Business | Opinion
Number of people living below poverty line is increasing
It says much about our time when we are more worried about billionaires than about the poor.
- By William Pesek
- Published: 23:46 October 26, 2008
It says much about our time when we are more worried about billionaires than about the poor.
The obsession with those with billions in good times is understandable enough. Now it is their misfortune that dominates the headlines: Las Vegas mogul Sheldon Adelson and investor Carl Icahn seeing their net worth drop, Russian oligarchs falling on hard times, Chinese and Indian tycoons losing a bundle in stocks.
We hear less about the so-called bottom 1.4 billion. That's the number of people estimated to live in extreme poverty, which since 1990 has generally been defined as Dh3.67 ($1) a day or less.
Numbers like this should give markets pause, yet they rarely affect investment decisions, bond yields or stock valuations. It's getting harder to turn a blind eye to how many consumers are below Asia's poverty line. Why? The number is growing. "What we forget when we look at Asia's rapid growth is those being left behind," Ifzal Ali, chief economist of the Asian Development Bank, told me in Manila earlier this month. "The combination of surging food prices and turmoil in global markets will significantly increase that number." To better understand living standards, Ali oversaw a three-year research project to produce the first Asia-specific benchmark for regional poverty. It redrew the poverty line at $1.35, the median of 16 developing Asian countries in 2005. China didn't participate.
The new goalpost is meant to reflect Asia's rapid growth and widening disparities. Its utility lies in the ability of nations to compare their poverty-reduction progress with Asian peers.
The ADB data didn't account for the historic surge over the last year in food and energy prices. They also came well before today's global credit crisis. And definitions of who is poor can be disorienting. Are we to believe that someone making $2 or $4 a day is suddenly and joyously awash in prosperity?
"In this world, we are so fascinated by the experiences of billionaires, all the while people at the bottom are doing worse and worse," Ali said.
The need for internationally comparable poverty estimates has never been more important in Asia. It is home both to the world's fastest-growing economies and the bulk of extreme poor. It's quite a disconnect: The region with the greatest potential also is home to many of the world's weakest economic links. The ADB's measure uses a poverty-specific "purchasing power parity" method that targets the baskets of goods and services used in each country. For example, someone making $1 or $2 a day in Mongolia or Nepal can probably get by better than someone living in Malaysia or Thailand.
Great emphasis is put on the differing quality of items such as food and shopping habits. It matters if consumers in one country are likely to get lesser-quality rice than in others. The same is true of whether they shop at so-called wet markets as opposed to Carrefour SA or Wal-Mart Stores Inc.
Even before this year's run-up in commodity prices, many households in developing Asia spent more than 50 per cent of income on food. As prices rise, more Filipinos, Indians and Indonesians are being pushed into poverty. Leaders in Asia need to work harder to make sure high growth rates are shared by all. That means reducing the corruption and economic inefficiencies that benefit the elite. It also means not letting today's global credit crisis distract countries from spreading the advantages of growth.
"It's so important to put the inflation genie back in the bottle," said Ali, who is retiring this month after more than two decades at the ADB.
- Bloomberg
More from Business Opinion
More from Business
Business Editor's choice
-
Saudi-Bahraini economic ties hit new high
Whilst press reports continue speculating on a possible new political structure defining ties between Saudi Arabia and Bahrain, facts on the ground confirm ever- stronger economic ties between the two neighbours
-
Cupid targets the Fed with early tweets
Declarations range from pure romance to cute overtures and racier fare
-
Do unemployment figures flatter to deceive?
Jobseekers and recruiters give out mixed signals ranging from optimism to downright despair even as official data show recovery
