From Poverty to Power

How Active Citizens and Effective States Can Change the World

By Duncan Green

Practical Action Publishing

Copyright © 2013 Oxfam International
All rights reserved.
ISBN: 978-1-85339-741-7

Contents

Cover,
List of figures,
List of tables,
List of boxes,
About the author,
Foreword,
Preface to the Second Edition,
Acknowledgements,
List of acronyms,
PART ONE,
The unequal world,
PART TWO,
The political roots of development,
I have rights, therefore I am,
I believe, therefore I am,
I read, therefore I am,
I surf, therefore I am,
We organise, therefore we are,
I own, therefore I am,
I vote, therefore I am,
I steal, therefore I am: Natural resources, corruption, and development,
I rule, therefore I am,
From Poverty to Power,
PART THREE,
An economics for the twenty-first century,
Living off the land,
The changing world of work,
Private sector, public interest,
Going for growth,
Sustainable markets,
PART FOUR,
Living with risk,
Social protection,
Finance and vulnerability,
Hunger and famine,
HIV, AIDS, and other health risks,
The risk of natural disaster,
Climate change: Mitigation, adaptation, organisation,
Living on the edge: Africa’s pastoralists,
Violence and conflict,
Shocks and change,
PART FIVE,
Who rules the world?,
The international financial system,
The international trading system,
The international aid system,
International rules and norms,
The international system for humanitarian relief and peace,
Climate change,
Global governance in the twenty-first century,
PART SIX,
The food and financial crises of 2008-11,
The global financial crisis,
Living on a spike: the food price crises of 2008 and 2011,
PART SEVEN,
A new deal for a new century,
Notes,
Bibliography,
Background papers and case studies,
Glossary,
Search terms,
Acknowledgement,

CHAPTER 1

The unequal world

Massive poverty and obscene inequality are such terrible scourges of our times – times in which the world boasts breathtaking advances in science, technology, industry, and wealth accumulation – that they have to rank alongside slavery and apartheid as social evils.

(Nelson Mandela, London, 2005)

From cradle to grave, a person’s life chances are dominated by the extraordinary levels of inequality that characterise the modern world. A girl born in Norway will almost certainly live to old age. If she is born in Sierra Leone, however, she has a one in four chance of dying before her fifth birthday. A Norwegian girl can expect to go to a good school, followed by university, and to be healthy and cared for right through to old age. In Sierra Leone only two in three girls start school at all, and many drop out along the way, deterred by having to find ‘user fees’ levied by the school or by the low standards of education, or forced to stay home to care for their brothers and sisters, or to go out to work to feed the family. Only one in four women is able to read and write. University is an impossible dream.

The extent of global inequality is breathtaking. The income of the world’s 500 richest billionaires exceeds that of its poorest 416 million people. Every three minutes, somewhere in the developing world, two women die needlessly in childbirth or pregnancy,and over 40 children are killed by avoidable diseases such as diarrhoea or malaria. Governments spend least on health care where the need is the greatest.

Ending inequality’s ‘lottery by birth’ is perhaps the greatest global challenge of the twenty-first century. And it is one that concerns all nations, since in a globalised world, poverty and suffering do not remain confined within borders, but spill over in the form of conflict, migration, and environmental degradation.

The world as a whole is far more unequal than any single country. Such grotesque unfairness would probably precipitate social and political meltdown were it to occur within a single country. One consequence of globalisation is that the world is increasingly coming to resemble just that: a single community bound together by ever-improving transportation and communications links. The political price of continued inequality can only rise.

According to a calculation by Oxfam based on income distribution data held by the World Bank, if global inequality could be reduced to even that of Haiti (one of the most unequal countries in the world), the number of people living under $1 a day poverty would be halved to 490 million. Go further, and achieve a distribution of income of a middle-ranking country (in terms of inequality), say Costa Rica, and $1 a day poverty falls to 190 million – a fifth of the current total.

Even within countries, inequalities are grotesque across the whole spectrum of life chances. Children born into the poorest 20 per cent of households in Ghana or Senegal are two to three times more likely to die before the age of five than children born into the richest 20 per cent of households. In the UK, the government’s Scientific Reference Group on Health Inequalities found that life expectancy in the country’s wealthiest areas is seven to eight years longer than in the poorest areas.

Inequality compounds, and often stems from, discrimination based on gender, race, or caste. Black Brazilians are twice as likely as whites to die a violent death, and are only one-third as likely to go to university. In Guatemala, the number of children of European descent dying before they reach their fifth birthday is 56 in every 1,000, compared with 79 of every 1,000 indigenous children. In the Indian states of Uttar Pradesh and Bihar, primary school enrolment for scheduled caste and scheduled tribe girls is 37 per cent, compared with 60 per cent for girls from non-scheduled castes. Among boys from non-scheduled castes, 77 per cent are enrolled.

For poor people, such inequalities cancel out the benefits of living in a better-off society. Here too, rich countries have nothing to brag about. The infant mortality rate among indigenous Canadians is, on average, two to three times the national rate, and the average indigenous person will die 20 years earlier than the average Canadian.

