical labour, so in reality they need much more than the UN’s calorie threshold. The average rickshaw driver in India, for example, burns through about 3,000–4,000 calories per day. The FAO itself recognises this flaw. Its 2012 report admits that ‘many poor and hungry people are likely to have livelihoods involved in arduous manual labor’. It calls its core definition of hunger ‘narrow’, ‘very conservative’, focused on only ‘extreme caloric deprivation’ and thus ‘clearly insufficient’ to inform policy. It acknowledges that most poor people actually require calories sufficient for ‘normal’ or even ‘intense’ activity.
So what happens if we measure hunger at these more accurate levels? We see that between 1.5 billion and 2.5 billion people are hungry, according to the FAO’s own data. This is two to three times higher than the Millennium Campaign would have us believe. And the numbers are rising, even according to the FAO’s questionable new methodology.
Source: Food and Agricultural Organisation, State of Food Insecurity 2012.
But even these estimates aren’t quite good enough. Another problem with the FAO’s definition is that it only counts calories. So people who have serious deficiencies of basic vitamins and nutrients (a condition that affects some 2.1 billion people worldwide) are not counted as undernourished as long as they can get enough calories to keep their hearts pumping. People who suffer from parasites, which inhibit food absorption rates, also fall through the cracks, since what counts is calorie intake, not actual nutrition. And people who are hungry for months at a time are not counted as hungry, since the definition of hunger only captures hunger that lasts for over a year. The FAO writes: ‘The reference period should be long enough for the consequences of low food intake to be detrimental to health. Although there is no doubt that temporary food shortage may be stressful, the FAO indicator is based on a full year.’ In other words, the FAO’s definition presupposes, without invoking any supporting evidence, that eleven months of hunger is not detrimental to human health.
In light of all this, it is safe to say that the narrative of the Millennium Development Goals dramatically underestimates the scale of global hunger. Again, the idea here seems to be to simply keep people alive, just to satisfy the metrics, while caring little about the kinds of lives they are able to live. And this tragedy persists in the face of what has surely become one of the most repeated facts of our time: that we collectively produce enough food each year to feed everyone in the entire world, at 3,000 calories per day. Hunger is not a problem of lack. It is a problem of distribution. A disproportionate amount of the world’s food ends up flowing to rich countries, where much of it ends up as waste. In the US and Europe, consumers bin up to half the food they purchase. The UN finds that cutting global food waste by only a quarter and redirecting it to where it is needed most would solve global hunger in a single stroke.
Thomas Pogge likes to point out that the real metric of poverty reduction actually has nothing to do with proportions, and nothing to do with absolute numbers either. ‘The morally relevant comparison of existing poverty,’ he says, ‘is not with historical benchmarks but with present possibilities: How much of this poverty is really unavoidable today? By this standard, our generation is doing worse than any in human history.’
A More Honest View of Poverty
Let’s go back to the claim made by the Millennium Development Goals, that 1 billion people live in absolute poverty today. That’
s a staggering number no matter how you look at it, and a trenchant indictment of our global economic system. But a growing number of scholars are beginning to insist that the picture is actually even worse than this. They are beginning to question whether the dollar-a-day threshold is the right poverty line to be using in the first place. The international poverty line used by the MDGs – $1.25 per day – is based on the national poverty lines of the fifteen poorest countries. Why should we trust the poverty lines of a few extremely poor countries? Why should we believe that these lines are an accurate reflection of what poverty is really like in those countries? What if the bureaucrats who set the national poverty lines don’t have access to adequate data? What if the numbers are manipulated for the sake of political image?
Even if we do choose to accept the accuracy of these national lines, using them to calculate the IPL means setting it at rock bottom. And this level tells us very little about what poverty is like in even slightly better-off countries. Take Sri Lanka, for example. In 1990, government authorities conducted a survey that found that 40 per cent of the population fell under the national poverty line. But the World Bank, using the IPL, reported only 4 per cent in the same year. In Mexico in 2010, the government reported a poverty rate of 46 per cent using the standard national line, while the World Bank reported only 5 per cent using the IPL. In other words, in many cases the IPL makes poverty seem much less serious than it really is. India offers another example. Using the IPL, the World Bank estimated that India had 300 million people living in poverty in 2011, and claimed that the proportion of impoverished people had been decreasing steadily over time. But empirical research in India at around the same time showed that 680 million people ‘lack the means to meet their essential needs’. Indeed, in 2011 nearly 900 million Indians, or 75 per cent of the population, were subsisting on less than 2,100 calories per day, up from 58 per cent in 1984. So not only does the World Bank dramatically understate the true extent of poverty in India, it also claims there has been a ‘reduction’ of poverty while hunger has been decisively on the rise.
The same story can be told in many other regions, where living just above the IPL still means living in destitution. In India, a child living just above the IPL has a 60 per cent risk of being underweight. In Niger, babies born to families just above the IPL face an infant mortality risk of 160/1,000, more than three times the world average. Earning $1.25 per day comes nowhere near to providing the ‘adequate’ standard of living that is supposedly guaranteed by the Universal Declaration of Human Rights, which states: ‘Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care.’
Even establishment institutions are beginning to recognise this. In 2014 the Asian Development Bank conceded that the $1.25 line was simply too low to be meaningful. It is now considering nudging it up to $1.50 – a level that will at the very least allow for basic nutrition. Even this minor shift would see the number of people in extreme poverty rise by more than 1 billion, and invert the MDGs’ poverty reduction trend.
