Do the Poor Count?

An economic catastrophe occurred on August 26th 2008 that was quickly forgotten across the media: an extra 430 million people were classified overnight as absolutely poor. The cause was no tsunami or natural disaster, but simply the revisions of World Bank statisticians who adjusted the international poverty line from $1.08 to $1.25 a day.

Contradicting the Bank’s celebrated decline in extreme poverty figures last year which fell to less than a billion for the first time, the new measurements revealed a far less optimistic outlook — a total of 1.4 billion poor people in 2005, up from 986 million people in 2004. A margin of error, in other words, of 42 percent, defining a quarter of the developing world as living without sufficient means for human survival.

Despite this, the World Bank keenly stressed that poverty eradication continues to improve. It does not mean that the plight of the poor has worsened, we are told, only that the plight is now better understood. The lack of almost any critical news coverage implied that the rest of the world was inclined to agree. Does it really matter, after all, where the line is drawn in the sand, or how the number crunchers add up their figures? Is the question of poverty measurement not merely academic?

In fact, the revised figures are of crucial importance to not only the cause for global justice, but also our understanding of the world over the past quarter century of globalization. The World Bank, as the near exclusive provider of global poverty figures, uses the statistics to defend its policies of deregulation, privatization, market liberalization, and increased economic growth through free trade as the overruling means to combating poverty. Despite a long history of controversy, the figures still hold an almost uncontested authority with governments, NGOs and the popular media who frequently cite the estimates as evidence that neoliberal policies and globalization have reduced global poverty. This makes it doubly surprising that the Bank’s spin on the new figures have been so readily accepted and hardly questioned.

The figures for 2005 at the $1.25 baseline, no matter how the statistics are tailored, paint a dismal picture of mass destitution; 1.4 billion people living in extreme poverty is equivalent to roughly four times the entire population of the U.S., an inconceivable number to envisage. In Africa, the number of poor people has near doubled since figures began in 1981, with still half the population of sub-Saharan Africa living below the poverty line. In India, 200 million people in extreme poverty effectively fell through the cracks of the World Bank’s headcount whilst the statisticians learned how to ‘improve’ their tallies. Revisions to China’s figures were similarly dramatic, up to 207 million from a previous 130 million people in extreme poverty.

When considering that China did not follow neoliberal policies, it is doubtful that the Bank can take any credit for China’s remarkable success in reducing poverty during the 1990s. As the Bank states, China’s success still accounts for nearly all the world’s reduction in extreme poverty. If China is therefore removed from the equation, the most damning conclusion from the new figures becomes clear: the number of poor in the developing world has remained almost the same, at about 1.2 billion, over the period of globalization between 1981 and 2005.

This fact alone places the Bank’s hailing of a dramatic percentage reduction in poverty over 25 years into a different light. At the very least, it calls into question their confidence in declaring that “there has been strong — if regionally uneven — progress toward reducing overall poverty.” At most, it underlines the fact that globalization has been largely ineffective at either reducing the burgeoning ranks of the world’s poor, or including this vast swathe of the global population into the mainstream economy.

The Colombia University economist Sanjay Reddy, one of the Bank’s foremost critics on this topic, has stated his view that the individuals directly involved have approached the exercise in a sincere fashion, and are persons of the utmost integrity. That said, the Bank has already undertaken two previous revisions of the base year for calculating purchasing power rates, wreaking havoc to its poverty estimates each time. When employing the aggregate headcount, previous development indicators revealed that global poverty increased between 1990 and 2001 in the number of $2 a day poor, from 2.65 billion to 2.74 billion.

The Bank’s assumption that the Millennium Development Goals on poverty and hunger will still be reached are now starkly contradicted. According to a separate study by the Bank, an extra 100 million people could fall into extreme poverty due to soaring food and energy prices. This means that an extra half a billion people in total are now thought to be struggling for survival compared to previous estimates. On current trends, at least a billion people will still live below the $1.25 a day line in 2015, including a third of the world’s poor who will live in Africa. Only China is currently on target to achieve the goals, reports the Bank, while most other countries are not. As shown by other independent studies, this is an understatement: without urgent action the world could see hunger doubling instead of halving by 2015.

This cursory analysis of the Bank’s statistics is meant only to emphasize an obvious and, since the release of the widely uncriticized new data, a remarkably neglected point: that the World Bank’s poverty figures are no longer indicative of any real improvement in the plight of the poor — even by their own measures. As the latest figures graphically illustrate, almost half the world — over three billion people — live on less than $2.50 a day. Altogether, the Bank reports no change in the number of people living below $2 a day, at around 2.5 billion between 1981 and 2005. And it is unlikely, they warned, that the number of extremely poor will drop below one billion again before 2015. The distinction between the haves and have-nots could not get any clearer.

The World Bank’s disregard of its basic deficiencies in analyzing poverty is ultimately not surprising. After all, the Bank makes no disguise of its uncompromising belief in economic growth through unfettered markets as the strongest antidote to poverty, ignoring all signs since the 1980s that wealth has failed to trickle down to the poorest of the poor. More surprising, however, is the lack of external scrutiny of the Bretton Woods institutions in the formulation and usage of global poverty figures, and the lack of criticism on what those figures reveal.

