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Poverty & Inequality

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Fighting Poverty: A Global Challenge
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A new system should be created that is totally focused on social relief and justice, not pandering to the calls of the profit-driven private sector capitalist market that permeates the present world, says Dr David Hill.


4th September 08 - Patricia Khashayar interviews Dr David Hill, Press TV

The following is an interview with the Executive Director of World Innovation Foundation Charity (WIFC), Dr. David Hill, on poverty and its causes.

Q. Poverty has become a global challenge, affecting nearly all world countries, what are the main causes of this international problem?

A. According to Mollie Orshansky who developed the poverty measurements for the US government, "to be poor is to be deprived of those goods and services and pleasures which others around us take for granted."

But this is a sedate definition for the majority of the worlds poor and where in the developing world can one consider poverty to be a daily battle just for human survival.

That is the big difference in perceptions here between the rich capitalistic west and around half the population of the world. I can tell you now that things will not get any better by continuing to adopt the 'West's' capitalist system to defeat poverty in the developing East and where it will cause immense harm both in human misery and global wars eventually.

The reason I say this is really common sense, for as the population of the world increases to between 9 billion and 12.5 billion people by 2050, and as the world's basic natural resources to sustain life dwindles to an acute situation, wars are inevitable under the dictum of the capitalist market system.

In this respect, nations only go to war basically for economic reasons if you read into the causes of wars and the underlying objectives for those who started them. The first and second world wars were economic wars and the latter was definitely fuelled by poverty in Germany and the imperialistic aspirations of Japan (economics, in other words).

Therefore, the right economic mechanisms will either destroy the human experience forever or allow the human experience to live on for thousands of millenniums to come. But I have to say that most probably, this greatest decision of human existence will be determined in this present century as the effect of depleting non-renewable natural resources meets head on with 9-12.5 billion people to be fed, clothed and housed.

Q. Many international organizations and companies have attempted to fight poverty and improve the quality of life in the world, what do you think of such approaches? How successful have these efforts been?

A.Overall and presently, the World Bank, the IMF and IFC have failed the world's poor and in doing so, have hardly improved the lives of half the population of the world. Indeed, these institutions have impoverished the world's poor through un-repayable national debts with their massive repayments structures that alleviate nothing.

For all-in-all, the post application process of the Bretton Wood's thinking has totally failed the poor of the world and where the executing institutions need abolishing and replacing with ones that in the future have successful outcomes. This is where a new system should be created and totally focused on social relief and justice, not pandering to the calls of the profit driven private sector capitalist market that permeates the present world.

For as Friends-of-the-Earth state, "The World Bank Group has steadily increased its support of the private sector over the years and its private sector lending arm, the International Finance Corporation (IFC), is an increasingly important facilitator of private investment in the developing world. A part of the World Bank Group whose mission as a development institution is to promote development and alleviate poverty, IFC's lending to the private sector is often at odds with this mission."

To put poverty into perspective, it pervades all countries both rich and poor.

Q. Could you provide us with some statistics showing the prevalence of this global issue? How many countries are affected by it?

A. In this respect, I give hereafter a mere present-day snapshot of the global problem relative to poverty and where all nations suffer from this iniquity. Therefore the capitalist system according to current information available does not work in the interests of the elimination of poverty and where therefore a better system has to be found, and quickly!

Unfortunately, this highly needed 'change' thinking will not come from the present 'establishment/status quo' thinking of the 20th century economic class, but from 'independent' revolutionary thinking of this present century.

1.World Poverty- According to the World Bank, in 2008 there are still 987 million people living on US $1 a day or around 15 percent of the world's population. Adding to this, a further 2 billion people still live on US $2 dollars a day that combined together equate to 45 percent of the world's population. But taking into account inflation since the 1 and 2 dollar arbitrary poverty line was introduced by World Bank economist Martin Ravallion, poverty has not declined in real terms and is in fact increasing.

This is indifference to what the World Bank et al are telling the world. In this respect, a dollar today is only worth 55 percent of what it was in 1998 or the equivalent present day worth of US $1.82. Therefore, the primary statistics released by the World Bank with regard to poverty are totally flawed and very wide off the mark. Considering this therefore, global poverty is far greater today than it was a mere decade ago and the trends are not encouraging for the future.

2. USA- According to Education News Colorado on 18th June 2008, more kids are now living in poverty than in 2000, but more alarmingly they now live at extreme levels of poverty.

According to the author JS Hacker in his book, "The great risk shift: The new insecurity and the decline of the American dream", 58.5 percent, of all Americans will spend at least one year beneath the poverty line at some point between ages 25 and 75.

Thirty-seven million Americans live in poverty according to the US Census Bureau, the "Income, Poverty and Health Insurance Coverage Report" for 2007, US Census Bureau, 26th August 2008 (quoted by Press TV on 27th August 2008).

3. Pakistan- According to the Asian Development Bank in its report of August 2008, the number of poor in Pakistan grew since 1999 from 32 percent of the population to 40 percent of the population in 2002.

