The Divide

by Jason Hickel

  Two

  The End of Poverty . . . Has Been Postponed

  Everything faded into mist. The past was erased, the erasure was forgotten, the lie became truth.

  George Orwell, 1984

  On a cool September day in 2000, the world’s heads of state gathered at the United Nations headquarters in New York to sign one of the most important international agreements in modern history: the Millennium Declaration. It was a monumental occasion. For the first time, world leaders had committed themselves to a full range of development aspirations. And the main objective – the one that captured the world’s attention – was a pledge to cut global poverty and hunger in half by 2015.

  After the meeting in New York, UN staff buckled down to the work of formulating the aspirations of the Millennium Declaration into a series of eight concrete, measurable targets called the Millennium Development Goals. Goal 1 was to cut poverty and hunger in half, but there were a number of others: to achieve universal primary education, to eliminate gender disparity in education, to reduce child mortality by two-thirds, to reduce maternal mortality by three-quarters, and to reverse the spread of AIDS and malaria. Poor countries themselves would be responsible for meeting these targets (the assumption being that poverty had to do with domestic policies) with the help of aid and other forms of assistance from rich countries.

  After the launch of the MDGs, a well-funded PR campaign kept the programme prominent in the public imagination and high on the global policy agenda. It quickly became the biggest coordinated international effort of the 21st century. Each year the UN published a report updating the world on progress towards the goals. And only twelve years in, with their deadline still three years away, they claimed success on Goal 1. They announced that poverty rates had already been cut in half, and that the goal of halving hunger was close to being achieved.

  The announcement came as a shock to many. At the time, the world was still mired in the worst economic crisis in nearly a century. As Western economies had contracted, export industries in the global South dried up and employment fell. To make matters worse, the poorest had been hit by unprecedented spikes in the price of food. If anything, analysts were expecting there to be more poverty and hunger. Nevertheless the media seized the story and ran with it. Soon after the UN’s report, The Economist ran a widely shared article with the headline: ‘A Fall to Cheer: for the first time ever, the number of poor people is declining everywhere’. That same year, Charles Kenny published Getting Better: Why Global Development Is Succeeding, with a glowing foreword by Bill Gates. Gates himself published a public letter in 2014, opening with the words: ‘By almost any measure, the world is better than it has ever been.’ And the Swedish academic Hans Rosling continued to make his earnest presentations with shiny visual gimmicks illustrating how the plight of the poor keeps improving. Rosling’s TED Talk, ‘The Best Stats You’ve Ever Seen’, has been viewed more than 10 million times. The UN’s poverty-reduction figures quickly became some of the most repeated statistics in the world.

  This is what I call the ‘good-news narrative’ about poverty. It is a comforting story, a welcome contrast to the depressing tales that often fill the daily news cycle. After all, it feels good to take a step back and realise that things are not as bad as they seem – that in the broad scheme of things, the world is gradually getting better. It is a story that vindicates our civilisation and affirms our deepest and most powerful ideas about Progress.

  It also serves as a potent political tool. The good-news narrative enjoins us to believe that the global economic system is on the right track. It implies that if we want to eradicate suffering, we should stick with the status quo and refrain from making drastic changes. For anyone who has an interest in maintaining the present order of distribution – the global 1 per cent, for instance – the good-news narrative is a useful story indeed. Sometimes this argument is quite explicit. In early 2015, the Spectator published a blog post with the title: ‘What Oxfam doesn’t want you to know: global capitalism means less poverty than ever’. It led with the MDG statistics on the reduction of extreme poverty, followed by a graph showing the declining proportion of undernourished people in developing regions. The author argued that all the attention we’ve been focusing on social inequality and wealth accumulation among the richest 1 per cent is misplaced. The 1 per cent may now have more wealth than the combined population of the entire rest of the world, but that’s OK because the very system that has made them so rich has also reduced poverty in developing countries. ‘We are, right now, living through the golden age of poverty reduction,’ the author wrote. ‘Anyone serious about tackling global poverty has to accept that whatever we’re doing now, it’s working – so we should keep doing it. We are on the road to an incredible goal: the abolition of poverty as we know it, within our lifetime. Those who care more about helping the poor than hurting the rich will celebrate the fact – and urge leaders to make sure that free trade and global capitalism keep spreading. It’s the only true way to make poverty history.’

  Of course, even if we take the good-news narrative at face value, it tells us nothing about whether these gains are the direct result of the rapid extension of free-market capitalism across the globe, as the Spectator article asserts. Indeed, it is possible that they have happened in spite of it. But what is clear here is that when it comes to the question of global poverty, the political stakes are high. If poverty is falling faster than ever, that would be a strong argument in favour of our existing economic system. If poverty is falling a little bit, but not as quickly as it was before, then maybe our system isn’t quite as good as it could be. And if poverty is not falling at all but rather rising, that would be a good reason to change the system altogether. With these kinds of questions on the table, it is crucial that we have the facts straight.

