Think Change Rewind – what does poverty really mean today?

We are taking a break from our regular schedule this month to look back on some of the most popular episodes released since Think Change first aired back in March 2022.

This episode revisits a conversation we released last year, and the halfway point of the 2030 Sustainable Development Goals deadline to end poverty and reduce inequalities.

We asked what poverty really means today, and if old notions of ending poverty simply by increasing individual income above an arbitrary line are even useful anymore.

This year we have looked closely at trends across a range of issues – both globally and by region – which has revealed just how much effort is needed if we want to meet these targets by 2030, with no one left behind.

With the so-called ‘polycrisis’ pushing more people into poverty, and the World Bank’s Poverty and Inequality Platform’s global poverty estimates at 712 million people living below the $2.15 per day poverty line, we asked our guests how we define and fight poverty today.

Guests

• Sara Pantuliano (host), Chief Executive, ODI
• Rathin Roy, Visiting Senior Fellow and former Managing Director, ODI
• Yamini Aiyar, President and Chief Executive, Centre for Policy Research
• Ricardo Fuentes-Nieva, Chief Economist for DataPop Alliance and former Director of the Equity and Social Policy Programme, ODI

Chapters

• 0:10 Introduction (Sara Pantuliano)
• 2:17 How we talk about poverty (Ricardo Fuentes-Nieva)
• 5:55 New definitions of poverty – have institutions kept up? (Yamini Aiyar)
• 9:29 A look at the policies: Brazil and the UK (Rathin Roy)
• 13:02 A key message to leaders (Rathin Roy)
• 15:06 The depoliticisation of poverty (Yamini Aiyar, Rathin Roy)
• 22:13 Democracy and inequality (Ricardo Fuentes-Nieva, Yamini Aiyar)
• 30:25 Conclusion (Sara Pantuliano)

Transcript

0:00:10 - Sara Pantuliano 

Welcome to Think Change, I'm Sara Pantuliano. This August, we're taking a break from our regular schedule and we want to revisit some of the most popular episodes that you, our listeners, have tuned into since we released the first episode of Think Change back in March 2022. You may remember an episode we released last year at the halfway point of the Sustainable Development Goals, to discuss how we tackle poverty and how we reduce inequalities.  

We asked what poverty really means today and if old notions of addressing poverty simply by increasing individual income above an arbitrary line are even useful anymore. Global poverty figures have generally focused on income flows. Economic growth was seen as key to achieving prosperity and the SDGs, but despite increases in labour productivity or GDP per capita, inequality has continued to increase and has stalled or reversed poverty reduction. In reality, income levels don't capture the complex and dynamic structure of how poverty is really experienced today. Poverty is not just about money, It's also about the other assets that people have. Tangible assets like a good education, access to adequate health care, digital access and skills, and intangible assets like social capital and access to networks. Poverty is inherently political, and it is political action that is needed to challenge the power structures that make and keep people poor and develop appropriate policies to tackle it. We were privileged to hear about this from Yamini Aiyar, renowned political scientist and former President and Chief Executive of the Centre for Policy Research in New Delhi.  

Ricardo Fuentes-Nieva, Chief Economist for DataPop Alliance and former Director of the Equity and Social Programme at ODI. And Rathin Roy, visiting Senior Fellow at ODI and former Managing Director. They brought a unique perspective on how poverty has changed over time and how we should define and fight it. Well, Ricardo, let me start with you. What do you see as some of the main limitations in how we understand and we talk about poverty at the moment?  

0:02:25 - Ricardo Fuentes-Nieva 

Thank you, Sara. I think you mentioned it at the beginning the idea that a flow of income on a daily basis which is how we understand poverty. For many, many decades, following the lead from the World Bank, I think it's somewhat outdated. It's still useful, but it needs to be accompanied with different approaches.  

