Just a couple weeks ago, we explored exactly how many billionaires it would cost to save the planet. The answer: between 300 and 50,000.
Since then, we at BOAS have been thinking about how many billionaires it would take to address a whole host of global problems. To dive deeper into this inquiry of whether or not the wealthiest 0.01% can actually disentangle the world’s gravest enigmas, we turn our attention now to global poverty.
Currently, more than 700 million people, or 11% of the world population live in extreme poverty (i.e. below the global poverty line of $1.90 per day). The United Nations deems this socio-economic and political challenge so dire that they named “eliminate poverty” as the first of their Sustainable Development Goals setting targets and expectations for life in the year 2030. While governments around the world have been making palpable progress toward poverty mitigation over the past several decades, the COVID-19 pandemic threw a sizable wrench in many leaders’ plans. For example, in Sub-Saharan Africa up to 42 per cent of the population lived below the poverty line in 2020.
So how much would it cost to completely eliminate this systemic dilemma?
Estimates on the cost of ending poverty around the world have been shockingly agreed upon, unlike the equally ambiguous price of “saving the planet.” American economist, public policy analyst and former director of The Earth Institute at Columbia University, Jeffrey Sachs, is responsible for the universally accepted appraisal of $175 billion per year. Thinking in billionaire terms, that would translate to just 175 people needed to alter the course of humanity (for a year, at least), particularly in developing nations.
On the bright side, this amounts to “less than 1 percent of the combined income of the richest countries in the world, and only four times the United States’ military budget for one year.” Plus, in the United States, poverty could be alleviated using a universal basic income costing less than 3 percent of this country’s GDP.
Why Should Bezos, Gates, and Musk Pay the Price for Poverty?
On the flipside of these celebratory stats, the question remains “who is responsible for forking up the money?” More specifically, as you may have guessed by our argument from the saving the planet segment, why are billionaires best suited for this task rather than state or national governments? This concept was partially explored in the last article of this series, but the unique application of billionaire philanthropy to poverty, in particular, is worth understanding.
First and foremost, government interventions have already failed. The Monterey Consensus, for instance, was an agreement signed at a 2002 United Nations conference that dedicated 0.7% of gross national product (GNP) as official development assistance for each signatory. In other words, countries were mandated to donate a marginal percentage of their revenue to help break the cycle of poverty. Unfortunately, countries like the United States have not lived up to their duties and thus the fight for liberty among lower socio-economic groups continues.
Secondly, using policy instruments, such as reversing Bush-era tax cuts for the nation’s wealthiest, could actually help pay for “40% of what is needed to end extreme poverty in the world.”
In addition to sufficiency in wealth, billionaires themselves are a particularly compelling party. According to Laurence Chandy, Director of the Office of Global Insight and Policy at UNICEF, donations by local billionaires in many countries around the world could either completely balance out financial insecurity or at least make ‘a big dent’ in it. Along with a group of fellow researchers, he investigated whether billionaire charity would create a lasting impact over a 15-year period. Results showed that while some regions would necessitate charitable donation from the entire billionaire population within a country, others (i.e. Colombia, Georgia and Swaziland) only needed one single person to put an end to the madness.
And if that hasn’t sunk in for you yet, maybe this statistic will help clear your rationally perplexed mind:
“Warren Buffet’s net worth alone is enough to end American hunger three times over.”
TLDR: money is not the problem here, but rather how it is distributed. We need our world’s billionaires to step up to the plate and use their money for some good.
The Costs of Un-Impoverization
There is a slight caveat here, though. If you are a fanatic in economics, or even someone who accounts meticulously for your own personal finances, you may already be skeptical of how the $175 billion per year estimate was even derived (and whether that method produces a “true cost” result). Indirect costs and unintended consequences can make things a lot more pricey (or alternatively less pricey) than the baseline estimate. If this inquisitive sense burns within you, you are right on.
