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Global Challenges Poverty

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Poverty

Poverty is the deprivation of common necessities such as food, clothing, shelter and safe drinking water, all of which determine our quality of life. It may also include the lack of access to opportunities such as education and employment which aid the escape from poverty and/or allow one to enjoy the respect of fellow citizens. According to Mollie Orshansky who developed the poverty measurements used by the U.S. government, "to be poor is to be deprived of those goods and services and pleasures which others around us take for granted."Ongoing debates over causes, effects and best ways to measure poverty, directly influence the design and implementation of poverty-reduction programs and are therefore relevant to the fields of public administration and international development.

Although poverty is mainly considered to be undesirable due to the pain and suffering it may cause, in certain spiritual contexts "voluntary poverty," involving the renunciation of material goods, is seen by some as virtuous.

Poverty may affect individuals or groups, and is not confined to the developing nations. Poverty in developed countries is manifest in a set of social problems including homelessness and the persistence of "ghetto" housing clusters.

Causes of poverty

Many different factors have been cited to explain why poverty occurs; no single explanation has gained universal acceptance.

Possible factors include:

Economics

• Unemployment. Some countries' governments are believed to purposefully maintain a 2-10% unemployed populace to act as a 'replacement threat' to unskilled private sector workers, by way of maintaining an existing thriving service economy.
• As of late 2007, increased farming for use in biofuels,along with world oil prices at nearly $130 a barrel,has pushed up the price of grain.Food riots have recently taken place in many countries across the world.
• Capital flight by which the wealthy in a society shift their assets to off-shore tax havens deprives nations of revenue needed to break the vicious cycle of poverty.
• Weakly entrenched formal systems of title to private property are seen by writers such as Hernando de Soto as a limit to economic growth and therefore a cause of poverty.
• Communists see the institution of property rights itself as a cause of poverty.
• Unfair terms of trade, in particular, the very high subsidies to and protective tariffs for agriculture in the developed world. This drains the taxed money and increases the prices for the consumers in developed world; decreases competition and efficiency; prevents exports by more competitive agricultural and other sectors in the developed world due to retaliatory trade barriers; and undermines the very type of industry in which the developing countries do have comparative advantages.
• Tax havens which tax their own citizens and companies but not those from other nations and refuse to disclose information necessary for foreign taxation. This enables large scale political corruption, tax evasion, and organized crime in the foreign nations
• Unequal distribution of land.Land reform is one solution.

Governance

• Lacking democracy in poor countries: "The records when we look at social dimensions of development—access to drinking water, girls' literacy, health care—are even more starkly divergent. For example, in terms of life expectancy, rich democracies typically enjoy life expectancies that are nine years longer than poor autocracies. Opportunities of finishing secondary school are 40 percent higher. Infant mortality rates are 25 percent lower. Agricultural yields are about 25 percent higher, on average, in poor democracies than in poor autocracies—an important fact, given that 70 percent of the population in poor countries is often rural-based.""poor democracies don't spend any more on their health and education sectors as a percentage of GDP than do poor autocracies, nor do they get higher levels of foreign assistance. They don't run up higher levels of budget deficits. They simply manage the resources that they have more effectively."
• The governance effectiveness of governments has a major impact on the delivery of socioeconomic outcomes for poor populations
• Weak rule of law can discourage investment and thus perpetuate poverty.
• Poor management of resource revenues can mean that rather than lifting countries out of poverty, revenues from such activities as oil production or gold mining actually leads to a resource curse.
• Failure by governments to provide essential infrastructure worsens poverty.
• Poor access to affordable education traps individuals and countries in cycles of poverty.
• High levels of corruption undermine efforts to make a sustainable impact on poverty. In Nigeria, for example, more than $400 billion was stolen from the treasury by Nigeria's leaders between 1960 and 1999.
• Welfare states have an effect on poverty reduction. Currently modern, expansive welfare states that ensure economic opportunity, independence and security in a near universal manner are still the exclusive domain of the developed nations, commonly constituting at least 20% of GDP, with the largest Scandinavian welfare states constituting over 40% of GDP.These modern welfare states, which largely arose in the late 19^th and early 20^th centuries, seeing their greatest expansion in the mid 20^th century, and have proven themselves highly effective in reducing relative as well as absolute poverty in all analyzed high-income OECD countries.

