source: Carl Herman, Examiner.com

The Economics of Ending Poverty

The following article is also a social science high school lesson that you are welcome to use.

Instructions: Please read the following with full comprehension. Cut and copy the questions onto your own Word document. Answer the questions. This assignment is worth 2 points per question.

 

“Every day, I saw more evidence about the evils humankind will inflict on their fellow humans to gain or maintain powerWhat is more, those who choose not to empathize may enable real monsters. For without ever committing an act of outright evil ourselves, we collude with it through our own apathy…If you choose to use your status and influence to raise your voice on behalf of those who have no voice; if you choose to identify not only with the powerful, but with the powerless; if you retain the ability to imagine yourself into the lives of those who do not have your advantages, then it will not only be your proud families who celebrate your existence, but thousands and millions of people whose reality you have helped transform for the better. We do not need magic to change the world, we carry all the power we need inside ourselves already: we have the power to imagine better.”  – J. K. Rowling, Harvard Commencement, June 5, 2008. http://harvardmagazine.com/go/jkrowling.html .

 

You want to live in successful communities: family, friends, work, city, nation, and the global community. For our global community, let’s look at one area of how “success” can be measured, our current status, and the opportunity of building a brighter future through future policy. Please pay attention to the following three pages of economic and political information. Millions of lives are at stake. Also importantly at stake is how you will rate and respect yourself as a global citizen. We have three pages of data to understand to help these millions of human beings. Ready? Here we go!

The United Nations (UN) Millennium Goals for 2015,[1] agreed to by 192 countries, are a good start to see how we’re doing as a global community:

Goal 1: Eradicate extreme poverty and hunger
Goal 2: Achieve universal primary education
Goal 3: Promote gender equality and empower women
Goal 4: Reduce child mortality
Goal 5: Improve maternal health
Goal 6: Combat HIV/AIDS, malaria, and other diseases
Goal 7: Ensure environmental sustainability
Goal 8: Develop a global partnership for development

To fund these goals, the developed nations committed to annually contribute 0.7% of their gross national income (GNI) for the approximate 10 years to realize the project goals. For the US, this translates to about $90 billion a year for 10 years. The total costs of meeting the Millennium Goals is estimated from $40-$60 billion per year by the Borgen Project[2] to an average of $150 billion per year at the most intensive phases by economist Jeffrey Sachs.[3] The low estimate is about 0.2% of the developed nations’ GNI, with the high estimate just over one half of one percent. Most nations have not funded the Millennium Goals up to their promise of 0.7%,[4] with Sachs reporting the 2005 contribution of the US at 0.22%. The Bush administration requested and Congress approved a 2006 reduction of aid to 0.17%[5] (that means the US taxpayers are funding the end of poverty with only one-sixth of one percent of our income – are you shocked by this reality check of “American generosity”?). Funding for 2007 dropped to 0.16%.[6] Sachs also reports that Americans report in polls that they believe the amount of the US budget to help the poor is 25%, with the median response of what we “should” give as 10%. Ten percent of the US budget (different from gross national income) is about $250 billion per year.

One of the key accomplishments of what our investment would buy is the rapid elimination of the annual deaths by poverty. The United Nations Children’s Fund (UNICEF),[7] the hunger-ending organizations RESULTS,[8] and Bread for the World[9] estimate that 15 million people die each year from preventable poverty, of whom 11 million are children under the age of five. Jeffrey Sachs says the total deaths are closer to 8 million.[10] Either way, poverty causes more human destruction every year than a Holocaust. The total deaths from poverty in the last 15 years is conservatively greater than from all wars, revolutions, murders, accidents, and suicides in the 20th century.[11] In the past 20 years, the total deaths from poverty probably eclipse all the above categories of death in all known human history.[12] Make sure you get this: in your lifetime of a high school Senior, human beings have allowed other people in poverty, mostly helpless children under the age of five, to die before our eyes in numbers greater than all of the catastrophic events in our history books. Since I graduated from high school in 1978, preventable poverty has killed ~ 450 million people, which equals the entire population of the United States plus five additional Californias. When our political leadership have not yet expressed connectedness to the suffering of our fellow human beings to even give 1% of our income, what does that mean? Can we conclude that our government has evolved enough to call them socially competent or compassionate?

