CAPITALISM'S ACHILLES HEEL Dirty Money and How to

The Global Divide 221
In the 1950s the development community was focused on growth in
GDP as the all-revealing measure of progress. By the 1960s experts realized
that this wasn’t satisfactory; it had to be per capita growth in GDP, to assure
that rising populations enjoyed rising personal incomes. Then in the 1970s
this focus was supplemented with the idea of basic human needs, the notion
that everyone deserves to have at least the minimum components of food,
clothing, and shelter. What these minimums should be was never fully
agreed. The 1980s produced another shift, adding to per capita GDP such
nonmonetary factors as life expectancy and literacy in measuring well-being.
Starting in the 1990s, this trend among some scholars toward broadening
the meaning of poverty continued, now including deprivation of capabilities
and social opportunities.
Through it all, there has been no accepted definition of poverty. Part of
the reason is because poverty is both a moving target and a relative term.
Furthermore, what is considered as poverty in the United States has no comparison
to the far more severe levels of deprivation I have seen in Africa,
Latin America, and Asia. Despite the complexities of the matter, however, a
basic grounding in some of the common measures of poverty and inequality
is useful in appreciating the scope of these issues.
First, the poverty line. In monetary terms, the World Bank most often
uses $1 a day and $2 a day. Other levels, such as $3 a day and $5 a day also
appear in the literature. And the poverty line is adjusted for inflation, so that
$1 a day may actually mean $1.08 or $1.34 or some other figure.
Poverty head counts are important. With a poverty line set at $1 a day,
how many people around the world are living at or below this level? Depending
on their calculations, various researchers have produced figures of
300 million, 766 million, 1.2 billion, and more than 1.8 billion. 8 In other
words, with estimates varying by as much as a factor of six, there is no consensus
on the count of the global poor.
Poverty gaps can be measured, providing a sense of the depth of poverty.
For those living below $1 a day, what is their average distance below this
poverty line? Are they just below it or far below it? Take Sierra Leone as an example.
The three poorest quintiles have average annual PPP incomes of $29,
$52, and $256, respectively. This averages $112 per year across the three
quintiles, which is far below a poverty line set at $1 a day. In other words, in
Sierra Leone the poverty gap is huge and the depth of poverty is extreme.