Global Poverty

August 15, 2018
Editor(s): Stefano Gunawan
Writer(s): Sam Iacono, Megan Ortega, Leena Phan

In the early 1800s, ninety-percent of the world lived in absolute poverty…

Today, just ten-percent does. How is this possible? There are many reasons, but one of the largest ones is because human progress over the last few hundred years has been staggering. In the modern era, it has become a truism to speak of the ‘technological revolution’, ‘globalisation’ and the ‘age of progress’, but rarely ever do we stop to think about what all that actually means. It is worth taking just a few moments here to highlight some things we humans can all be proud of:

  • From 1995 to 2009, the level of international aid to Sub-Saharan Africa increased by six-fold, thereby compounding the level of help deliverable to millions of impoverished people.
  • In 1977, smallpox, a disease that killed 300 million people in the 20th century, was finally eradicated.
  • In 1900, Karl Landsteiner discovered the blood groups and, with the help of Alexander S. Wiener, uncovered the Rhesus Factor. Together, they are estimated to have saved 1 billion lives by making blood transfusions safe and reliable.
  • In 1909 a chemist named Carl Bosch perfected the work of an earlier chemist named Fritz Haber and turned fertiliser into a mass-scalable product, thereby revolutionising our ability to feed human beings. Bosch and Haber are estimated to have saved 2.7 billion lives.

Figure 1. Poverty has been on a steady decline for decades

All of these achievements and more are reasons why global poverty has been on the rapid decline. But while global poverty is certainly decreasing, the fact still remains that 10% of the human population remains in poverty – which is over 750 million people struggling for food, water and shelter.

Recently, The United Nations set as one of its Sustainable Development Goals the objective to eradicate poverty completely by the year 2030, and while this is conceivable given our recent progress in the area, experts still agree it’s a very optimistic goal.

This article will serve as a dissection of the word ‘poverty’. To start, we will see what poverty actually means in quantitative figures, both for us at home and for those abroad. Next, we will look more qualitatively at poverty, beyond the numbers, and into the day-to-day realities. And lastly, we will see what is currently being done to tackle poverty, and what you may be able to do to help the cause.

The Broad View

Poverty means different things to different people. This is why the term ‘relative poverty’ exists. In Britain, something called the ‘indicator of material deprivation’ classes a child in poverty if they are unable to celebrate their birthday. In America, an impoverished person is deemed as such if they fall below the poverty threshold of $11,770 USD. And in Australia, the poverty line is marked at 50% of the median household income (adjusted for households with dependants), which places some 17.4% of Australian children in poverty. Needless to say, these are all ‘relative’ measures of poverty, and are quite different from what we generally refer to, which is ‘absolute poverty’.

Absolute poverty is far direr. On United Nations benchmarks, absolute poverty is defined by an income level of $1.90 a day. It is by this measure of poverty that the earlier mentioned 750 million-plus people are categorised. Geographically, it is common knowledge that many of these people live in sub-Saharan Africa, but a large proportion is also found in South, Central and East Asia, as well as in Australia’s neighbourhood region of the Pacific.

Figure 3. The list of the top 40 most impoverished countries

Interestingly, discussions of poverty are often lumped in with disputes about the ‘inequality gap’. This relationship is worth a mention, especially because of the alarming statistics that come with it. One from the Credit Suisse Global Wealth Report 2017, for instance, showed that the top 0.7% wealthiest people in the world (net worth of over $1 million) own 45.9% of the worldwide wealth, while the bottom 70.1% (net worth of under $10,000) own just 2.7%. This statistic is alarming, but it should perhaps be framed another way: a ship may rise, but so may the tide. It is true that the rich are getting richer and the poor are getting poorer, but that’s in relative terms. Put another way, you could also say that everybody is getting richer because the tide is rising for everyone, it just happens that the rich are getting richer at a faster rate. That certainly isn’t ideal, but it’s not as bad as what we are commonly led to believe – namely that the poor are somehow getting robbed by the rich, which simply isn’t the case.

The micro view: You are the 1%

In William MacAskill’s timely book named Doing Good Better, he talks more about the disparity in global wealth. MacAskill acknowledges that while poverty may exist all around the world (relative poverty), it is the poverty in certain pockets of the world that we really need to be concerned with (absolute poverty). In making this point, he highlights the following: “You are the 1%… If you are reading this book then, like me, you’re probably lucky enough to be earning $16,000 per year or more, putting you in the richest 10% of the world’s population[1]. That’s a remarkable situation to be in.”

MacAskill made a fair point. This disparate view of the world is perhaps best illustrated by observing the beneficiaries of different charities around the world. To take one famous example (TED Talk; Peter Singer, 2013), charity critics have often compared one of Australia’s most emblematic charities, Guide Dogs Victoria, with charities that operate in places of absolute poverty, such as the Against Malaria Foundation. When looking at the beneficiaries of the two charities, a stark contrast can be seen. GDV serves those of the upper middle class – often late retirees – who have some $40,000 spare to invest in a highly trained companion to guide their escapades. In contrast, the AMF serves those living in sub-Saharan Africa – often children and mothers – who have not even enough to purchase a $2 mosquito repellent bed net. While this contrast is clearly stark, we should be wary not to condemn. Both guide dogs and anti-malaria bed nets are making the world a better place, it is simply the case that the latter targets a more urgent and large-scale populace.

What can you do?

Helping the problem of poverty is not an easy thing to do, especially if you are remote from where it exists. In situations for people such as for those reading this article, it is likely that the only avenue to help is through giving to charity. But the world of charity does raise some scepticism, and rightly so. Research has shown that

some charities can be up to hundreds of times more effective than others,

and that’s not including the oft-cited scandals and financial misconduct of the lesser charities. These few sub-par charities, however, are not a fair representation of charities as a whole.

In recent years ground-breaking research has been conducted by not-for-profits named GiveWell and The Life You Can Save, who have made strides in cutting through the fog of charitable giving. The organisations – using what is known as ‘effective altruism’ frameworks – compile ‘top picks’ of charities that make the largest impact. The already mentioned Against Malaria Foundation is one of them and has in fact been ranked at number one by both organisations primarily because of their proven ability to save 1 life for every $3500 USD donated. Another organisation with impressive economic cost-efficiency is the Deworm the World Initiative, which treats children’s schistosomiasis at $0.71 per child, thereby allowing many children to avoid ill-health and get a proper education.

There are many other top picks, including charities that target things such as sanitation, sight restoration, vitamin supplementation and direct cash transfers, all of whom have been vetted and approved by GiveWell and TLYCS’s high standards. Notably, many of these top picks operate in sub-Saharan Africa, which is where the majority and most afflicted of globally impoverished people reside. But effective charities don’t always operate far from home. Here in Australia, too, there are charities that tick many boxes for those hoping to do good. For Australians, Oxfam Australia stands out as one example, not only for their international aid programs but also for their highly effective political advocacy work.

In closing, it is apt to caveat that this article has been just a brief introduction to the world of poverty. In truth, scholars and developmental economists have spun in circles for decades trying to crack the mystery of why poverty still persists, and how it might eventually be eradicated for good. But happily, it seems that history will soon emerge with its own answer. If current trends continue, then we may all live to see a day when poverty, as it is currently defined, will be gone forever.

[1] To be in the top 1% you would have to earn over $52,000 USD per year.

The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.

Meet our authors:

Stefano Gunawan

Stefano Gunawan is a 3rd year student pursuing an Honours degree in Economics. In the future he hopes to acquire a role in public policy and planning.

Sam Iacono
Megan Ortega

Leena Phan