  Some of the claims made by the MDGs are strong and deserve to be celebrated. The number of deaths among children under five declined from 12.7 million in 1990 to 6 million in 2015. That means there were 18,000 fewer children dying each day. This is a remarkable improvement. The same is true of maternal mortality, which declined by an impressive 45 per cent during the MDGs. Primary school enrolment is up. And HIV and malaria infection rates have declined markedly. While the UN technically fell short of reaching its targets on these fronts, the numbers are nonetheless evidence of substantial progress.

  But the headline assertion of the good-news narrative, the claim that poverty and hunger have been cut in half, rests on much shakier ground. If we look more closely, the real story about global poverty is not quite as rosy as we have been led to believe. In fact, it is nearly the opposite of the official narrative. How did this happen? What is going on? And what might a more accurate story of global poverty and hunger look like?

  The Great Poverty Disappearing Act

  To understand what’s wrong with the story of poverty reduction, we have to start at the beginning. The first multilateral agreement to reduce global poverty was signed in 1996, when the world’s heads of state met at the World Food Summit in the beautiful city of Rome. The commitment back then was a bold one: ‘We pledge our political will and our common and national commitment to achieving food security for all and to an ongoing effort to eradicate hunger in all countries, with an immediate view to reducing the number of undernourished people to half their present level no later than 2015.’ It is crucial to note that the goal was to halve the absolute number of undernourished people. The Rome Declaration focused specifically on hunger rather than income as the key dimension of poverty, but it set an important precedent for the type of target – in terms of parameters and ambition – that the world would pursue.

  Four years later, when the world’s leaders gathered to sign the Millennium Declaration in New York, they set out an explicit goal on income poverty – the first of its kind. There was enormous fanfare surrounding this new pledge, but those who were watching closely found little to celebrate, for the goalposts were subtly shifted from the ones lai
d out in Rome. The new commitment was to halve ‘the proportion of the world’s people whose income is less than one dollar a day and the proportion of people who suffer from hunger’ from the baseline year of 2000. By switching from absolute numbers to proportions, the target became easier to achieve, simply because it could take advantage of population growth. As long as poverty was not getting much worse in absolute terms, it would automatically appear to be getting better in proportional terms. At the time, there were 1,673 million people in poverty. To cut the number of poor in half would mean reducing the poverty headcount by 836 million people. But to cut the proportion meant reducing it by only 669 million people – a significantly easier goal to achieve. It was a masterful piece of statistical theatre, and almost nobody noticed.

  That was just the beginning. Shortly after the Millennium Declaration was adopted, the UN rendered it into the Millennium Development Goals that we know so well today. During this process, the poverty goal (MDG-1) was diluted yet again – this time behind closed doors, without any media commentary at all. First, they changed it from halving the proportion of impoverished people in the whole world to halving the proportion in developing countries only. Because the population of the developing world is growing at a faster rate than the world as a whole, this shift in the methodology allowed the poverty accountants to take advantage of an even faster-growing denominator. On top of this, there was a second significant change: they moved the starting point of analysis from 2000 back to 1990. This gave them much more time to accomplish the goal, extended the period of denominator growth and allowed them to retroactively claim gains in poverty reduction that were achieved long before the campaign actually began. This backdating took particular advantage of gains made by China during the 1990s, when hundreds of millions of people were lifted out of extreme poverty, and deceptively chalked them up as a victory for the Millennium Development Goals.

  This new round of statistical theatre shrank the target by even more than the first round. The goal of the Millennium Declaration was to cut the number of poor by 669 million people. But MDG-1 pledged to cut the number of poor by only 490 million. There’s another way to think about this change. The world’s governments initially decreed that there should be no more than 1,004 million people living in poverty in 2015; that was to be the absolute cap, and anything more than that was deemed to be morally unacceptable. But they later decided to adjust the cap upward to 1,327 million, essentially declaring it would be acceptable for 323 million additional people to suffer from extreme poverty in 2015. This also meant that they permitted themselves to be much less aggressive in the fight against poverty: while the initial goal required an annual rate of poverty reduction of 3.35 per cent, the final goal allowed for a much more leisurely rate of only 1.25 per cent. In comparison, the new goal would need hardly any effort to achieve.

  There is something highly questionable about the ethics behind MDG-1, given that it rests on such a flexible understanding of moral acceptability. But for those who are committed to promoting the good-news narrative, it has been remarkably useful. By redefining the goal, the Millennium Campaign is now able to claim that poverty has been halved when in fact it has not.

  TABLE 1 Diluting the poverty goal.

  Baseline year Baseline poverty count (millions) Promised reduction by 2015 (millions) Proportion reduction by 2015 (%) Annual rate of reduction (%)

  Millennium Declaration 2000 1673 669 40 3.35

  MDG-1 1990 1817.5 490 27 1.25

  Source: Adapted from Pogge, ‘How World Poverty is Measured’.

  The good-news narrative about poverty reduction only works because the goalposts have been shifted. But that’s not the only sleight of hand to be concerned about.