Demographics and Social Factors

• Overpopulation and lack of access to birth control methods.Note that population growth slows or even become negative as poverty is reduced due to the demographic transition.
• Crime, both white-collar crime and blue-collar crime, including violent gangs and drug cartels.
• Historical factors, for example imperialism, colonialism and Post-Communism (at least 50 million children in Eastern Europe and the former Soviet Union lived in poverty).
• Brain drain
• Matthew effect: the phenomenon, widely observed across advanced welfare states, that the middle classes tend to be the main beneficiaries of social benefits and services, even if these are primarily targeted at the poor.
• Cultural causes, which attribute poverty to common patterns of life, learned or shared within a community. For example, Max Weber argued that the Protestant work ethic contributed to economic growth during the industrial revolution.
• War, including civil war, genocide, and democide.
• Discrimination of various kinds, such as age discrimination, stereotyping,gender discrimination, racial discrimination, caste discrimination.
• Individual beliefs, actions and choices.For example, research by Isabell Sawhill, a respected researcher from the Brookings Institute indicates that, in the United States, if any individual follows three rules, their chance of being in poverty shrinks to a statistically insignificant level: (1) Stay in school, don't drop out. (2) Postpone bringing children into the world until marriage. (3) Work, don't quit, keep working, no matter how humble the job. Thus, her research indicates that most poverty is associated statistically with individuals who choose (a) to drop out of school, and /or (b) to have children outside of marriage, and/ or (c) who do not hold a job for long. In short, her research suggests that most poverty is statistically associated with poor or unwise life choices.

Health Care

• Inadequate nutrition in childhood, itself an effect of poverty, undermines the ability of individuals to develop their full human capabilities and thus makes them more vulnerable to poverty. Lack of essential minerals such as iodine and iron can impair brain development. It is estimated that 2 billion people (one-third of the total global population) are affected by iodine deficiency, including 285 million 6- to 12-year-old children. In developing countries, it is estimated that 40% of children aged 4 and under suffer from anemia because of insufficient iron in their diets. See also Health and intelligence.
• Disease, specifically diseases of poverty: AIDS,malaria and tuberculosis and others overwhelmingly afflict developing nations, which perpetuate poverty by diverting individual, community, and national health and economic resources from investment and productivity.Further, many tropical nations are affected by parasites like malaria, schistosomiasis, and trypanosomiasis that are not present in temperate climates. The Tsetse fly makes it very difficult to use many animals in agriculture in afflicted regions.
• Clinical depression undermines the resilience of individuals and when not properly treated makes them vulnerable to poverty.
• Similarly substance abuse, including for example alcoholism and drug abuse when not properly treated undermines resilience and can consign people to vicious poverty cycles.

Environmental Factors

• Erosion. Intensive farming often leads to a vicious cycle of exhaustion of soil fertility and decline of agricultural yields and hence, increased poverty.
• Desertification and overgrazing.Approximately 40% of the world's agricultural land is seriously degraded.In Africa, if current trends of soil degradation continue, the continent might be able to feed just 25% of its population by 2025, according to UNU's Ghana-based Institute for Natural Resources in Africa.
• Deforestation as exemplified by the widespread rural poverty in China that began in the early 20th century and is attributed to non-sustainable tree harvesting.
• Natural factors such as climate change.or environment Lower income families suffer the most from climate change; yet on a per capita basis, they contribute the least to climate change.
• Geographic factors, for example access to fertile land, fresh water, minerals, energy, and other natural resources, presence or absence of natural features helping or limiting communication, such as mountains, deserts, navigable rivers, or coastline. Historically, geography has prevented or slowed the spread of new technology to areas such as the Americas and Sub-Saharan Africa. The climate also limits what crops and farm animals may be used on similarly fertile lands.
• On the other hand, research on the resource curse has found that countries with an abundance of natural resources creating quick wealth from exports tend to have less long-term prosperity than countries with less of these natural resources.
• Drought and water crisis.

