1By Mal Warwick

It’s shocking.

After the world’s rich nations invested more than $2.3 trillion over the past 60 years to end global poverty, billions of our fellow humans remain desperately poor.

Not to put too fine an edge on it, the collective effort to end poverty has failed. Lest we succumb to insanity as Albert Einstein defined it – “doing the same thing over and over again and expecting different results” – it’s essential that we wage any new war on poverty with a different battle plan.

To be sure, staff or boosters of the World Bank and the UN and many of those engaged in the private development establishment will shriek in protest at those statements.

In February 2012, the World Bank reported new poverty estimates revealing “that 1.4 billion people in the developing world (one in four) were living on less than $1.25 a day in 2005, down from 1.9 billion (one in two) in 1981 … [and] that there has been strong—if regionally uneven—progress toward reducing overall poverty.”

Doubts Over the Millennium Development Goals

MGD-2015

The pièce de resistance in the World Bank report was that, by 2008, the nations of the world were already on target to meet the first of the Millennium Development Goals—halving by 2015 the incidence of extreme poverty as measured in 1990.

Not so fast, the critics responded. One observed:

“This is the current reality of global poverty as reported by the World Bank: almost a quarter of the developing world (22 percent) cann

ot meet their basic needs for survival, while not far from half of the population (43 percent) is trying to survive on less than $2 a day … [U]sing $2 a day as the marker of extreme poverty would reveal a far less sanguine outlook.

If a more realistic marker of $2.50 a day is used, twice as high as the current level [of $1.25], then the Bank’s own data showed a slight increase in the number of poor between 1990 and 2005.”

Ask the People

Former World Bank economist-turned-outspoken-critic William Easterly went further, asking,

“Why don’t you just ask people if they think they are poor? Gallup’s World Poll does.

In contrast to the World Bank global poverty rate of 25 percent (around which there were … uncertainties on the order of 40 percent of the original estimate): 33 percent worldwide say they don’t have money for food; 38 percent say their living standards are poor, and 39 percent say they are ‘in difficulty’. So you are on safe ground saying, ‘there are lots of people in poverty’. But don’t insult our intelligence with an exact number.”

We cast our lot with Easterly and his fellow critics. But there’s an even more poignant rebuttal to the legions of foreign-aid fans:

In 1950, the population of the world was estimated at 2.6 billion people. The World Bank informed us in 2012 that the number of people who were living on $2 a day or less was 2.7 billion.

Is that progress? Not in my opinion!

So, if the numbers demonstrate clearly to at least some of us that conventional efforts to end poverty have failed, the obvious question to ask is “Why?”

This article was adapted from The Business Solution to Poverty: Designing Products and Services for Three Billion New Customers, by Paul Polak and Mal Warwick. It was originally written for and published on CSRwire’s Commentary Channel Talkback.

2 Responses to “Trillions spent to end poverty, billions still poor”

  1. Matt

    $2.3 trillion is a lot of money. But bear in mind that this money has been spent over a period of 50+ years, and has been spent on billions of people.

    If we assume it has been spent over exactly 50 years, that equates to $46bn per year.

    If we assume it has on average been distributed amongst 2bn people, then that equate to each recipient of aid receiving approximately a mere $23.

    Put like that, it doesn’t sound too surprising that $2.3 trillion hasn’t achieved a great deal in terms of poverty.

    What it has achieved though, is a massive improvement in access to basic health care such as vaccines. Aid has helped eradicate smallpox, nearly eradicate polio, nearly eradicate guinea-worm disease, cause large declines in deaths from malaria, nearly eradicate River Blindness from west Africa, cause a huge decline in measles etc…

    Reply
    • Mal Warwick

      There’s some truth in what you say. Yes, in public health and education, in particular, there have been extraordinary advances. Those are fields in which top-down action is necessary for large-scale change to occur. But that $2.5 trillion — or $46 billion per year — amounts to hundreds of millions of dollars per country. (Assume 100 poor countries; divided equally that would mean $460 million per country.) That’s a hell of a lot of money, and we haven’t seen anything even remotely in proportion to that investment in the sort of economic development that would make a genuine contribution to eradicating poverty. In fact, there are more poor people now than there were when the whole thing started! That is NOT a success story.

      Reply

Leave a Reply