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The always-illuminating Adam Tooze on poverty around the world…

In his speech at the 1973 Annual Meetings, World Bank President Robert McNamara coined the term “absolute poverty,” describing it as “a condition of life so degrading as to insult human dignity and yet a condition of life so common as to be the lot of some 40% of the peoples of the developing countries.” He then posed a difficult question: “And are not we who tolerate such poverty, when it is within our power to reduce the number afflicted by it, failing to fulfill the fundamental obligations accepted by civilized [people] since the beginning of time?” This defining speech solidified the Bank’s new goals at that moment: to accelerate economic growth and to reduce poverty.

That was 1973. Half a century later, what a wave of publications the World Bank tell us is that the fight against absolute poverty faces a new and urgent historic challenge.

From the 1990s onwards economic development brought giant progress towards the goal of ending absolute poverty. But that progress stopped ten years ago.

Since 2015, the push to raise the world’s population out of the direst deprivation, has stagnated. As the World Bank authors acknowledge, we are “facing a lost decade in the fight against global poverty”.

Not only has there been little progress since 2015. But the onset of what the World Bank Poverty, Prosperity and Plant Report dubs the “polycrisis”, is putting further progress even further out of reach. As a blog post amplified:

We are facing a series of overlapping and interconnected crises that are impacting lives and livelihoods almost everywhere. The combined effects of slow economic growth, rising conflict and fragility, persistent inequality, and extreme weather-related events have sent shockwaves across the globe. High-income economies are showing signs of resilience, but the outlook for low-income economies and fragile countries remains deeply troubling.

Just a decade ago, we had cause for more optimism. There was significant progress in sustainable development between 1990 and 2015, with more than a billion people lifted out of extreme poverty. This was a monumental achievement, driven primarily by strong economic growth in China and India, and it brought the wealthiest and least-well off economies closer in income levels. Yet, what seemed like a clear path to complete poverty eradication has since faded… global poverty rates have only now gone back down to pre-pandemic levels, with forecasts indicating a trajectory for the coming years that is dismal at best. Almost half the world’s population—around 3.5 billion people—is living on less than $6.85 a day, the poverty line for upper-middle-income countries. At a more extreme level, almost 700 million people are living on less than $2.15 a day, the poverty line for low-income countries. Extreme poverty has become increasingly concentrated in Sub-Saharan Africa or places affected by conflict and fragility…

… Thanks to Asia’s remarkable growth, absolute poverty is no longer a general global condition. It is now concentrated in a belt running across the breadth of West Africa, the Sahel, Central and Eastern Africa and extending up to the Horn of Africa. Across this vast region a rapidly growing population that will soon number more than half a billion, struggle to survive amidst increasingly harsh and unpredictable environmental conditions, more hampered than helped by states that fail to provide even basic infrastructure and services and where as one recent study of Nigeria has shown, inter-communal violence is amplified by environmental shocks.

Conflict, violence and political instability make either public or private action to escape poverty impossible. As the World Bank comments:

The importance of stability for future poverty reduction can be seen from the graph below, prepared for Western and Central Africa. Countries that managed to avoid fragility (Benin, Cabo Verde, Gabon, Ghana, Equatorial Guinea and Senegal) managed to steadily reduce poverty. Relative to countries that are presently fragile, or that moved in and out of fragility, stable countries reduced poverty by an additional 15 to 20 percentage points. Stability, by the way, goes beyond an ability to maintain peace. Macro-fiscal and debt sustainability are equally critical, as Ghana which recently defaulted on its external debt unfortunately shows. Poverty (at $ 2.15) increased from 25% in 2020 to 33% in 2023.

The implication is clear. Future poverty reduction will increasingly be premised on the ability to ensure stability, as stability is a precondition for economic growth and poverty reduction. In a world in which conflict and instability are on the rise, and debt distress is rising, this is a sobering realization and bad news for the global community’s ability to eradicate poverty anytime soon.

It is a long way from the civilizational language espoused by McNamara half a century ago…

Addressing poverty in turbulent times: “Africa & absolute poverty in an era of polycrisis,” from @adam_tooze.

Apposite: “How China Defeated Poverty” (possible paywall)

(Image above: source)

* Franklin D. Roosevelt

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As we seek stability, we might recall that it was (tradition holds) on this date in 1517– All Hallows (All Saints) Eve– that Martin Luther, a priest and scholar in Wittenberg, Germany, upset by what he saw as the excesses and corruption of the Roman Catholic Church (especially the papal practice of taking payments– “indulgences”– for the forgiveness of sins), posted his 95 Theses on the door of Castle Church.  Thus began the Protestant Reformation.

(source)