Poverty reduction

In politics, the fight against poverty is usually regarded as a social goal and many governments have institutions or departments dedicated to tackling poverty. One of the main debates in the field of poverty reduction is around the question of how actively the state should manage the economy and provide public services to tackle the problem of poverty. In the nineties, international development policies focused on a package of measures known and criticized as the "Washington Consensus" which involved reducing the scope of state activities, and reducing state intervention in the economy, reducing trade barriers and opening economies to foreign investment. Vigorous debate over these issues continues, and most poverty reduction programs attempt to increase both the competitiveness of the economy and the viability of the state.

Economic growth

World GDP per capita rapidly increased beginning with the Industrial Revolution.

The anti-poverty strategy of the World Bank depends heavily on reducing poverty through the promotion of economic growth. The World Bank argues that an overview of many studies shows that:

• Growth is fundamental for poverty reduction, and in principle growth as such does not affect inequality.
• Growth accompanied by progressive distributional change is better than growth alone.
• High initial income inequality is a brake on poverty reduction.
• Poverty itself is also likely to be a barrier for poverty reduction; and wealth inequality seems to predict lower future growth rates.

Free market

Although the term 'free market' is essentially a misnomer, since all markets (regardless of whether they are national or domestic) function only via shared public infrastructure and are, accordingly, regulated by governments in a wide variety of ways, the rhetoric of 'free markets' and 'free enterprise' has won out in the public media over time. What are frequently described as free market reforms represent one strategy for reducing poverty, though not a strategy without its problems. For example, while the 20th century has seen noted reductions of poverty in India and China, both of those countries have also been sites of some of the century's most horrific corporate-sponsored human rights abuses. So, while hundreds of millions of people in the two countries 'grew out' of poverty (depending on how one measures poverty), mostly as a result of the abandonment of collective farming in China and the cutting of government red tape in India,tragedies like the Bhopal disaster and massive deforestation throughout much of India have more than tarnished such successes. Additionally, in China, the end of collective farming could not, properly speaking, be described as a move toward a 'free market,' since land ownership remained a question of state districting and management.So, while shifts in market structure and values have definitely played a role in fostering economic growth in India and China, that growth has often come with serious, even shocking human and environmental costs.

Developing countries face a range of obstacles to trading competitively on international markets. Almost half of the budget of the European Union, for example, is directed to agricultural subsidies, which primarily benefit large multinational agribusinesses who form a powerful lobby.Japan gave 47 billion dollars in 2005 in subsidies to its agricultural sector,nearly four times the amount it gave in total foreign aid.The US gives 3.9 billion dollars each year in subsidies to its cotton sector, including 25,000 growers, three times more in subsidies than the entire USAID budget for Africa, although America contributes a sum far larger than the 3.9 billion dollars through other agencies.Critics argue that agricultural subsidies in the developed world drain taxation revenue, increase the end-prices paid by consumers, and discourage efficiency improvements, while retaliatory trade barriers unfairly undermine the competitiveness of agricultural and other exports in those industries in which developing countries would otherwise have a significant comparative advantages.