In every historical case where poverty has ended, birth rates have dropped, thereby decreasing population growth.[13] When infant mortality rates (percentage of children who die before their first birthday) are compared with population growth rates over time, the data reveal that when families are confident that their children will survive, families have fewer children. This data can also be confirmed by comparing fertility rates of women to income, from current and historical work from The Population Reference Bureau.[14] The type of poverty we’re speaking of is called “extreme” or “absolute” poverty: a human being attempting to live on $1/day or less. On our planet of ~6.5 billion people, over one billion live in absolute poverty.[15] Therefore, it’s in our collective self-interest to end poverty from both an economic and resource-preserving incentive, and from a moral sense most people report of connectedness to people who needlessly suffer.

One of the strongest tools to empower the poor to end their own poverty is Microcredit, small loans for poor people who do not have the collateral to borrow from commercial banks.[16] The lobbying group I volunteered with for 18 years, RESULTS (www.results.org ), was the primary organization working to create the 1997 UN Microcredit Summit. RESULTS also manages global progress for the Microcredit Summit’s goals for ending poverty.[17] Muhammad Yunas, the founder of Microcredit, was the recipient of the 2006 Nobel Prize in Economics. Microcredit has funded over 100 million people to work their way out of poverty, which extends to family members totaling perhaps 500 million people. Microcredit requires funds for start-up, then repays those funds and makes a profit. The loan repayment rate reported by banks, such as the founder’s Grameen Bank, is over 95%.[18] Microcredit programs could be expanded to help hundreds of millions of human beings living in poverty, but suffers the same lack of political will for funding as the UN Millennium Goals. RESULTS and other groups achieved slight funding increases for Microcredit, but only from focused public pressure in the face of Democratic and Republican leadership’s lack of initiative on their own.[19]

What you have just read is an economic cost-benefit analysis. Was this empowering to understand the relevant data and how much it would cost to solve this problem? Does the price tag help inform your voice and vote whether this policy is worth our collective tax dollars? Politics could be said to be one cost-benefit analysis after another. All we do is consider proposed policies and answer the question whether it merits our investment.

Let’s consider some analysis on this issue. Our political “leaders” are not willing to share resources even at less than one percent of our income to save the lives of those in extreme poverty. By definition, this is a problem of being selfish. The same leaders who consciously vote to under-fund the legally-binding policy commitment of the UN Millennium Goals and the opportunity of Microcredit every year are among the wealthiest individuals in the nation:

“U.S. senators had a median net worth of approximately $1.7 million in 2006, the most recent year for which their financial data is available, and 58 percent of the Senate’s members could be considered millionaires. In the House of Representatives, the median net worth was about $675,000, with 44 percent of members having net worths estimated to be at least $1 million. By contrast, only about 1 percent of all American adults had a net worth greater than $1 million around the same time.”[20]

The median net worth of US Senators rose in 2009 to $2.38 million; a 40% increase. House members’ median net worth rose to $765,010; a 13% increase.[21] “Leadership” seems to do best; House Speaker Nancy Pelosi’s net worth increased from 2008 to 2009 from $13.7 million to $21.7 million[22]; over a 50% increase and begging the question of how that legally could happen when her salary is a little over $200,000. Perhaps a related piece of data is that “insider trading” is legal for members of Congress.[23]

The top one percent of US household income earners make more pre-tax income than the bottom 40 percent combined and their total wealth is greater than the lowest 90 percent combined.[24] The life expectancy in the US of the wealthy with health care is now 30 to 50 years greater on average than the life expectancy of the poor without health care.[25] The Bush administration, supported by Democratic Party leadership, enacted three rounds of tax cuts since 2001. When the plan includes all phases in 2010, the top one percent of income earners will reduce their taxes by $130 billion, more than the rest of the 99% of US taxpayers combined.[26] This amount would likely fund the Millennium Goals all by itself. The top one percent currently earns more than $350,000 a year.[27] The US current tax structure also allows the majority of the US’ most profitable corporations to pay zero federal taxes.[28]

Given this brief data, a fair question is whether our leadership is a plutocracy[29] (control by the wealthy for their own benefit rather than the public good), and if our political leadership have become addicted to wealth and power rather than representing the political will of the people.[30] The data seem to support this hypothesis and falsify the ideal of our having a government that represents the public’s interests, at least on the issue of ending poverty.

