“Take a bow, capitalism.” That’s from The Economist, a business-happy publication that has every reason to perpetuate the myth that a world run by free enterprise is improving people’s lives. Its story continues with an astounding claim: “The world now knows how to reduce poverty.” Perhaps by presenting questionable data that seems to support what the business community wants us to believe.
Other super-capitalists are similarly exuding hyperbole in defense of their shaky beliefs. Said a spokesman for the American Enterprise Institute: “It was the American free-enterprise system that started to spread around the world. They looked at you and said, ‘I want to have their life, their freedom, and their stuff, and they threw off their chains of poverty and tyranny.’” But it’s clear, when the facts are checked, that the chains of poverty are being wrapped around more and more human beings.
According to the Credit Suisse Global Wealth Databook 2016, the median wealth of the world’s adults is $2,222, down from $3,248 at the end of 2007. While the rich people of the world have taken more than their share of the $35 trillion wealth gain since the recession, the world median has dropped by over $1,000!
There are other recent indications of rising poverty. Based again on Credit Suisse wealth data, in just seven years the world’s Gini Coefficient, the most widely accepted measure of inequality, has surged from 88.1 to 92.7. Wealth inequality BETWEEN countries has grown dramatically. It’s a stunning rise, further evidence of a world splitting into two.
A widely held misconception is that global inequality between countries is declining because of growth in China and other developing countries. But that claim is generally made with respect to income inequality, and it is only partially true. Global income inequality is down only in relative terms, in the sense that an income boost from $1 to $2 a day is greater in percentage than an income boost from $1,000 to $1,500 a day.
The world poverty threshold was recently increased by the World Bank from $1.25 to $1.90 per day. Numerous sources have recognized the absurdity of this dollar amount for day-to-day survival. The United Nations Conference on Trade and Development argues for a $5 minimum; ActionAid says $10; even the World Bank admits that the $1.90 poverty line is “too miserly for middle-income countries,” and that”more than 50 percent of the population in IDA [the world’s poorest] countries live on less than US $6 a day and are considered at high or moderate risk of relapsing into poverty.”
In addition, the poverty threshold has not kept up with inflation. The World Bank set the first poverty threshold to $1.01/day using 1985 purchasing power parity. It eventually raised the threshold to $1.90/dayat 2011 purchasing power parity. But with inflation, $1.01 in 1985 is equivalent to $2.10 in 2011. The World Bank’s most recent threshold adjustment falls far short of realistic human needs.
The UN’s Millennium Development Goals (MDGs) took advantage of this in the year 2000, calling for a halving of poverty, but backtracking to the year 1990 to include the income gains across China.
Conditions getting better? Only in the minds of capitalists who don’t want their comfortable lives disrupted by a rebellion among their billions of victims.
This article has been excerpted from: ‘Extreme Poverty Cut in Half? Only in the Minds of the Capitalists’.