Bringing the market to remote, rural areas can bring farmers the information to produce more profitably. For example, mobile phones could be used to do this, helping people in remote areas of the developing world. Farmers receive market information sent directly to their phones.In Ethiopia, for example, remote farmers produce crops that may not bring the best profits. When they sell their products to a local trader, who then sells to another trader, and another, the cost of the food rises before it finally reaches the consumer in large cities. Economist Gabre-Madhin proposes warehouses where farmers could have constant updates of the latest market prices, making the farmer think nationally, not locally. Each warehouse would have an independent neutral party that would test and grade the farmer's harvest, allowing traders in Addis Ababa, and potentially outside Ethiopia, to place bids on food, even if it is unseen. Thus, if the farmer gets five cents in one place he would get three times the price by selling it in another part of the country where there may be a drought.Such schemes, while attractive, again give the lie to the term 'free market.' Gabre-Madhin's plan, for instance, is likely to require government support of some sort, since independent neutral parties can be as hard to come by in Africa as anywhere else in the world. Ultimately, as philosopher Noam Chomsky has argued, the idea of the 'free market' is something of a fantasy, since markets tend to either depend on massive government subsidies of everything from raw materials to transportation or to consist largely of single corporations selling products to their own overseas branches, without those products (or the jobs associated with making them, ever going to citizens of poverty-stricken areas. In effect, this means that the word 'free market' acts as a sort of trick, used to convince people to support government spending that mostly benefits the very wealthy and that they would never otherwise support. It is for this reason that Chomsky has described free market capitalism as "socialism for the rich."

The Global Competitiveness Report, the Ease of Doing Business Index, and the Index of Economic Freedom are annual reports, often used in academic research, ranking the worlds nations on factors argued to increase economic growth and reduce poverty. Again, though, factors that may increase economic growth should neither be confused with factors that increase the freedom of markets nor simply assumed to benefit those living in poverty. This becomes clear with a glance at one of the world's strongest expressions of the 'free market': the United States health-care system, which functions with almost no government oversight, and under which 45 million of the country's 301 million citizens are uninsured.Perhaps not surprisingly, the U.S., long one of the world's greatest proponents of 'free markets' in poverty-stricken countries, itself has one of the worst records on domestic poverty among the industrialized nations, with nearly 16 million of its citizens living in what is termed 'deep poverty': earning half or less of the federal poverty line figure per year.

One theory for reducing poverty suggests that raising tariffs and import substitution leads to greater wealth by protecting the country from the deeper inequalities of what is called free trade. This theory was practiced highly between the 1950s and 1970s, when it appeared to fail to develop wealth. The theory assumes a lack of trade barriers on incoming (often highly subsidized) goods from wealthier countries, considered by some economists a driver of poverty. Most countries have some history of import substitution and direct government protection of and investment in local industries, however, although that history is often troubled and difficulty-ridden. The theory claims that reducing tariff receipts can lower a major source of government revenue & spending, while raising tariffs may improve the terms of trade for the poor.In contrast, a WTO study has shown that in practice often high tariffs lead to a stagnation of economic growth and development and the costs of the tariffs are borne most heavily on the poor.The search for acceptable and appropriate market solutions to the problem of poverty continues, but one thing at least is certain: there are no markets that can be truly described as 'free,' and many of the markets described in this way leave untouched or actually worsen the conditions of poverty. At the very least, many analysts agree, blind faith in the 'free market' must be called into question, prompting re-examination of certain basic values.

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Our World ... Needs Our Help & Saving

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Map of world poverty by country, showing percentage of population living on less than 1 dollar per day 2007/2008

Life expectancy at birth 2007/2008

Life Expectancy at birth (years)

Life expectancy at birth (years) world map including:

1) All 192 United Nations member states.

2) 26 dependent territories - marked with an asterisk (*) or a white minus sign (-).

3) Republic of China - Taiwan.

4) Hong-Kong and Macau - Special Administrative Regions of the People's Republic of China.

5) Occupied Palestinian Territories: West Bank and Gaza Strip.

6) Western Sahara territory.

Gini Coefficient World Human Development Report 2007/2008

A low Gini coefficient indicates more equal income or wealth distribution, while a high Gini coefficient indicates more unequal distribution

Population living below national poverty line 2008

Percentage population undernourished world map 2008

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