Reliance on arbitrary metrics, like a $1.90-a-day bar for poverty, masks huge and growing inequality in the world
The coronavirus pandemic is set to push half a billion people into poverty and is expected to double the number of people facing acute hunger to 265 million, according to a new report of UN.
A scathing new report published on Monday by Philip Alston in his parting shot as the United Nations special rapporteur on extreme poverty and human rights paints a world where poverty is rampant—yet undercounted, due to the World Bank's reliance on outdated metrics.
The report comes at a critical juncture, as the coronavirus pandemic is set to push half a billion people into poverty and is expected to double the number of people facing acute hunger to 265 million.
"Even before Covid-19, we squandered a decade in the fight against poverty, with misplaced triumphalism blocking the very reforms that could have prevented the worst impacts of the pandemic," Alston said in a press release issued alongside the report.
"When combined with the next generation of post-Covid-19 austerity policies, the dramatic transfer of economic and political power to the wealthy elites that has characterized the past forty years will accelerate, at which point the extent and depth of global poverty will be even more politically unsustainable and explosive," the report says.
Alston, who stepped down as special rapporteur in May, places much of the blame for misplaced global optimism on international institutions and economists' over-reliance on the World Bank's international poverty line of $1.90 per day as the definition of extreme poverty. In his six years as special rapporteur, Alston has produced a series of withering reports on global poverty—and the world's richest countries, including the United States, were not spared his scrutiny.
The number of people living below the $1.90 threshold is down from 1.9 billion in 1990 to 734 million in 2015, but even those who eke their way past the extreme poverty line may still struggle to secure basic necessities, such as food and housing.
"The IPL [International Poverty Line] is explicitly designed to reflect a staggeringly low standard of living, well below any reasonable conception of a life with dignity," says the report, which was presented to the UN Human Rights Council today by Alston's successor, Olivier De Schutter.
"It would be difficult to overstate the significance of this report. It's a direct, high-profile challenge to the dominant narrative about global poverty that has for so long been promoted by the UN, the World Bank, and international NGOs," said Jason Hickel, an economic anthropologist and senior lecturer at Goldsmiths, University of London.
Alston described the threshold of $1.90 per day as "scandalously unambitious" and argued that more realistic measures reveal the number of people living in poverty to be far higher and progress to be much slower. The number of people living on less than $5.50 per day, the World Bank's poverty line for upper-middle-income countries, has remained nearly stagnant since 1990. In 2018, almost half of the world's population lived on less than $5.50 per day.
"With numbers like these on the table, it becomes clear that the world economy is simply not working for the majority of humanity—and we need to face up to that fact," Hickel said.
The $1.90 global yardstick of extreme poverty is derived from an average of national poverty lines of some of the world's poorest countries, but this has masked the significant country-to-country variance in the cost of living, and in most contexts it is well below national poverty lines. Under the World Bank's definition, Thailand has no one living in extreme poverty. Yet 10 percent of Thais live under the poverty threshold, according to the country's own definition.
"The line is set so low and arbitrarily as to guarantee a positive result and to enable the United Nations, the World Bank, and many commentators to proclaim a Pyrrhic victory," Alston writes in the report.
"The $1.90 poverty line has come under sustained criticism for many years, because, remarkably, it has no grounding in any empirical assessment of human needs. As a measure of poverty, it is completely arbitrary," Hickel said.
The World Bank has different poverty metrics for middle- and high-income countries as well as multidimensional poverty measures. "But the reality is whenever you see the big statements coming out of the bank, or any of the big statements coming out of the UN, they're based on the $1.90 a day measure," Alston said in an interview with Foreign Policy.
The World Bank did not immediately respond to a request for comment for this story.
The report also criticizes the UN's Sustainable Development Goals for their over-emphasis on economic growth as a rising tide to lift all boats. Decades of strong economic growth have in many instances only further entrenched extreme inequality. Between 1980 and 2016, 27 percent of total real income growth was captured by just 1 percent of the world's population, according to the 2018 World Inequality Report.
While many billionaires have become indispensable in international aid efforts, Alston writes, "Philanthropy is less likely to expose and tackle unjust underlying structures." The reliance on the private sector and nonprofits shifts responsibility away from governments and international institutions, he argues.
Alston proposes a number of systematic approaches to poverty reduction, including debt forgiveness, universal social safety nets, and a move beyond the foreign aid model toward a more progressive tax system. Tax havens have enabled multinational corporations to put some 40 percent of their overseas profits beyond the reach of the tax system, costing countries some $200 billion each year in lost revenues.
"Poverty is a political choice and will be with us until its elimination is reconceived as a matter of social justice," the report concludes.