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The rich get richer ... poor do, too

By Christopher Lingle / July 5, 2000



HONG KONG

The poor always seem to be with us, because, to a certain extent, poverty is as much a relative assessment as it is an absolute one.

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Discussions about poverty are laden with value judgments and often motivated by political rather than humanitarian concerns. Perhaps the only thing worse than politicizing poverty measurements to serve partisan ends is manipulating them for the betterment of certain interest groups.

As it turns out, some nongovernmental organizations (NGOs) and national or international bureaucracies may overstate poverty measures because their funding depend upon an impression of extensive suffering by others. In effect, most aid or charitable organizations suffer a conflict of interest because they'd need many fewer employees or smaller budgets if the world was convinced they've done their job. They have an incentive to provide stark images of people in distress who depend upon them.

One problem with measuring the extent of worldwide poverty by international agencies is that they use earnings benchmarked in US dollars. With this approach, depreciation of a local currency could increase the number of poor. One in every 5 of the world's 6 billion people live in abject poverty; another 1.2 billion survive on less than $1 a day. But this information provides limited information about local conditions and costs.

For evidence of the exaggeration of poverty, it's instructive to examine the UN Conference on Trade and Development (UNCTAD) publication "The Least Developed Countries 1999 Report." The introduction asserts that after a "lost decade" for developing countries in the 1980s, these nations in the 1990s are increasingly marginalized and have greater inequality, poverty, and social exclusion. The report also indicates astonishing improvements. Per capita GDP (in 1997 US dollars) of the world's poorest countries, identified by UNCTAD as the least-developed countries (LCDs), rose from $163 in 1980 to $235 in 1997 - a 44 percent increase on average. Secondary-school enrollment rose from 15 percent to 19 percent of the relevant age groups - a 26 percent increase. Primary-school enrollment rose from 66 percent to 70 percent of the relevant age group. For the same period, mortality rates dropped from 116 to 108 per 1,000 live births in the least-developed countries, and food supply rose from 2,050 to 2,145 calories per capita per day.

As evident from the experience in Hong Kong and Singapore, there is no correlation between poverty and high population density. The barren islands that are home to these city-states also prove that poverty does not necessarily arise from a lack of natural resources.

If poverty can't be literally eliminated, there are things that can alleviate the burden on the poor that don't require throwing more money at NGOs or aid agencies.

There is considerable evidence poverty is the outcome of inappropriate policies and poorly designed legal institutions. Resistance to change and poor choices by politicians and government officials are the principal source of the suffering of their own citizens.