The one-sentence summary
We can end poverty by 2025 and change the world forever.
Can’t be bothered to read it? Listen to the 5-minute summary in two parts.
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WHAT THE BOOK SAYS
- This book was originally written in 2005 and then revised in 2017, when the author revised his proposed deadline to 2030.
- It is essential to understand the definition of extreme poverty. The answer lies in the word ‘extreme’. For example, the USA shows a poverty rate of 15%, but extreme poverty refers to the most degrading and dangerous kind of poverty so deep and severe that it threatens the daily survival of those in this poverty trap.
- The reasons why countries fail to achieve economic growth include poverty itself as a cause of economic stagnation, physical geography, fiscal traps including lack of investment or crippling debt, governance failures, cultural barriers, geopolitics, lack of innovation, and demographic traps.
- There are four kinds of poverty:
- Household consumption: the proportion of a population living on less than $1.25 a day.
- Multidimensional: inability to meet a range of basic needs such as nutrition, basic health care, access to safe water and sanitation, education and so on.
- National poverty line: as defined by each country.
- Relative poverty: related not to basic needs but human dignity and represented by the number of households whose incomes are so low that they cannot participate in the mainstream of the nations’ economic and social life.
- One way to view this is as an economic development ladder. The poorest of the poor can’t even get a foot on the lowest rung. Of the world’s population of 6.3 billion, 5 billion have reached the first, lowest rung of the ladder. 5.7 billion live in countries where life expectancy increased. As a rough guide, many in Malawi suffer from extreme poverty, Bangladesh garment workers have a foot on the first rung, Indian IT workers are a few rungs above, and China has made massive progress. When countries get their foot on the ladder of economic development, they are generally able to continue the upward climb.
- The gulf between today’s rich and poor countries is a new phenomenon that began in 1820 with the Industrial Revolution. Despite many reports, there has been a steep decline in poverty since 1990, from 43% in developing countries to 11.5% in 2015.
- Extreme poverty can be eradicated if developed countries give just 0.7% of their GDP to less well-off countries, as recommended by the UN. Astonishingly, many countries such as the USA consistently fail to do this – they provide just o.15% of GDP. As the author points out, the costs of action are small, and indeed a tiny fraction of the costs of inaction.
- There are 5 reasons why the level of effort required is so modest:
- The numbers of extreme poor have declined to a relatively small proportion of the world’s population.
- The goal is to end extreme poverty, not all poverty.
- Success in ending the poverty trap is easier than it appears.
- The rich today are so vastly rich.
- Our tools are more powerful than ever.
- The Big Five interventions that can fix it are:
- Agricultural inputs to raise crop yields.
- Investment in basic health to save lives.
- Investments in education to build knowledge and skills.
- Power, transport and communication services.
- Safe drinking water and sanitation.
- The extreme poor lack six major kinds of capital:
- Human capital: health, nutrition and skills
- Business capital: machinery, facilities, transport
- Infrastructure: roads, power, water, telecommunications
- Natural capital: arable land, healthy soil, biodiversity
- Public institutional capital: commercial law, judicial systems, services and policing
- Knowledge capital: scientific and technical know-how
- Headwinds that can threaten progress are demography, environmental threats, conflict and moral indifference – all of which have come significantly into play since the book was written.
WHAT’S GOOD ABOUT IT
- The economic possibilities of our time include ensuring that all of the world’s poor countries can make reliable progress up the ladder of economic development with modest financial help from the rich countries – more than is now provided, but within the bounds of what they have long promised.
- Many of the facts about escaping extreme poverty are not well understood by rich countries. For example, it is a commonly held belief that women who work in sweat shops in Bangladesh are hard done by, but when interviewed in detail they actively prefer it to the grinding poverty of a rural existence, and all agree that their employment has changed their lives for the better.
- It is a myth that rich people have become rich because the poor have become poor. It’s not the transfer of income from one region to the other – it’s the overall increase in world income, but at a different rate in different regions.
- Major economic growth is accompanied first and foremost by urbanization. The main reasons for this are increased food productivity causing lower prices and fewer farm activities, and the advantage that high-intensity urban life provides for most nonfarm activities.
- Ultimately, it all boils down to committing to ending poverty, adopting a plan of action, raising the voice of the poor, redeeming the role of the USA in the world, rescuing the IMF and the World Bank, strengthening the United Nations, harnessing global science, promoting sustainable development, and making a personal commitment. It’s a long list, but it can be done.
WHAT YOU HAVE TO WATCH
- There is a lot of economic information in the book, but it does arrive at clear answers. Even updated from 2005 to 2017, it is now another 7 years old.