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Poverty Down! Inequality & Hunger Up... Huh?

New, upbeat World Bank and UN reports celebrate a global success story: Between 1990 and 2008, the world cut by half the share of the world’s really poor — those living on less than $1.25 a day. And we achieved this goal five years ahead of the “Millennial Development Goal.”


These reports also assure us that since 2008 this positive trend has continued.

While big stories on this triumph — based on a World Bank memo — appeared some months ago in The New York Times and a few other outlets, now the news is properly published in full color, along with congratulatory words from the UN’s Ban Ki-moon.

But I’m baffled.

How could the world have made huge strides against extreme poverty when, since the mid-nineties, the number of chronically undernourished people has risen to record highs — now roughly one billion? Given that the poor spend at least half their income on food and global food prices have hit historic highs, how is it possible that poverty is truly decreasing?

And that’s not the only mystery. How could we cut the rate of dire poverty in half when at the same time we learn elsewhere that 71 percent of the world’s people live in countries where economic inequality is worsening?

I’m still trying to figure it out, and help has come from Professor Thomas Pogge, a philosopher at Yale and author of Politics as Usual, among many works.

First, he clarified for me that the bar for extreme poverty, $1.25, is even more dire than it appears. It’s not set via international exchange rates — which, say, in India would mean 69 rupees a day. Instead, the Bank uses what’s called “purchasing power parity (PPP),” which in India amounts to only about a third as much. It comes to just 19.50 rupees for all daily needs — enough to buy one meal in a Calcutta street market. “PPPs for individual household consumption,” Pogge writes, underrates the cost of food in poor countries “by about 50 percent on average.”

Most important, Pogge helped me see, it’s easier to win the game when you move the goal post. And the World Bank and UN have moved it twice.

First, the World Bank and UN changed what gets measured to determine progress in overcoming world poverty: Pogge notes that the 1996 Rome Declaration — the product of representatives of more than 80 countries convened by the UN’s Food and Agriculture Organization — promised to reduce, relative to 1996, the number of hungry people by half by 2015.

But in 2000, the Millennium Declaration, and the subsequent Millennial Development Goals, shifted the measurement from numbers of people to their share of the population affected. And this is a telling change, especially because poverty — a root of hunger — itself contributes mightily to population growth. So a poverty-spurred growth in numbers of people has, ironically, helped meet a poverty-reduction target measured by a decline in the percentage of people affected.

Note well: The advance-against-poverty picture looks quite different when using absolute numbers:

World Bank statistics reveal that between 1990 and 2008 the number of people still in the below-$1.25 category has not fallen by half but by less than a third; and excluding China, the drop is an unimpressive 9 percent.

Suddenly, it is much harder to celebrate.

And mentioning China brings us to a second goal-post fudge. Pogge points out that while the Millennium Declaration adopted by the UN in 2000 makes that year its baseline, the eight specific Millennial Development Goals are measured against 1990.

And how does this baseline shift make the story appear rosier?

Starting the race in 1990 makes it possible to include the hundreds of millions of Chinese who officially escaped extreme poverty during the decade following. But, isn’t celebrating success against extreme poverty as a “global” phenomenon pretty misleading if a huge piece of that progress reflects changes in just one country? And in a country whose policies few would want to emulate?

Moreover, before we uncork the champagne we need to view poverty through a wider lens.

Taking in twenty-seven years, from 1981 to 2008, we see that the number of people living below the still very miserly poverty line of $2.50 per person a day has increased by almost 8 percent to three billion. Outside of China, the number has grown by fully 32 percent to 2.4 billion.

Now, to the hunger puzzle.

The first target under the Millennial Development Goal #1, focusing on poverty, is to cut in half the percentage of hungry people hungry worldwide. Since in the Global South poor people spend 50 to 70 percent of their income on food, shouldn’t three food-price spikes (2007-08, 2011, and now) in five years be enough to scuttle attempts to meet hunger-reduction targets?

What has happened?

At the 1990 starting line, 16 percent of the global population — 845 million people — officially suffered from hunger. As poor people were reeling from a doubling of the global Food Price Index between 2007 and 2011, the Food and Agriculture Organization estimated in 2009 that 1.02 billion, or 15 percent, were hungry. Even though, in 2010 its estimate fell back some, to 925 million — that’s still 13.6 percent of the world’s people, far from the 8 percent that the Millennial target demands.

Finally, how is it possible to have less poverty and worsening inequality? “Seventy-one per cent of the world’s people live in countries where income inequality has been increasing,” reports the Conference Board of Canada. These include “large-population countries like China, India, Russia, and the United States,” it notes. Only 22 percent live in countries where inequality in decreasing.

It may be statistically possible for income inequality to go up and poverty to go down (if the poor were joining the middle class while the rich were leaping even farther ahead of everybody). But that’s not what I’m seeing. In the U.S., for example, poverty and inequality are certainly spreading together. “The number of families in deep poverty grew sharply during the recent recession and its aftermath,” writes Paul Tough in The New York Times Magazine, “and in 2010, the share of Americans whose families made less than half of the poverty line hit a record: 6.7 percent of the population, or 1 in 15 Americans.”

In India, in early 2012, an official commission reported that the country’s population below the official poverty line is now 30 percent, down from 37 percent in 2004-05. Given India’s size, such improvement must have contributed significantly to the World Bank’s positive claims. But, at about the same time we started hearing good news on global poverty reduction, the Times of India reported that “inequality in earnings has doubled in India over the last two decades, making it the worst performer on this count of all emerging economies.” Plus, almost 42 percent of Indian children younger than five are underweight and almost 60 percent are stunted in height. Both estimates are much larger than the overall percent of Indians below the poverty line.

But wait: How could there be so many more children suffering from obvious hunger than Indians in “official poverty”? In other words, how could you be excluded from the poverty count if you don’t even have enough to feed your children?

So it’s clear I’ve not figured this out. But I do have a new question. Why aren’t more people questioning the World Bank’s numbers game?

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