Adam W. Parsons is the editor of Share the World’s Resources (STWR), an NGO campaigning for global economic and social justice based upon the principle of sharing. He can be reached at: adam@sharing.org. Read other articles by Adam, or visit Adam's website.

12 comments on this article so far ...

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  1. James Keye said on September 19th, 2008 at 10:06am #

    Another way to see these issues is that half the world’s people, nearly 3.5 billion, live in the greatest destitution, danger and hopelessness ever in the history of the world. No unassaulted “savage” society was so impoverished and powerless. Using almost any form of a Utilitarian Calculus, here has never been such suffering by any species.

    I applaud Mr. Parsons for his work. This information needs to be presented to us every day with our $5 latte and $4 croissant.

  2. Danny Ray said on September 19th, 2008 at 12:37pm #

    I am not quite sure that I understand. If it cost $1.25 just to survive and one quarter of the world’s population are surviving on less than that, then the amount to survive on must therefore be less than $1.25.
    Because if you could starve on $1.25 and you have less than that. Then you would be dead. Most of that quarter of the population should have already starved to death ? Either you or the world bank is working on bad logic.

  3. Deadbeat said on September 19th, 2008 at 4:48pm #

    Danny Ray writes…

    If it cost $1.25 just to survive and one quarter of the world’s population are surviving on less than that, then the amount to survive on must therefore be less than $1.25.

    I don’t believe that is what the author wrote. He stated that according to the World Bank the international poverty line is is living on less than 1.25/day. That defines what the author states as extreme poverty.

    The challenge is trying to survive and living a live of human dignity on 1.25 or less. IMO I think your misstatement of the author’s premise has led to your fallacious conclusion.

  4. Danny Ray said on September 19th, 2008 at 4:50pm #

    Most excellent point Deadbeat, Thanks

  5. Brian Koontz said on September 19th, 2008 at 7:36pm #

    In reply to Danny Ray:

    The life expectancy of someone “living” on $1.25 a day is greatly diminished, due to a nearly complete absence of material services (health, sanitation, nutrition). Not only do these people live much shorter lives, those lives are utterly miserable and very desperate. Poor nutrition results in mental and physical health problems, carried on to any children. Desperate need for money results in accepting virtually any conditions to gain that money (theft, prostitution, terrible working conditions). The lives of these people are reduced to a struggle for dignity and survival. Untreated diseases are the norm rather than the exception. This condition would never be tolerated in a world where every human is treated equally.

    The question is not “what amount of money is the bare minimum needed for short-term survival” but rather “what amount of money is needed for *decent* long-term survival”. Decent survival includes a limit on the number of hours worked, occasional access to the arts, good nutrition for the entire family, health care, and labor rights. Anything less is uncivilized, and the condition of humanity as it currently stands is abhorrent.

    The question for the first-world left is the same as it has always been – are you willing to give up some of your treasures – some of your imperial benefits – so that the world can become civilized? So far history has answered that question with a resounding “no”, and 30,000 child corpses per day is just the tip of the iceberg of the cost of that choice. Unless that answer becomes “yes”, the only solution is for the first-world left to be thrown from their throne along with the rest of the imperial monsters.

  6. Danny Ray said on September 20th, 2008 at 6:37am #

    The question for the first-world left is the same as it has always been – are you willing to give up some of your treasures – some of your imperial benefits – so that the world can become civilized?

    I guess I would have to answer a resonding NO to that.

  7. cg said on September 20th, 2008 at 9:08am #

    How is living on 1.25 a day in Zambia comparable to living on 1.25 a day in USA or Poland?
    I live on 400 a month in the USA. This puts me way below the poverty line but I eat fairly well.
    400 a month in Zambia would make me middle class, pretty well off, so to speak, would it not?

  8. Mulga Mumblebrain said on September 20th, 2008 at 3:07pm #

    I must say Danny does not appear to be a little ray of sunshine by any means. Now what psychological type is it that shows such smug indifference to human suffering?

  9. Danny Ray said on September 20th, 2008 at 5:08pm #

    American ?

  10. Adam W. Parsons said on September 21st, 2008 at 9:36am #

    James, Deadbeat, Brian et al,

    Many thanks for the comments which I think altogether raise an important point – that statistics can blind us to the reality of what it means to be absolutely poor. The theme of this article was perhaps even more basic: that ideological assumptions and statistical biases aside, the latest poverty figures reveal an even more abysmal world situation according to any commonsense lay analysis – and yet this straight-forward observation has been widely neglected by the global justice movement. The MDGs on poverty and hunger, following the food price crisis, are now further out of reach than ever. But without even a trustworthy analysis of global poverty, effective monitoring of progress remains elusive.

    As for Danny Ray’s point, one might argue that even $10 a day – which is the maximum daily income of possibly 78% of the world – is not enough to live a life of human dignity. The IFPRI’s report last year on ‘The World’s Most Deprived’ sub-divided the national poverty line of $1 a day into 3 further categories, with the ‘ultra poor’ living on less than 50 cents a day (consituting 162m people – a number that would now need a huge revision upwards in the light of the Bank’s new figures!). $1.25 a day, in other words, is far from as bad as it gets.