4. Chile- According to the Inter-American Bank of Development's report of August 2008, food prices internationally were up 68 percent between January 2007 and March 2008 and where if food prices remain high in Chile, the nation's poverty rate will increase from 12.3 percent to 17.2 percent.

5. Peru- Due to high international food prices poverty will rise from 44.2 to 49.5 percent of the population according to the August 2008 report by the Inter-American Bank of Development.

6. Canada- A report in late 2007 by The United Way of Greater Toronto stated that 30 percent of Toronto families, amounting to about 93,000 households, were living in poverty. A similar study in 1990 showed that about 16 percent of families were in the same situation and therefore a 14 percent increase in a mere 17 years.

7. Mexico- Latin American News Agency quoted on 18th August 2008 that 8 million additional Mexicans had been pushed into poverty over the last two years due to the soaring fuel prices and their impact on food prices. At least 18.5 million Mexicans now live in extreme poverty.

8. Scotland, UK- More than 1million Scottish households will face fuel poverty before the end of the year after two energy firms announced huge increases in the price of gas and electricity - Media comment on 22nd August 2008.

9. United Kingdom-There are 900,000 more people living in severe poverty than there were in 1997. The gap in infant mortality between the poorest and richest households has grown - George Osborne, Conservative Party shadow Chancellor of the Exchequer, August 2008.

10. India- In July 2008 after the collapse of the World Trade Organization (WTO) negotiations, India's commerce minister Kamal Nath stated that India is a country where 700 million people live on a maximum of 2 dollars a day and where 300 million people of these live on 1 dollar a day, equating together to 87 percent of the total population of India.

11. China- Although China has gone through an unprecedented economic miracle, achieved in a single generation, there are still 300 million Chinese living on a maximum of USD2 a day and 2/3rds of this number on only USD1 a day - BBC interview late 2007.

Q. How has Globalization influenced poverty? Has it succeeded in overcoming the problem or has it worsened the situation?

A. Indeed, according to the environmental activist Lorna Salzman, for the millions squatting in hovels daily (over 1 billion people), they derive NOTHING from globalization. It is infuriating to realize that globalization is a total scam for the vast majority of the world's people.

In terms of the poor and what a capitalist predicts for their future, James D. Wolfensohn stated in 1999 when he was President of the World Bank, that out of the 6 billion people living on our planet, 3 billion live on less than two dollars a day. By the end of the next fifteen years (2015), these will be 4 billion out of 8 billion (living on the same amount). In other words, the UN's Millennium Development Goals of halving poverty by 2015 was defunct before it even began.

These two statements in many ways say everything to me in terms of future world poverty adopting the dictates of capitalism, as we have on the one hand the environmental activist and on the other hand the head of the institution that is charged to reduce poverty. Both say basically that capitalism and globalization will do nothing for the poor, other than to further impoverish them or keep the status quo.

But overall I have made some basic observations:

1. Capitalism harnesses self-interest in a helpful and sustainable way but only for those who can pay. The poor therefore have no part in this inequitable system.

2. Capitalism increases inequality. In modern times, China and India are experiencing this social problem already.

3. Capitalism is a system that uses people to make a very small minority rich beyond their wildest dreams and a world that suffers through that process. Indeed, although capitalism gives the people a wage, it has no real human conscience and where people are always at the whims of the rich who employ them. As world population grows and the Earth's natural finite resources depletes forever, one does not have to be an Einstein to see that the present capitalist system will eventually fail human development with catastrophic effects.

Indeed, the capitalist system has made the very few enormously rich but left half the world conversely poor. This can be seen in that the richest 5 percent of the world's countries generated 64 percent of the world's output and income in 2007. Therefore, world income and wealth is distributed very unequally and where the bottom 95 percent of countries earned only 36 percent of world GDP last year.

Indeed, only a minority of people become rich through capitalism and where the vast remainders of people live in comparative poverty. Considering the ramifications of this, it cannot be right for either the sustainability of our planet or the very survival of the human experience itself in the long term.
In this respect, it is not good for industrialized nations also and where David Brady stated in his paper, "Did Economic Globalization Cause Greater Earnings

Inequality in Affluent Democracies?" that he presented to the annual meeting of the American Sociological Association in late 2007, that the analysis of 18 affluent democracies from the 1960s to the present day demonstrate that globalization significantly increased earnings inequality.

Q. How can we end poverty? Are there any practical ways which can help communities combat this global challenge?

A. When we discuss capitalism and its link with poverty we have to read one of the most authoritative and 'independent' modern-day reports undertaken on the subject. In this respect, the report is from the New Economics Foundation (NEF) based in the United Kingdom. First published in 2006 its title is, "Growth isn't working: the uneven distribution of benefits and costs from economic growth". It reported that the world economy is giving less to the poorest in spite of the ongoing global poverty campaign.

In this respect, the report commented that the worlds poorest have seen a 73 percent drop in share of benefits from growth in the last decade. Indeed, according to the NEF, globalization is failing the world's poorest, as their share of the rewards of growth plummet and where added to this the accelerating climate change hurts the poorest most.

