January 22, 2020

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[Why] Conventional Efforts to End Poverty Have Failed

If the numbers demonstrate clearly that conventional efforts to end poverty have failed, the obvious question to ask is "Why?"


This is the first in a six-part series on the fight against global poverty, adapted from The Business Solution to Poverty: Designing Products and Services for Three Billion New Customers.

Trillions Spent With Little to Show For It

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 child-povertyprotest 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

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) cannot 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

MGD-2015Former 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?”

I’ll respond to that question next week.


The Business Solution to Poverty: Can Anyone Survive On Crumbs?

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