Is it even possible to eradicate poverty completely?
According to the Pareto principle, 80% of the world’s wealth is in the hand of 20% of the people. If more resources are created the distribution of the new wealth also follow this rule. This rule doesn’t only work in economics, it is also applicable in science and sports for prediction and in computer engineering for simulation and testing.
Business insider says there are about $214 trillion worth wealth in this world. There are 7 billion people in this world. So, according to this rule (214 x 80% =) $171 trillion should be in hand of 1.4 billion people. Which is very true.
So, if we want help the world’s poorest 2 billion people by creating new resources and opportunities, how much of the new resources get transferred to the wealthier 20% (1.4 billion) people? Yes, 80% of it.
It may look very innocent or usual to see a poor man trying to dig out a non-renewable resource to feed his family, but, most of that resource will make the rich richer.
In central Indonesia there is a seaside village called Lamakera. It is considered the world’s largest sting ray fishing site. Villagers here have conducted traditional sting ray hunts for many generations, but with the arrival of the gill plate trade in the early 2000s, the community converted to diesel engines and transformed to a full-scale commercial fishery, landing over 1,000 sting ray in a single season and threatening the very existence of the species. This villagers are poor and they do not have any other alternative than to fish. Gills of Sting ray provide them with enough money to live by and send kids to school. But, the gills are million dollar trade at Chinese medicine market. This million dollar resource is not making the fishermen millionaire, most of the money is going to some fraud businessmen in China.
So, how is this possible to create a world where no one lives under the poverty line without depleting every last bit of resources on earth? Does earth have enough?
The earth doesn’t have enough. But, we are no fool either. 80/20 rule works when we let nature run its autonomous course. If we acknowledge that this is how nature works and take steps against it then tide can be turned. This is why volunteering and philanthropic activities are important. Donations rotate the existing wealth without digging out more resources from the earth.
You may think 8 richest people on earth owns half the wealth in this world. If they wanted, anyone of them could eradicate poverty of Africa and Asia once and for all. But, it is not that simple. You see, if Bill gates wanted to feed poorest 2 billion people one dinner, you may think it would cost him around $4 billion, right? With $2 per head, it could be a feast. But, the 80/20 rule says it would cost him $120 billion. I don’t think he has that much cash at hand. So, next time before looking up to Bill gates remember this: poverty is a problem much bigger than Bill Gates, Mark Zuckerberg, Warren Buffett etc. and it requires every able hand to beat the Pareto’s principle.