Poverty Anywhere Is a Threat to Prosperity Everywhere

In May 1944, with the Second World War still raging, delegates of the International Labour Organization met in Philadelphia and adopted a declaration that stated, among its principles, that poverty anywhere constitutes a danger to prosperity everywhere. The sentence was a lesson learnt from the 1930s, when economic misery in one country had spread to others through collapsing trade, desperate politics and war. The Declaration of Philadelphia became part of the ILO's constitution. Seventy years later the Ebola epidemic of 2014 in West Africa gave a different illustration of the topic's claim that poverty is a threat to everybody.

The epidemic began in a forest village in Guinea in late 2013 and spread to Liberia and Sierra Leone, three of the poorest countries on earth. They had few doctors, fragile clinics and long civil wars behind them. Liberia had about one doctor for every hundred thousand people. The disease spread rapidly, killing more than eleven thousand people, and a few cases reached Europe and the United States. The international response cost billions of dollars, and the economic damage to the region exceeded the cost of the health systems that could have contained it. Poverty had made a local outbreak into a global emergency.

Health is only one channel. Poor countries are the breeding grounds of drug resistant infections, since patients who cannot afford a full course of treatment stop early and train the bacteria to survive. Tuberculosis resistant to several drugs now spreads across borders. Pandemics travel through airports, and the Spanish influenza of 1918, which killed tens of millions, thrived among populations weakened by war and malnutrition. A world connected by travel is a world in which public health is a shared good, and the weakest link determines the strength of the chain.

Poverty is also linked to conflict and migration. Paul Collier, in The Bottom Billion in 2007, studied the countries in which about a billion of the world's poorest people live, and found that they are caught in traps of civil war, weak governance and dependence on natural resource exports. A civil war in one such country, he estimated, costs the country and its neighbours tens of billions of dollars. Refugees and migrants seeking a living move to richer lands. The movement of millions of people from Syria, Afghanistan and Africa to Europe after 2015 showed how conflicts and desperation reach far beyond the countries of origin.

The movement of millions of people from Syria, Afghanistan and Africa to Europe after 2015 showed how conflicts and desperation reach far beyond the countries of origin.

Prosperity is also affected by the lack of markets. The poor, taken together, are a vast body of potential consumers and producers. C. K. Prahalad argued in 2004 that the billions at the bottom of the economic pyramid are an untapped market, and companies that serve them with low cost goods can profit and help at the same time. The Marshall Plan after the Second World War is the classic case. The United States spent about thirteen billion dollars to rebuild Western Europe between 1948 and 1952, and the recovered economies became the best customers of American exports. Enriching the poor enriches the rich. Demand that grows in the poorer half of the world keeps factories running in the richer half.

The environment adds another link. Poor farmers who clear forests for land, and communities that burn wood for cooking, contribute to the loss of the forests and the warming of the planet. Poverty also leaves little room for caring about the long term, since survival tomorrow is the first demand. A global problem such as climate change cannot be solved without enabling the poor to adopt cleaner means of living, and rich countries therefore have a stake in finance and technology transfer. The air that crosses borders does not recognise a boundary between rich and poor.

Poverty also wastes talent. In 2017 Raj Chetty and colleagues showed that American children from the richest one per cent of families were ten times as likely to become inventors as children from families below the median income, even when their early test scores were equal. The world loses discoveries in the same way each time a gifted child is kept from school by hunger. The vaccine, the cheaper battery or the better crop that never gets invented is a loss to everybody, including those who never learn what they have missed.

India shows the principle at home. A district in which children are stunted and undereducated drags down the productivity of the country, and a slum without sanitation endangers the health of the whole city. The migrant who leaves a poor state for the construction sites of a rich one puts his labour into the economy and sends back his savings. The regional gap between the south and west and the north and east has political and economic consequences that affect every state. Policies such as the rural employment guarantee and the public distribution system are investments in a national market as well as relief.

The link is not mechanical, however. Some societies have been prosperous while tolerating deep poverty within them. The Gulf states, with rich citizens and poor migrant workers, and the United States, with its pockets of destitution, have prospered for decades. Colonial powers grew rich on the labour of the poor. It is arguable that rich countries benefit from the cheap labour of poor ones and that a degree of global inequality is built into the pattern of trade. If poverty were always a threat to prosperity, one would expect the rich to have acted more decisively against it.

The more accurate claim may be that poverty threatens the security and stability of the prosperous and diminishes the quality of their prosperity. The costs are those of disease, instability, lost trade and a moral discomfort that is difficult to put in numbers. In 2015 the United Nations adopted the goal of ending extreme poverty by 2030, recognising that the world's future is entangled. Whether wealthy nations will act on their self interest when it is not immediate is uncertain. The topic puts the argument in terms of danger, and perhaps this is because compassion alone has never been enough to move us.