Dystopia and global poverty

from David Ruccio

And as Angus Deaton reminds us, those struggling to survive in conditions of extreme poverty aren’t just “over there,” in the Third World. Notwithstanding the focus of the World Bank-sponsored campaign to eradicate extreme poverty and the ubiquitous appeals on behalf of the needy in poor countries, a large portion—approximately 14 million people—live in wealthy countries—some 5.3 million in the United States alone.

Is there any more damning condemnation of contemporary economic institutions, in both the North and the South?

But wait, there’s more.

We’re talking about hundreds of millions of people living—barely—on less than $1.90 a day!

That’s the official World Bank number, updated in recent years from the original $1 a day and then $1.25 a day. But let’s put that number in perspective, in order to understand how low a threshold it actually is.

First, according to recent research by Robert C. Allen (pdf), $1.90 a day for people in Third World countries covers a consumption basket of food, a variety of nonfood items, and housing. But the devil, as always, is in the details. For food, we’re talking only 2100 calories a day (enough to allow people, beyond a bare minimum, “a more ample supply of energy to do the work that sustains society as well as raising children”), plus additional food (basically animal fat and vegetables) to meet recommended daily allowances of various vitamins and minerals (iron, B12, Folate, B1, Niacin, and C). That’s it in terms of food.* It all includes various nonfood items, such as fuel, lighting, clothing, and soap—but not education, medical, and other such nonfood expenditures. Finally, a housing allowance is calculated, which amounts to just 32 square feet per person.**

Calculate the total of those expenditures (using linear programming) and you end up with an extreme poverty line for people in Third World countries of only $1.90 a day. And the way the world economy is currently organized, it can’t guarantee even that miserly sum to hundreds of millions of people across the globe.

The second way of putting that number into perspective is to recalculate it for people in wealthy countries. Allen has done that, too. For the United States, it comes out to about $4 a day (mostly because housing costs are so much higher, and make up a much larger percentage of poor people’s budgets, than in the Third World).***

That means we’re talking about just $1460 a year for an individual or $5840 for a family of four.**** The way the economy is organized in the United States forces over 5 million people to get by on less than $4 a day.

Consider what those numbers represent—whether $1.90 a day in the Third World or $4 a day in rich countries like the United States—and there’s no doubt we’re living in an economic dystopia.

 

*Thus, in Sri Lanka, the so-called Basic diet would consist, per person per year, of the following: 309 pounds of rice, 108 pounds of beans and lentils, 77 pounds of eggs, 9 pounds of oil, and 99 pounds of spinach, cauliflower, or peanuts).

**As even Allen admits, “By the standards of rich countries, this represents extreme, and often illegal, overcrowding. Even illegally subdivided apartments in New York offer 5–10 square meters per person.”

***In Third World countries, about two-thirds of spending is on food, one quarter on nonfoods, and 5–10 percent on housing. The food share drops to one quarter in the United States, the nonfood share remains at one quarter, and the housing share explodes to half or more of income.

****The official poverty line in the United States is $34.40 a day for an individual, which comes out to $12,752 a year. According to that standard, 43.1 million Americans (12.7 percent of the population) live in poverty.