development globalisation poverty sustainability

Why economic growth alone cannot solve poverty

Issue 2678 of New Scientist magazine If there’s one thing you hear repeatedly when reading about development, it is that growth of the world economy must be maintained if poverty is to be alleviated. Here’s Jeffrey Sachs for example: “Rapid economic growth and the spread of prosperity are on the way” he promises in CommonWealth, fearlessly equating economic growth with the spread of prosperity. “This spread of prosperity is fueled by globalization.”

According to Andrew Simms, writing in the New Scientist last month, “this argument is at best disingenuous. By any reasonable assessment it is claiming the impossible.”

Why? Because the poor’s share of growth is minute. For every $100 added to the world’s total wealth, just 60 cents ends up in the tattered pockets of the poor. “For the poor to get slightly less poor,” writes Simms, “the rich have to get very much richer. It would take around $166 worth of total global growth to generate $1 extra for people living on below $1 a day.”

If that sounds like a compromise worth making, consider the amount of consumption required to create that kind of extra wealth: “To get the poorest onto an income of just $3 a day would require an impossible 15 planets worth of biocapacity.”

In other words, it is impossible for us to spend our way to the end of poverty. The rising tide does not raise all boats equally. The world is not big enough to sustain the kind of growth we require. If we want to see a fairer deal for the poor, we need to consume less ourselves. We need to make wealth history.

To give Simms the final word: “With global growth constrained by the need to limit carbon emissions, redistribution becomes the only viable route to poverty reduction.”

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