It Will Take 100 Years for the World’s Poorest People to Earn $1.25 a Day
DEVELOPMENT, 30 Nov 2015
The sustainable development goals will aim to eradicate poverty by 2030 but our current economic model, built on GDP, could never be inclusive or sustainable.
If you follow international news you will be accustomed to headlines announcing that world leaders have succeeded in cutting global poverty in half over the past couple of decades. Its sounds like brilliant news, but it’s just not true. The numbers have been furtively manipulated to make it seem as though our economic system is working for the majority of humanity when in fact it is not.
The sustainable development goals, to be decided in September, will take this dubious good-news story a step further. This time, the main goal is not just to further reduce extreme poverty, but to eradicate it entirely – and to do so by no later than 2030. This is a welcome move: it’s about time we finally got around to putting poverty eradication firmly on the agenda. But it also raises some tough questions. Is it possible to end poverty under our current economic system?
A few weeks ago economist David Woodward tackled this question in an article published in the World Economic Review. His findings are shocking. He shows that, given our existing economic model, poverty eradication can’t happen. Not that it probably won’t happen, but that it physically can’t. It’s a structural impossibility.
Let’s assume that we can maintain the fastest rate of income growth that the poorest 10% of the world’s population have ever enjoyed over the past few decades. That was between 1993 and 2008 – after the debt crisis of the 1980s that crippled much of the developing world and before the banking collapse of 2008. During that period, their incomes increased at a rate of 1.29% each year.
So how long will it take to eradicate poverty if we extrapolate this trend? 100 years.
That’s what it will require to bring the world’s poorest above the standard poverty line of $1.25/day. Compare that with the SDGs’ 2030 target. And keep in mind that Woodward’s methodology is not able to capture the poorest 1% of the world’s population, who will still remain in poverty even at the end of this period. That’s 90 million people, more than the entire population of Germany today, who will remain in poverty forever. Whatever the SDGs will achieve, poverty “eradication” won’t be one of those things.
Even this extremely optimistic, best-possible scenario does not account for the slowdown in income growth since the financial crash. It doesn’t factor in the spikes in food prices that have effectively wiped out the incomes of the poor over the past few years, or the fact that climate change is already unravelling development gains across the global south. It imagines all of this away, and assumes that no further economic or ecological crises will happen in the next 100 years – which is a very big assumption indeed.
As if the 100-year timeline isn’t disappointing enough, it gets worse. A growing number of scholars are beginning to point out that $1.25/day – which is the official poverty line of the SDGs – is actually not adequate for people to survive on. In reality, if people are to meet their most basic needs and achieve normal human life expectancy, they need closer to $5/day. How long would it take to eradicate poverty at this more accurate line? 207 years.
Progress is woefully slow because to date the only strategy for reducing poverty is to increase global GDP growth. Politicians, economists and the development industry all have no other ideas. But GDP growth doesn’t really benefit the poor – or the majority of humanity, for that matter. Of all the income generated by global GDP growth between 1999 and 2008, the poorest 60% of humanity received only 5% of it. The richest 40%, by contrast, received the rest – a whopping 95%. So much for the trickle-down effect.
To eradicate poverty global GDP would have to increase to 175 times its present size if we go with $5/day. In other words, if we want to eradicate poverty with our current model of economic development, we need to extract, produce, and consume 175 times more commodities than we presently do. This is horrifying to contemplate. And even if such outlandish growth were possible, it would drive climate change to unimaginable levels and wipe out any gains in poverty reduction.
It’s a farcical proposition – a cruel joke played at the expense of the poor. And, as if to add insult to injury, to achieve this level of GDP growth, global per capita income would have to be no less than $1.3 million. In other words, the average income would have to be $1.3 million per year simply so that the poorest two-thirds of humanity could earn $5 per day. It’s completely absurd, but shows just how deeply inequality is hardwired into our economic system.
But it is in fact possible to eradicate poverty in fewer than 207 years, and to do so without destroying our ability to inhabit this planet. We need to abolish debts owed by developing countries, close down the tax havens, install a global minimum wage, place a moratorium on land grabs, and put an end to the structural adjustment programmes that allow rich countries to control the fates of poor countries. On top of all this, we need to dethrone the GDP measure and replace it with something more rational – like the Genuine Progress Indicator or the Happy Planet Index.
Unfortunately, the SDGs do not provide the answer, because they are not allowed to challenge dominant economic interests. Despite the fact that we’re already overshooting our planet’s total biocapacity by about 50% each year, growth, production, and consumption remain at the centre of their agenda. Yes, it’s all qualified by terms like “inclusive” and “sustainable”, but there are no clear commitments on what this is supposed to look like.
Of course, the corporations and rich-country governments that control the SDG process are very unlikely to adopt the change needed to truly eradicate poverty, because it would threaten the interests of the global 1%. But that’s exactly the point, and we need to be making it every chance we get.
Jason Hickel is an anthropologist at the London School of Economics.
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