How Bad Will Poverty Be In 50 Years?

Subject to political reform that is the main obstacle against economic development, poverty should reach the level of zero in 50 years.

Caveat: A very small number of people have mental, or behavioural disabilities so that they cannot earn. They should not be regarded as poor, but as dependents whose survival depends on social safety nets. The world is rich enough to provide for a small number of dependents through social charities and subsidies.

The current global per capita income is 10,000 dollars, which is far above the poverty level. And yet about 800 million out of 7700 million people are poor.

Question: What did 6900 million people do right so that they are not poor, and what did 800 do wrong that they are poor?

Answer: Primarily, agriculture is the root cause of poverty. Humans are overwhelmed by the emotional attachment to ancestral homes in the villages that they do not want to abandon. They stay there and keep growing crops on the ancestral lands despite the continuously declining real price of food in the face of ever-increasing excess supply of food. That is, they become poorer and poorer as they grow more and more food.

In 2018, the world’s 7700 million people needed 1540 million tons of food grains, but the production was almost 70% larger than needed, at 2600 million tons.

The impoverishment is technically called terms of trade deterioration. Take two baskets of goods, one consisting of food items and another consisting of non-food items. Select quantities such that at a starting pint, the two baskets are of equal value. Then as time goes, the price of the food basket keeps falling while that of the non-food basket remains the same. The farmer is becoming poorer and poorer as the price of what he sells is falling but the price of what he is buying is not falling.

The obvious solution is to take them out of agriculture (and reduce food production by some degree) and engage them in the production of non-food items in towns. Follow the example of developed nations where peasants moved out of villages and fled to towns so that by now, 95% or more of the peasants are no longer in the villages, and they are no longer peasants.

These people will need help. They will need social support to settle down in cities and find jobs, for which they may need some training and education. They also may need some credit to start small and medium businesses.

There is no shortage of capital or of the knowledge and skill these people need to acquire. But the big problem is politics. Parochial and sectarian politics and corruption may perpetually prevent the required transition to cities. One of the key political instruments is that the government will buy up the land of the poor, and add some low-interest credit to it, and help them settle down in cities. Once the poor small medium and marginal farmers leave the villages, the government can help a few large farms to take over the land and apply modern technology to increase the quality of the food output but decrease the quantity. One of the most important political challenges for all nations is to turn some land retired from food production into new forests and orchards that can support a larger non-human population of all kinds of wild animals. Some of the depopulated villages may be redesigned as ecological tourist attractions.

About 5% of the poor are non-farm people. They need help with education and credit to get restarted as urban residents. In most cases, the lingering urban poverty is the outcome of racist politics of exclusion, leading to endemic pockets of urban slums in which the residents are disproportionately deprived of good education and employment opportunities, and tend to be disproportionately engaged in criminal activities that perpetuate the low achievement. Perhaps about 2% of the poor need help from a reformed criminal justice system to create paths of tenable rehabilitation in proper income-earning ventures.

If there is political will, the world can be fully free of poverty in the next half-century, and indeed even earlier. I am pretty sure that an organized urbanization program can be carried out in 25 to 30 years to take all 800 million people from the villages into newly built towns. The bulk of the work the newly arrived urban people will do is to build the town itself. Creating about 400 million new apartments in the next 25 years will absorb nearly the entire working-age labour population of the poor. And the very ownership of the flats, acquired over a 25-year financing circuit will in itself make them non-poor.

Economic development is nothing new. We have more than two and half centuries of recorded detailed accounts of how it occurred. We can take advantage of the proven stock of knowledge to pull the poor out of poverty. We certainly have the resources to do it.

But do we have the willingness to do it?

First published in Quora

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