Poverty is Not Your Destiny

Causes of poverty Edit Main article: Causes of poverty Causes of poverty is a highly ideologically charged subject, as different causes point to different remedies. Very broadly speaking, the socialist tradition locates the roots of poverty in problems of distribution and the use of the means of production as capital benefiting individuals, and calls for re-distribution of wealth as the solution, whereas the neoliberal school of thought is dedicated the idea that creating conditions for profitable private investment is the solution. Neoliberal think tanks have received extensive funding,[182] and the ability to apply many of their ideas in highly indebted countries in the global South as a condition for receiving emergency loans from the International Monetary Fund. Wealth concentration Edit See also: Economic inequality and Wealth concentration Worlds regions by total wealth (in trillions USD), 2018 Poverty can also be reduced as an improved economic policy is developed by the governing authorities to facilitate a more equitable distribution of the nation's wealth. Oxfam has called for an international movement to end extreme wealth concentration as a significant step towards ameliorating global poverty. The group stated that the $240 billion added to the fortunes of the world's richest billionaires in 2012 was enough to end extreme poverty four times over. Oxfam argues that the "concentration of resources in the hands of the top 1% depresses economic activity and makes life harder for everyone else – particularly those at the bottom of the economic ladder."[183][184] It has been reported that only 1% of the world population controls 50% of the wealth today, and the other 99% is having access to the remaining 50% only, and the gap has sharply increased in the recent past.[185] In 2018, Oxfam reported that the gains of the world's billionaires in 2017, which amounted to $762 billion, was enough to end extreme global poverty seven times over.[186] Global share of wealth by wealth group, Credit Suisse, 2017 José Antonio Ocampo, professor at Columbia University and former finance minister of Colombia, and Magdalena Sepúlveda Carmona, former UN Special Rapporteur on Extreme Poverty and Human Rights, argue that global tax reform is integral to human development and fighting poverty, as corporate tax avoidance has disproportionately impacted those mired in poverty, noting that "the human impact is devastatingly real. When profits are shifted out, the tax revenues from those profits that could be available to fund healthcare, schools, water sanitation and other public goods vanish from the ledger, leaving women and men, boys and girls without pathways to a better future."[187] Raghuram G. Rajan, former governor of the Reserve Bank of India, former chief economist at the International Monetary Fund and professor of finance at the University of Chicago Booth School of Business has blamed the ever-widening gulf between the rich and the poor especially in the US to be one of the main Fault Lines which caused the financial institutions to pump money into subprime mortgages – on political behest, as a palliative and not a remedy, for poverty – causing the financial crisis of 2007–2009. In Rajan's view the main cause of increasing gap between the high income and low income earners, was lack of equal access to high class education for the latter.[188] The existence of inequality is in part due to a set of self-reinforcing behaviors that all together constitute one aspect of the cycle of poverty. These behaviors, in addition to unfavorable, external circumstances, also explain the existence of the Matthew effect, which not only exacerbates existing inequality, but is more likely to make it multigenerational. Widespread, multigenerational poverty is an important contributor to civil unrest and political instabilityPoverty reduction Edit Main article: Poverty reduction See also: Aid and Development aid Various poverty reduction strategies are broadly categorized based on whether they make more of the basic human needs available or whether they increase the disposable income needed to purchase those needs. Some strategies such as building roads can both bring access to various basic needs, such as fertilizer or healthcare from urban areas, as well as increase incomes, by bringing better access to urban markets. Statistics of 2018 shows population living in extreme conditions has declined by more than 1 billion in the last 25 years. As per the report published by the world bank on 19 September 2018 world poverty falls below 750 million.[190] Increasing the supply of basic needs Edit Food and other goods Edit Spreading fertilizer on a field of Rapeseed near Barton-upon-Humber, England Agricultural technologies such as nitrogen fertilizers, pesticides, new seed varieties and new irrigation methods have dramatically reduced food shortages in modern times by boosting yields past previous constraints.[191] Before the Industrial Revolution, poverty had been mostly accepted as inevitable as economies produced little, making wealth scarce.