Over the last, say, 15 years or so, we've moved from income poverty to multidimensional poverty, following kind of a rights-based approach. But I mean, for me, and especially given the context of the world in the 21st century, what we need is we need to start thinking about how people, households and communities are building wealth, and not only financial wealth, but other types of wealth human capital, political connections, social capital and the like. So we need to start moving from the flows you know, how much income we're having in a single day to kind of a portfolio of different types of capitals that people and communities have. And again, you know I want to stress, it's not only about financial capital, it's about all the things that makes us wealthy, our connections, our education, our natural capital, our forests and our climate, and especially the interaction between those types of capital, how my education interacts with my political connections and the things like that. So I think that's really important, that we start thinking poverty in those terms.  

0:04:11 - Sara Pantuliano 

That's really interesting, Ricardo. So, building on what you're saying, how do you think being poor today differs from, say, 10 or 20 years ago?  

0:04:22 - Ricardo Fuentes-Nieva 

I think the world has made enormous progress in reducing the extreme income poverty. That was one of the big results that organisations like the World Bank recognised, especially given the growth first in China and then in India. But what the climate change and the COVID crisis has shown us is that the vulnerability of people and communities depends more, much more, than income flows only. You know, people are more resilient when they have this portfolio of capital, of assets, tangible and intangible. So I think, even though we see kind of that decline in the number of people living under a certain number, a certain poverty line, what we see is our understanding of what actually determines what can you do with your life, which should be kind of a framework for how we understand poverty is changing and I think it's paramount that we start measuring poverty differently and that we start designing policies in a different way to adapt to this new reality.  

0:05:41 - Sara Pantuliano 

Yeah, I completely agree with you. Yamini, do you recognise this? I mean you work on social policies, you work with governments. I mean, do you think any institutions have truly grasped the implications of this new definition of poverty?  

0:05:56 - Yamini Aiyar 

No, the short answer. But let me complicate it a little bit. I think that the idea that poverty is multidimensional itself was a long, hard battle, and the recognition that poverty measured just in terms of income and that it needs to at least acknowledge other forms of human capital has, you know, over decades of engagement on this issue, penetrated to a degree into the policy ecosystem. So in India, for instance, back in 2011, we conducted a socioeconomic cost census that essentially said we won't just take income criteria but look at multidimensional aspects of poverty, on the basis of which eligibility would be determined for people to access government benefits. But I think the bigger challenge here is sort of linking in with what Ricardo just said is that the vulnerability also creates a lot of mobility in poverty, as in, you're moving up and down the poverty ladder quite a lot through the course of your increasingly so through the course of your life cycle. So you know, the, the and income shocks are now a very repeated and regular feature.  

So if I just, for example, look at the Indian context over the last three to four years, you know we some of them were self goals, some of them were policy externalities, some of them were unimaginable things like the pandemic, so we demonetized in 2016. We introduced a goods and services tax that had an implication particularly on small and micro enterprises. Then we had COVID. Then this year we had a bunch of climate shocks that caused very high levels of serial inflation, which affects the consumption basket in a big way for the average Indian. All of this together has created a context where there is a very strong likelihood, due to multiple income shocks, that those cohorts of households that had moved away from extreme poverty above the poverty line actually probably have been pushed back.  

And as unemployment is increasing, as vulnerabilities are increasing, the ability for households to move back up the ladder becomes much more complex. So we need to be, so, I think where the big policy gap is is that we're still living in a world where we think of poverty as, in some ways, a somewhat linear progression. You move up the poverty ladder, out of poverty, but the honest truth is that, even in a five-year period, you can go back down and you can move back up, and then you can go back down, because most households are actually vulnerable. So I actually think, rather than thinking about this as poverty, if we think about this as vulnerability. We may understand the dynamism of the experience of poverty and then be able to design policy that responds in a much more agile way to this dynamic interaction that households have with the horrific experience of poverty through their life cycles.  

