Monday, 2 May 2022

Just End Poverty Now: The Case for a Global Basic Income

According to the World Bank’s latest figures, around 700 million people live in utter destitution, on less than $1.90 per day, poorer than the average pet cat in the rich world. It is easy to agree that this is a terrible thing. It has so far been much harder – even for philosophers – to agree on what should be done about it. Peter Singer, for example, argues that rich people should donate more to effective charities. Thomas Pogge argues that rich world citizens should stop their governments from supporting less than ideally just global institutions. Yet this intellectual debate is an unnecessary distraction. We already have all the moral agreement we need to act. Ending extreme poverty is not an intellectual problem but a practical one, and not even a particularly difficult one. We just need to find the people who are poor and give them enough money so that they aren’t poor anymore.

I. Everyone agrees that extreme poverty is a very bad thing

There is endless political debate about what counts as poverty, and about who deserves to be helped and how. But there is almost universal agreement that extreme poverty is a terrible thing, and that anyone living on less than $1.90 per day is definitely poor and in need of help. People this poor are unable to afford the most basic things - like food and shelter - they need to live a minimally decent life. For example, they must routinely make moral choices that no human should ever have to, such as deciding which child gets to eat today, or which child gets to go to school while the others work. Their situation is made worse by the volatility of the little income they do obtain, which may be highly seasonal in the case of subsistence farmers or landless labourers (the majority of the world’s destitute). Lack of a reliable income stream makes it hard to maintain even a minimal level of consumption, takes away the ability to plan, and makes escaping poverty even harder.

Moreover, destitution is an urgent problem because every moment it continues does grave and irreversible harm that will persist for decades and can even be transmitted to future generations. For example, the mal- and under-nourishment of children taking place right now around the world will cast a long shadow over their lives as (and if) they grow up into adulthood, even if their country’s economic circumstances improve in the meantime. Poor nourishment leads to physical and mental stunting, in turn making people more vulnerable to disease and less able to benefit from opportunities like education. The circle returns to its beginning, since as adults they will be less economically productive and earn lower incomes. Via poor maternal health, some of these disadvantages may also be passed on to their children.

 

II. Why does extreme poverty persist?

It is important to pose this question in the right way. It is a wonderful and surprising thing that only 10% of the world’s population are destitute. Extreme poverty is the default human condition, and until 200 years ago 90% of all human beings alive were trapped in it. Since then capitalistic economic growth has flipped those statistics upside down. Indeed, one can track the progress of poverty reduction by the embrace of capitalist institutions around the world. In particular, the percentage of the world’s population in extreme poverty has fallen by 80% since 1980, neatly coinciding with the era of ‘neoliberal globalisation’ that so many righteous but dangerously ignorant activists condemn. 


Eliminating all remaining extreme poverty by 2030 is at the top of the Sustainable Development Goals promulgated by the UN in 2015. Unfortunately there isn’t a discernible plan to achieve this goal beyond hoping that recent economic growth trends continue. Such complacency cannot be justified. Capitalism has had 200 years to work on the world, with impressive results. But for those places which have not yet benefitted much from capitalism we should ask two questions: ‘What has been holding those countries back?’ and ‘Why should things be different now?’

 A persuasive answer to the first question comes from the economist Paul Collier. In The Bottom Billion, Collier identifies 4 key 'traps' afflicting around 60 countries: conflict; incompetent governance; the natural resource curse; and being landlocked with poor neighbours. These traps explain why capitalism hasn’t worked its magic trick in many poor countries despite their apparent comparative advantage in cheap labour. Moreover, unless we see evidence that a poor country is escaping from its traps, we can have no confidence that capitalism alone will alleviate poverty there in the near future.

Unfortunately these traps also limit the scope for international development aid to lift substantial numbers of people out of destitution. Aid programmes run by foreigners cannot engage effectively with the politics of economic reform in such countries, and they are too small in scale to have much direct effect on economic development. Their successes, which are real, tend to be very focused micro-intervention programmes, like providing childhood vaccinations or mosquito nets in countries where annual government health spending per person may be as low as $2. 


