From poverty reduction to wealth reduction
At the turn of the millennium, the main device through which the World Bank and other Western donors proposed to deal with global poverty was through the Poverty Reduction Strategy Paper. This strategy involved a mixture of spending on basic social provision and infrastructure mixed with a continued economic liberalism which – as we now know – made little difference to global poverty and inequality. Indeed, by many measures, since 2007 poverty and inequality have been increasing. In addition to the weak results of the Poverty Reduction Strategy, the super-rich have been doing very well, thank you. It is in light of these broad patterns that I propose a Wealth Reduction Strategy Paper.
The problem is not the poor; it is the rich. And, more specifically, the Olympian amounts of wealth that they have accrued. And, if we set out a Wealth Reduction Strategy we can also imagine a far more effective Poverty Reduction Strategy in the process. It is not a nice romantic neoliberal win-win strategy; it is the best kind of lose-win.
Before setting out this strategy, a few caveats and explanations. This is a thought experiment, not a plan. I make no apology for that [https://grahamharrison.me/2015/10/14/utopia-mirage-dystopia-the-slender-hope-for-a-more-beautiful-future/]. Perhaps more importantly, I will be using some very crude figures to set out my proposal. Every one of these figures can be contested and indeed calculations of wealth and poverty are endlessly varied and revised in light of new methodological techniques and data sets. There are also many more tangible ‘political economy’ questions that can be raised, for example about the pricing of assets; the ‘invisible’ nature of part of the income of the poor; the ability of the rich to hide assets. I am happy to accept that all of the figures are guesses made by international institutions and academic researchers, but to suppose that they remain effective illustrations of the kind of world we live in and the possibilities for wealth reduction that are on offer. I do not think that revisions in these figures – perhaps even quite large ones – will change the substance of the case.
A thought experiment for harsh times
According to Credit Suisse, the top one per cent of the world’s individuals possess about half of the world total wealth. Total global wealth (assets minus income) is calculated at about $250 trillion (that’s twelve zeros), so the total wealth – assets held by the richest net of their incomes – is $125,000,000,000,000.
I am arguing that, ideally, the one per cent should be forcibly dispossessed of this wealth in order to produce a more socially just global income distribution. This means taking these assets (financial, property, industrial capital) and converting them into income by monetising them. Let us assume that the estimated values of this wealth are realised on sale (perhaps to the nearly super-rich, perhaps to states). We would then have choices about how to distribute the money as grant income. The most commonly-held view of social justice and its relationship to poverty is that one should start with the poorest and work your way up.
According to the World Bank, there are about 896 million people living on less than $1.90 a day, and this is a commonly-used categorisation of global extreme poverty. This means that those people are on average earning $688 or less per year. According to the International Labour Organisation, the global average wage income per year is just under $10,000. So, in any one year, in order for the world’s most income-poor to reach the global average, a shortfall of $9,312 would have to be compensated for. If one considers the $125 trillion as a global grant income fund that could be used to meet this gap, it would have to pay $8,343,552,000,000 to those 896 million people. This seems a lot until you recognise that this would leave $116,656,447,999,944 in the pot – enough to maintain the world’s extremely poor people at the global average of $10,000 for fifteen years.
One important issue with the figures here is that the very crude mean global income calculation does not adjust for the numbers of children within each country. But, I would argue that we need to break away from the strong association of grant allocation to the ‘working poor’, mainly because children and older people (both warmly defined as dependents by economists) are often especially poor and vulnerable.
According to UNICEF, about 22,000 children die from poverty-related diseases every day (mainly diarrhoea). The WHO estimates that poor sanitation and unsafe water kill about 17 million people per year, and that there are about 170 million underweight children. Malaria kills about 600,000 people per year; tuberculosis kills about 1.5 million people a year (often in conjunction with the immune-deficiency caused by AIDS). And so on; and so on. Global mass poverty is a litany of unnecessary death. The statistics point to one clear conclusion: 896,000,000 people are living, but never far from illness and death. So, a simple and rather undeniable fact is that this transfer of wealth into income for the poorest has a basic and direct effect in massively reducing poverty-related deaths in the hundreds of thousands if not millions.
If you need further convincing that this thought experiment is not morally convincing, consider further the implications of a sustained generational income transfer. Poor people do not simply consume this income; they build more productive lives. Fifteen years (which morbidly coincides with an entire productive life for millions) is long enough to invest, plan, build up skills, adapt, grow. In other words – and there is a wealth of evidence in livelihoods study to back this up – giving money to the poor means providing a powerful dynamo to global production, innovation, and growth. Raised and stable incomes would also mean more people getting education and training – indeed the provision of the grant incomes could be conditional on participation in participation in primary education. That is something some countries already do. There is a strong multiplier effect in this redistribution which would create further broader upward movement in global average incomes and reductions in global inequality.
If you are agreeable that the saving of lives and energising of livelihoods are desirable outcomes but are concerned about the one per cent, don’t be. If these ‘high value’ individuals are really so valuable, one can assume that they would have the wherewithal fairly quickly to re-establish themselves. After all, do bear in mind that they have only had their wealth taken from them. Whatever incomes they were earning would likely be reduced, but not removed; and their primary residence would remain their property. It would be a hard task indeed to pity the millionaire who loses his/her financial portfolio, abandoned to their reduced but comfortable income, having to lay off some of the domestics. Only the most absurd liberal neutrality can argue the wrong in this with a straight face.
Perhaps we can reassure the mewling one percenters as they flail about in their slowly algaefying swimming pools that the assets they possessed have been put to far better use and that the best economic arguments suggest that the accrual of massive wealth amongst such a small number of individuals was significantly undermining the prospects for sustained growth everywhere. On the other hand, let’s just leave them in their pools. The idea that politics is about pleasing or justifying decisions to all is patently absurd.
In 1729 Jonathan Swift wrote the dark satire A Modest Proposal. In it, he suggested that the solution to mass poverty in Ireland was to eat the poor – their infants to be precise. My proposal has the merit both of allowing the world’s poor to live and the world’s super wealthy to remain uneaten (and I doubt that they would taste very nice: either obese and polluted with heroin and goose liver pâté or gym-thin and sinewy). And, my proposal is not offered as satire, although it is clearly idealistic. It seems to me that the practicalities of this kind of global conversion of the rich’s wealth into the poor’s income are extremely difficult to address, but as a basic socially just redistribution it seems almost like common sense. It is an ought without an is, or even a more proximate might.
But it is worth bearing in mind that there is nothing in this proposal that challenges global capitalism, just its current distribution of wealth. Capitalism – historically unprecedented in its flexibility and tenacity – could endure this transformation. Arguably aspects of my proposal are already explicitly made by mainstream writers who think income transfers to the poorest will revitalise markets and that unproductive wealth distorts the proper functioning of a market economy. The rub is political: it is how one can generate a political challenge to the global oligarchy who have such immense control over economies, states, and peoples. It is difficult to imagine how liberal reformism or enlightened elite global governance would be fit to this task. In the absence of ‘realistic’ political projects to address the cohabitation of extreme poverty and extreme wealth, the spectre of more radical political possibilities remains.