Canberra Skeptics

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Canberra Skeptics

• World Poverty
• Explanations and Proposed Solutions
• Thomas Pogge
• Leitner Professor of Philosophy and International
  Affairs, Yale University
• with additional affiliations at
• the Australian Centre for Applied Philosophy and
  Public Ethics (CAPPE)
• and the University of Oslo Centre for the Study
  of Mind in Nature (CSMN)

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• Eradicating Poverty

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MDG-1 Poverty Progress
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The Grand Promise to Halve Poverty by 2015 First
Version

• 1996 World Food Summit in Rome the number of
  extremely poor is to be halved during 1996-2015.
  This implies an annual reduction by 3.58 (50
  over 19 years).
• We pledge our political will and our common and
  national commitment to achieving food security
  for all and to an on-going effort to eradicate
  hunger in all countries, with an immediate !
  view to reducing the number of undernourished
  people to half their present level no later than
  2015.
• www.fao.org/docrep/003/w3613e/w3613e00.htm

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The Grand Promise to Halve Poverty by 2015
Second Version

• 1996 World Food Summit in Rome the number of
  extremely poor is to be halved during 1996-2015.
  This implies an annual reduction by 3.58.
• 2000 Millennium Development Goal (MDG) 1 the
  proportion of extremely poor among the worlds
  people is to be halved 2000-2015. This implies
  annual reduction by 3.35 (40 15yrs).
• to halve, by the year 2015, the proportion of
  the worlds people whose income is less than one
  dollar a day and the proportion of people who
  suffer from hunger.
• www.un.org/millennium/declaration/ares552e.htm

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The Grand Promise to Halve Poverty by 2015 Third
Version

• 1996 World Food Summit in Rome the number of
  extremely poor is to be halved during 1996-2015.
  This implies an annual reduction by 3.58.
• 2000 Millennium Development Goal 1 (MDG-1) the
  proportion of extremely poor among the worlds
  people is to be halved 2000-2015. This implies
  annual reduction by 3.35 (40 15 yrs).
• MDG-1 as subsequently revised by the UN
  the proportion of extremely poor among the
  population of the developing countries is to be
  halved 1990-2015. This implies an annual
  reduction by 1.25 (27 over 25 years).

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Goal 1 Eradicate Extreme Hunger and Poverty

• Target 1. Halve, between 1990 and 2015, the
  proportion of people whose income is less than
  US1 a day
• Target 2. Halve, between 1990 and 2015, the
  proportion of people who suffer from hunger
• UN The Millennium Development Goals Report
  2008, p.6 www.un.org/millenniumgoals

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www.un.org/millenniumgoals/MDG-Page1.pdf
www.un.org/millenniumgoals/sgreport2002.pdf?OpenEl
ement
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A Promise Diluted
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• Quantifying Poverty

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Updating the World Banks International Poverty
Line

• The Bank initially fixed its IPL at 1.02
  1985-dollars per day, noting that eight poor
  countries 1985 domestic poverty lines were close
  to this amount. Soon rounded down to 1.00
  1985-dollar per day.
• In 2000 the Bank reset its IPL to 1.08
  1993-dollars per day, noting that this was the
  median of the ten lowest domestic poverty lines
  in 1993.
• In mid-2008 the Bank reset its IPL again to 1.25
  2005-dollars per day, noting that this was the
  mean of the 15 poorest countries domestic
  poverty lines.
• Many of the domestic poverty lines used to
  anchor all these IPLs are themselves fixed by
  the Bank.

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Updating the World Banks International Poverty
Line

• Used from 1990 until 1999
• 1.02 1985-dollar per day, today 2.03 in US
• 1.00 1985-dollar per day, today 1.99 in US
• Used from 2000 until 2008
• 1.08 1993-dollar per day, today 1.60 in US
• Used since August 2008
• 1.25 2005-dollar per day, today 1.37 in US
  or 9.59 per week or 500 annually
• www.bls.gov/data/inflation_calculator.htm

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Is 1.25 (2005) a day enough?

• The US Department of Agriculture has for many
  decades published data about what it costs to
  adhere to an elaborately designed low-cost food
  plan that was variously called the Restricted
  Food Plan for Emergency Use, the Economy Food
  Plan . . . developed as a nutritionally adequate
  diet for short-term or emergency use, and the
  Thrifty Food Plan. In 2005, the cost of
  purchasing this minimal diet for a household of
  two to four people was (depending on household
  size and childrens ages) between 3.59 and 4.97
  per person per day.
• www.cnpp.usda.gov/USDAFoodCost-Home.htm

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Is 1.25 (2005) a day enough?