0:09:03 - Sara Pantuliano 

It's so true about the dynamic nature of poverty. Rathin, you used to lead the Poverty Research Center of BNDP in Brazil. What are some of the examples you've seen around the world of how wealth and poverty manifest in different ways? And actually, what are some of the policies and examples of effective policies that have responded to these nuances that you can recall?  

0:09:29 - Rathin Roy 

Thank you, Sara. I'll take two examples, one from when I lived in Brazil and one from where I am now in the UK. So in Brazil, I noticed one day they were all long flights from Brasilia, you know, to Asia and Africa, so I tend to sleep, but one day I happened to be awake in the daytime as the flight from São Paulo came into Brasilia and I saw skyscrapers. Now, where I lived, there were no skyscrapers, there were only huge ranches and bungalows. Where are these skyscrapers coming from?  

And I suddenly realised the skyscrapers housed the poor, outside a city with very low density of population, and the rich lived in the centre of the city, with access to assets, tangible and intangible, firstly, land. Second, by virtue of the location, a variety of public assets which the poor had no access to. When I thought about my own city, Bombay in India, I realised it was the same there that living in a slum meant that you had lack of access to a range of tangible and intangible assets that you did not have if you didn't live in the slum. And that is what really differentiated, I think, the drivers of poverty. For someone who wants to stop being poor permanently and the kind of stuff that was at vogue when I was in the sector, which is to talk about two very fashionable things livelihoods mercifully thrown out of the window now permanently, and social protection. Now, as I understood it, social protection should come if there's a disability which you get by an act of nature. It is not something that you you you are able to counteract because of a social disability.

The reason I think this has happened and I, as an economist, I must share in the blame for this is the active attempt to depoliticize poverty that has happened over the last 40 or 50 years. 

This has resulted in our not understanding something that I've learned in the United Kingdom. 

When I go back now home here, there will probably be an appeal in my, in my box for food banks. There will be an appeal to try and give children in North London school meals that they were to afford. In a sense, this is because the recent crisis in Britain has meant that everybody in Britain, except the top 3% of the population, is going to be less rich than they were before. So the vulnerability to poverty of the bottom 40% in Britain today is more or less equal to the vulnerability of poverty of the bottom 30% or 40% in India today. Why would this be so unless, as Ricardo says, it is happening not because the solution or the problem lies in income drops, but in resilience to income drops, which can only come from assets which include tangible and non-tangible assets. The lack of access to these assets is a profoundly political question. By avoiding it, we have both depoliticised, politicised poverty and focused on the income question, and I think the time has come now to change that forever. 

0:12:27 - Sara Pantuliano 

Absolutely, and I think at ODI we're that set on making sure that we can help rethink poverty and bring the politics back into the equation. For instance, next week we'll be at the World Economic Forum annual meeting in Davos and we're actually holding an event to get leaders and decision makers to better understand the new dimensions of poverty so they can take meaningful action. Rathin, what do you think is the key message that the leaders attending Davos need to understand about this issue? 

I mean obviously making poverty political, but how do we put it to them in a way that they can't avoid the question?

0:13:08 - Rathin Roy 

Well, I'm not being facetious, Sara. One thing you could do is ask them to hand over their cell phones at once and do without them for 24 hours and ask what impact it had on their family lives, on their bottom line and on their ability to stay healthy. Just those three things, and we might actually get a great understanding from that. Davos is a classic example of why we need a new definition of poverty, because with a new definition of poverty comes a new definition of the rich and the powerful. The people in Davos, like you, are not necessarily rich. They're not even necessarily wealthy. I mean, you're wealthy but you're not super wealthy.

You're not Davos wealthy, but you are, as I am, as everyone in this conversation is well endowed in the sense that we have a set of endowments, as Ricardo was saying physical, financial, cultural, social and networked endowments which allow us to be part of a meaningful conversation with those who may be economically wealthy, politically powerful, socially relevant. That, with globalisation, then becomes the essence of Davos. So the well endowed have to ask themselves the question what is it that we can do to make people less fortunately endowed than us better endowed? Can that be done purely to capitalism? Would that involve sacrifice? Would that involve different ways of seeing the problem? I think if the well-endowed recognised the fortunateness of their well-endowedness and tried to solve that problem rather than solving the problem through silly aphorisms. Like you know, give a man a fish or teach a person to fish, neither improves endowments. I think that must play a big role. Whether it will or not, of course, is another matter. 

