The era of scarcity ended and we didn't notice. Poverty is a choice we make, not something inherent to the natural order of things.
Does anyone have to be poor? Or is the ongoing existence of poverty a choice we make?
In 2021, the world’s population was 7.9 billion people. Over the same time period, the gross world product (GWP)—the sum total of all human economic activity—was around $87 trillion.
This figure encompasses vast inequality, everyone from yacht-owning billionaires to slum-dwelling sweatshop laborers to rural subsistence farmers. But if we divided GWP evenly into population—i.e., if the world’s economic output were distributed evenly to every human being—it yields an annual income of $11,000. This world of Gini coefficient zero is an unrealistic hypothetical, like frictionless spheres in a vacuum, but it gives a sense of where the limits are.
For most of us in the West, this would be a severe demotion: $11,000 is below the poverty level, even if you assume people would partner off and form families to share that income.
But for billions of people, this would be an enormous increase. 85% of humanity survives on $30 per day or less. For these aspiring billions, human beings with the same dreams and aspirations as Westerners, that income would bring them from subsistence to stability, even to comfort.
Wealth redistribution isn’t zero-sum
When the problem is put like this, it seems like an irresolvable conflict of interest. Wealthy Westerners, understandably, don’t want to impoverish themselves. People in the developing world, also understandably, want the same level of wealth and comfort as their richer neighbors.
However, it’s too reductive to view this as a zero-sum conflict. Even Western nations, despite their wealth, suffer from pervasive poverty and insecurity. What if we made it our goal to end this everywhere? Could we organize society more intelligently so that no one would have to suffer from these wants?
If you start with the stereotypical Western lifestyle—a large private house, travel by personal auto or airplane, a diet heavy in meat—and try to fit it into $11,000 a year, it seems like serious deprivation. Then again, that lifestyle contains many luxuries which aren’t necessary for a good life. It’s perfectly possible to live happily and comfortably without them. Mr. Money Mustache raised a family on less than $30,000 a year, relying on strategic frugality and a DIY ethos rather than asceticism or deprivation.
This insight is the idea behind basic income programs. We can eliminate poverty by simply handing out cash. It wouldn’t fund everyone’s wants, and it might not be enough to live on by itself. But it would supply a floor of stability, so that no one has to be hungry or homeless.
Best of all, it would be cheap. A relatively small amount of money could make a huge difference in the lives of the poorest. By one estimate, a mere $66 billion—just half of what the world spends on foreign aid already—would eliminate extreme poverty worldwide, if given as direct cash transfers.
Another line of evidence is the expanded child tax credit passed in 2021 as part of the American Rescue Plan. It was a short-lived benefit, since Congress shamefully allowed it to expire. But while it was in effect, it reduced the child poverty rate in the U.S. by almost one-third. It kept 3.7 million children out of poverty. Survey data shows that 91% of beneficiaries spent the money on basic needs like food, clothing, rent and school supplies.
An analysis by the Tax Policy Center found that keeping the more generous child tax credit would cost $225 billion per year. That sounds like a lot, but it’s only 1% of U.S. GDP. Clearly, that’s a cost that we could sustain if we chose to. As the price for making sure children have enough to eat and a roof over their head, it sounds like an outright bargain.
When you look for it, you see this pattern over and over. The world’s farmers grow enough food to feed 10 billion people, 1.5 times the current population, even without accounting for how much food goes to waste. Global energy production, if it could be redistributed equitably, is more than enough for everyone’s needs. In the U.S., there are more empty houses than homeless people. We make so many clothes that some places burn them for fuel.
All these lines of evidence converge on one insight: there’s enough for everyone. No human being needs to go without the necessities of life.
If we wanted to, we could feed everyone, clothe everyone, house everyone, ensure that everyone has health care and education. We could treat this as a right that we possess just by virtue of being alive, not a privilege that has to be earned and that can be taken away. Poverty exists not because we don’t produce enough—we produce more than enough. We just need to do a better job of distributing it.
Is basic income fair?
Now, you can imagine arguments against this. One common objection is that it encourages laziness and selfishness. Those who make this argument say that if the necessities of life are given away for free, some people will choose to stop working and others will have to pick up their slack. They fear that we’ll end up with the productive supporting the unproductive.
Note, however, that this is a moral objection rather than a purely economic one. It may offend our intuitions of fairness if some people slack off at the expense of others, but it doesn’t threaten to undermine civilization. There are already tens of millions of people who don’t work, whether from age, disability or choice, and that hasn’t caused a collapse. If you believe that people should be forced to work, have the honesty to say that it’s a preference—not a necessity.
It’s true that in the past, there wasn’t always enough to go around. Everyone who was able had to labor for the sake of survival. Even then, in times of famine and war, we faced brutal choices about how to divide up inadequate resources. But that’s not a problem we have anymore.
The age of scarcity is over! It ended, and we didn’t even notice. We’re living in an age of abundance now. For anyone to suffer from a lack of material needs today makes as little sense as going hungry in a forest of fruit trees. There’s a place for everyone at the banquet table of civilization. No one has to be left out in the cold. We should welcome this as wonderful news.
Once this truth is more widely recognized, we can go on to ask what’s fair. We can discuss how to divide up the bounty of civilization so that no one is deprived and no one is forced to work to support those who won’t. But the starting point of that conversation has to be the acknowledgment that poverty isn’t inherent to the natural order. There’s no reason it has to exist.