Let’s look a little further. We’ve established the actions of our political “leaders” DO NOT reflect the will of the American public, and that their actions, enabled by public ignorance, allow a million children to die every month while guaranteeing that more impoverished children will be born to repeat this gruesome suffering. When the government acts with such astounding cruelty, it moves away from being a democracy (political power coming from the people and exercised for them by representatives) and moves toward tyranny (rulers who place their own interests above the public with unjust and oppressive policies). To be clear: I am not using an ad hominem attack to call the entire US government, “tyrannical.” I am quite comfortable meaning exactly what I’ve written: because the US policy to end poverty reneges on our obligation to fund the UN Millennium goals at 0.7% of our GNI, defies the American people’s policy preference, ignores the long-term profits of Microcredit, and directly contributes to the slaughter of human beings, this particular policy is tyrannical rather than democratic. You are free, of course, to disagree and use your own adjective to describe our government policy in this area.

This information and analysis will predictably evoke cognitive dissonance.

Let’s consider two more concepts important to you: love and evil. Allowing a million children to die every month when it’s relatively easy to save their lives is evil. Although not a common dictionary definition, my favorite for “evil” is “a preference for one’s own material benefit over the well-being of others.” Most Americans prefer expressing sufficient love for human beings to help those in extreme poverty, especially children. Love is characterized by a feeling of connectedness to others, a care for their well-being approaching one’s preference for one’s own material benefit. Love will share resources; especially at the meager level of less than 1% of our income as we’re discussing with the UN Millennium Goals.

In conclusion, please allow me to polarize your two options regarding political participation on our major policies, such as this one. One option is to participate and earn your competence as a citizen of a democracy. The other is not to participate in major policy and hope that others do it for you. For the issue of ending global poverty, have the “others” performed to your level of satisfaction?

If you feel comfortable doing so, declare your commitment to be politically and economically competent. This means that you will factually understand the important policy options, welcome multiple perspectives while holding people accountable for factual accuracy, and participate in policy decisions and follow-up to see how policy goals perform.

Of course, the other option is available. You could justify not understanding important political issues concerning war and peace, millions of people’s lives, or billions of dollars of economic investment by responding “whatever” or “I’m too stupid to know or find out.” The Greeks poignantly captured the disgust for someone uninterested in political and economic issues. Their word for such a person has remained un-translated for over 2,000 years: idiot.

Ponder that.

From the extensive quote section on your assignment, “Policy Analysis” (not published, but consider this one), I included Benjamin Franklin’s warning that he did not believe the American people were up to maintaining a republic through competent citizenry. He predicted that through public indifference and ignorance, America would devolve back into tyranny. If you didn’t read all of those quotes, I suggest that you do to gain some insight into what some of our most capable minds have said regarding the challenge of keeping a democracy in a world where governments are often attacked by non-democratic interests.

On September 18, 1787, just after signing the US Constitution, Benjamin Franklin met with members of the press. He was asked what kind of government America would have. Franklin:“A republic, if you can keep it.” In his speech to the Constitutional Convention, Franklin admonished: “This [U.S. Constitution] is likely to be administered for a course of years and then end in despotism… when the people shall become so corrupted as to need despotic government, being incapable of any other.”

The Quotable Founding Fathers, pg. 39 http://books.google.com/books?id=TizXI1yOTBQC&dq .

 

If this lesson has evoked your emotional passion, with whatever policy response you see as best, that’s great! Your emotions are powerful motivation. To the degree you feel passion about political issues, give yourself permission to feel it fully and use your emotional state to constructively create a brighter future. Channel any hate against into passion for improved policy, fear into excitement, and sadness into being moved by the importance you feel for issues. Your emotions tell you when something is important for you. Living consistent with what you’re passionate for is a big part of the art and science of being with people: social science.