• The cost of the USDAs Thrifty Food Plan covers
  the cost of nutrition only. It includes no money
  at all for minimal requirements of clothing,
  shelter, medical care, water and other utilities.
• But perhaps food and other necessities are
  cheaper  in the countries in which very poor
  people live than they are in the United States?

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Is 1.25 (2005) a day enough?

• The Bank converts its International Poverty Line
  (IPL) at purchasing power parities (PPPs) and
  thus takes cost of living differences into
  account. (The PPPs of poor countries are
  calculated to be, typically, between one third
  and one half of the currency exchange rate.) The
  Banks whole methodology is based on the
  assumption that its PPPs for individual
  consumption expenditure by households facilitate
  accurate comparisons of incomes and consumption
  expenditures by poor households anywhere.

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Is 1.25 (2005) a day enough?

• But actually, the much narrower and more
  poverty-relevant PPPs for food and nonalcoholic
  beverages are considerably higher ? in each and
  every one of 88 listed poor countries ? than the
  broader PPPs used in the Banks conversion. They
  are, on average, 51.6 percent higher. At the
  Banks converted IPL, poor people can buy about
  as much food as could be bought with US0.83 in
  the US in 2005.
• siteresources.worldbank.org/ICPINT/Resources/icp-f
  inal.pdf, pp. 28-37

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The Impact of the IPL level on the Banks Poverty
Count

• It is very obvious that the lower the Bank sets
  its IPL, the fewer poor people it will count. It
  is less obvious how the level of the IPL will
  affect the charted evolution of poverty a lower
  poverty line will reduce the poverty count in
  each year and may therefore have no effect on the
  assessed poverty trend at all. (The Bank uses
  2005 PPPs to convert its IPL into 2005 local
  currency units (LCUs), then national consumer
  price indices to convert it further into LCUs of
  other years.)

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Poverty Definition and MDG-1
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econ.worldbank.org/docsearch Paper 4703, pp.
34-5
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Another Reality Check

• While the Bank reports a stream of good news from
  the poverty front, the FAO has recently reported
  that the number of chronically undernourished
  people (Target 2 of MDG-1) is exceeding 1 billion
  for the first time ever. In the 1990s and until
  2006 this number was reported to be around 800
  million. One important cause food prices doubled
  2006-08 (partly on account of rapidly rising
  biofuel demand).
• www.fao.org/news/story/en/item/20568/icode/

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Would a higher IPL be Hopelessly Unrealistic?

• Using its latest IPL (1.25 per day or 38 per
  month, in 2005 intl dollars), the World Bank
  counts 1.4 billion poor people living 28 below
  this line on average. Total deficit 0.15 of
  world product (0.33 at PPP).
• With a less inadequate poverty line of 2 per
  day or 61 per month (2005 intl dollars), the
  Bank counts 2.6 billion poor people living 40
  below this line on average. Total deficit 0.6
  of world product (1.3 at PPP).
• With a more HR-realistic poverty line of 2.50
  per day or 76 per month (2005 intl dollars),
  the Bank counts 3.14 billion poor living 45
  below this line on average. Total deficit 1.1
  of world product (2.2 at PPP).
• econ.worldbank.org/docsearch Paper 4703, pp. 23,
  34-5

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Primary Cause Poverty
 
 

• Among ca. 6800 million human beings, about
• 1020 million are chronically undernourished (FAO
  2009)
• 2000 million lack access to essential drugs
  (www.fic.nih.gov/about/plan/exec_summary.htm),
• 884 million lack safe drinking water
  (WHO/UNICEF 2008, 32),
• 924 million lack adequate shelter (UN Habitat
  2003, p. vi),
• 1600 million have no electricity (UN Habitat,
  Urban Energy),
• 2500 million lack adequate sanitation (WHO/UNICEF
  2008, p. 7),
• 774 million adults are illiterate
  (www.uis.unesco.org),
• 218 million children (aged 5 to 17) do wage
  work outside their household often under
  slavery-like and hazardous conditions as
  soldiers, prostitutes or domestic servants, or in
  agriculture, construction, textile or carpet
  production (ILO The End of Child Labour, Within
  Reach, 2006, pp. 9, 11, 17-18).

