Why & How: Poor and Rich

DEFINING POVERTY...

Absolute poverty is defined according to an absolute minimum standard, often called the ‘poverty line’. Relative poverty means that you are poor in relation to those around you.
Income poverty (‘less than a dollar a day’, for example), means that you are poor if you have less money than the defined poverty line for your country. Human poverty takes into account other factors, such as life expectancy, infant malnutrition, illiteracy and lack of food or clean water. Basic needs definitions also go beyond money, to include all the things that a person needs in order to survive – including employment and participation in society.

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MEASURING POVERTY...

Measuring poverty is always a problem, especially if you recognize that just using money is not enough. There are a number of new measurements emerging, like the Index of Sustainable Economic Welfare.¹ This measures ‘quality’ economic activity by, for example, making a subtraction for air pollution and an addition for unpaid household labour.
Another method is the Human Poverty Index. This is ranked according to three main areas of deprivation: survival; knowledge and a decent standard of living. In the industrial world, where the Index also includes social exclusion, some 7 to 17% of the populations are classified as poor. The higher the percentage figure, the greater the poverty in that country.

AN UNEQUAL WORLD

Inequality is on the increase. In 1976 Switzerland was 52 times richer than Mozambique; in 1997, it was 508 times richer. Two hundred and fifty years ago, the richest countries were only five times richer than the poorest, and Europe only twice as rich as China or India.

The rich...

In 1960, the 20% of the world’s people who live in the richest countries had 30 times the income of the poorest 20%; by 1995 it was 82 times. The world’s 225 richest people have a combined wealth of over $1million million. Only four per cent of this wealth – $40 billion – would be enough for basic education and healthcare, adequate food and safe water and sanitation for all the world’s people.

the 15 richest have assets that exceed the total Gross Domestic Product (GDP) of sub-Saharan Africa.
the assets of the 84 richest exceed the GDP of China, which has 1.2 billion inhabitants.

and poor...

More than a thousand million people still live in poverty, a tenth of them in the industrialized world.

Of the 4,400 million people in the Majority World, nearly 60% lack basic sanitation and more than 30% have no access to clean water.
25% do not have adequate housing.
20% have no access to modern health services. Two thousand million women are anaemic (including 55 million in the industrial world).
20% of children in the world do not attend school to grade five.

THE GOOD NEWS:

in the past 50 years poverty has fallen more than in the previous 500. Since 1960 child-death rates have been halved and malnutrition has declined by a third. Developing countries have covered as much distance in human development during the past 30 years as the industrial world managed in over 100.

THE BAD NEWS:

one in four of the world’s people still live in severe poverty. It’s worse for women than for men; and for black people than for white. Even in the so-called ‘rich’ world increasing numbers of people do not have enough to live on.

The ‘FOOTPRINT’ of a small number of people in a rich community – or in the rich world – will take up a lot more space than that of a large number of people in a poor community – or the poor world. So the rich have bigger houses, gardens and physical space, but they also have greater access to a wider range of resources – schools, shops, banks, health services, for example. A rich community may have many doctors or schools or shops to choose from – a poor one just one of each. But the latter can increase its space by having a place to meet or by setting up its own credit union or other social group.

WHAT MAKES A GOOD LIFE?

The percentage of Americans calling themselves happy peaked in 1957 – despite the fact that consumption has doubled since. Having more does not then mean we enjoy life more – and yet consumption is increasing everywhere except in Africa, where the average household consumes 20% less than it did 25 years ago.

GHANA

‘Being poor’ in this survey meant being unemployed, unhealthy, unable to take care of your family, not being able to afford clothes or proper food, not being listened to, and being ‘lazy’.

AIDING THE POOR?^3^

The UN has set the target for overseas aid at 0.7% of a country’s GNP. Only the Netherlands and Sweden currently meet this target and the US aid budget is the lowest of all. Overall, aid is 0.22% of GNP. If it had stayed at its 1992 level of 0.33%, it would today be $24 billion more than it is.
The majority of aid is not spent on direct poverty alleviation. Some is ‘tied’ to trade deals, or debt servicing. In 1997, debt-service payments from sub-Saharan Africa amounted to 80% of aid. Only 24.3% goes to the poorest countries.

CONSUMING NEED, CONSUMING GREED

The 20% of the world’s people who live in the highest-income countries consume 86% of the world’s resources. The bottom 20% in the lowest-income countries consume less than 10%. The average protein consumption is 115 grams a day in France but only 32 grams in Mozambique. And the less money you have, the greater proportion you must spend on food rather than health or education.

Private and public health expenditure, 1990

See http://www.foe.co.uk/progress for more details of the ISEW.
Peter Ohene Kyei, ‘Field perspectives on decentralisation and rural poverty alleviation in Ghana’, presented at the 1998 Development Studies Association, Bradford, Britain.
The Reality of Aid 1998/99 (Earthscan).
All other figures are from the 1998 Human Development Report (UNDP).