The present IPL theoretically reflects what $1.25 could buy in the United States in 2005. But the US government itself calculated that in 2005 the average person needed at least $4.58 per day simply to meet minimum nutritional requirements, and that is to say nothing of housing and other costs necessary for basic survival. According to British economist David Woodward, living at this level in the UK would be ‘equivalent to 35 people living on a single minimum wage, with no benefits of any kind, no gifts, borrowing, scavenging, begging or savings to draw on (since these are all included as “income” in poverty calculations), and no free health service or education (since these are not generally available to the poor)’.
If $1.25 is not sufficient to guarantee basic nutrition, or provide children with a decent shot of not dying before their fifth birthday, then how can we legitimately claim that lifting people above this low line means bringing them out of poverty? If we are to be serious about eliminating poverty in meaningful terms, we need to set a line that at the very least allows people to achieve the lower end of normal human life expectancy, which is about seventy-four years. Recent studies place this ‘ethical poverty line’ at about $5 per day – four times higher than the standard $1.25 line. This line isn’t perfect, because it still ends up comparing contexts that may not be entirely comparable, but it is the best global line that’s currently available.
Source: PovcalNet (2005 PPP)
The $5 poverty line enjoys support from a number of sources. Economists Rahul Lahoti and Sanjay Reddy argue that people require about $4.50 per day to cover minimum basic nutrition alone. The New Economics Foundation in London shows that people need about $5.87 per day to reduce infant mortality rates to 30 per 1,000, which is the world average (although still five times higher than in developed countries). As it turns out, $5 per day is the mean average of all the national poverty lines in the developing world. It also accords with the World Bank’s own repeated statements that the $1.25 line is ‘deliberately conservative’, appropriate for only the poorest countries: ‘In more developed regions, higher international poverty lines are more appropriate. When comparing poverty rates across countries within the Latin American and the Caribbean region, the $4 a day poverty line provides a more meaningful standard. For the Eastern European and Central Asia region, the $5 a day poverty line is often used.’ Some organisations are calling for an even higher poverty line. ActionAid, for instance, wants us to use $10 per day, which is the upper boundary suggested by the World Bank and the income necessary to cut infant mortality down to 20 per 1,000 (still three times more than in developed countries). Harvard economist Lant Pritchett calls for a poverty line of $12.50 per day as a global minimum standard for human well-being.
What if we were to take these concerns seriously, and measure global poverty at a minimum of $5 per day? We would find the global poverty headcount to be about 4.3 billion people. This is more than four times what the World Bank and the Millennium Campaign would have us believe. It is more than 60 per cent of the world’s population. And, more importantly, we would see that poverty has been getting worse over time. Even with China factored in, we would see that around 1 billion people have been added to the ranks of the extremely poor since 1981. At the $10-a-day line we see that 5.1 billion people live in poverty today – nearly 80 per cent of the world’s population. And the number has risen considerably over time, with 2 billion people added to the ranks of the poor since 1981.
There is a strong consensus among scholars that the $1.25 line is far too low, but it remains in official use because it is the only line that shows any progress against poverty – at least when you include China – and therefore is the only line that justifies the present economic order.
Inequality: Measuring the Divide
Most everyone is worried about inequality these days. We know that income inequality within countries has been getting worse over the past few decades; this much is common knowledge, and we have movements like Occupy Wall Street to thank for bringing it to popular attention. But what about inequality between countries? On this front, most economists tell us we have nothing to worry about. Yes, there may be a yawning divide between rich and poor countries, but there’s also some good news: that divide is narrowing, and fast.
Economists typically measure income inequality between countries using the Gini index, a method devised by Italian statistician Corrado Gini in 1912. A score of 0 represents total equality, where everyone has exactly the same income. A score of 100 represents total inequality, where one person has everything and everyone else has nothing. In other words, the higher the number the greater the inequality. In 2016 the World Bank’s top inequality expert, Branko Milanović, published new data showing that in-equality between countries – corrected for population – had declined dramatically over the past few decades, from a Gini index of 63 in 1960 down to 47 in 2013, with a precipitous drop beginning i
n the 1980s.
The story ricocheted through the media. Just days after Milanović’s data was released, conservative commentator Charles Lane wrote a celebratory column in the Washington Post. He criticised Pope Francis and US presidential candidate Bernie Sanders for making such a big deal about inequality at the time. Yes, the world’s richest 1 per cent have seen their incomes skyrocket, but that’s OK, he argued, because the very system that is delivering them their extraordinary wealth is also reducing inequality globally. The US model of free-market globalisation isn’t causing inequality, as its critics claim – on the contrary, it is reducing it. In fact, the greatest drop in inequality occurred precisely once the United States started pushing free-market policies around the world through structural adjustment and the World Trade Organization. The Cato Institute, a well-known libertarian think tank, picked up on the story too. ‘Despite what you might think if you listen to voices prominent in the media . . . there has been a vast reduction in poverty and income inequality worldwide over the past quarter-century,’ they wrote. ‘This is the good news about the world today. Indeed, it’s the most important news about our world.’
This story has the benefit of feeling intuitively right. After all, we’re aware that countries like China and some East Asian economies have made dramatic leaps towards industrialisation, and have produced large and growing middle classes. And indeed that is exactly the key point. As it turns out, the trend towards greater global equality has been driven entirely by China and East Asia. Take China out of the picture, and the good news narrative melts away. In fact, the economists Sudhir Anand and Paul Segal show that if we take China out of the Gini figures, we see that global inequality has been increasing, not decreasing – up from 50 in 1988 to 58 in 2005. This is important, because – once again – China and East Asia are some of the only places where structural adjustment was not imposed by Washington. Instead of being forced to adopt a one-size-fits-all blueprint for free-market capitalism, China relied on state-led development policies and gradually liberalised its economy on its own terms. It is disingenuous, then, for commentators like Charles Lane and the Cato Institute to build an inequality-reduction narrative that rests on gains from China and chalk it up as a win for Washington’s approach to free-market globalisation.