The NEF report revealed that the share of benefits from global economic growth reaching the world's poorest people is actually shrinking, while they continue to bear an unfair share of the costs.

According to the figures contained in the report, growth was less effective at passing on benefits to the poorest in the 1990's than it was even in the 1980's, but where also it concluded in an age of rising climate chaos, this would definitely deteriorate the future prospects for the poor even further.
Calculations in the NEF report exposed also that between 1990 and 2001 for every US$100 worth of growth in the world's income per capita, just US$0.60 found its way to the poor and contributed to reducing poverty for those living on less than a dollar a day.

This analysis equated to 73 per cent less than in the 1980's, the so called 'lost decade for development', when US$2.20 in every US$100 worth of growth contributed to reducing poverty for those living on less than a dollar a day.

Indeed, to achieve a single dollar of poverty reduction in the 1990's it took US$166 of extra global production and consumption with enormous environmental impacts that hurt the poorest most. As an example the upheaval from climate change.

The NEF report stated that the belief that global economic growth is the only way of reducing poverty for the world's poorest people is the self-serving rhetoric of those who already enjoy the greatest share of the world's income. Indeed, based upon the global distribution of income in 1993, even if the benefits of global growth were distributed evenly, it would benefit someone in the richest 1 percent of the world's population 120 times more than someone in the poorest 10 percent.

Overall NEF stated that, "Our obsession with growth and our relentless pursuit of a global system which creates ever greater dependency on it has put us on the road to perdition. This confronts us with an artificial and unnecessary choice between the moral imperative of poverty eradication and the practical necessity of environmental sustainability. We need policies aimed directly at reducing poverty and ensuring environmental sustainability, leaving growth as a by-product. That means a new global economic system which will allow, foster and support such policies at the national level."

The problem is that the growth dictum places the economies of the developed world as motivating models of economic development for the rest of the world to follow. But to duplicate these standards of living, in an environmental understanding, is fundamentally invalid. Indeed, for everyone in the world to sustain themselves at the present EU level of consumption, the world would require twice the resources of the biosphere, an impossibility. Indeed, if we all consumed at the rate of the USA, we would require the resources of five biospheres to sustain ourselves, another impossibility.

Therefore, we are really fooling ourselves in believing that between 9 and 12.5 billion people by 2050 can live at this level. Unfortunately, our politicians do not tell us this and by not doing so they create the conditions that will eventually create enormous conflict throughout the world.

I say this with no relish and can only hope that our leaders eventually see our present system of development for what it really is, a recipe for human disaster on a momentous level and where human extinction awaits us all.

According to the NEF report, "Orthodox economics tells us that a rising tide lifts all boats, or that, rather than sharing the cake more evenly, it is better to bake a larger one. Ironically now, however, sea levels really are rising, as a result of global warming and driven by the pollution from economic growth. And millions of the poor have no boats at all to rise in. Where the cake is concerned, the massed ranks of orthodox economists are yet to find the ingredients, or even a recipe, to bake a spare planet to share among the world's population."

Q. In your opinion, what are the most important strategic initiatives that should be pursued on national and international levels to confront poverty?

A. Relying on growth to deliver the world's poorest people out of poverty is both economically and ecologically inept in even the short-term. For as NEF's figures exposed, poverty could be reduced without growth by undertaking more effective distribution with what we already have. In this respect, by redistributing just 1 percent of the income of the richest 20 percent of the world's population would have the same rewards as world growth of 20 percent without redistribution.

This would be over ten times the average per capita growth rate of global GDP since 1981. Added to the rate of poverty decline attained from 1981 to 2001 could have been obtained through the annual redistribution of just 1/10th of 1 percent of the income of the richest 10 percent of the world's population

Conformist economists, who are the vast majority, assert that redistribution of income is flawed in the long term, but where the NEF report shows that this rate of transfer could be sustained for 300 years before the world as a whole reached even the average level of inequality of EU countries.

Therefore, economists in the old school and with the vested interests of capitalism at heart do not fully understand the global dynamics of today.

Overall, NEF considers that, if we are to reconcile the objectives of poverty reduction and environmental sustainability, we need to challenge this conventional wisdom, and the blind pursuit of economic growth, which springs from it.

Indeed the NEF states and I fully concur that we cannot afford to continue with a system which sacrifices the environment on which we all depend for our very survival to give yet more to those who already have too much, in the hope that a few more crumbs will fall from the rich man's table.

Therefore, to achieve real progress we need to change in the way we think about and discuss economic issues, and break out of the confines of mainstream economic thinking. We also need a shift in power relations, both globally and nationally, to move power from developed countries, elites and commercial interests to the majority of the world's population, the poor.

Q. Any last points...

A. Presently I believe governments, the private sector and the wealthy are creating omnicide, human extinction, as a result of irresponsible human action.
I will give the alternative economic solution to global poverty and how we can preserve the human experience for our future generations to come in a later interview. Overall future generations cannot get away from them including the future world of unrelenting poverty and human conflict.

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