Half the world — nearly three billion people — live on less than two dollars a day. source 1
The GDP (Gross Domestic Product) of the poorest 48 nations (i.e. a quarter of the world’s countries) is less than the wealth of the world’s three richest people combined. source 2
Nearly a billion people entered the 21st century unable to read a book or sign their names. source 3
Less than one per cent of what the world spent every year on weapons was needed to put every child into school by the year 2000 and yet it didn't happen. source 4
51 percent of the world’s 100 hundred wealthiest bodies are corporations. source 5
The wealthiest nation on Earth has the widest gap between rich and poor of any industrialized nation. source 6
The poorer the country, the more likely it is that debt repayments are being extracted directly from people who neither contracted the loans nor received any of the money. source 7
20% of the population in the developed nations, consume 86% of the world’s goods. source 8
The top fifth of the world’s people in the richest countries enjoy 82% of the expanding export trade and 68% of foreign direct investment — the bottom fifth, barely more than 1%. source 9
In 1960, the 20% of the world’s people in the richest countries had 30 times the income of the poorest 20% — in 1997, 74 times as much. source 10
An analysis of long-term trends shows the distance between the richest and poorest countries was about:
“The lives of 1.7 million children will be needlessly lost this year [2000] because world governments have failed to reduce poverty levels” source 12
The developing world now spends $13 on debt repayment for every $1 it receives in grants. source 13
A few hundred millionaires now own as much wealth as the world’s poorest 2.5 billion people. source 14
“The 48 poorest countries account for less than 0.4 per cent of global exports.” source 15
“The combined wealth of the world’s 200 richest people hit $1 trillion in 1999; the combined incomes of the 582 million people living in the 43 least developed countries is $146 billion.” source 16
“Of all human rights failures today, those in economic and social areas affect by far the larger number and are the most widespread across the world’s nations and large numbers of people.” source 17
“Approximately 790 million people in the developing world are still chronically undernourished, almost two-thirds of whom reside in Asia and the Pacific.” source 18
According to UNICEF, 30,000 children die each day due to poverty. And they “die quietly in some of the poorest villages on earth, far removed from the scrutiny and the conscience of the world. Being meek and weak in life makes these dying multitudes even more invisible in death.”
That is about 210,000 children each week, or just under 11 million children under five years of age, each year. source 19
For economic growth and almost all of the other indicators, the last 20 years [of the current form of globalization, from 1980 - 2000] have shown a very clear decline in progress as compared with the previous two decades [1960 - 1980]. For each indicator, countries were divided into five roughly equal groups, according to what level the countries had achieved by the start of the period (1960 or 1980). Among the findings:
Growth: The fall in economic growth rates was most pronounced and across the board for all groups or countries.
Life Expectancy: Progress in life expectancy was also reduced for 4 out of the 5 groups of countries, with the exception of the highest group (life expectancy 69-76 years).
Infant and Child Mortality: Progress in reducing infant mortality was also considerably slower during the period of globalization (1980-1998) than over the previous two decades.
Education and literacy: Progress in education also slowed during the period of globalization.
“Today, across the world, 1.3 billion people live on less than one dollar a day; 3 billion live on under two dollars a day; 1.3 billion have no access to clean water; 3 billion have no access to sanitation; 2 billion have no access to electricity.” source 21
The richest 50 million people in Europe and North America have the same income as 2.7 billion poor people. “The slice of the cake taken by 1% is the same size as that handed to the poorest 57%.” source 22
The world’s 497 billionaires in 2001 registered a combined wealth of $1.54 trillion, well over the combined gross national products of all the nations of sub-Saharan Africa ($929.3 billion) or those of the oil-rich regions of the Middle East and North Africa ($1.34 trillion). It is also greater than the combined incomes of the poorest half of humanity. source 23
A mere 12 percent of the world’s population uses 85 percent of its water, and these 12 percent do not live in the Third World. source 24
Consider the global priorities in spending in 1998
Global Priority $U.S. Billions
Cosmetics in the United States
8
Ice cream in Europe
11
Perfumes in Europe and the United States
12
Pet foods in Europe and the United States
17
Business entertainment in Japan
35
Cigarettes in Europe
50
Alcoholic drinks in Europe
105
Narcotics drugs in the world
400
Military spending in the world
780
And compare that to what was estimated as additional costs to achieve universal access to basic social services in all developing countries:
Number of children in the world2.2 billionNumber in poverty1 billion (every second child)Shelter, safe water and healthFor the 1.9 billion children from the developing world, there are:
640 million without adequate shelter (1 in 3)
400 million with no access to safe water (1 in 5)
270 million with no access to health services (1 in 7)
Children out of education worldwide121 millionSurvival for childrenWorldwide,
10.6 million died in 2003 before they reached the age of 5 (same as children population in France, Germany, Greece and Italy)
1.4 million die each year from lack of access to safe drinking water and adequate sanitation
Health of childrenWorldwide,
2.2 million children die each year because they are not immunized
15 million children orphaned due to HIV/AIDS (similar to the total children population in Germany or United Kingdom)
The total wealth of the top 8.3 million people around the world “rose 8.2 percent to $30.8 trillion in 2004, giving them control of nearly a quarter of the world’s financial assets.”