0:14:44 - Sara Pantuliano 

Yeah, quite well, I may try to get their phones and see what they say, but I think that proves the point very poignantly. Yamini, what do you think are some of the successful actions that policymakers could take in the medium term to better protect people from some of the shocks they're experiencing and, fundamentally, to counteract rising inequality?

0:15:07 - Yamini Aiyar 

I agree with the larger point that Rathin is making, which is that the discourse on poverty needs to be politicised all over again. It is fundamentally a political act and it is fundamentally about how societies are structured, how power is allocated and therefore how capital of all kinds financial, human, social capital is allocated and distributed within society and the politics around that shapes the possibility of opportunity for those who do not access capital or marginalises those who do not have access to capital and consolidates power in ways that you don't get that kind of mobility. And it has also become, almost because it has been depoliticised we are constantly looking for policy tools rather than a political conversation about empowerment and poverty. So, when it comes to the policy tools, it has and there too, by the way, there's been a big battle. It's just interesting that now some parts of that battle have become part of the mainstream and are seeking to depoliticise it. So, for instance, the allocation of public finances to building aspects of human and social capital it's a redistributory question. It's fundamentally, foundationally political, and one of the big challenges always has been especially in debates in India but across the globe, about how much are we willing to allocate to building these forms of capital for policy to allocate, for policy to build these forms of capital, and how much is going to be used for enhancing capital that the capitalists already have access to?

One of the interesting things that have happened, at least in the discourse in India and technology plays a role in all of this, and Rathin and I have been agreeing about this and arguing in different ways about this for quite a long while is that the idea that the state has some responsibility towards those who do not have capital by handing over cash. So the idea of it's sophisticatedly called a universal basic income In India we call it a direct benefit transfer the idea that the state has some responsibility to what Rathin calls a compensatory state to compensate for those who do not have the possibility of equal participation in market. That has sort of become a deeply ingrained part of the politics of poverty in India. So across the country you will find whether it's the national government or state governments this redistribution being positioned as direct benefit transfer I'm giving cash to the poor and that is the beginning and end of my welfare responsibility for the state and that, by the way, there's a complete elite consensus around this. It is a consensus that brings in the technology hegemony that marvels on the possibility of direct cash and direct technology that enables these transfers to take place. It's convenient for the big capitalists. Some small amount of transfers go to the poor, and then we can go on and do all the things that actually fund the mine capital of all kinds for the poor, for example, flout environmental regulations of all kinds to build all kinds of infrastructure that is basically going to enhance the capital of the capitalists and undermine all forms of basic assets and, in fact, enhance the vulnerability of those who lose their homes and lose their traditional livelihoods as a consequence of all of this infrastructure. So this and and it's done very cleverly because it creates a politics of welfarism, where of of creating a welfare state, whereas fundamentally it's about doing the bare minimal rather than reimagining the fundamental challenges of power structures that create unequal societies in the first place. 

And then there is this other aspect of investments in human capital.

Increasingly now it has become common, and I find it very amusing especially in the very fraught debates that we've had in India about welfare spending how those who don't like too much public spending and worry a little too much, in my opinion, about fiscal deficits arguing that yeah, we should be putting more on health and education, but, by the way, the state doesn't know how to do very good health and education. 