Please watch a 7-minute video of a 12-year-old girl exercising her political voice for better environmental policy from political leadership at the UN Earth Summit: http://www.youtube.com/watch?v=uZsDliXzyAY&feature=related . The transcript: http://www.sustainablestyle.org/sass/heirbrains/03suzuki.html .

Questions to review the facts:

  1. Explain in your own words what the UN Millennium Goals are designed to accomplish by 2015.
  2. Explain the estimated range of investment from low to high to achieve the Millennium Goals in dollars per year and in percent of gross national income of the developed countries.
  3. Explain how the US is doing in fulfilling their promise to fulfill the Millennium Goals in percent of GNI, how much the US public believes we’re spending to help end poverty in percent of our budget, and how much most Americans would like to contribute in percent of budget and total dollars.
  4. Explain how many people die from poverty, and how many are children under five years of age. Explain this amount compared with the number of deaths from wars and other violent deaths.
  5. Explain the benefits of ending poverty from a moral view and an economic practical view.

 

Questions for your analysis:

  1. Since studies in the 1970’s announced that ending poverty was achievable and affordable, US Presidents and the US Congress have drastically under-funded policy to end poverty. Write your analysis of why the political leadership of both parties quietly under-fund this policy.
  2. Most people have a moral code that each person is equally valued and valuable, usually expressed in religious, spiritual, and/or philosophical terms. How do you explain this gap between what people say they value, and what they do and allow others to do.
  3. US government leaders are aware of the facts you’ve discovered here. The lobbying group I volunteered with for 18 years, RESULTS (www.results.org), made sure of this, along with many other organizations. Political “leaders” speak to the American public of their “compassionate conservatism,” “respect for human dignity,” “love of freedom,” and other platitudes. Explain the prevailing principles of leadership you conclude are in action from the Democratic and Republican leaders in the face of the staggering death toll from poverty.
  4. Explain your disinterest whether this current level of political and economic competence extends into the future, or explain what knowledge and skills society needs to develop to build a brighter future.
  5. Explain what an individual can do to affect democratic social change. Explain the role you’d like to play in ending poverty or your indifference on this issue.
  6. Explain the degree you find this assignment helpful in understanding the application of economics in the real world. Explain the degree you find this assignment helpful to discover the facts of ending poverty.
  7. Please explain the degree of cognitive dissonance you experienced in this assignment in simultaneously holding the facts of poverty with your ideals that we have an honorable democracy in America. Explain your analysis of the validity of applying the terms, “plutocracy,” “addiction to wealth and power,” and “tyranny” to our government leaders with respect to their policy performance in at least the area of ending poverty.
  8. Please let me know anything else you’d like to communicate regarding this assignment and/or any of the others.

[1]United Nations. The UN Millennium Development Goals: http://www.un.org/millenniumgoals/, and Wikipedia: http://en.wikipedia.org/wiki/Millennium_goals.

[2]Borgen Project: Poverty Reduction through Political Accountability: http://borgenproject.org/Cost_of_Ending_Poverty.html

[3]The End of Poverty: Economic Possibilities for our Time. Jeffrey Sachs: http://www.earth.columbia.edu/pages/endofpoverty/index.

[4]Global Issues. Shah, A. Sustainable Development. US and Foreign Aid Assistance. April 27, 2008: http://www.globalissues.org/TradeRelated/Debt/USAid.asp.

[5]Stiglitz, J. The World Bank and Development Assistance. House Financial Services Committee Testimony. May 22, 2007. http://www2.gsb.columbia.edu/faculty/jstiglitz/download/Stiglitz_HouseWBTestimony.pdf.

[6]Organization for Economic Cooperation and Development. Debt Relief is Down: Other ODA Rises Slightly. April 4, 2008:  http://www.oecd.org/document/8/0,3343,en_2649_33721_40381960_1_1_1_1,00.html

[7]UNICEF. State of the World’s Children Report 2006: Excluded and Invisible: http://www.unicef.org/sowc06/pdfs/sowc06_chap1.pdf

[8]RESULTS. Child Survival: http://www.results.org/website/article.asp?id=241

[9]Bread for the World. Hunger Facts: International: http://www.bread.org/learn/hunger-basics/hunger-facts-international.html.