Middle-income countries appear the most unequal. Gini index trends show that Eastern Europe/former Soviet Union and Asia had the largest increases in inequality between 1990 and 2008. Inequality in India has doubled in the last 20 years. Latin America remains the region with the highest level of income inequality, although the region is marked by significant improvement since 2000. Low-income countries show mixed results; sub-Saharan Africa is highly unequal but appears to have reduced its Gini index by almost five points, on average, since 1990.

Nowhere is the injustice of inequality more evident than in the phenomenon of ‘missing women’. Due to discrimination, the world’s female population is lower than it should be compared with males; discrimination starts even before birth through selective abortion and then continues as girl children’s nutrition and health care are neglected compared with their brothers’. Recent estimates put the number of missing women at 101.3 million – more than the total number of people killed in all the wars of the bloody twentieth century. Eighty million of these are Indian or Chinese: a staggering 6.7 and 7.9 per cent of the expected female populations of China and India respectively.

One little recognised, but crucial facet of inequality is in access to quality essential services. Education and health care are available in two forms within India: better-quality, state-of-the-art services for a few contrasts with a dilapidated, low-quality service shorn of all dignity for the majority of the poor.

Why inequality matters

Oxfam and other NGOs have long highlighted the moral repugnance of the world’s yawning social and economic divides. There is something deeply unjust about a system that allows 850 million people to go hungry, while an epidemic of obesity blights millions of lives in rich countries (and increasingly, in cities in developing countries). A new word, ‘globesity’, has even been coined to describe this global phenomenon.

Extreme inequality provokes outrage and condemnation, because it violates the widely held notion that all people, wherever they are, enjoy certain basic rights. Addressing inequality is essential if countries are to live up to their obligations under the international human rights framework established by the UN, to guarantee equal civil and political rights and to pursue the ‘progressive realisation’ of economic, social, and cultural rights.

Yet inequality and redistribution have been out of fashion with rich country decision-makers for many years and warrant barely a mention in the Millennium Development Goals (MDGs), which emerged during the course of the 1990s. In sway to the Washington Consensus view that ‘a rising tide lifts all boats’, rich country leaders believed that economic growth alone would be enough to address poverty. By 2005, the manifest failure of that approach prompted a rash of high-profile publications from the World Bank, and the UN argued that tackling inequality is one of the most urgent tasks of our time.

Academics used to stress the positive potential for inequality to reward ‘wealth creators’ and so encourage innovation. Now economists argue that it is equality that is good for growth, and makes it more effective at reducing poverty.

Inequality wastes talent. If women are excluded from top jobs, half the talent of any nation is squandered. By one estimate, if all states in India were to perform as well as the best (Karnataka) in eradicating gender discrimination in the workplace, national output would increase by a third. When banks refuse to lend to poor people, good economic opportunities are wasted.

Inequality undermines society and its institutions. In an unequal society, elites find it easier to ‘capture’ governments and other institutions, and use them to further their own narrow interests, rather than the overall economic good.

Inequality undermines social cohesion. ‘Vertical inequality’ between individuals is linked to rises in crime, while ‘horizontal inequality’ (for example, between different ethnic groups) increases the likelihood of conflicts that can set countries back decades.

Inequality limits the impact of economic growth on poverty. A one percent increase in growth will benefit poor people more in an equal society than in an unequal one.

Inequality transmits poverty from one generation to the next. Most cruelly, the poverty of a mother can blight the entire lives of her children. Each year in developing countries around 30 million children are born with impaired growth due to poor nutrition during foetal development. Babies born with a low birth weight are much more likely to die, and should they survive, are more likely to face a lifetime of sickness and poverty.

While inequality has received greater attention in recent years, rich country decision-makers have shied away from the idea of widespread redistribution of the kind that occurred in Europe after World War II or in the New Deal in the USA. The World Bank argues for equality of opportunity (for example, access to education, freedom from discrimination, equality before the law), but mentions greater equality of outcome only in relation to avoiding absolute deprivation. The redistribution of assets, through progressive taxation or radical land reform, is treated with great caution and its risks (for example, deterring investors) are continually stressed. When the rich world talks about development, it is more comfortable talking about poverty than about inequality, and it prefers inequality to redistribution.

Moreover, inequality holds the key to the poverty that persists around the world. The idea of ending poverty is not new, but the global economy now has the resources to actually do so. The twentieth century delivered extraordinary progress in health, education, democracy, technology, and economic growth. Each year, the global economy churns out some $11,205 worth of goods and services per man, woman, and child – 25 times the $456.25 per annum that defines the ‘extreme poverty’ of a billion human beings. There is more than enough to go round. According to an analysis from the Brookings Institution, just $66bn a year would be sufficient to lift everyone on the planet above the extreme poverty line of $1.25 a day, if it could be delivered straight into the hands of poor people. That is just over half of the global aid budget and just 4 per cent of the world’s military spending in 2010.

