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Copenhagen Consensus Center

Post-2015 Consensus: Poverty Viewpoint, Rogers

Viewpoint Paper

The economic approach which brought us intractable poverty is unlikely to be helpful in solving these problems. The neo-liberal economic model fails to assign value to anything that has not been brought into the monetized economy, fails to assign costs to many externalized harms such as climate change or social breakdown and sets artificial boundaries on the solutions that can be sought. These problems are clearly exhibited in Gibson’s paper, leading him to conclude that four of the five proposed targets should not be adopted.

A different set of assumptions and values leads to a different conclusion. I feel no loyalty to any particular economic model, find it impossible to discuss poverty outside the context of wealth and inequality and assign value to things that make life worth living and the world a beautiful and well-functioning place, regardless of whether they have been monetized or not. Given these assumptions, my analysis of the same empirical evidence reviewed by Gibson leads me to the opposite conclusion: that the targets proposed under Goal 1 are reasonable and achievable, and could even be strengthened.

If we want to quantify the benefits associated with eradicating extreme poverty, we need to first calculate the costs of extreme poverty; these, then, become the benefits which accrue as it is eradicated.  The costs are extensive, including poor health, domestic violence, mental illness, substance abuse, crime, incarceration, difficulty in maintaining economic stability or growth, loss of creative contributions, lack of trust, social breakdown, conflict, inability to achieve collective solutions due to lack of social solidarity, and many others.

Next we need to look at the costs and effectiveness associated with various possible approaches to poverty eradication. Despite the political unpalatability of redistributive spending to those who will be expected to pay, if we are serious about ending extreme poverty, this is the fastest, most efficient way to get the job done. The financial resources to reduce poverty are held by the top 1% of individuals who own about half the world’s wealth.

In addition to national efforts, the success and costs of poverty eradication depend on the willingness of the international community to contribute aid, favor the poorest countries in trade and tariff agreements, provide debt relief, bring the abusive practices of multinational companies under control, establish financial transaction taxes globally, and end illicit financial outflows and tax avoidance.

Cutting poverty as more broadly defined in half is less about abject suffering and more about the multitude of physical, emotional, social, economic and political ills that come about from having an underclass. The very concept of poverty is relative, not absolute. It may also be more difficult to eradicate moderate poverty than extreme poverty. The real question is whether we have the political will to do it.

The use of social protections and floors to overcome poverty has been recommended by poverty researchers and others. Studies have shown that economic growth often fails to result in poverty reduction, and also that inequality may reduce growth rates and thus further block poverty reduction. It is redistribution, or redistribution in conjunction with growth, that works.

If eliminating poverty is our goal, and we are serious about accomplishing it, then social protections programs, including floors, will be the primary tools in our toolkit. For the least developed countries, increased external aid will be a necessary redistributional tool at the international level.