Extreme Poverty: One Winner, Millions of Losers, and Too Many Accomplices

The poverty line is a World Bank estimation that defines the minimum required income to secure necessities of life, although it takes into consideration only tangible aspects such as wealth or income, it often illustrates the standard of living and the life quality. The line setting was initially USD1 per day, by 2005 and due to the increasing inflation the World Bank revised its subsistence level and raised it to USD1.25. In 2015 the poverty line witnessed an increase of USD 0.65 to achieve the USD 1.90 per day.

The constant rise in the subsistence level is almost convincing, one is tempted to believe that the poverty rate is decreasing. Some optimistic studies would state that in a 20 year period of time the poverty rate will be as reduced as 1% of the world population.

Reality Check

The World Bank, if fact never rose the poverty line, it just adjusted the old line to the depreciation in the purchasing power of the dollar. Bank experts explain that the new subsistence level is roughly equivalent to the old one. But effect wise it is actually significantly lower, and therefore makes it seems like the poverty rate has decreased, as all of a sudden the bank has announced a decline in the poverty rate, and stated that the poverty has decreased by almost 100 million individuals.

Stepping out from Teletubbies world, the reality is other, there are still as many poor people as there used to be 10 years ago. But the development industry has been happy to take the new story on board, claiming gains against poverty that haven’t actually happened. The NGO community is celebrating the fact that, according to the WB new poverty line, the poverty rate will dip below 10% this year. But excitement aside, even USD1,90 is not enough for human survival.

How much is $1.90 per day, adjusted for purchasing power? Technically, it represents the international equivalent of what USD1.90 could buy in the United States in 2015. Another time the reality is slightly different, when the US Department of Agriculture calculates it in 2015 the minimum necessary to buy sufficient food was USD 5.04 per day, without taking into account other requirements for survival, such as shelter and clothing.

Peter Edward of Newcastle University explains that in order to achieve a normal life expectancy, people need roughly 2.7 to 3.9 times the set poverty line. In the past, that was USD5 a day, using the bank’s new calculations, it’s about USD7.40 a day. As it happens, this number is close to the average of national poverty lines in the Rest.

Deficits of poverty in Africa are only too many. In Niger, infants living at USD1.90 have a mortality rate three times higher the global average. The same story can be told of many other countries. If USD1.90 is too low to achieve basic nutrition or to secure a fair chance of surviving the first year of life, why are we using it?

The World Bank picked the USD1.90 line because it’s the average of the national poverty lines of the very poorest countries in the world, like Chad and Burundi. But it tells us very little about what poverty is like in most other countries. So what would a more meaningful measurement of poverty look like? One option is to count poverty country-by-country using each nation’s own poverty line, with USD1.90 as an absolute floor. If we do that, we would see that about 1.7 billion people remain in poverty today, which is more than 70% higher than the World Bank would have us believe.

So what would happen if we were to measure global poverty at this more accurate level? We would see that about 4.2 billion people live in poverty today. That’s more than four times what the World Bank states, and more than 60% of humanity. And the number has risen sharply since 1980, with nearly 1 billion people added to the rank of the poor over the past 35 years.

The UN’s sustainable development goals, launched in September, are set to use the USD1.90 line to measure poverty. Why do they persist with this implausibly low threshold?…

Maybe because it’s the only one that shows any meaningful progress against poverty…

or because somehow it makes us happy and helps us sleep through the night…

A more honest approach would force us to simply realise that the global economy isn’t working for the humanity.

Written by Nawal Allal

Originally published on the November 5th, 2015

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