The current projected budget is missing some massive, non-monetary expenses. Simply stated, Sachs set the going price for poverty salvation based on the amount of money it would require to get every person in the world to earn above the $1.90 threshold in the least laborious way possible–using donations such that every person brings in at least the global poverty line in wages each day.
For those curious, the global poverty line is derived by first defining the poverty line for every country around the world, based on costs of living, including minimum nutritional, clothing, and shelter needs. Once each country’s line is calculated, they are converted to a common currency using purchasing power parity (PPP) exchange rates. Then all of these numbers are averaged and converted to a global metric. Sadly, about 70% of people in some countries, particularly in Southern Asia and sub-Saharan Africa, live below this line.
However, this calculation of financial disadvantage is grossly negligent. A person living in poverty, in many cases, is not just struggling as a result of the fact that they don’t have a stable and abundant stream of income. In fact, there are many manifestations of poverty, which include lack of resources educationally, medically, socially, and politically.
What is Poverty, Anyway?
According to the World Bank Organization,
“Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time.
Poverty has many faces, changing from place to place and across time, and has been described in many ways. Most often, poverty is a situation people want to escape. So poverty is a call to action -- for the poor and the wealthy alike -- a call to change the world so that many more may have enough to eat, adequate shelter, access to education and health, protection from violence, and a voice in what happens in their communities.”
In other words, distilling poverty down to a difference in dollars will not solve the problem. Quite the contrary, this one-size-fits-all-type solution represents a blazing money pit. Instead, we must systemically and institutionally reform. We must put our dollars towards value-added causes, creating a more just and safe world using resources and infrastructure to their highest degree.
But what realms should we focus on to be most “effective” with our dollar?
According to Stand Together, an organization supporting philanthropic activities in the United States, chronic unemployment, personal debt, educational failure, addiction and trauma, and the breakdown of the family are the top five reasons why people fall into poverty and stay there. This is referred to as the ‘cycle of poverty,’ a compounding, devastating current keeping people in financial and emotional ruts of suffering.
Inconveniently but truthfully, money transfers alone cannot enable impoverished individuals to clear these hurdles. In addition to low confidence levels and 'negative self-stereotyping' often characterizing people in situations of long-term poverty, the cards stacked against this demographic makes it increasingly difficult for them to get the help they need.
Can the Circle be Unbroken?
You may be thinking to yourself right now: wow, the future looks pretty disastrous. But lift your chin up because as devastating as cycles of poverty may be, we must remain faithful for any meaningful change to be made. Not to mention, in 2015, 10 per cent of the world’s population lived at or below $1.90 a day, which is down 16 percent from 2010 and 36 percent from 1990.
At the same time, let us not be remiss. While the trend for the past three decades, which the UN declares the three “Decades for the Eradication of Poverty,” have seen a decline in poverty overall, the rate of decline has been steadily flatlining. We musn’t throw in the towel just yet. Even if just one in ten people is considered impoverished around the world, that is one in ten fewer potential innovators, one in ten fewer future doctors, scientists, or entrepreneurs, one in ten more people living every day on this planet wishing it was their last.
Fortunately, we have the means to put a stop to it. In fact,
“If the top 500 billionaires in the world pooled the increase in their net worth from one year, they could eliminate extreme poverty seven times over.”
Now I’m not saying that the top 500 billionaires would be willing to divest their wealth so rashly, but if they were, we could instantly afford a better quality of life for the poorest people on our planet.
While we do inevitably need young activists, productive policymakers, innovative scientists, and ingenius companies to continuously propel our journey towards a poverty-free world, wouldn’t it be nice for a couple hundred billionaires to chip in and make the process a whole lot faster and more effective?
Here at BOAS, we are firm believers in effective giving. Money is a very powerful tool and if used intentionally, it can fundamentally transform the world we live in for the better. So why not call on the world’s billionaires to put their pocketbooks to use to end poverty? Why not redistribute their insane amounts of wealth to the people who need it most? And why not walk the walk while we’re at it by doing our part to demonstrate how to be lifesavers and positive consumers?