In other words, about 0.13% of the world’s population controlled 25% of the world’s assets in 2004. source 27
Notes and Sources
1) This figure is based on purchasing power parity (PPP), which basically suggests that prices of goods in countries tend to equate under floating exchange rates and therefore people would be able to purchase the same quantity of goods in any country for a given sum of money. That is, the notion that a dollar should buy the same amount in all countries. Hence if a poor person in a poor country living on a dollar a day moved to the U.S. with no changes to their income, they would still be living on a dollar a day. In addition, see the following:
In addition, as also stated in the previous link, in the United States for example, the poverty threshold for a family of four has been estimated to be around eleven dollars per day. The one dollar a day definition then misses out much of humanity to understand the impacts. Even the two dollars per day that I have pointed out here, while affecting half of humanity, also misses out the numbers under three or four, or eleven dollars per day. These statistics are harder to find, and as I come across them, I will post them here!
As an aside, Morgan Spurlock, the Oscar nominee for his documentary Super Size Me where he went 30 days on a diet of burgers only to see the effects, produced another documentary where for 30 days he tried to live on the minimum wage of $5.15 per hour. At times he was earning $50 to $70 a day and yet the tremendous hardships he faced was incredible (including a ludicrous $40 for a bandage in a hospital, and some $500 for just being seen to).
More fundamental than that though, for example, is a critique from Columbia University, called How not to count the poor. The report describes an ill-defined poverty line, a misleading and inaccurate measure of purchasing power equivalence, and false precision as the three main errors that may lead to “a large understatement of the extent of global income poverty and to an incorrect inference that it has declined.” (Emphasis added). This allows the World Bank to insist that the world is indeed “on the right track” in terms of poverty reduction strategy, attributing this “success” to the design and implementation of “good” or “better policies”.
But the statistic is not lost on some of the most prominent people in the world
The New York Times in one of their email updates, in their Quote of the Day section, for July 18, 2001 provided the following quote: “A world where some live in comfort and plenty, while half of the human race lives on less than $2 a day, is neither just, nor stable.” — President Bush
See also James Wolfenson, The Other Crisis, World Bank, October 1998 who said: “Today, across the world, 1.3 billion people live on less than one dollar a day; 3 billion live on under two dollars a day; 1.3 billion have no access to clean water; 3 billion have no access to sanitation; 2 billion have no access to electricity.” (See also note 21 below.)
Koffi Anan, UN Secretary General, in a speech on the International Day for the Eradication of Poverty, 17 October 2000, said “Almost half the world’s population lives on less than two dollars a day, yet even this statistic fails to capture the humiliation, powerlessness and brutal hardship that is the daily lot of the world’s poor.”
18) World Resources Institute Pilot Analysis of Global Ecosystems, February 2001, (in the Food Feed and Fiber section). Note, that dispite the food production rate being better than population growth rate, there is still so much hunger around the world.
Robert E. Black, Saul S Morris, Jennifer Bryce, Where and why are 10 million children dying every year?, The Lancet, Volume 361, Number 9376, 28 June 2003. (Note, while the article title says 10 million, their paper says 10.8 million.)
Small note on living on the minimum wage in the US in comparison to the statistic of how many live on one or two dollars a day
June 11, 2005
Added statistic on concentration of wealth amongst top 0.13% of the world’s population
February 18, 2005
Added a number of statistics regarding the state of children around the world
April 28, 2004
Cited a list of global priority spending in 1998
Causes of Poverty
Poverty Facts and Stats
compiled by
George Draffan
Our nation [no, the world] owes
George Draffan a debt of gratitude!
Wealth Distribution
The Premise
Going back to biblical times there have been protests about the concentration of wealth. It thus seems that there must be some underlying reasons why this remains a popular idea. Several arguments can be made in favor of a more equitable distribution of wealth.
Arguments For
The moral argument:
Many of the major religions condemn the accumulation of wealth. The most obvious example is found in the well-known sayings of Jesus. But many eastern religions expect their true followers to disdain wealth, or in some cases material possessions altogether.
