Economist speaks about global poverty

Andrea Sinclair

American University professor says almost 3 billion people live on less than $2 a day

Twenty thousand people die every day because of poverty, said Brad Schiller, an economics professor at American University.

Schiller, who spoke about global poverty yesterday, cited data from the World Book and said 54 percent of the world’s population is in severe poverty. That means 2.7 billion people live on less than $2 a day.

Twenty-five percent of people in the world do not have access to safe water, Schiller said.

“As Americans, we’d think, ‘Oh, there must be lead in the water,'” Schiller said.

The World Bank defines safe water as a public water pipe within a half kilometer of the home. Schiller showed a photo of a few people kneeling at a water trough surrounded by dirt.

“That is considered safe water,” he said.

There is a different standard for poverty in the United States. Forty percent of Americans are considered poor, and 85 percent of them own standard household appliances such as colored televisions, he said.

“Homeless people in the U.S. have a higher standard of living than the globally poor,” Schiller said.

Haiti, with 67 percent of its people living in extreme poverty – less than one dollar a day – is the poorest country in the western hemisphere.

Haiti, Mali and Nigeria are the countries with the highest percentage of people in extreme poverty, and Schiller said that countries like these are “political hotspots.”

There are two schools of thought that attempt to fix this problem, Schiller said. The “Old School” is a government-to-government transaction.

“You hope (the money) trickles down,” Schiller said. “But everyone knows there’s a leak.”

Schiller said that while some people have been helped, there is a large amount of money used by the political elite and politicians.

The “New School” of thought uses microfinancing to give small loans at a grassroots level, Schiller said. For example, if you give a woman in a rural area a microcredit, usually around $100, she can buy a loom and be able to develop her own sewing business. These microcredits have an 85 percent payment rate, which means individuals can often repay the lenders.

Schiller noted, however, that because the data comes from lenders, there’s no way for analysts to determine whether the loans improved economic prosperity. Also, although these loans are distributed at a grassroots level, “down the road, political leaders in these (poor) countries will want a piece of that loan,” Schiller said.

Schiller also said that education in poor countries is somewhat overrated.

“In the U.S. we want everyone to get educated and be successful,” Schiller said. “But that’s not to say a farmer won’t become more efficient without a sixth grade education.”

Jason Mancini, senior economics major, said he learned a lot from Schiller’s lecture.

“He took away the populist sense of things and got down to the facts and what is actually going on,” he said.

Diane Kotenko, Ukranian economics graduate student, said that the lecture was informative.

“It was an American point of view on global poverty,” Kotenko said.

Schiller has written for the Wall Street Journal and New York Times and has written three text books: “The Economy Today,” “Essentials of Economics” and “The Economics of Poverty and Discrimination.”

Contact College of Business reporter Andrea Sinclair at [email protected].