What Does Bill Gates Know About Poverty?
By Joanne Knight
29 January, 2014
The Gates Foundation 2014 Annual Letter confidently declared the end of poverty by 2035. With some personal wisdom thrown in, Mr. Gates proudly expounded on the achievements in poverty reduction around the world. Institutions like the UN Development Project and the World Bank have similar reports on poverty reduction: 650 million people lifted out of extreme poverty (living on $1.25 per day) in the last three decades. These organizations approach poverty reduction within a framework of increasing economic growth and trade liberalization. However, too many poverty reduction projects rely on the ‘generosity’ of the global elite, like the Gateses, scattering a few crumbs of their obscene wealth. It seems after three decades more should have been achieved.
The Gates Foundation 2014 Annual Letter confidently declared the end of poverty by 2035. It criticized all the nay-sayers in poverty reduction and spelled out the good news to all the terrible sceptics in the world. With some down home wisdom thrown in, Mr. Gates proudly expounded on the achievements in poverty reduction around the world.
“The global picture of poverty has been completely redrawn in my lifetime. Per-person incomes in Turkey and Chile are where the United States level was in 1960. Malaysia is nearly there, as is Gabon. And that no-man’s-land between rich and poor countries has been filled in by China, India, Brazil, and others.”
Institutions like the UN Development Project and the World Bank have similar reports on poverty reduction: 650 million people lifted out of extreme poverty (living on $1.25 per day) in the last three decades. These organizations approach poverty reduction within a framework of increasing economic growth and trade liberalization. However, too many poverty reduction projects rely on the ‘generosity’ of the global elite, like the Gateses, scattering a few crumbs of their obscene wealth. It seems after three decades more should have been achieved.
The simple measure of marking poverty reduction by reducing the number of people living below the poverty line ignores the conditions that people live under. Non-existent labour standards which lead to young girls being forced to work for days on end, being raped and abused while at work. Factories collapsing killing workers, as well as the simple grinding misery of living on such small wages.
Jasmine Whitbread, CEO of Save the Children, raised the issue of supply chain standards at the WEF forum “Ethical Capitalism: Worth a Try?” She commented that most corporations that STC deals with are not willing to address the issue of labor standards in their supplier companies because it is “very difficult.” This response seems to be woefully inadequate when the stories of the labor atrocities being committed in sweatshops have been being reported for at least 20 years. Even in the US, the minimum wage has stalled at $7.25 per hour and Walmart workers are eligible for SNAP and Medicaid programs because they cannot earn enough to support their families or Walmart medical insurance.
The UNDP reports some limitations to the economic growth and trade liberalization model.
“Economic growth will not produce jobs and cut poverty unless it is inclusive and equitable, and unless the needs of the poor and marginalized are at the centre of development priorities.”
Its Human Development Report 2013 stated:
“There is a clear correlation between past public investment in social and physical infrastructure and progress on the Human Development Index.”
Such statements seem to contradict programs like IMF loan conditionality and pressure on developing countries to reduce tariff protections for local industries and exports. In the recent, Pakistan-IMF loan agreement conditions included increasing domestic power tariff by 30 percent, imposing a new gas levy and the privatization of 65 public sector enterprises.
A UNDP report written in 2006, Can Privatization and Commercialization of Public Services Help Achieve the MDGs examined the effectiveness of privatization in the provision of health, education, electricity, and water. It found that “market-led policies fail to contribute to the MDGs [Millenium Development Goals] and often reduce the likelihood of achieving them. Strengthening the State in assuming central responsibility for providing essential public services will help correct these setbacks.”
Bill Gates is dismissive of the question of inequality: “…inequality will still be a problem: There will be poor people in every region.” Indeed. A new briefing paper by Oxfam, Working for the Few, calls on the World Economic Forum to address the question of wealth inequality. The report finds that the 85 richest people in the world have as much wealth as those in the bottom half of the wealth distribution. One percent of the world's population owns about $110 trillion, or about half of the world's wealth, which is 65 times the total wealth of those on the bottom half of the wealth distribution. Seventy percent of the global population live in countries where economic inequality has increased in the last 30 years. The richest one percent increased their share of income between 1980 and 2012 in 24 out of the 26 countries where the data is available. Unfortunately this shows that there are fortunes to be made in this system which may make it tempting to perpetuate such stark inequality.
As fewer people gain more wealth they also gain more political power. Anyone following proceedings at the WEF annual meeting in Davos this week can see that these people exist in an echo chamber of corporate jargon. Discussions about a more ethical capitalism focused on the role of corporations to take more social responsibility in the way they conduct business, rather like leaving the fox in charge of the hen house. Environmentally responsible corporations continue to increase GHGs in the atmosphere and work against solutions to global warming. The social responsibility record of corporations can be seen in their labor practices and starvation wages.
Gates claims that “Almost all countries will be what we now call lower-middle income or richer. …Their labor forces, buoyed by expanded education, will attract new investments.” The Gates model ignores the fact that it is almost inevitable that there will be more economic crashes in the future. Ambar Narayan and Carolina Sanchez-Paramo, Senior Economist at the World Bank, reported on the negative impact of the 2008 economic crisis on Mexico, Philippines, and Bangladesh. They found that the poorest 20% of Mexican households suffered an average per capita income loss of about 8% and reported a 5% loss for the entire population. Narayan et al found that “crisis-vulnerable” households will be poor because of the crisis that would not have been poor otherwise.
“The characteristics of these households are quite different from the chronically poor as well as the general population. On average, they appear to be more skilled and urban than the chronically poor, but less so than the general population. They also are more likely to be economically active than the chronically poor, indicating that the crisis would have significantly increased the number of “working poor.” Crisis vulnerable households suffer much larger income losses (25% - 50%) than the average household (3% - 5%) – mainly due to loss in labour income in Mexico and the Philippines and loss in remittances in Bangladesh.”
Repeated economic crashes mean that progress to build a middle class is one step forward, two steps back.
Since the global economic crisis, the same voices keep bleating out the same slogans as they did before 2008. The same toxic investment derivatives continue to circulate unimpeded. No charges have been laid to punish the responsible corporate criminals. Austerity packages are the answer to the economic problems created by the devastating practices of international banking. Even though this poverty reduction model has an extremely limited impact on actually improving the lives of the poor, the same voices will continue to recommend it because, in the end, it means large profits for the rich.
Joanne Knight writes about corporation corruption of political processes and daily lives. She has a Masters of International Relations.
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