To double the income level of roughly 5.64 billion people would cost the world’s wealthiest only 0.5% of their wealth
By Mark Anielski : What would it cost to eliminate poverty and ensure that each person on the planet enjoyed a ‘living wage’; enough income to meet their basic needs for a descent and good life?
First, the world’s leaders, along with the world’s billionaires, would have to issue a joint declaration that all people on the planet are deserving of a sufficient ‘living wage’ that would meet their basic needs for a good life.
What is a living wage? A living wage is the income required to meet the basic needs for a reasonable good life of clean water, good air, good food, comfortable shelter, clothing and some healthy degree of autonomy.
The Catholic 13th century theologian Thomas Aquinas (building on the ideas of Aristotle) said what is required of a good life is sufficiency of material needs (and hence sufficiency of income to finance those needs) and virtuous action).
Based on Plato and Aquinas, the key virtues to act upon are moderation, courage, justice and wisdom.
Here are the facts:
• The current estimated global poverty line is $1.45 per day or $530 per year.
• Two dollars and 50 cents per day ($912 per year) is the estimated poverty level in developing countries. In 2005, according to poverty facts, currently roughly 50 per cent of the world’s people (over 3.2 billion) live on that amount per day while 80 per cent (5.15 billion) live on $10/day or less. That $10 dollar a day (US$3,650 per year) figure is close to poverty levels in the U.S.
• The poorest 40 per cent of the world’s population accounts for 5 per cent of global income. The richest 20 per cent accounts for three-quarters of world income.
• In 2005, the wealthiest 20 per cent of the world accounted for 76.6 per cent of total private consumption. The poorest fifth just 1.5 per cent.
• The poorest 10 per cent accounted for just 0.5 per cent of all consumption while the wealthiest 10 per cent accounted for 59 per cent of all the consumption.
• About 0.13 per cent of the world’s population controlled 25 per cent of the world’s financial assets in 2004. The total wealth of the top 8.3 million people around the world “rose 8.2 per cent to $30.8 trillion in 2004, giving them control of nearly a quarter of the world’s financial assets.”
• A conservative estimate for 2010 is that at least a third of all private financial wealth, and nearly half of all offshore wealth, is now owned by world’s richest 91,000 people – just 0.001 per cent of the world’s population.
• The next 51 per cent of all wealth is owned by the next 8.4 million – just 0.14 per cent of the world’s population. Almost all of this financial wealth has managed to avoid all income and estate taxes, either by the countries where it has been invested and or where it comes from.
• The world’s gross domestic product in 2006 was $48.2 trillion in 2006.
• The world’s wealthiest countries (approximately one billion people) accounted for $36.6 trillion dollars (76 per cent).
• The world’s billionaires – just 497 people (approximately 0.000008 per cent of the world’s population) – were worth $3.5 trillion (over 7 per cent of world GDP).
• Low income countries (2.4 billion people) accounted for just $1.6 trillion of GDP (3.3 per cent)
• Middle income countries (three billion people) made up the rest of GDP at just over $10 trillion (20.7 per cent).
How much would this cost to eliminate poverty around the world (with 7.074 billion people and assuming the same distribution of poverty)?
To double the income level of roughly 5.64 billion (80 per cent of the world’s population who live on less than $10/day) to $10.00/day would cost $29.39 billion per year. (I have not included people in the developed countries who may not be earning $10/day).
That $29.39 billion is equivalent of 0.5 per cent of the total estimated wealth of the world’s billionaires (according to Forbes latest wealth estimates).
If we bumped this up to my estimate of a ‘good life’ living wage of roughly U.S. $4.00/work hours or roughly $20/day (averaged over 365 days), then the annual price tag would jump to $85.7 billion per year or 1.6 per cent of the total wealth of the world’s wealthiest billionaires.
Mark Anielskiis a partner and co-founder of Genuine Wealth, a Canadian enterprise whose mission is to help businesses, communities and nations mature into flourishing economies and enterprises of wellbeing. He was a senior economic advisor to China between 2003 and 2006.