  *

  What counts as poverty – the ‘poverty line’ – is normally calculated by each nation and is supposed to reflect the total cost of all of the essential resources that an average adult needs to subsist. For most of recent history, it has been understood that poverty lines are not really comparable across contexts: what counts as poverty in Somalia is not the same as what counts as poverty in Chile. Nonetheless, there was a big push to try to find some kind of common denominator that would make it possible to measure the poverty rate across the world with a single methodology. Martin Ravallion, an Australian economist at the World Bank, was the first to make this a reality. In 1990 he noticed that the poverty lines of a few of the world’s poorest countries clustered around $1.02 per day. It seemed reasonable, he thought, to assume that this would be a good low-end threshold for measuring absolute poverty. On Ravallion’s recommendation, the World Bank adopted the dollar-a-day line as the first-ever international poverty line (IPL).

  But the IPL proved to be somewhat troublesome. Using this line, the World Bank was forced to announce in its 2000 annual report that poverty was rising. ‘The absolute number of those living on $1 per day or less continues to increase,’ the report read. ‘The worldwide total rose from 1.2 billion in 1987 to 1.5 billion today and, if recent trends persist, will reach 1.9 billion by 2015.’ This was alarming news, and projected a troubling future trend. Not only that, it also suggested that the structural adjustment programmes imposed by the World Bank and the IMF on global South countries during the 1980s and 1990s in the name of ‘development’ were actually making things worse. This posed serious problems for the World Bank. If poverty reduction was going to be the method by which we measured global economic progress, then it was clear that structural adjustment would have to be scrapped, and the World Bank would have to acknowledge a very costly mistake. This would mean halting the process of forced market liberalisation and privatisation around the world, which was bad news for the multinational corporations – and the global South elite – who benefited so much from it. It was a dramatic moment that looked set to consign the World Bank’s radical free-market policies to the dustbin of history.

  But not long after the report was released, the World Bank’s story changed. In 2001, the Bank’s president, James Wolfensohn, delivered a speech in which he stated that the forced imposition of free-market policies had actually reduced poverty in the developing world: ‘Over the past few years,’ he announced, ‘better policies have contributed to more rapid growth in developing countries’ per capita incomes than at any point since the mid-1970s. And faster growth has meant poverty reduction: the proportion of people worldwide living in absolute poverty has dropped steadily in recent decades, from 29 per cent in 1990 to a record low of 23 per cent in 1998. After increasing steadily over the past two centuries, since 1980 the total number of people living in poverty worldwide has fallen by an estimated 200 million.’

  What was curious about Wolfensohn’s speech was that he acknowledged that per capita incomes had been growing faster up until the mid-1970s, technically admitting that the World Bank’s structural adjustment programmes had slowed progress during the 1980s and 1990s. But at the same time he claimed that poverty had nonetheless been reduced during those decades – and that’s the part of the story that captured everyone’s attention. The media went along with it, pivoting from questioning the Bank’s policies to celebrating its success against poverty. That was in 2001. Then, three years later, the Bank published its new official figures, which stated that poverty reduction was even more successful than Wolhfensohn had suggested – twice as successful, in fact: a grand total of 400 million people were rescued from extreme poverty between 1981 and 2001. The story just kept getting better.

  How did the World Bank’s poverty numbers change so suddenly from a rising trend to a falling one? To put it simply, they changed the international poverty line. In 2000, they shifted it from the original $1.02 level to $1.08. While the new poverty line looks slightly higher than the old one, in reality it was just ‘rebased’ to new purchasing power parity (PPP) calculations, which are updated every few years to compensate for depreciation in the purchasing power of the dollar. If the purchasing power of the dollar goes down, people need more dollars to buy
the same stuff as before. So the poverty line needs to be periodically ‘raised’ to account for this. But in this case they didn’t raise it quite enough to account for purchasing power depreciation. So the new $1.08 poverty line was actually lower in real terms than the old $1.02 line. And lowering the poverty line made it appear as though fewer people were poor than before. When the new line was introduced, the poverty headcount fell literally overnight, even though nothing had actually changed in the real world.

  This new poverty line was introduced in the very same year that the Millennium Campaign went live, and it became the campaign’s official instrument for measuring absolute poverty. With this tiny alteration, a mere flick of an economist’s wrist, the world suddenly appeared to be getting better.

  The IPL was changed a second time in 2008, to $1.25. The World Bank’s economists claimed that this new line was roughly equivalent to the earlier one, in real terms, but watchdogs like Yale professor Thomas Pogge and economist Sanjay Reddy at the New School in New York pointed out that the data was simply not comparable. Once again, the number of absolute poor changed overnight, although this time it went up – by 430 million people. At first glance this seems like it must have been shockingly bad news – a decisive blow to the good-news narrative. But there was a bright side, as far as the World Bank was concerned: the poverty reduction trend started to look significantly better, at least since the baseline year of 1990. While the $1.08 line made it seem as though the poverty headcount had been reduced by 316 million people between 1990 and 2005, the new line inflated the number to 437 million, creating the illusion that an additional 121 million souls had been saved from the jaws of poverty. Once again, the Millennium Campaign adopted the new poverty line, which allowed it to claim yet further gains.