Extreme poverty could be on its way out. According to a new paper from the Center for Global Development, “most of the world’s poor live in countries that already have the national financial capacity to end extreme poverty.” That is, governments could end extreme poverty (living on $1.90 per day or less) and even eliminate poverty up to $5 per day, all with the resources they already have at their disposal.
The study, from Andy Sumner of King’s College, London and doctoral student Chris Hoy of the University of Sydney, can be summed up in three points. The first is that the poor are fairly equally poor, all around the world. “In fact, the average poor person in Brazil is actually worse off than the average poor person in the Democratic Republic of Congo,” write Sumner and Hoy, “and the average poor person in Ethiopia is only slightly worse off than the average poor person in China or India.”
That puts a lot of the extremely poor in countries that have the financial means to fix the problem.
Next up is the radical idea of taxing the poor in order to help the extremely poor. This could end 75% of extreme poverty, and “may even end poverty up to $5 per day,” say the authors. The thinking goes that growth rates since 2000 mean that many people in developing countries wouldn’t be considered poor, even by U.S. standards. Increasing the taxes on those people would redistribute enough wealth to make a big dent in extreme poverty.
The third point is public spending. The authors recommend taking all the money used for fossil-fuel subsidies (which they consider “regressive,” and which “benefit the rich”), along with the cash wasted on surplus military spending, and using that to fund cash transfers to the poor. So large are fossil-fuel subsidies that even in poorer countries like Ethiopia, Mozambique, Tanzania, and Uganda, relocating the money would provide almost half the money needed to end poverty.
The authors conclude that the problem is no longer resource scarcity, but “national inequality and political economy.” That is, income equality and the politics around it are the chief causes of extreme poverty today. If that sounds familiar, its because we cover income inequality all the time here at Co.Exist, but usually within the setting of developed countries like the U.S.
The U.N. has committed to ending poverty “in all its forms” by 2030, but Sumner and Hoy say that this could be fixed way sooner, with relatively little effort. It would be ironic, then, if a policy of wealth distribution fixed poverty in the developing world, while government recalcitrance towards taxing the rich, and socialist public-spending left the poor in the developed world behind.
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