'Development' is the word that we love to hear for
both individual and national perspective. It has reduced people's
suffering and has given us a prosperous society. Thus, we are living in a world
of unprecedented opulence, which could not possibly be imagined even a
century ago. There have been remarkable changes in the life style of mankind;
thanks to the revolutionary developments in science, technology and governance.
We have overcome the distance barriers among the continents, established
democratic governments and increased international trading. But it could not be
said that through these developments we have eliminated deprivations and poverty
from the world. Poverty still persists and in fact more than 1.2 billion
people still live below the defined poverty line. As poverty
persists, it also plays an important role in policy makings, adopting
strategies and politics of the world. Thus poverty reduction has
become a prevailing rhetoric in the realm of politics around the world.
So, from time to time, we get to see the reports of poverty reduction in
the mass media. It can also be seen politicians are claiming quite often that
they have or their political parties have reduced, if not
extirpated, poverty to a great extent. Following this trend, it was
not odd of hear from our Bangladeshi finance minister recently claiming
they have reduced poverty of the country roughly from 48% to 30%. When it
appears to be good news for all Bangladeshis but there are some internal issues
that require some explanations.
Although it appears people know when to use the word
'poverty' in our daily life but it is not something easy to
define. Normally poverty is defined as a denial of choices and opportunities
and a violation of human dignity. Otherwise lack of basic capacity to
participate effectively in the society which can mean unemployment
or not having enough to feed, lack of access to education, clinics, clean
water and sanitation etc. Nonetheless, it is measured
by income of a person. If a person earns less than $1.25 a day then he is
living in extreme poverty. This $1.25 figure was adopted in 2008 according to
the new provisional estimates in 2005 to accommodate inflation with 1996
$1.00 figure. It is estimated that the proportion of people in the
developing world living on less than $1.25 a day was 20.6 percent in 2010, down
from 43.1 percent in 1990 and 52.2 percent in 1981. That is, 1.22 billion
people lived on less than $1.25 a day in 2010, compared with 1.91 billion in
1990, and 1.94 billion in 1981.
Now if we measure poverty by personal income then as the
previous paragraph shows we have reduced world poverty by at least 20% in the
last two decades. But poverty is not all about income rather it is
fundamentally about capability of a person. Definitely, you might think that
increased income of a person offers him more capabilities than what he had in
lower income. It is easy to picture only if the cost of everything
remains static against your increased income. However, for example, costs or
prices of daily commodities are not constant. They are also increasing
in majority of the cases which makes it inevitable to increase your income
even to hold on to the same financial capabilities. If your income stays
static against increasing commodity price then you are losing your
capabilities. Now, someone's condition will only improve if his rate of increasing income
is higher than the rate of increasing commodity price.
It is crucial to ask yourself whether you can buy a
product for $1.25 today which used to cost $1.00 in 1996. I dare to expect
‘yes’ answer from you as most of the products will cost you two or three folds
today than the cost was in 1996. In case you want to say ‘yes’, then it is easy
to prove you wrong. For example- recent financial report in Bangladesh shows
the inflation rate of the country is about 7.5%, which means value of money is
decreasing by 7.5% each year. This inflation rate, on average, had been same
over the last 20 years. When inflation rate is 7.5% the value of money
halves every 9.5 years that means Bangladeshis need to earn more than double
the amount they earn today within next 10years just to adjust with inflation
rate or staying in the similar economic position. As I mentioned the inflation
rate has been similar throughout the last 20years, the people of Bangladesh
have to earn at four times today than the amount they used to earn 20years ago.
Otherwise their economic position has worsened. Fortunately, many people do
earn more than 4 times nowadays than what they used to 20 years ago but
the claim that they have reduced poverty by 20% within the last decade is questionable,
and might be quixotic.
However, the inflation rate for dollar is roughly 3% a year,
which means every 23 years the value of dollar halves ($2 instead of $1). It's
been 17 years since 1996 $1 poverty line and we just adjusted it to $1.25 what should
have been at least $1.70 today. This gap in adjustment allows many people being
excluded from the poverty list and consequently quixotic reduction of poverty
in the world. If we were to calculate poverty by using $1.70 income scale then
millions more might fall into the poverty line that are otherwise
excluded today by using $1.25 scale.