    Whatever our conclusion, and in the light of the financial crisis which threatens to distract attention from the other joint and major crises of hunger, conflict and climate change, a massive reordering of international priorities is clearly needed.

    For anyone interested in a more effective measure of international poverty, I would recommend Pogge and Reddy’s approach that focuses on sufficiency for meeting basic human needs – see their website at http://www.socialanalysis.org/ (e.g. see the conclusion of ‘Unknown: The Extent, Distribution, and Trend of Global Income Poverty’).

    A longer and referenced version of this article is available at: http://www.stwr.org/globalization/world-bank-poverty-figures-what-do-they-mean.html

  11. Brian Koontz said on September 21st, 2008 at 9:36pm #

    cg wrote:

    “How is living on 1.25 a day in Zambia comparable to living on 1.25 a day in USA or Poland?
    I live on 400 a month in the USA. This puts me way below the poverty line but I eat fairly well.
    400 a month in Zambia would make me middle class, pretty well off, so to speak, would it not?”

    This is something I want to study, the issue of comparative costs across the world. I know, however, that markets are global. I suspect, though don’t know, that housing costs are substantially less in many areas of the world than in the U.S. Food costs should be comparable, although possibly lower in the U.S. for some foods since American agribusinesses are subsidized by American taxpayers.

    One way in which you are clearly correct is that relative to the majority of the nation’s population, $400 a month in Zambia is middle class. But that’s not saying anything worthwhile. That’s like saying that with respect to the inhabitants of a slum, someone owning a computer is middle class. Zambia is destitute, so having a median income in Zambia is much worse than having a median income in the U.S., which is an industrial developed economy reaping imperial benefits with a (however eroded) welfare system.

    Mulga Mumblebrain wrote:

    “I must say Danny does not appear to be a little ray of sunshine by any means. Now what psychological type is it that shows such smug indifference to human suffering?”

    To be fair, he may merely be being honest. When it comes down to it, I don’t believe many people even on the left in imperial countries would be willing to accept a system of global socialism, which is what I mean by “civilized” and pulling people around the world out of poverty. This means that your child gets less presents at Christmas, you eat less at restaurants, you may have to forego college for your children, and likely even more sacrifices. Meanwhile, while you are making all of these sacrifices you can’t even see the people you are helping – they are on the other side of the world, represented by statistics only even to those who are educated. Balancing helping someone you can’t even see versus helping your own children is one of the reasons the left in imperial countries has never been serious about civilizing the world.

    Global socialism (anarchic or authoritarian) is a radical position, even on the left. I’d love to see the first-world left embrace such a position, but I doubt that will happen anytime soon.

    Here’s what Cecil Rhodes, British financial magnate, had to say about Imperialism in 1895:

    “I was in the West End of London yesterday and attended a meeting of the unemployed. I listened to the wild speeches, which were just a cry for “bread!” “bread!” and on my way home I pondered over the scene and a I became more than even convinced of the importance of imperialism … My cherished idea is a solution for the social problem, i.e., in order to save the 40,000,000 inhabitants of the United Kingdom from a bloody civil war, we colonial statesmen must acquire new lands to settle the surplus population, to provide new markets for the goods produced in the factories and mines. The Empire, as I have always said, is a bread and butter question. If you want to avoid civil war, you must become imperialists.”

    The “poor people” of imperial countries are bribed into silence – given bread and butter, and a bit more if necessary, in order for them to have privileges over the terrorized masses (the third world). Divide and conquer once again, and hence the multinational capitalists went on to *produce* massive poverty, intentionally, to kill hundreds of millions of people (perhaps billions by now) and control the world. Do you understand why being “anti-war” is such a nonsense position? “Show the corpses!”, the silly monsters of the “anti-war movement” cry – those same people never say “Show the corpses!” of the tens of thousands killed every day by *economic* imperialism. The only logical conclusion is that they are fine with killing millions of people, except through military war.

    It is the “poor people” of imperial countries, as well as the middle class, that *allow* imperialism to happen. The ruling class buys the silence of the rest of us with some bread and butter, and keeps the rest of the profits for themselves. That can end very soon, or 30,000 or more child corpses per day can keep being produced.

    We hear the number 1.2 million (or thereabouts) a lot. That’s the number of Iraqis killed due to the American invasion, surely a horrific tragedy. But how often do we hear the number 11 million (per year), who are children that die due to economic imperialism?

    The very same people who congratulate themselves on being “left” and “moral” and “environmentally conscious” in America in reality are mass murderers.

    That bread is covered by both butter and blood.

  12. Mr Mohammed said on September 22nd, 2008 at 7:15am #

    It is all true.
    The World Bank wriggles and fiddles with the figures in order to try to justify their policies but obviously the world’s poor increase and continue to increase and become poorer and poorer and die sooner and sooner and will continue to do so until the present economic system comes to an end.