Can we end poverty?

Yes, and no. Now we know what it means to be poor, we can talk about what it would take to end poverty.

You may remember that ‘absolute’ poverty is defined ‘in terms of the minimal requirements necessary to afford minimal standards of food, clothing, health care and shelter’. Meanwhile, ‘relative’ poverty is defined ‘relative to others in a country; for example, below 60% of the median income of people in that country.’

One of these can be eradicated, but the other is a different story…

We can (and should) solve absolute poverty

Poverty – absolute poverty – is solvable. As Norburg points out in Progress, we are rapidly decreasing the proportion of people in the world who live in poverty.

A world in which everyone has access to the basics of food, water, sanitation, health care, shelter, education, information and services is something we can both imagine and achieve.

That’s not to say that absolute poverty does not remain an issue.

The economic collapse in Venezuela, for instance, has resulted in extreme shortages.
Nearly 75% of the population has lost an average of 8.7kg (19.4lb) in body weight.
Formerly ‘middle-class’ adults, Al Jazeera reports, are now seen picking through the garbage for food.
Nine in 10 large hospitals have only 7% (yes, 7%) of necessary supplies. This has resulted in thousands of avoidable deaths, and the resurgence of diseases such as malaria that were previously eliminated.
Millions of people lack adequate housing.
Basic toiletries are in short supply. With extremely high inflation, in the triple digits (although some predict it may be over 1,600%, or even 2,200% by the end of this year), few can afford them anyway.

Just how bad this is may not immediately spring to mind, but an article published last year reports a packet of powdered milk was selling for over $700 US. A kilo of maize flour? More than $300. And things have worsened considerably since then.

One Reddit user (who unfortunately I cannot credit as this article did not provide a username) posted a photograph of an enormous stack of Venezuelan currency, which, in 2001, would have been worth $71,000 US. In 2017, it is worth only $21. This is far beyond normal inflation. The country is paying other countries to print more money. And it costs more money to print the money than the bill’s face value.

But these problems are solvable.

These shortages, and others around the globe, are not a result of there not being enough food. They are result of the economic and moral failings of the global community. The US National Association of Wheat Growers, for instance, reports that it’s on track to ‘meet global demand and still have a surplus’ this year. In 2013, a professor of geography who specialises in food and agriculture, Joshua Muldavin, estimated that globally, we have ‘two or three times the amount of food needed to feed the number of people in the world’. The Economist is not quite so optimistic, arguing that a green revolution is needed in Africa to feed everyone.

These shortages are also not purely a result of one economic style or another. Most economies worldwide are defined as ‘mixed’ as none purely encapsulate capitalist or communist policies. It is notable, however, that shortages exist not only in countries with communist or socialist pasts or current policies. At least two countries which rank among the most economically free in the world (Botswana and Rwanda) also appear on the Global Hunger Index as countries in which there is a serious hunger situation.

Stefano Corsi rightly defines food insecurity as a problem with the ‘location of food’. And it’s not just a matter of food wastage and production surpluses in first world countries. A 2009 World Food Program excerpt shares how the problem occurs on a local scale too. In a country where maize crops were filling storehouses to capacity, farmers like the Salijeni family in Malawai, whose cotton crops failed to sell struggled to survive, having to gather wild-growing tubers to eat.

Worldwide, we have enough food. The issue is with getting it to the people who need it.

‘The poor will always be with us’

In my last post, I quoted Dorothy Rowe, author of The Real Meaning of Money, who states:

‘I think there is too much poverty. Not everyone would agree with me. Some people see poverty as being inevitable, like rain.’

Perhaps you have heard ‘the poor will always be with us’. This Biblical phrase (from Matt. 26:11) has been disgustingly used by politicians to, among other things, justify cutting the healthcare of millions of people in the US. Rather than viewing this as an indictment of the rich, and a ‘systemic sin‘, Republican representative Roger Marshall (a doctor!) claims ‘Just like Jesus said, “The poor will always be with us,”…There is a group of people that just don’t want health care and aren’t going to take care of themselves.’

While the current healthcare debate in the US has highlighted a number of potential problems, counter examples abound. Major objections to the feasibility, as opposed to the morality or desirability of such a system include the size of the population. Many countries with free basic healthcare have relatively small populations. However, generally speaking, economies of scale should give the US government much greater potential to negotiate lower prices than any of these countries. Others say the population’s geographical dispersement will make it unfeasable. But Australia has a much more disperse population which it manages to serve via the Flying Doctor and subsidised transportation and accommodation for those from remote communities who need to seek medical treatment in urban areas.

It all depends on what you mean by ‘the poor’

While Marshall et al’s views appear based on an unsupportable interpretation of Christian doctrine which should not have a place in legislation in any case, there is some truth to the phrase. But it all depends on which kind of poverty we are talking about.

It’s relative poverty that will always be with us.

Relative poverty, by definition, is unsolvable unless we live in a world in which everyone is and has exactly the same. Because relative poverty is defined in relation to how much others have, rather than the presence or absence of a defined list of absolutes, there will always be inequality. The question is not how to solve this type of poverty – which might be better called ‘inequality’. The question is how to lessen the gap.

Relative poverty – when it refers to indefensible inequalities in income and wealth – is an enormous problem. It contributes to a great amount of psychological distress and unhappiness.

But it may not be the best measure of who is doing it tough. According to Creighton, the absolute level of income is what matters most for low-income households. In 1973, the Henderson inquiry found that $62.70 per week was sufficient to sustain two adults and two children. In 2010 dollars, that works out to about an annual income of $25,074. But ACOSS’s poverty line of $39,104 is substantially higher. What gives?