III. What then should be done about global poverty?

It is widely believed that rich countries behave wickedly towards poor countries and systematically exploit their economic power to prevent them from exporting anything but cheap commodities, thereby keeping them poor and us rich (the philosopher Thomas Pogge has been particularly prominent here). From this analysis it follows that the way to end world poverty is to end the unjust exploitation of poor countries by the rich, for example by reforming global institutions and trade rules. 

There are at least two problems with this thesis. First, it is mostly false. There is no conspiracy against the poor world and there is no need for one since economic prosperity under capitalism is not a zero-sum game. For example, contrary to what various activists and even political philosophers claim, developing countries have enjoyed special and preferential terms within the global trading regime for decades. This allows them to take advantage of rich countries' extremely low import tariffs without having to lower their own tariffs (although they would actually be better off if they did). The very poorest countries in the world are covered by additional multiple overlapping schemes that provide zero-tariff zero-quota access to rich countries for almost all their products.

Secondly, suppose the charge were at least partly correct and the global order is unjustly holding poor countries back. That would mean that we ought to change those unjust rules. But it would not mean that changing those rules is the best way to eliminate poverty, because that would still require waiting several decades for endogenous economic growth to raise incomes. There is no good reason to make the desperately poor people of the world wait another generation to escape.

What about expanding the targeted micro-interventions that directly improve poor people’s lives right now? The focus here is on specific, self-contained interventions with clearly measurable outcomes for recipients rather than more ambitious but vague goals like ‘provide good quality elementary education to all’. Perhaps we should all be reaching into our pockets to fund charities that provide this kind of aid to the poor, as argued by proponents of Effective Altruism such as the philosophers Peter Singer and William MacAskill? 

On the one hand this sounds wonderful! Anyone who feels they can afford to help can donate to a charity rated for its efficiency in converting dollars into Quality Adjusted Life Years. On the other hand, whatever marginal good this individualistic ‘consumerist’ approach might achieve, it is structurally incapable of ending poverty itself. This is partly because Effective Altruism eschews politics, which one needs to achieve large complex projects, and partly because micro-interventions don’t add up to a solution to poverty because they only target its symptoms. (For a fuller critique.) If we actually want to end poverty we have to come up with a plan big enough to do so and specifically targeted to poverty. The most obvious thing – perhaps too obvious to have interested great minds – is to give poor people money.

 

IV. Just give money to the poor

The idea of a Global Basic Income is simple. In a world as rich as ours, no human being should be living in extreme poverty. The very least we should do is provide every destitute person with a claim on the world’s collective economic prosperity sufficient to escape that terrible condition. In practise this entails distributing a partial basic income to all residents of Low-income countries to bring them over the threshold of $1.90 per day (in most places 50c per day would be sufficient), and a more sophisticated targeting system for the pockets of destitution remaining in Middle-income countries like India.

This approach is deliberately minimalist in its moral, financial and logistical demands to make it easier to agree on and act on. 

Morally, it falls far short of almost any conception of social justice. It does not answer the traditional question, ‘What do we owe each other as fellow citizens (of the world)?’ but a much more basic question based on bare humanity, ‘What is the very least we should do to meet the needs of other human beings?’

The advantage of this minimalism is that answering this question does not require first raising and settling a substantive dispute about justice, such as what a fully just global economic order would look like or what responsibility former colonial powers bear for historical injustice. Pretty much every religion and ethical theory in the world agree on the obviousness of the duty to alleviate extreme poverty, whatever else they might disagree on. This means that a Global Basic Income can be the object of an overlapping consensus among citizens, political movements and governments motivated by quite different moral beliefs and ideals, and despite continuing profound disagreements about the nature and demands of true global justice.