[192] Geoffrey Parker wrote that "In Antwerp and Lyon, two of the largest cities in western Europe, by 1600 three-quarters of the total population were too poor to pay taxes, and therefore likely to need relief in times of crisis."[193] The initial industrial revolution led to high economic growth and eliminated mass absolute poverty in what is now considered the developed world.[194] Mass production of goods in places such as rapidly industrializing China has made what were once considered luxuries, such as vehicles and computers, inexpensive and thus accessible to many who were otherwise too poor to afford them.[195][196] Even with new products, such as better seeds, or greater volumes of them, such as industrial production, the poor still require access to these products. Improving road and transportation infrastructure helps solve this major bottleneck. In Africa, it costs more to move fertilizer from an African seaport 60 miles inland than to ship it from the United States to Africa because of sparse, low-quality roads, leading to fertilizer costs two to six times the world average.[197] Microfranchising models such as door to door distributors who earn commission-based income or Coca-Cola's successful distribution system[198][199] are used to disseminate basic needs to remote areas for below market prices.[200][201] Health care and education Edit Hardwood surgical tables are commonplace in rural Nigerian clinics. See also: Health care system and Primary education Nations do not necessarily need wealth to gain health.[202] For example, Sri Lanka had a maternal mortality rate of 2% in the 1930s, higher than any nation today.[203] It reduced it to 0.5–0.6% in the 1950s and to 0.6% today while spending less each year on maternal health because it learned what worked and what did not.[203] Knowledge on the cost effectiveness of healthcare interventions can be elusive and educational measures have been made to disseminate what works, such as the Copenhagen Consensus.[204] Cheap water filters and promoting hand washing are some of the most cost effective health interventions and can cut deaths from diarrhea and pneumonia.[205][206] Strategies to provide education cost effectively include deworming children, which costs about 50 cents per child per year and reduces non-attendance from anemia, illness and malnutrition, while being only a twenty-fifth as expensive as increasing school attendance by constructing schools.[207] Schoolgirl absenteeism could be cut in half by simply providing free sanitary towels.[208] Fortification with micronutrients was ranked the most cost effective aid strategy by the Copenhagen Consensus.[209] For example, iodised salt costs 2 to 3 cents per person a year while even moderate iodine deficiency in pregnancy shaves off 10 to 15 IQ points.[210] Paying for school meals is argued to be an efficient strategy in increasing school enrollment, reducing absenteeism and increasing student attention.[211] Desirable actions such as enrolling children in school or receiving vaccinations can be encouraged by a form of aid known as conditional cash transfers.[212] In Mexico, for example, dropout rates of 16- to 19-year-olds in rural area dropped by 20% and children gained half an inch in height.[213] Initial fears that the program would encourage families to stay at home rather than work to collect benefits have proven to be unfounded. Instead, there is less excuse for neglectful behavior as, for example, children stopped begging on the streets instead of going to school because it could result in suspension from the program.[213] Removing constraints on government services Edit See also: Political corruption, Tax havens, Transfer mispricing, Developing countries' debt, and Conditionality Local citizens from the Jana bi Village wait their turn to gather goods from the Sons of Iraq (Abna al-Iraq) in a military operation conducted in Yusufiyah, Iraq Government revenue can be diverted away from basic services by corruption.[214][215] Funds from aid and natural resources are often sent by government individuals for money laundering to overseas banks which insist on bank secrecy, instead of spending on the poor.[216] A Global Witness report asked for more action from Western banks as they have proved capable of stanching the flow of funds linked to terrorism.[216] Illicit capital flight from the developing world is estimated at ten times the size of aid it receives and twice the debt service it pays,[217] with one estimate that most of Africa would be developed if the taxes owed were paid.[218] About 60 per cent of illicit capital flight from Africa is from transfer mispricing, where a subsidiary in a developing nation sells to another subsidiary or shell company in a tax haven at an artificially low price to pay less tax.[219] An African Union report estimates that about 30% of sub-Saharan Africa's GDP has been moved to tax havens.[220] Solutions include corporate "country-by-country reporting" where corporations disclose activities in each country and thereby prohibit the use of tax havens where no effective economic activity occurs.[219] Developing countries' debt service to banks and governments from richer countries can constrain government spending on the poor.[221] For example, Zambia spent 40% of its total budget to repay foreign debt, and only 7% for basic state services in 1997.