The fairness argument:
As all people come into the world equally helpless they should ultimately reach at least approximate equality of condition when they mature. People have an innate sense of what is fair as many psychological experiments have demonstrated. The intrinsic sense of fairness requires basic economic equality.
The economic efficiency argument:
Having a population with gross inequalities of wealth causes economic inefficiencies. For example, if too many people are too poor there will be limited markets for the output of industry and agriculture. This will limit the growth potential of the economy. Some also argue that excessive wealth produces waste as the rich spend there money on items which are economically inefficient. Buying jewelery instead of investing in new enterprises.
The social stability argument:
When societies get too out of balance social unrest increases. In the most extreme cases this leads to civil disturbance or revolution. This resentment against the wealthy may lead to their death or banishment and the forcible taking of their property. The most popularly cited example is the French revolution, but there are many other cases. Even where the rebellion doesn't succeed the damage to the society may be severe and long lasting.
The democratic argument:
The concentration of wealth in a small group allows for anti-democratic influence of social policy. The wealthy have the ability to create their own "think tanks" and astro-turf front organizations. These are then used to create the perception that the public is in support of their self-serving objectives. Recent studies have shown how these techniques were used in the repeal of the estate tax debate as well as in the rise of new factions opposing the liberal social policies of the Episcopal church. When such vast amounts of money are under the control of a tiny group the basic mechanisms of democracy are undermined.
Arguments Against
Private property is sacred (or inviolable).
Society is based upon a person's right to the product of their labors (or their ancestor's labor) and thus the state has no right to take it away.
wealthy people create growth opportunities for society.
Only those with a large amount of capital can startup or expand new businesses. If they didn't exist the economy would not grow as fast.
wealthy people are the only ones who can support the arts.
Throughout history it has been the wealthy who have commissioned fine art, musical compositions, museums and other monuments of civilization.
Poor people are lazy (or inferior).
This argument is a variant of the Calvinist belief that salvation is found through work. Thus those who become wealthy are "blessed" and deserve their rewards. Those who are poor are to blame in some fashion for their position in society and government intervention to alter the balance will only lead to even more lazy people and the eventual breakdown of society.
Redistributing Wealth
Let us assume, for the moment, that the arguments for redistribution are more persuasive than those against. Then how would redistribution be achieved? There seem to be only two avenues. The first is through the appropriation of wealth. This has been done several times in history. Henry VIII seized the wealth of the Catholic church in England and kept part for the treasury and redistributed part to his supporters. During the French revolution much of the wealth of the aristocracy was seized by local authorities or looted by the populace.
The results of such drastic actions are hard to foresee. It may lead to a permanent realignment of power in society, as in England or it may lead to anarchy and the rise of a dictator as in France.
The second approach is via taxation. Once again there is a historical example in Britain. During the 20th Century the government decided that the hereditary landowners had too much wealth. They established a plan whereby the wealth would be transferred over many decades via death duties. As the lord of the manor died off his heirs would have to pay a tax on the value of the estate. This has had the effect of gradually transferring the wealth of the aristocracy to the government. One difficulty has been that, in many cases, the estates are worth so much that the heirs cannot find buyers and they get transferred to the "National Trust". This is the nub of all wealth transfer schemes. In order to tax the wealthy at a rate that forces them to sell part of their assets there must be buyers who can afford to purchase the items. A painting appraised at one million dollars is worth nothing if there are no buyers. Even assets like stocks depend upon a pool of buyers for them to be convertible to cash.
When the wealth of a society gets sufficiently unbalanced it ceases to valuable since there are no people with the resources to purchase it. During the French revolution most of the furniture in the estates was looted and much of it was used for firewood. It had no value in a peasant's home. It didn't fit, wasn't practical, and the decorative detail was useless.
So any plan that is going to shift the balance of wealth has to deal with issues of extracting real value from the accumulations of the wealthy without causing a drop in the marketability of the assets.
Can wealth redistribution take place in the US? The least disruptive approach would be changing the tax code to be more progressive. This could be modifications to the income tax, the restructuring (not elimination) of the estate tax, and imposition of either wealth taxes or consumption taxes. The wealthy can be expected to object to all of these changes. In addition they have the political and economic clout to promote their self interests. A concerted effort by the people can succeed. Recent examples in countries like the Phillipines and Poland show the power the people can have when they join peacefully for a change in the organization of society.