The difference, Creighton points out, is the ‘bundle of goods’ considered sufficient to sustain a family. Nowadays, ACOSS consider a household to be living in poverty when its income is less than half the median household income. (After adjustments for differences in household composition and housing costs.) By using a measure such as this, the number of households classified as living in ‘poverty’ can increase, as the rich get richer. Even if the living standards of low-income households are significantly better today than they were in, say, 1973. The real problem here is increasing inequality.

Inequality is the issue

Imagine two companies, AlphaCorp and OmegaCorp. On the surface, they look pretty similar. Both have 9 employees. Both pay their employees a total of $900k a year, so of course, the average salary at both companies is the same, $90k per annum.

But there the similarities end. At AlphaCorp, the bulk of the money paid out in wages go to the CEO, who earns $650k a year. Obviously, there isn’t much left to go around after that. The lowest paid worker receives just $11k a year.

At OmegaCorp, the CEO earns $150k a year, which is triple what the lowest-paid employee receives, who is on a salary of $50k a year.

Assuming the position of CEO is already filled, which company would you prefer to work for?

I think most of us would opt for OmegaCorp. You’d get a starting salary of $50k a year, which is 4.5 times higher than the starting salary at AlphaCorp. But if you work your way up to second-in-command, you’d also earn $40k a year more than your counterpart at AlphaCorp.

Yet which scores better when it comes to the measure of relative poverty?

You might think that AlphaCorp, where the CEO earns more than 54x the lowest paid employee would score pretty badly. But at AlphaCorp, because the top end of the ladder is so highly paid, the median employee’s salary is just $13k. (Note how much lower this is than the average of $90k) So the lowest-paid employee at AlphaCorp actually earns 84% of the median salary. This is well above the ‘poverty line’ of less than 60% of the median wage.

On the other hand, OmegaCorp, where the CEO earns just 3x the lowest paid employee doesn’t fare so well on this measure. At OmegaCorp, there is a much gentler curve of income distribution. The median salary is the same as the average – $90k a year. The lowest-paid employee at OmegaCorp, therefore, with $50k a year in income earns just 55% of the median income. Even though in dollar figures this is significantly more than their counterpart at AlphaCorp, it falls below the OmegaCorp poverty line of 60% of the median income.

Making things fairer

Perhaps you think that the example of AlphaCorp is extreme. Consider the fact that the average CEO in America makes not 54x, but 70x the median salary of their employees. That’s the median, not the lowest salary.

Some make more than 300 times the median salary of their employees.

As Forbes points out, a CEO can make in a single day more than their employees will make in a year. And when we look at minimum wage it’s much worse. A full-time minimum wage employee at WALMART will need to work 1,372 hours (that’s over 34, 40-hour weeks) just to earn what CEO Michael T. Duke makes in a single hour.

Watch your language

Confusing ‘relative’ and ‘absolute’ poverty, or not distinguishing between them at all, is what makes it possible for lawmakers to say things like ‘the poor will always be with us’ in order to justify stripping people of healthcare. A lack of access to basic healthcare is not an issue of relative poverty. It’s one of the key indicators of absolute poverty.

I also suspect that a lack of differentiation between absolute and relative poverty in the news media, and our own lack of understanding of the different meanings of these terms, contributes to a sense of apathy when it comes to global poverty. If, even in the richest country in the world one in five children lives in ‘poverty’, it all seems too hard to fix. But when we break down what is meant, we can more easily see what people need.

Two different issues

Absolute and relative poverty are really two different issues. One is about a lack of basic things like food, water and shelter. The other is a mathematical expression which identifies who has limited access to one particular resource – money. Living in relative poverty can, as Charles Long shows, mean living a quite happy, abundant life. Or, depending on the country and the time you live in, it can mean experiencing absolute poverty as well.

We can end absolute poverty.

We can only completely eliminate relative poverty if everyone is and has exactly the same. This is problematic for a number of reasons. People have different needs, for example, regarding food and medicine, for factors beyond their control.

But we CAN reduce the gap and make economies fairer.

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Today’s featured image is of the bananas I bought today in Vilnius. Over the past month, we’ve traveled from Tallinn, Estonia, to Vilnius, Lithuania, through Riga, Latvia. This is the same path ‘The Baltic Way’ took in 1989. The world’s longest chain of people, The Baltic Way imparted a message of human rights and sovereignty. Earlier this week, we visited the Stebuklas (miracle) tile that marks the end of the chain in Cathedral Square.

In my previous post, I pointed out I’d prefer a crop of bananas to lumps of metal on a desert island. This photograph of bananas is inspired by an incredible exhibition we saw at the Estonian Teletorn at the beginning of this section of our trip, ‘There are No Bananas’. It described the shortages that people had to deal with during Soviet rule, as well as the incredibly creative solutions they came up with. The title was inspired by the status of the banana as a ‘mythical’ fruit – most children born during this time had never seen one, and couldn’t be certain that they really existed.

The bananas I bought today were 99c a kilo.

How important is money in your life? Let me know what you think in the comments!

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3 thoughts on “Can we end poverty?

  1. Excellent post! I 100% believe that every human, in the US and throughout the world, should have the necessities! Healthcare is a wonderful example. Jimmy Fallon said it extremely well – “No Parent Should Ever Have to Decide If They Can Afford to Save Their Child’s Life.” This to me breaks down the simple ideals of providing basic necessities to every single person in the world. Everyone should have the opportunity to live a full, complete and healthy life.

    1. I completely agree Lance. The necessities should be a right to everyone, regardless of where they live. I think Jimmy Fallon expressed it really well too. Sadly, a heartbreaking reality for many.
      Thank you so much for checking out my blog by the way, and so quickly! I really appreciate it!

      For anyone looking for a commonsense guide to money, I really recommend mystrategicdollar.com 🙂

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