[222] One of the proposed ways to help poor countries has been debt relief. Zambia began offering services, such as free health care even while overwhelming the health care infrastructure, because of savings that resulted from a 2005 round of debt relief.[223] The World Bank and the International Monetary Fund, as primary holders of developing countries' debt, attach structural adjustment conditionalities in return for loans which are generally geared toward loan repayment with austerity measures such as the elimination of state subsidies and the privatization of state services. For example, the World Bank presses poor nations to eliminate subsidies for fertilizer even while many farmers cannot afford them at market prices.[224] In Malawi, almost five million of its 13 million people used to need emergency food aid but after the government changed policy and subsidies for fertilizer and seed were introduced, farmers produced record-breaking corn harvests in 2006 and 2007 as Malawi became a major food exporter.[224] A major proportion of aid from donor nations is tied, mandating that a receiving nation spend on products and expertise originating only from the donor country.[225] US law requires food aid be spent on buying food at home, instead of where the hungry live, and, as a result, half of what is spent is used on transport.[226] Distressed securities funds, also known as vulture funds, buy up the debt of poor nations cheaply and then sue countries for the full value of the debt plus interest which can be ten or 100 times what they paid.[227] They may pursue any companies which do business with their target country to force them to pay to the fund instead.[227] Considerable resources are diverted on costly court cases. For example, a court in Jersey ordered the Democratic Republic of the Congo to pay an American speculator $100 million in 2010.[227] Now, the UK, Isle of Man and Jersey have banned such payments.[227] A family planning placard in Ethiopia. It shows some negative effects of having too many children. Reversing brain drain Edit Main articles: Reverse brain drain and Human capital flight The loss of basic needs providers emigrating from impoverished countries has a damaging effect.[228] As of 2004, there were more Ethiopia-trained doctors living in Chicago than in Ethiopia.[229] Proposals to mitigate the problem include compulsory government service for graduates of public medical and nursing schools[228] and promoting medical tourism so that health care personnel have more incentive to practice in their home countries.[230] It is very easy for Ugandan doctors to emigrate to other countries. It is seen that only 69 percent of the health care jobs were filled in Uganda. Other Ugandan doctors were seeking jobs in other countries leaving inadequate or less skilled doctors to stay in Uganda.[231] Controlling overpopulation Edit Main article: Human overpopulation Map of countries and territories by fertility rate as of 2020 Some argue that overpopulation and lack of access to birth control can lead to population increase to exceed food production and other resources.[232][66][233][234] Better education for both men and women, and more control of their lives, reduces population growth due to family planning.[235] According to United Nations Population Fund (UNFPA), by giving better education to men and women, they can earn money for their lives and can help them to strengthen economic security.[236] Increasing personal income Edit The following are strategies used or proposed to increase personal incomes among the poor. Raising farm incomes is described as the core of the antipoverty effort as three-quarters of the poor today are farmers.[237] Estimates show that growth in the agricultural productivity of small farmers is, on average, at least twice as effective in benefiting the poorest half of a country's population as growth generated in nonagricultural sectors.[238] Income grants Edit Afghan girl begging in Kabul Main articles: Guaranteed minimum income, Social security, and Welfare A gua A poor child walks with one sandal Serving the poor market Edit The concept of business serving the world's poorest four billion or so people has been popular since CK Prahalad introduced the idea through his book Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits in 2004, among many business corporations and business schools.[275][276] Kash Rangan, John Quelch, and other faculty members at the Global Poverty Project at Harvard Business School "believe that in pursuing its own self-interest in opening and expanding the BoP market, business can make a profit while serving the poorest of consumers and contributing to development."[277] According to Rangan "For business, the bulk of emerging markets worldwide is at the bottom of the pyramid so it makes good business sense – not a sense of do-gooding – to go after it.".[277] In their 2013 book, "The Business Solution to Poverty," Paul Polak and Mal Warwick directly addressed the criticism leveled against Prahalad's concept.