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Millions of Deaths
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• Intranational and Global Inequality

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Global Inequality

• At current exchange rates, the poorest half of
  world population, 3,400 million, have less than
  3 of global household income ? the same as the
  most affluent 300,000 (0.1) in the US.
• Spreadsheets from Branko Milanovic, World Bank
• Saez Tables and Figures Updated,
  elsa.berkeley.edu/saez/
• At current exchange rates, the poorest half of
  the worlds population, some 3,400 million, have
  ca. 1 of global wealth ? as against 3 had by
  the worlds 1125 billionaires (2008!).
• www.iariw.org/papers/2006/davies.pdf, table 10A,
  p. 47
• www.forbes.com/2008/03/05/richest-billionaires-peo
  ple-billionaires08-cx_lk_0305intro.html

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Shares of Global Wealth2000 poorest versus
richest households
Calculated in market exchange rates so as to
reflect avoidability of poverty. Decile Ineq.
28371. Quintile Ineq. 851. Year 2000, 125
trillion total. (www.iariw.org/papers/2006/davies.
pdf, table 10A, p. 47)
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Rising Inequality in the US

• In the last US economic expansion (2002-06),
  average per capita household income grew 12.
• In the top one percent this growth was 51, in
  the remainder of the population 4.
• The top percentile captured 73 of the real per
  capita growth of the US economy (45 in the
  1993-2000 Clinton expansion).
• Saez Updated, elsa.berkeley.edu/saez/, Table
  1, from IRS Data

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Rising Inequality in the US (1978-2005)

• The income share of the bottom half declined
  from 26.4 to 12.8. Meanwhile, that of the top
  one percent rose from 8.95 to 22.90 (2.6-fold)
  that of the top tenth percent from 2.65 to
  11.58 (4.4- fold) and that of the top hundredth
  percent from 0.86 to 5.46 (6.4-fold Saez Table
  A3). The top hundredth percent (30,000 people)
  now have nearly half as much income as the bottom
  half (150 million) of Americans and nearly half
  as much also as the bottom half (3400 million) of
  world population.

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Kuznets curve is the graphical representation of
Simon Kuznets's theory ('Kuznets hypothesis')
that economic inequality increases over time
while a country is developing, then after a
critical average income is attained, begins to
decrease. One theory as to why this happens
states that in early stages of development, when
investment in physical capital is the main
mechanism of economic growth, inequality
encourages growth by allocating resources towards
those who save and invest the most. Whereas in
mature economies human capital accrual, or an
estimate of cost that has been incurred but not
yet paid, takes the place of physical capital
accrual as the main source of growth, and
inequality slows growth by lowering education
standards because poor people lack finance for
their education in imperfect credit markets.
Kuznets curve diagrams show an inverted U curve,
although variables along the axes are often mixed
and matched, with inequality or the Gini
coefficent on the Y axis and economic
development, time or per capita incomes on the X
axis. Wikipedia
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Whats Happening in China?

• In China, 1990-2004, the income share of the
  bottom half declined from 27 to 18 ? while that
  of the top tenth rose from 25 to 35.
• papers.ssrn.com/sol3/papers.cfm?abstract_id799844
  
• Note new inequality figures at WB World
  Development Indicators

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China
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What is Happening Globally?

• Growth in international inequality has stalled
  except with respect to the poorest countries (the
  bottom billion).
• Global inequality continues to increase, mainly
  because of whats happening within countries.
  Many more are trapped in severe poverty than just
  those bottom billion and, with international
  income inequality rising over the last 25 years,
  the shares of global top fractiles must have
  increased similar to within-US.
• Best source Branko Milanovic, World Bank

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• Hypothesis about Competitive/ Adversarial Systems

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Competitive/Adversarial Systems

• ? e.g. real economy, financial markets,
  politics and international relations, courts,
  academic research, media ? can be highly
  efficient when they are properly framed. Proper
  framing is achieved when the rewards players seek
  from the system are highly correlated with the
  creation of social value. Proper framing requires
  that the rules of the game are appropriately
  designed and that these rules are administered in
  a transparent and impartial way.

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Competitive/Adversarial Systems

• contain seeds of their own demise /
  deterioration insofar as they provide incentives
  to various reward-focused players to try to get
  ahead by affecting, in their own favor, either
  the rules or their impartial application. With
  such efforts, the rules and personnel organizing
  and constraining the competition become objects
  of the competition turf.

