Photo: Pau Casals / Unsplash
Photo: Pau Casals / Unsplash

Global poverty: fantasy or reality?

Unpacking the recent Smith and Hickel debate on the evolution of global poverty.

Global poverty has been declining for a few decades, or has it? A few months ago, this question was at the heart of a debate stirred by Noah Smith, an economics commentator for Bloomberg. Channeling those who argue poverty is less today than at any other point in history, Smith wrote a newsletter on the online platform Substack criticising the loudest voice on the other side – Jason Hickel. For some time, Hickel (an economic anthropologist based in London) has been arguing that global poverty reduction is a fantasy promoted by institutions like the World Bank. This story is then marketed by wealthy Davosians like Bill Gates and intellectuals like Steve Pinker to make everyone feel better about the world as it is and as it has been progressing for the last few decades. I am tempted to believe that most economists agree with the viewpoint adopted by Noah Smith. When Smith published his article, it generated plenty of support on Twitter – the best proxy for a crowd in the age of pandemia.

There is a simple explanation for why Hickel stands alone on this stage – it is a difficult task to show evidence that global poverty has not declined. Log into the World Bank's database, and you will be hit by a promotional graphic on the homepage, which shows that a greater fraction of the world now lives above the poverty line than at any other point in history. The poverty line is a global monetary threshold, measured in International Dollars (i.e., adjusted for variation in cost-of-living). It represents a pooled aggregate from national estimates of the cost of purchasing the basic needs of human life (food, housing, energy, education, health, etc.). In the 2015 estimate, less than 10 percent of the world lived below this threshold compared to almost 43 percent in 1981. After the economic consequences of the pandemic, this number has likely increased but is unlikely to return to past levels and is related purely to a shock (rather than systematic swelling).

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Himal Southasian