So that then becomes a ruse on which you say it's not worth putting money into something that the state can't do. We make a hell of a lot of money and produce bad infrastructure, but we should put more capital expenditure because there are huge multiplier effects there for all the big infrastructure that suits capital. So you know, there is a urgent need to reframe the debate around how public finances need to be allocated and recognise that that is fundamentally a political choice, not a policy choice, and also to be aware of the pitfalls of using the new marvels of technology as ways of doing the bare minimum and creating a rules of a welfare state, which is actually fundamentally further entrenching inequalities and power structures that exist that create this problem in the first place. 

0:20:32 - Sara Pantuliano 

I think, Yamini, you've hit the nail on the head. 

0:20:34 - Rathin Roy 

I see, Rathin wants to come in. Just to supplement what Yamini was saying in a first world context, if you take what Ricardo is saying, the fight over capital look at Britain. So there's one fight about maintaining the countryside versus building houses and expanding the appallingly short stock of housing for poor people. That's one fight and that's a fight between those who would like to preserve the countryside as a capital asset for themselves. There's another fight about rights obey this wonderful British custom where you can walk across someone's private land by custom. You can walk for miles all together and those being closed down. Both are fights over capital and both are fights over assets, are both intrinsic to the politics of who has and who doesn't. So that politics, I think, is as vibrant and important in a rich country as a poor one and therefore, in a sense, what Ricardo has been proposing unifies the poverty discourse. It's no longer a problem of just poor geographies. It's a problem of people who are poor irrespective of the geography in which they live. 

0:21:35 - Sara Pantuliano 

I completely agree, and I think we've heard from Yamini in a way, this depoliticization of poverty goes hand in hand with the politics of welfarism, which are functional to maintaining the status quo and basically allow these power structures to remain unchallenged. And in fact, Ricardo, this is what we've been discussing at ODI that it's really time to develop a new framework of understanding that can really bring the politics back at the center and challenge these policies that are, in a way, instrumental to maintain things in there and end up widening the gap between rich and poor. 

0:22:13 - Ricardo Fuentes-Nieva 

Definitely, because what we have here is a body of work for the future, a body of work in the understanding, in the theoretical understanding, that it's not flows of income that determine the well-being of people, but a wide array of stocks, a portfolio and the interaction between these different stocks. And we need to kind of push that idea and use examples, as Rathin was describing, to see the difference, you know, between seeing someone who's poor because doesn't have enough income or is slightly above the poverty line and then is no longer considered poor, and someone who's got like education and connections and savings and and all those things that allows us to to withstand shocks. And I think that's that's key right now and that's key because what we see is this recurrence of bigger and bigger and bigger shocks, be it pandemics or be it climate shocks or be it economic crisis and things like that. So, like as Yamini was saying, people, even if they're not poor, they might still be vulnerable, and this vulnerability is related to that kind of like small portfolio of tangible and intangible assets. So that's why we need to think this.

Now, there are, like many challenges. The first and obvious challenge is the challenge of measurement. Many, many, many scholars over the years have tried to systematise and standardise our understanding of how we measure the different types of capital, human capital, social capital, political capital, natural capital, all that. And over the years we've been facing many, many challenges. But that's not a reason not to try. It'd be a failure of imagination if we don't try to advance that agenda just because it's difficult to measure. On the opposite, I think that gives one perfect strand of work how we measure better the different types of capital and how we measure better the dynamics between different types of capital as we move forward. And then a different strand of work would relate to what Jamini was saying how do we reimagine public policies that move away from transfers to redistribution? And that's at the center of that power struggle.

Transfers are important. I don't want to throw away the baby with the bathwater. You know transfers are key in the short term, but we cannot just rely on transfers to solve this complex issue of poverty around the world. We need to think about how different types of capital are distributed, how the state needs to play a role on the accumulation of different types of capital, through public investment in education, through public investment in infrastructure, through taxes and redistribution and the like, and what it means in terms of the vulnerability of communities and societies. 

