The consensus on raising people out of poverty is surprisingly recent

Friday, July 26, 2013

On July 17th India released its latest poverty figures. They tell an encouraging tale: just under 22% of Indians were below the poverty line in 2011-12, down from over 37% in 2004-05. With an election not far off, these statistics will not go unchallenged. Naysayers are already grumbling that the numbers have been released early to make the government look good. But even as political opponents slug it out, it is worth noting what they are not arguing about. Nobody is saying that a decline in poverty is a bad thing. Nor does anyone dispute that policymakers should try to help large numbers of poor people out of penury. This mirrors a worldwide consensus: whether the United Nations or the World Bank, sundry public officials or high-minded celebrities, everyone thinks that poverty alleviation is both desirable and possible. The debates are about the details.

That might sound wholly unsurprising. Yet in a new paper Martin Ravallion, an economics professor at Georgetown University and a former research director at the World Bank, charts the evolution of thinking on poverty over the past three centuries. He reckons that this consensus is of remarkably recent vintage. Not that long ago every element of the received wisdom—that poverty is a problem, that public policy should try to reduce the numbers of poor, and that there are good ways to try to do so without hurting the economy—would have been suspect.

According to the mercantilist thinking that dominated European thought between the 16th and 18th centuries, poverty was socially useful. True, it was miserable for the poor. But it also kept the economic engine humming by ensuring the availability of plentiful cheap labour. Bernard de Mandeville, an 18th-century economist and philosopher, thought it “manifest, that in a free nation where slaves are not allow’d of, the surest wealth consists in a multitude of laborious poor.” That attitude was the norm.

If poor people were regarded as instrumental in ensuring economic development, that explains why there was little appetite for policies to help them leave poverty behind. What action there was tended to be palliative in nature. In the 18th century changes to the Poor Laws were designed to stop adverse shocks like failed harvests or bereavements from making life even harder for already poor people. Such policies were designed to protect the poor from the worst deprivations, not to raise them up.

Source: The Economist (link opens in a new window)

poverty alleviation