Financially, $1.90 is a very small amount of money. That is why it is the World Bank's threshold for utter destitution. But the other side of that fact is that in the global context, $1.90 is a trivial piffling amount of money, and the average destitute person’s shortfall from that threshold is even smaller. The World Bank estimates the entire poverty gap at only 0.2% of what global GDP stood at in 2013. This is a figure so small that it is dwarfed by annual economic growth since then, or, indeed, the measurement errors in constructing the figures. Even swollen by administrative expenses and the overshoot costs of universal rather than targeted disbursement, this does not seem an amount that the rich world would miss. There is no morally significant good, including securing their own material comfort and that of their families, that rich world citizens would need to give up in order to fund the ending of extreme poverty.


Logistically a Global Basic Income would make use of existing and proven institutions (such as the World Bank) and infrastructure (such as mobile money). (A more detailed proposal can be found here.) It would work in the same way as the elimination of smallpox: a global cooperative programme funded and logistically supported by richer country governments (because they are the ones best able to afford the expense), but also depending on the cooperation of middle and low-income governments. However – also like efforts to eliminate contagious diseases – a Global Basic Income can make substantial progress in eliminating poverty even in the non-ideal conditions of international politics. It is so flexible and scalable that even in the absence of global action, individual countries - or even international charities - could put it into action.

The key to the success of a Global Basic Income is that it puts money directly into poor people’s hands (which is relatively easy) rather than trying to help poor people by first helping their countries (which is hard). It thereby bypasses all the traps that keep countries poor - except for the conflict trap - without solving them. Yet even with regard to the conflict trap, although up to 1.5 billion people live in countries with significant political/criminal violence, the number who live under really anarchic conditions is much smaller. For example, though we hear all the time about the dreadful chaos in the Congo, most of that is limited to the provinces bordering Rwanda and Uganda. Most of the 85 million population live in areas peaceful enough to roll out a cash transfer programme. Generally speaking, the logistics of a Global Basic Income programme should be feasible wherever you can buy a cold bottle of Coca Cola, i.e. nearly everywhere.

Beyond theory, there is now a vast amount of empirical evidence from trials and full-fledged programmes in countries around the world that just giving money to the poor reduces poverty. Even tiny direct transfers of a few cents per day have been shown to improve individual lives and communities, as shown for example by higher enrolment in schools and better nutrition together with reduced desperation for income (in the form of crime and prostitution). Poor people, it seems, are mostly quite capable of spending extra income 'rationally' on meeting their basic needs, and they tend to do a better job of it than NGOs and government agencies.

 

V. Money isn’t everything, but it is a lot

It is important to acknowledge that a lack of purchasing power is not the whole story of poverty. Poverty concerns shortfalls in one's standard of living in a broad sense, which includes such items as reliable access to clean drinking water, sanitation, electricity, and transportation; the determinants of good health; security from violence; primary/secondary education; and so on. As the Multidimensional Poverty Index developed by the Oxford Poverty and Human Development Initiative shows, income destitution does not correlate exactly with acute poverty. An important reason for this is that many basic needs are ‘club goods’, in that they are most efficiently provided at large scale (for example, electricity networks rather than diesel generators). But this requires large scale organisation and capital investment that is not possible in the absence of reliable and effective government institutions. Affordable access to these goods therefore substantially depends on whether one lives under a sufficiently competent, motivated and funded government. Since most of the world's poor live in poor and badly governed states, a Global Basic Income would not automatically eliminate all aspects of poverty. That requires institutional development as well, a focus of more conventional international development programmes.

Nevertheless, eliminating destitution would make these people's lives go much better than they do now and is preferable to a narrow focus on institutional development for at least four reasons. 

First, it empowers recipients rather than treating them like the patients of a do-gooding bureaucracy. For once they are the ones with the money, and organisations and companies must compete to serve their needs. 

Second, even if institutional development would be better in theory, the world’s poor have already been waiting generations for it to arrive. At this point, it is time to try a second best solution (as well). 

Third, cash transfers can reach people and kinds of poverty that are hard to reach in any other way. For example, children are sent to work instead of school because poor families need their income to survive. A basic income relaxes that economic constraint where improvements to education systems or outright bans on child labour would not. For another example, cash is an important complement to public services, such as by making it affordable for people to travel to public health clinics. 