And one very important point is that this agenda is relevant, as Rathin was saying, not only for people on their certain level of gross national income. It's relevant also for high-income countries. The example that Rathin was mentioning is very important. That's in the spirit of the Sustainable Development Goals, but, more importantly, that's in the spirit of people who are suffering from these shocks, you know, from these shocks, and people who, like, in a way, kind of their plight is being disregarded because, they're not under like an income poverty line, you know, and they're like oh, you're not poor, you know. 

But then the fact that your neighborhood is blighted by crime, you know, and then your house is no longer worth anything, even though you put all your savings in that you know, like, I mean that's a real social problem and that's a problem of poverty and we're ignoring it because we're saying, oh, it's a homeowner, you know, like, I mean just like. 

But we're not seeing the dynamics that that when neighborhoods get crime ridden, the value of that asset is collapsing and and and. Then, like, I mean you, you, even though you're not under an income poverty line, you might still be feeling poor and vulnerable and and and and being left behind. So I think it's paramount. It's paramount that we start working on this, that we start discussing this more seriously, that we start measuring and that we start designing public policies in a different way. So, if we think about what's the biggest problem right now, like maybe the most kind of urgent problem for me is this crisis of democracy, but it's closely related to what we're discussing. It's closely related to the fact that I mean we think with transfers things are going to be solved, but I mean people don't want transfers, people want two things dignity and the ability to not be vulnerable, and then democracies are not really providing that.

0:27:41 - Yamini Aiyar 

But I'm going to add a bit of a corrective to this. I think that it is true that democracy has not necessarily opened itself up to solving the problem of inequality. In some ways it has perhaps exacerbated it, but at the same time, without democracy you would not have a be alive to the problem, or nor would you have the ability to actually solve for it in and of itself. I mean, if you think about the Indian context, the only way in which the poor have been able to make themselves heard through into the policy space which is fundamentally it is elite and it is especially as the Indian economy opened up, it has increasingly chosen to allocate at one point was trying to allocate less and less space for the voices of the poor. 

It is the electoral imperatives of democracy that ensured that there was some semblance of welfare and some semblance of investment in human capital in the poem, and in fact it is through the process of democracy that we were able to at least begin what I think was an audacious and interesting experiment and you only recognize how audacious it was once the experiment almost failed or was reversed was the attempt to actually try and reimagine what welfare is through a language of rights, and that really actually was. It's trying to get to exactly, Ricardo, what you were saying human and social capital but it was doing it through the grammar of rights, in terms of re-imagining citizen-state relationships, to be able to achieve that, and those spaces only emerged through democracy. So I wouldn't throw democracy out of the window, because I do think that democracy is the only form of political organisation that we know that creates space for articulation of voice, expression and a push for representation that creates a logic that pushes elites to respond. 

0:29:41 - Ricardo Fuentes-Nieva 

No, no, totally, you know I wouldn't. Also, I wouldn't throw democracy out of the window. You know like I mean, but my concern is more like how democracies are functioning, especially in the last 30 years, you know like I mean, with the advent of globalisation. And I think, like, because you're totally right on how democracy changed, the representation and the spaces for voices of vulnerable groups. You know, and the thing is, we don't need to reinvent the wheel, we need to go back to how democracy was working. 

0:30:15 - Yamini Aiyar 

Yeah, it's imperfect democracies or democracies which basically have moved into becoming electoral authoritarian democracies, which is the challenge. 

0:30:25 - Sara Pantuliano 

Well, thank you so much, Ricardo, Yamini and Rathin. This has been a fantastic conversation. Unfortunately, that's all we have time for, but I think what's emerged really clearly is the extent to which poverty, as Yamini said, is fundamentally a political act. So it's time to rethink the framework around poverty, beyond these arbitrary income levels that we've talked about, and think of public policy or policy interventions that can genuinely aim to redistribute key assets, to allow access to those who don't have these assets. I mean, this is a tall order, but it is something that we need to push for to challenge the current consolidation of power and wealth. The next episode we'll be back to regular schedule and have a whole range of exciting discussions coming up which we hope will inspire you to think and push for change. Until then, thank you for listening.