This is an optimistic piece — a rarity for sure around this blog. Here I claim that in 15 years or so, extreme poverty which afflicts around one billion people, mainly in the so-called third world, will be eradicated. That problem has plagued mankind since the beginning but the end is in sight.
Global extreme poverty will be eliminated as a side-effect of technological advances, primarily made by people who probably neither care about poverty nor do they intend to solve that problem. Which is good news for India. India has the largest number of people suffering extreme poverty in the world. Around half of the billion extremely poor people of the world live in India.
There are two kinds of problems. There are hard problems and there are impossible to solve problems. Given time, with advances in knowledge, all hard problems will be solved. Poverty is a hard problem but not an impossible problem since in many parts of the world it has been solved for all practical purposes. The critically important key to eradicating poverty is knowledge.
Knowledge is what economists call a “public good.” Once produced, knowledge can be repeatedly used without diminishing the available stock. It is “non-rival” in consumption. Technology increases monotonically because of the accumulation of knowledge. And technology (which is essentially knowledge of how to do something) developed somewhere gets adopted in the rest of the world with surprising rapidity. It is very cheap to use once developed.
Consider the cell phone, internet and computer technologies that were developed in the Western economies (they are called developed economies partly because they developed technology) but those advances spread to every part of the globe. Just like the computation and communications technologies, it will be people in rich countries who will develop the technology to eliminate poverty in poor countries, albeit not by design nor intent.
That means India’s dire poverty will be solved not by Indians — least of all by the insanely inept, criminally corrupt government of India which is arguably the fountainhead of India’s poverty — but by others. I note in passing that India’s telecommunications problem was created by the government but it was solved using foreign technology.
In the following I conjecture how the end of poverty will happen.
Poverty has been the default condition of humanity. For nearly all of history, everyone — even those who lorded over the masses — was poor by present standards. Being not-poor is a modern condition, hardly more than a century old. Of course people of the past did not know that they were dirt poor. They just accepted their condition as if it were a fact of nature.
Standards evolve. For certain we would be considered poor by future standards, just as we do the people of a century ago. The poor of the past did not have the kind of stuff most of us have and take for granted: the essential basics of life and luxuries such as the technological gadgets and gizmos we have come to depend on.
Stuff requires Knowledge and Energy
In the past, they did not have the stuff we have because they lacked the technology (the knowledge) to make the stuff we can. They knew very little about how to transform the matter they found on or near the surface of the earth into usable stuff, and they had to work hard to eke out a subsistence existence, to have enough to eat to ward off death for a few decades. Life expectancy was less than half of today’s.
We humans make stuff. That requires two ingredients: knowledge and energy. In the primitive state of humanity, there was little knowledge (technology) and all the energy was mainly what muscles could produce. Consequently very little was produced, and everyone was materially poor.
With time, though, the stock of knowledge (technology) grew, as did the amount of energy available to humans with the discovery of new sources of energy. To aid human and animal muscle power, humans discovered how to get energy from wood, water, coal, wind, oil and ultimately nuclear fission. With every advance in knowledge and energy source, labor productivity increased. That means, for the same amount of human labor expended, more could be done.
An example. Using an earth mover, just one person move more earth than a few hundred people can with their bare hands. To make an earth mover, you need to know how to transform material found on or near the surface of the earth into one. It is the product of thousands of discoveries and inventions, made over centuries. That’s accumulated knowledge, or technology. All transformations require energy and know-how. Machines extend the power that humans have but machines need energy to function. Not just that, energy went into making it. Energy is the bottom line.
Energy: the Story of Civilization
The point here is this: you need both knowledge and energy to make stuff. We humans produce more stuff per capita than before because we know much more and consequently have more energy to use. The material progress of human civilization is the story of how humans have learned how to harness new sources of energy.
What qualifies as a new source of energy? The simple criterion is that it has to be a substitute for the other available sources. To be a substitute, it has to be cheaper in some practical sense. Fossil fuels are cheaper than wind and water power, and nuclear fission power is cheaper than fossil fuels, and so on. Fusion power and yet entirely new sources of energy, when the technology is developed, will be cheaper than the rest.
OK, so here’s the bottom line. We are richer than the people of the past because we have more technology and more energy. Both those two factors make us more productive. We can produce more stuff than what we could before. That trend will continue indefinitely into the future, and we will produce more stuff more cheaply. That means cheaper food, clothing, shelter, … more of whatever the lack of which we define as extreme poverty today.
Energy — the Ultimate Resource
The universe is energy. Matter itself is condensed energy, as Einstein’s equation E=mc^2 states. Living organisms require energy: photosynthesis uses solar energy to transform carbon dioxide, water and trace elements into plant matter, which is then used by animals as food, etc etc. If you have control of energy, you have control of the universe.
(A Kardashev Type III civilization can control the energy of its entire host galaxy. Imagine that.)
When energy becomes sufficiently cheap, nearly all of the stuff needed for the basic essentials of life will be produced with very little effort on the part of people. Imagine automated factories making everything, and all that remains is to have a system which distributes the stuff to whoever needs it. In economics terms, the marginal cost of production of that stuff will be close to zero, and therefore the price of it will be close to zero, and therefore everyone regardless of what their economic status is will be able to consume the basics.
The very notion of what constitute “the basics” itself will evolve over time. Running water and indoor plumbing were not basic some decades ago but they are now in the developed countries.
Getting back to energy and technology. Technology will grow at an increasingly accelerating pace. Every year greater advances in technology will be made than was made in the previous decade. That’s an order of magnitude — exponential — increase.
Today’s technology would have astounded our ancestors. It would have been magic to them. As Arthur C. Clarke observed, any sufficiently advanced technology is indistinguishable from magic.
I am writing this at home on a computer connected to the internet. I searched for a reference to Clark’s quote with a few mouse clicks. Practically everything that I need to know is available to me through this internet connection at a monthly cost less than the price of a couple of haircuts. I can read, write, watch, and listen to untold millions of others using technology that was mainly developed in the last two decades.
So therefore I would understand if you were to dismiss my claim that poverty will be history in just 15 years or so. Impossible, you’d say. But we both will be around to see what actually happens.
The other day I read that in Germany, the wholesale price of electricity frequently goes below zero. Meaning, the producers actually pay consumers to buy electricity. That is not at all surprising. The price of energy has been monotonically decreasing. That’s the same as saying the cost (and therefore the price) of everything has been monotonically decreasing.
Therefore when the price of energy gets sufficiently close to zero on average, from time to time, the price will drop below zero. That’s happening in the advanced industrialized countries now; it will happen in India in a few years.
Technology is advancing at an exponential pace. Therefore the cost of energy will continue to drop. Therefore the cost of production of stuff will monotonically decrease, until a point that it will be practically close to zero. Therefore all the basics of life will be available for consumption at zero price. Therefore extreme poverty will be solved. This will happen in about 15 years.
READ NEXT: The End of Poverty – Revisited.