Digressions
The Interest in Wealth Redistribution
In the US there is, currently, little interest in wealth redistribution. The populist impulse that existed around 1900 has not re-emerged around 2000. Many people attribute this to a general satisfaction with their standard of living of the majority of the middle class. In addition there is a wide spread native optimism which makes people feel that they have a good chance of moving up the economic ladder during their lifetime and thus any increased taxation on the wealthy will impact them at some point in the future. The fact that this is not borne out by statistics does not alter people's perceptions. In Europe the middle class is much more aware of the limited mobility within classes and is much more attuned to keeping wealth imbalance within limits.
The Arguments for Unfettered Wealth
Libertarianism
This has been discussed in numerous places. Most social critics feel that the arguments in favor of private property are just self serving. There is no natural law of private property. It only exists as long as there is a state structure with a robust police function which can maintain the property concept. Many societies do not recognized private property and function successfully. Even in developed countries most don't have as strong a Libertarian sentiment as is found in the US. Many feel that excessive wealth is unbecoming.
Only the rich can create economic growth
In the US this is contradicted by the history of our country. All the great industries of the 19th and 20th Centuries were created by individuals with no prior wealth. Andrew Carnegie, Henry Ford, Bill Gates, etc. started with essentially nothing and built huge enterprises. On the other hand the children of these entrepreneurs have not been especially noted for doing anything notable. Andrew Carnegie felt so strongly that each generation should make its own way that he left the bulk of his estate to charity. His children had to make their own way. The secret of a successful entrepreneur is his ability to raise capital to expand his enterprise. This is obtained from banks and selling stock and not generally from personal wealth. One doesn't need rich people to build a business. The capital of a bank can be $1000 from one hundred people or $100,000 from one person. The amount available to lend is the same. Wealth does not have to be concentrated to be available for investment. In the developed world much of the available capital comes from pension funds and is thus not provided by the wealthy.
Arts Patronage
In much of history the wealthy have created the permanent emblems of civilizations: castles and churches are most often cited. They have also been responsible for patronizing the arts and leaving us a legacy of fine art and music. But recently the biggest projects have not been paid for by patrons. The monuments of the 20th Century have increasingly been things like commercial buildings, sports stadiums and public works projects. Whether the movies or popular music of today will be held in the same veneration as the old masters and Beethoven future generations will have to decide. The point is, however, that the arts of today are democratized and not dependent on the wealthy. The only areas which continue the patronage model and are still the domain of the wealthy are opera, classical music and big fine art museums.
Divine Justice
This is a remnant of the Puritan origins of the US. By this time society should have evolved enough to realize that much of what happens in the world is beyond the control of the individual. Not only are inherited capabilities different, but many people are born into segments of society which handicap their progress up the economic ladder. Blaming the victim is just uncharitable and mean spirited.
Self interest
As is usual in discussions of public policy one can cut through a lot of posturing if one asks the question "who's ox gets gored?" In other words, are those objecting to change going to be negatively affected by the changes. It is obvious that the wealthy and their dependents (apologists, lackeys, and beneficiaries) potentially stand to lose the most. One should thus examine their arguments in this light. Those favoring redistribution are usually the poor so it is clear that they will support any position that potentially gives them more.
Conclusion
History has shown that when societies get too unequal bad things happen. They either become economically inefficient or they become subject to social unrest. In many cases both happen simultaneously. The banana republics of South and Central America are a good example. For hundreds of years a small ruling oligarchy has run things. Things are even pretty good for these people. However, the societies as a whole have not prospered. They have been subject to continual poverty and revolution and much of the development that has taken place is in the hands of foreign investors. The wealth of the few has been maintained at a high cost to the majority.
As new societies arise which are more equal and more efficient, the oligarchical societies will fall ever further behind. The peasant class that kept things going, inefficiently, will no longer be enough. The capital needed for growth will not be present and the expertise needed to deal with modern technology will not be in place. We can see such failed societies in parts of Africa.
We in the US need to decide if we are going to slip into an inefficient oligarchy, risk civil unrest or redirect our resources and wealth into more equitable avenues. No society is perfectly egalitarian, but when we have reached a point where the top one fifth in Manhattan makes $350,000 and the bottom fifth makes $7,000 we are probably near an economic tipping point. How we deal with the coming challenge is up to us.
Moral:A just society is an equitable society, an equitable society is a just society.
. The report describes an ill-defined poverty line, a misleading and inaccurate measure of purchasing power equivalence, and false precision as the three main errors that may lead to “a large understatement of the extent of global income poverty and to an incorrect inference that it has declined.” (Emphasis added). This allows the World Bank to insist that the world is indeed “on the right track” in terms of poverty reduction strategy, attributing this “success” to the design and implementation of “good” or “better policies”.