[278] They noted that big business often failed to create products that actually met the needs and desires of the customers who lived at the bottom-of-the-pyramid. Their answer was that a business that wanted to succeed in that market had to spend time talking to and understanding those customers. Polak had previously promoted this approach in his previous book, "Out of Poverty," that described the work of International Development Enterprises (iDE), which he had formed in 1982.[279] Polak and Warwick provided practical advice: a product needed to affect at least a billion people (i.e., have universal appeal), it had to be able to be delivered to customers living where there was not a FedEx office or even a road, and it had to be "radically affordable" to attract someone who earned less than $2 a day. Creating entrepreneurs Edit Countries by 2018 GDP (nominal) per capita.[280] Rather than encouraging multinational businesses to meet the needs of the poor, some organizations such as iDE, the World Resources Institute, and the United Nations Development Programme began to focus on working directly with helping bottom-of-the-pyramid populations become local, small-scale entrepreneurs.[281] Since so much of this population is engaged in agriculture, these NGOs have addressed market gaps that enable small-scale (i.e., plots less than 2 hectares) farmers to increase their production and find markets for their harvests. This is done by increasing the availability of farming equipment (e.g., pumps, tillers, seeders) and better quality seed and fertilizer, as well as expanding access for training in farming best practices (e.g., crop rotation). Creating entrepreneurs through microfinance can produce unintended outcomes: Some entrepreneurial borrowers become informal intermediaries between microfinance initiatives and poorer micro-entrepreneurs. Those who more easily qualify for microfinance split loans into smaller credit to even poorer borrowers. Informal intermediation ranges from casual intermediaries at the good or benign end of the spectrum to 'loan sharks' at the professional and sometimes criminal end of the spectrum.[282] Criticisms of this approach Edit Milton Friedman argues that the social responsibility of business is to increase its profits only,[283] thus, it needs to be examined whether business in BoP markets is capable of achieving the dual objective of making a profit while serving the poorest of consumers and contributing to development? Erik Simanis has reported that the model has a fatal flaw. According to Erik "Despite achieving healthy penetration rates of 5% to 10% in four test markets, for instance, Procter & Gamble couldn't generate a competitive return on its Pur water-purification powder after launching the product on a large scale in 2001...DuPont ran into similar problems with a venture piloted from 2006 to 2008 in Andhra Pradesh, India, by its subsidiary Solae, a global manufacturer of soy protein ... Because the high costs of doing business among the very poor demand a high contribution per transaction, companies must embrace the reality that high margins and price points aren't just a top-of-the-pyramid phenomenon; they're also a necessity for ensuring sustainable businesses at the bottom of the pyramid."[284] Marc Gunther states that "The bottom-of-the-pyramid (BOP) market leader, arguably, is Unilever ... Its signature BOP product is Pureit, a countertop water-purification system sold in India, Africa and Latin America. It's saving lives, but it's not making money for shareholders."[276] This leaves the ideal of eradicating poverty through profits or with a good business sense – not a sense of do-gooding rather questionable. Others have noted that relying on BoP consumers to choose to purchase items that increase their incomes is naive. Poor consumers may spend their income disproportionately on events or goods and services that offer short-term benefits rather than invest in things that could change their lives in the long-term.[285]Income grants Edit Afghan girl begging in Kabul Main articles: Guaranteed minimum income, Social security, and Welfare A guaranteed minimum income ensures that every citizen will be able to purchase a desired level of basic needs. A basic income (or negative income tax) is a system of social security, that periodically provides each citizen, rich or poor, with a sum of money that is sufficient to live on. Studies of large cash-transfer programs in Ethiopia, Kenya, and Malawi show that the programs can be effective in increasing consumption, schooling, and nutrition, whether they are tied to such conditions or not.[239][240][241] Proponents argue that a basic income is more economically efficient than a minimum wage and unemployment benefits, as the minimum wage effectively imposes a high marginal tax on employers, causing losses in efficiency. In 1968, Paul Samuelson, John Kenneth Galbraith and another 1,200 economists signed a document calling for the US Congress to introduce a system of income guarantees.[242] Winners of the Nobel Prize in Economics, with often diverse political convictions, who support a basic income include Herbert A. Simon,[243] Friedrich Hayek,[244] Robert Solow,[243] Milton Friedman,[245] Jan Tinbergen,[243] James Tobin[246][247][248] and James Meade.