[11]Assuming 15 years of poverty deaths totaling 300 million and 20 years at 400 million (poverty deaths have decreased over the past 20 years) compared to the estimates from Scaruffi, P. “Wars and Genocides of the 20th Century.” http://www.scaruffi.com/politics/massacre.html  (along with the relatively smaller numbers for murders, accidents, and suicides) and from Wikipedia: http://en.wikipedia.org/wiki/List_of_wars_and_disasters_by_death_toll.

[12]Probably a safe estimate given the population growth rate of the 20th century and a global population of ~1.6 billion in 1900.

[13]Global Issues. Myth: Too Many Mouths to Feed. Does Overpopulation cause Hunger?  http://www.globalissues.org/EnvIssues/Population/Hunger/FoodFirst/Overpopulation.aspand The Hunger Project. The Hunger Project’s Impact on Population. http://www.thp.org/issues/.

[14]The Population Reference Bureau. World Population Data Sheet. http://www.prb.org/pdf06/06WorldDataSheet.pdf

[15]UN Millennium Project. Fast Facts: The Faces of Poverty. http://www.unmillenniumproject.org/resources/fastfacts_e.htm.

[16]Wanttoknow.info. Invest in Microcredit or Microfinance: Help to End Poverty: http://www.wanttoknow.info/051023microcredit.

[17]Microcredit Summit Campaign. http://www.microcreditsummit.org/index.html.

[18]Grameen Bank. http://www.grameen-info.org/.

[19]For example: RESULTS. 2005 Basics: Global Microcredit Campaign. http://www.results.org/website/article.asp?id=1396.

[20]Open Secrets.org. Congress Has Wealth to Weather Economic Downturn. March 13, 2008: http://www.opensecrets.org/news/2008/03/congress-has-wealth-to-weather.html.

[21]CNBC. Members of Congress get richer despite sour economy. Nov. 17, 2010: http://www.cnbc.com/id/40233691.

[22]The Hill. Speaker Pelosi would take a big pay cut if Republicans take back the House. Sept. 21, 2010: http://thehill.com/capital-living/in-the-know/119857-pelosi-would-get-pay-cut-if-gop-takes-back-house.

[23]The American Dream. Insider trading is legal for members of Congress – and they refuse to pass a law that would change that. http://endoftheamericandream.com/archives/insider-trading-is-legal-for-members-of-congress-and-they-refuse-to-pass-a-law-that-would-change-that

[24]Business Week. D’Andrea Tyson, L. How Bush Widened the Wealth Gap. Nov. 1, 2004: http://www.businessweek.com/@@*7OQP4YQG8gsPxgA/magazine/content/04_44/b3906038_mz007.htm.

[25]The Independent. Doyle, L. American Inequality Highlighted by 30-year Gap in Life Expectancy. July 17, 2008: http://www.independent.co.uk/news/world/americas/american-inequality-highlighted-by-30year-gap-in-life-expectancy-869736.html.

[26]Citizens for Tax Justice. The Bush tax cuts: the latest CTJ data, March 2007: www.ctj.org/pdf/gwbdata.pdf , and NY Times, Krugman, P. Springtime for Hitler. Oct. 18, 2002: http://query.nytimes.com/gst/fullpage.html?res=9a0defde133df93ba25753c1a9649c8b63 .

[27]New York Times. Johnston, D.C. Income gap is widening, data shows. March 29, 2007: http://www.nytimes.com/2007/03/29/business/29tax.html.

[28]Buzzflash. Weiss, A. GAO finding: majority of corporations pay no taxes. Aug. 12, 2008: http://www.buzzflash.com/articles/alerts/451.

[29]Alternet.com. Guerrero, M.L. The US Economy is Socialism for the Rich. July 24, 2008: http://www.alternet.org/story/92426/the_u.s._economy_is_socialism_for_the_rich/.

[30]DanMahoney.com. Wealth and Power: Assets or Addiction? http://danmahony.com/wpoutline.htm.