Spanning the world, permeating the life story in every culture, observable across every belief system (religious, social and political), you will be sure to find the poor.
Whether the poor take the form of a starving child in Ethiopia, a beggar on the streets of Calcutta, a labourer in a sweat shop or a government subsidized shopper, cutting coupons at Walmart, it seems that in every society around the world, there are those who are better off and those who aren’t.
Is this a sign of the times? Is it a product of capitalism? Are we making progress on this front? Were things as bad back then, when Jesus spoke about giving to the poor? Or, has poverty always been with us and we will never truly escape it?
What is poverty?
According to Wikipedia, "Poverty" is defined as an economic condition of lacking both money and basic necessities needed to live, such as food, water, utilities, and housing. There are many working definitions of "poverty", with considerable debate on how to best define the term.
Confusion around the term is increased when titles such as destitution, absolute poverty, marginal poverty and relative poverty are also introduced. But for the purposes of this article, we will focus on absolute poverty or destitution as it has been used in reports and academia.
The threshold at which “absolute poverty” is defined will in the majority of cases look and feel the same from one territory to the next. It will be a complete lack of access to nutrition (food), clothing, clean drinking water, sanitation and shelter.
Absolute poverty refers to a set standard which is consistent over time and between countries. In 1990 the poverty line was set at 1 US Dollars per day. In 2008 the World Bank adjusted this upwards to $1.25 to account for inflation and in October 2015, it was similarly reset to $1.90 a day. Just imagine for a moment surviving on that amount per day. Life under that line would be unimaginably difficult, fraught with uncertainty and desperation.
A brief history of poverty
Poverty is not a new chapter in the history of humanity. It has long been the condition that the majority of people were subject to. In ancient Egypt, during the time of the Roman Empire and Chinese Dynasties, right up until the dawn of the industrial revolution, for the majority of people, life was difficult and the wealth of nations were held by the few: monarchs, kings and landlords.
Our World in Data has done an excellent job in illustrating this point through a series of slides that make up the presentation, "The Visual History of World Poverty". In it economist, Max Roser starts with the illustration provided below and shows seven slides tracking the history of poverty since year 1 AD right up until 2008. Here, we show the first and last slides of the series.
Source: Our World in Data
Source: Our World in Data
Using 1990 US Dollars as the constant, it is clear that for much of human history, people were poor. We know that the standard of living was very low in comparison to modern times (especially the last 100 years) where developments in transportation, science, medicine and provision of utilities have exploded.
Are we making inroads?
The simple answer is yes, at least where absolute poverty is concerned. The share of the world’s population living in absolute poverty has fallen from approximately 90% in 1820, to 43% in 1981, to 14% in 2011. Over the 30-year period from 1981-2011, the estimated number of people living in absolute poverty fell from 1.95 billion to 1.01 billion. Today the World Poverty Clock (set up to monitor the progress toward the UN’s goal of eradicating absolute poverty by 2030) estimates that 643.3 million people are still living under the $1.90 per day poverty line. Current projections from the organisation point to 6% of people living below the poverty line in 2030, or over 400 million people in absolute terms.
At our current rate of improvement, it will still take over a hundred years to eliminate absolute poverty and then we would still have an enormous task ahead of us to tackle unemployment, lack of education, and provision of a living wage.
A word on inequality
In many ways, there are two conversations being had. One is focused on bringing a huge number of people over the poverty line and the other conversation is aimed at inequality or unequal distribution of wealth.
Source: Our World in Data
It is said that the wealthiest 10% of the world control over half of the wealth and the remaining half is split between 90% of the globe’s inhabitants. While the $1.90 line is targeted and we mobilise our efforts to push everyone over it, surely we can’t stop there. It is an imperative that as a collective, humanity strives for upliftment beyond the poverty line. For a number of decades now we have possessed the means to feed all the earth’s people and there is no reason that hunger would prevail in our world today, yet it does.
Today, the poorer half of humanity earns less than 3% of the global household income. If only 3% of the 97% enjoyed by the wealthier half of the world’s population were to be transferred to the poorer half, it would double their income overnight.
In a world where we are told to dream big and earn even bigger, it comes as a sobering reminder that many of us are far better off than the majority of our neighbours, and a timely reminder that we are in a far better place wealth-wise than our ancestors.
To get a perspective of your earnings compared to the rest of the world, take a minute and visit the www.globalrichlist.com and enter in your annual salary. You might be surprised at the outcome...
Investment Specialist at Discovery Invest
Mark graduated with a Business Science Degree from the University of Cape Town in 2007. He then joined Sharenet, during which time he also completed his B.Com Honours through UNISA. Mark has helped to build, launch and manage derivative and share trading brokerage businesses. He is also a JSE Registered Securities Trader, and has worked on the trading desk at Sharenet. After seven-and-a-half years at Sharenet Mark then moved to Reitway Global (a specialist Global Listed Property Fund Manager) where his passion for property was further kindled. Mark currently works for Discovery Invest as an Investment Specialist on their Investec Managed fund offering. He has over ten years of experience in the equity and asset management sector and can be reached at: firstname.lastname@example.org
The views and opinions (where expressed) in this article are those of the author and do not necessarily reflect the official policy or position of Discovery Invest.