Needs-Based Anti-Poverty Production Strategies

Discussion

Jason Hickel and Dylan Sullivan:

"The needs-based poverty metric illuminates much smarter strategies for development. Once we understand that ending poverty is a matter of ensuring people can access the goods and services necessary to meet their needs, then the objective should be to increase production of those specific goods and services. So far we have referred to the goods that comprise the basic needs poverty line (food, shelter, clothing, fuel), but – as we will see in the next section – the same principle applies to the higher-order goods that are required to achieve decent-living standards (nutritious food, modern housing, healthcare, education, electricity, clean-cooking stoves, clothing, washing machines, sanitation systems, refrigeration, heating/cooling, computers, mobile phones, internet, transit, etc), which requires a higher level of industrial output.

In addition to drawing our attention to specific forms of production, the needs-based approach to poverty also draws our attention to prices. At any given level of production, poverty can be reduced by lowering the prices of essential goods, such as food, health care, and public transit. As the case of China illustrates, this can be achieved through policies of public provisioning and price controls, to ensure universal access to essential goods and services. This is critical to successful development strategy, and opens up important new possibilities. Of course, the objective of ensuring accessible prices is inseparable from the objective of shifting output from luxury items toward necessary goods, as this shifts the relevant supply curve to the right.

These strategies were understood by the socialist and anti-colonial movements of the mid-20th century, and indeed by the architects of the welfare state in the core economies during the same period. It was also understood by Simon Kuznets, the economist who invented GDP, who noted: “given the variety of qualitative content in the over-all quantitative rate of economic growth, objectives should be explicit: goals for ‘more’ growth should specify more growth of what and for what. It is scarcely helpful to urge that the over-all growth rate be raised to x percent a year, without specifying the components of the product that should grow at increased rates…” (Kuznets 1962, emphasis added). This is a clarity that urgently needs to be recovered."

(https://www.sciencedirect.com/science/article/pii/S2452292924000493)