Highten the global income curve
The world economy is characterized by a wide and in most respects, widening income inequality. While the global mean income level has converged over the last three decades, the distance between the richest few and the poorest few is growing ever larger.
During the covid pandemic, we have grown used to the mantra of ‘flatten the curve’. Here I wish to highlight a similar, yet probably counter-intuitive global goal of ‘hightening the income level curve’.
The SARS-Cov-2 virus has not only ravaged inner organs and lungs, but also wreaked havoc to the household economy of most working people. If the virus didnt incapacitate parts of your family, the national lockdowns imposed to curb its spread has most surely impacted your work-life in some way. And evidence is piling that this is disproportianally happening to the poorest of the poor. While not all countries have been hit equally hard, the turmoil in global markets the last year has distrupted the earnings of most working poor, servicing markets in richer countries.
The rise of the global income level curve
When the Swedish public health expert Hans Rosling started the Gapminder project his goal was to combat misinformation about global development. He pinpointed a range of development categories where humans knew nothing more about the state of the world than chimps (which equates to guessing the answers). Other projects such as the Upgrader test, where you can test your own knowledge, and Dollar Street, where you can ‘inspect’ hundreds of families’ standard of living in different places in the world, across the income level spectrum.
All of this points out that, contrary to common belief, the world is not divided into two camps: Rich and poor. Rather, global wealth levels are oncontinuum from very poor to very rich, with the majority in between. Most of you reading this are among the very rich in this respect. And the scale is logarithmic, meaning as you move up an income level, you double the amount earned per day (level 1 lives at $2 a day, level 2 at $8, level 3 at $32 levels etc).
The figures below illustrate this distribution at different points in time. As we can see, the income distribution was rather divided in the early second half of the 20th century. There was in fact a distinctive gap between the rich and the poor. During the 1990s and beyond, this changed however, with large swaths of people moving out of the ‘extreme poverty’ category.
Another common misconception that Rosling seeks to root out, is that wealth is only consentrated in the West. This has been true for most of the last 200 years, but is steadily shifting. It further hihglights another important point — differences between rich and poor are equally important within countries. Today, and increasingly so in the future, the worlds richers as well as the world’s poorest will be distributed among — not between — different countries. Alleviating this ‘relative’ (but still highly acute) poverty, is the topic for other articles.
Doing what we can — by giving what wecan
As has become a tradition, over the last few years I have used my birthday to reflect upon, and share, a cause, issue or project that is important to me. This year, however, I wanted to go further — not simply talk the talk, but also walk the walk. Much of this is due to corona, which has further cast a spotlight on what’s important to me — and how vulnerable many parts of society are. It has served as a reminder to me that someone are always worse off than yourself…
This year I want to highlight two charities that can make an oversized contribution to ‘rising’ the income level curve that I described above.
First out is the Giving what we can foundation, committed to giving more, more effectively. ‘Giving what we can’ is a “community of effective givers”. Their main goal is to inspire donations to the world’s most effective organisations and aim to create a culture where people are inspired to give more, and give more effectively. Their central tool is to make people ‘pledge’ parts of their income to charitable causes, based on the premise that if the richest 5 % of the world donates up to 10% of their income, we can alleviate extreme poverty for the roughly 5% who live under the poverty line (earning less than 1.85 dollars per day).
Based on the simple statistic highlighted by Rosling and his Gapminder illustrations, we can extrapolate from the general to the specific — from the global level to the individual: Making only a few dollars more per day makes all the difference for the world’s poorest. Therefore, it makes all the sense in the world ‘Giving what we can’ to help push the poorest 5% out of the 2-dollar per day poverty-trap. In this sense, giving directly to the poorest in the world is a very effective way of reducing extreme poverty.
That is why, this year I have decided to donate a share of my income to GiveDirectly.
GiveDirectly is the first — and largest — nonprofit that lets donors like you and me send money directly to the world’s poorest. They give cash directly to people living in poverty. And since 2009, they have transfered over $300 million in cash directly into the hands of over 500,000 families living in poverty. Giving just $30 can provide the bare necessities of life for a family for a month.
And no, people don’t just blow it on booze. In fact, research finds people use cash in impactful and creative ways. As it turns out, people use cash on medicine; cows and goats and chickens; school fees; water; solar lights; tin roofs; irrigation; motorcycles to jumpstart taxi services; businesses to generate income; and more.
Contemplating my own situation, having a stable income and a well-paying job (and that during corona), I realize I’m in an excellent position to give more. Even with my starting wage in Norway, I am among the top 4% richest in the world and earn 11.9 times that of the global median income. If I were to give away 10% of my income, I would still be among the 5% richest in the world and live a comfortable life.
Therefor, I have taken the decision to pledge part of my income to good causes over the next decade. Personally, I have chosen a model where I will donate successively more each year, starting at 1% in 2021 and ending on 10% in 2030. By this time in 2030, I will have donated more than 200 000 NOK to various causes (the placement of these funds will have to be content for a further article at some point — feel free to ask me about it).
I realize this donation model is not for everyone — not even an option for some, financially— but I’d still encourage you to consider the proposition this year.
Can 2021 be the year when you take the pledge?