Fourth, there may be an indirect link to the improvement of public services. Once people are lifted out of extreme destitution they are also liberated to some degree from the domination of circumstances and thus able to pay more attention to the institutions, people, and ideas that rule their lives, from local schools to national politics. People who aren’t hungry all the time are in a much better position to hold their government accountable for its performance.

 

VI. Flexibility

I proposed a deliberately minimalist version of a global basic income, yet the core idea can be scaled up or down.

First, although a Global Basic Income would work best if it was the object of international agreement and institutions, there is no need to wait for that to appear. If the voters of any rich world country could get this on the political agenda they could already make a significant start on eliminating poverty. Australia, say, could twin with a poor country like Madagascar and roll out a bilateral direct cash transfer programme. Besides its direct achievement in raising an entire country out of poverty, such a bilateral arrangement would also be a helpful demonstration to the rest of the world that good intentions can help people. I believe the main block on effective global action against poverty is not the amorality of rich world citizens or politicians, but scepticism about our ability to help poor people living in the rural backwaters of incapable or disinterested states thousands of miles away. This scepticism about the practicality of our moral concern for the global poor has significant grounding in fact: the unimpressive record of conventional aid programmes over the last 70 years to deliver on their good intentions. Yet, unlike amorality, such beliefs may be changed by evidence and argument.  

In contrast to conventional aid, a Global Basic Income is exceedingly simple, immediate, and transparent. It only aims to deliver a certain amount of money to all the members of a certain group of people, not to third parties with complicated plans to turn it into good works and eventually, hopefully, good outcomes. Its efficacy can be tracked and measured relatively straightforwardly: how much money goes in versus how much money reaches the poor. Additional claims made about how a partial basic income is expected to improve people’s lives (such as reduced child labour) can be followed up in the relatively short-term - which also allows problems to be identified and remediated early. It seems to me that such a system is much easier to trust in than conventional aid, exactly because it doesn’t require those who support it to do so out of faith or hope. As people see how successful a basic income can be, scepticism should decline. 

Second, the amount of money can also be scaled up. Indeed, once it is clear what a difference an extra 50c per day can make to people's lives, the rich world may well become more generous and more ambitious, perhaps adjusting the programme to target the World Bank’s $3.20 ‘moderate’ poverty threshold (25% of the world’s population).

There could be helpful indirect consequences of such generosity for economic and political development. 50c per day is only a partial basic income since it is merely aimed at topping up the meagre income people can already get hold of. It is not enough to live on by itself. But at higher amounts - say $1.50 per day - a guaranteed universal basic income would have many of the benefits of a social insurance system for countries unable to organise one. (Several very poor countries - such as Togo - used cash transfer programmes to alleviate the economic impact of Covid; unfortunately none could afford to keep them going for very long.) A full basic income would cover the minimal subsistence needs of those unable to work because of illness, disability, old age, or simple unavailability of jobs from one day to the next. This would remove the vulnerability to circumstances which forces poor people to live from day to day. A full basic income can thus go beyond guaranteeing subsistence to enabling a path to prosperity. Children could afford to stay in school to learn the skills they would need for employment in a non-subsistence economy. More people may be willing to take economic risks as entrepreneurs, for example by growing higher yield but less drought resistant crop varieties, if they know that failure will not wipe them out. And so on.

 

VII. Conclusion

In a $130 trillion economy the persistence of extreme poverty among a tenth of the world's population has become both ridiculous and shameful. Economic growth cannot be relied on to end poverty anytime soon. It will require action, and not just repeating the same kind of development interventions that have achieved so little over the last 70 years. Giving poor people money is not only the most obvious but also the most practically effective way of ending poverty. It would not even be very difficult or expensive. It really is the least we ought to do.

 

 

Note: This essay was also published in The Philosophers' Magazine. It is adapted from a longer academic paper published in Basic Income Studies and available here.