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Competitive/Adversarial Systems

• can lose much of their effectiveness when such
  efforts to corrupt are lucrative resources
  invested in corruption are lost to the system
  and, insofar as such efforts succeed, they
  diminish the degree to which the functioning of
  the system tracks its social purpose.

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Competitive/Adversarial Systems

• can include rules forbidding and penalizing
  efforts to modify the rules or their application.
  But these protective rules and their application
  are themselves vulnerable to modification
  efforts. Example soccer hidden and pretended
  fouls.

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Competitive/Adversarial Systems

• can, so long as countervailing temptations are
  not too strong, help stabilize their own proper
  framing by only by? sustaining a moral
  attitude toward certain rules and penalties
  (which then become punishments). To be effective,
  this moral attitude must be ingrained in the
  culture and internalized by many of the players
  and esp. by most of those who play a role in
  formulating or applying central system rules.

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Such Moralization has Limited Potential

• The moral character of certain rules and
  penalties is a matter of degree (how many
  disapprove, and how severely?), and is itself
  vulnerable to corruption as players have
  self-interested incentives to seek demoralization
  or moralization of some prescriptions. The
  success of such efforts depends on how morality
  is understood and lived in the wider culture.

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Long-term Tendency

• Money is becoming the pre-eminent universal
  reward, penetrating also the academic world
  (through grants, endowments), media
  (advertising), politics and international
  negotiations (campaign contributions), public
  administration (revolving door), and religion.
  The judicial system is the best hold-out but
  dependent for its rules on legislatures.

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Systemic Problem Regulatory Capture with
Inequality Spiral

• Often in concert, the richest players influence
  the rules and their application, thereby
  expanding their own advantage. Such run-away
  inequality strengthens, in each round, both the
  incentives and the opportunities for influence.
  Public facilities come under the influence of
  players with special and often near-term
  interests, who buy support from media and
  academics for this purpose (venality esp. of
  economists who live up to their homo oeconomicus
  paradigm). Special interests have been especially
  effective in influencing international agreements
  (WTO Treaty) and organizations (WIPO, World Bank).

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• Digression Financial Crisis

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Systemic Problem Instability

• Insofar as system rules and their application
  are privately purchased, the externalities for
  other players and the future are disregarded.
  Moreover, there is growing incoherence of the
  whole scheme of rules because its various
  components are shaped by different sets of
  players with diverse special interests. Both
  phenomena exemplify the structure of collective
  action problems (PD) The strongest players are
  impelled, by their self-regarding interests, to
  seek influence in ways that are detrimental and
  dangerous even to themselves collectively (and
  even more so, of course, to weaker players). Even
  the strongest are worse off in the long run than
  they would be if they abandoned their competitive
  efforts to manipulate in their own favor the
  rules and their application (but how can they?).

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Hypothesis

• Even the rich mighty, if only they think a
  little more long-term, have an interest in the
  reduction of economic inequality, esp. at the top
  end. In the long run, they must expect more
  damage from the mani-pulation efforts of other
  strong players than gain from their own such
  efforts.

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• Responsibility and Solutions

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Three Claims

• Today, most premature human deaths and other
  deprivations are causally traceable (but for)
  injustice in existing supranational institutional
  arrangements
• for which we (citizens of the more powerful
  countries) are co-responsible
• in violation of human-rights-correlative negative
  duties of justice.

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Counter-Argument

• Poverty is evolving differently in the various
  developing countries and regions. This shows that
  local (e.g., national) factors account for the
  persistence of severe poverty where it persist.

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Conceptual Answer to the Counter-Argument

• It merely shows that local factors are
  co-responsible for the persistence of severe
  poverty. It does not show that local factors are
  solely responsible. Example Differential
  learning success of students/pupils in the same
  class.

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• .

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Empirical Answer to the Counter-Argument

• Protectionism against the poor
• Pharmaceuticals at monopoly prices
• Privileges Borrowing, Resources, Treaties, Arms
  conferred on the basis of effective power alone
  entrenchment and perverse incentives
• Dirty Money outflows from developing countries of
  US850-1000 billion annually
• www.ffdngo.org/documentrepository/GFI20Report.pdf

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• Global Institutional Order

4 Privileges
Dirty Money
Protectionism Pharmaceuticals
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