Poverty, the human consequence of inequality

At the sharp end of the skewed distribution of power, assets, and opportunities are the billion people who live in extreme poverty. Poverty is about much more than a low income, something that becomes particularly clear when people living in poverty are asked to define it for themselves. It is a sense of powerlessness, frustration, exhaustion, and exclusion from decision-making, not to mention the relative lack of access to public services, the financial system, and just about any other source of official support. Poverty has a deep existential impact – being denied the opportunity to flourish, whether for yourself or your children, cuts very deep indeed. The academic Robert Chambers talks of the world being divided into ‘uppers’ and ‘lowers’, a description that fits numerous aspects of poverty, whether women’s subjugation by men, or the power imbalances between ethnic groups, and social classes. The many dimensions of poverty reinforce one another. Poor people are discriminated against, but many people are also poor because they suffer discrimination. In South Asia, households that face discrimination because of religion, ethnicity, or caste are significantly more vulnerable to labour market exploitation and debt bondage than other economically poor families.

In 2000, the World Bank published Voices of the Poor, a remarkable attempt at understanding poverty from the inside, based on discussions with 64,000 poor people around the world. What emerged from these interviews was a complex and human account of poverty, encompassing issues that are often ignored, such as the need to look good and feel loved, the importance of being able to give one’s children a good start in life, or the mental anguish that all too often accompanies poverty. The overall conclusion was that, ‘again and again, powerlessness seems to be at the core of the bad life’.

The reverse of such ‘multi-dimensional’ poverty is not simply wealth (although income is important), but a wider notion of well-being, springing from health, physical safety, meaningful work, connection to community, and other non-monetary factors. That is why good development practices build on the skills, strengths, and ideas of people living in poverty – on their assets – rather than treating them as empty receptacles of charity.

Although this multi-dimensional view of poverty is widely accepted in theory, in practice, attention centres on income poverty, most commonly defined by the international ‘extreme poverty’ line of US$1.25 a day, which forms the basis of the first Millennium Development Goal (MDG), that of halving the proportion of the world’s population living in extreme poverty by 2015. Anyone living below that line is judged to be unable to feed themselves properly. The $2a-day ‘poverty line’ is seen as the minimum required to provide food, clothing, and shelter.

There is plenty of good news on development (often downplayed by those keen for further action). Extreme income poverty is falling over time. Between 1990 and 2005 the number of people worldwide in developing countries living on less than the international extreme poverty line of $1.25 a day fell from 1.82 billion to 1.40 billion. As a proportion of the world’s rising population, this was a decline from 42 per cent to 26 per cent.

The nature and location of poverty is also changing. The UN notes ‘an increased tendency for people to rotate in and out of poverty, a rise in urban poverty and stagnation in rural poverty, and increases in the proportion of informal workers among the urban poor and in the number of unemployed poor’. In 2007, the earth’s urban population overtook its rural population for the first time in human history, driven mainly by growth in cities in developing countries. Of the three billion urban residents in the world today, one billion live in slums, and are vulnerable to disease, violence, and social, political, and economic exclusion. UN-Habitat estimates that the world’s slum population will double in the next 30 years, outpacing the predicted rate of urbanisation.

Globally, achievements in reducing income poverty can be attributed largely to the economic take-off of China and India. Despite worsening inequality, China in particular has made extraordinary progress, reducing the proportion of its people living in extreme poverty from 84 per cent in 1981 (835 million people) to just 16 per cent (208 million people) in 2005. Many countries have shown how to grapple successfully with the other dimensions of poverty. Egypt has sustained one of the fastest declines in child mortality rates in the world since 1980. Bangladesh, Honduras, Nicaragua, and Viet Nam have also achieved rapid progress. Such advances should of course be celebrated and learned from, but should not be allowed to mask the plight of numerous countries and sectors in which progress has been slow or nonexistent – and in many cases, poverty has been getting worse. In sub-Saharan Africa, the ranks of extremely poor people increased by 100.5 million between 1990 and 2005.

Beyond income poverty, too, the glass is not even close to half full. Compared with the position in 1999, there were 39 million fewer children of primary school age out of school in 2009, but close to 70 million still do not receive an education, 53 per cent of them girls. In 2009 there were 4.3 million fewer child deaths than there were in 1990, but 8 million children still die each year. Almost all such deaths are preventable. In Africa a child dies every 45 seconds of malaria; the disease accounts for 20 per cent of all childhood deaths.

The rapid scale-up in global immunisation since 2001 through the Global Alliance for Vaccines and Immunization has also brought down the death toll, estimating that it has saved five million lives. Yet diseases such as measles, diphtheria, and tetanus, which can be prevented with a simple vaccination, account for 1.5 million childhood deaths every year. For every child who dies, many more will fall sick or will miss school, trapped in a vicious circle that links poor health in childhood to poverty in adulthood. Like the 358,000 women who die each year from pregnancy-related causes, more than 98 per cent of the children who die each year live in poor countries. That some poor countries have brought an end to such pain and suffering makes these deaths all the more unacceptable.

(Continues…)Excerpted from From Poverty to Power by Duncan Green. Copyright © 2013 Oxfam International. Excerpted by permission of Practical Action Publishing.
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