[243] Income grants are argued to be vastly more efficient in extending basic needs to the poor than subsidizing supplies whose effectiveness in poverty alleviation is diluted by the non-poor who enjoy the same subsidized prices.[249] With cars and other appliances, the wealthiest 20% of Egypt uses about 93% of the country's fuel subsidies.[250] In some countries, fuel subsidies are a larger part of the budget than health and education.[250][251] A 2008 study concluded that the money spent on in-kind transfers in India in a year could lift all India's poor out of poverty for that year if transferred directly.[252] The primary obstacle argued against direct cash transfers is the impractically for poor countries of such large and direct transfers. In practice, payments determined by complex iris scanning are used by war-torn Democratic Republic of Congo and Afghanistan,[253] while India is phasing out its fuel subsidies in favor of direct transfers.[254] Additionally, in aid models, the famine relief model increasingly used by aid groups calls for giving cash or cash vouchers to the hungry to pay local farmers instead of buying food from donor countries, often required by law, as it wastes money on transport costs.[255][256] Economic freedoms Edit See also: Economic freedom and Red tape Corruption often leads to many civil services being treated by governments as employment agencies to loyal supporters[257] and so it could mean going through 20 procedures, paying $2,696 in fees, and waiting 82 business days to start a business in Bolivia, while in Canada it takes two days, two registration procedures, and $280 to do the same.[258] Such costly barriers favor big firms at the expense of small enterprises, where most jobs are created.[259] Often, businesses have to bribe government officials even for routine activities, which is, in effect, a tax on business.[260] Noted reductions in poverty in recent decades has occurred in China and India mostly as a result of the abandonment of collective farming in China and the ending of the central planning model known as the License Raj in India.[261][262][263] The World Bank concludes that governments and feudal elites extending to the poor the right to the land that they live and use are 'the key to reducing poverty' citing that land rights greatly increase poor people's wealth, in some cases doubling it.[264] Although approaches varied, the World Bank said the key issues were security of tenure and ensuring land transactions costs were low.[264] Greater access to markets brings more income to the poor. Road infrastructure has a direct impact on poverty.[265][266] Additionally, migration from poorer countries resulted in $328 billion sent from richer to poorer countries in 2010, more than double the $120 billion in official aid flows from OECD members. In 2011, India got $52 billion from its diaspora, more than it took in foreign direct investment.[267] Financial services Edit Information and communication technologies for development help to fight poverty See also: Microfinance and Microcredit Microloans, made famous by the Grameen Bank, is where small amounts of money are loaned to farmers or villages, mostly women, who can then obtain physical capital to increase their economic rewards. However, microlending has been criticized for making hyperprofits off the poor even from its founder, Muhammad Yunus,[268] and in India, Arundhati Roy asserts that some 250,000 debt-ridden farmers have been driven to suicide.[269][270][271] There has been significant rise of agriculture and small business that started booming up after the introduction of Grameen Banking especially in the rural areas. While making the foundation of this loan, from 1984 to 1989 loan recovery decreased from 99.4 percent to 96.9 percent.[272] Those in poverty place overwhelming importance on having a safe place to save money, much more so than receiving loans.[273] Additionally, a large part of microfinance loans are spent not on investments but on products that would usually be paid by a checking or savings account.[273] Microsavings are designs to make savings products available for the poor, who make small deposits. Mobile banking utilizes the wide availability of mobile phones to address the problem of the heavy regulation and costly maintenance of saving accounts.[273] This usually involves a network of agents of mostly shopkeepers, instead of bank branches, would take deposits in cash and translate these onto a virtual account on customers' phones. Cash transfers can be done between phones and issued back in cash with a small commission, making remittances safer.[274] Financial services in US Edit In USA there are abundance of payday loan companies that strive to serve those people whose credit scores are much below the standard credit score in order to take an eligible loan. While these companies initially gives money to people who would likely default from traditional loans, many still frown on these loan services due to charging astonishingly high interest rates. Business solutions to poverty Edit See also: Bottom of the pyramid A poor child walks with one sandal Serving the poor market Edit The concept of business serving the world's poorest four billion or so people has been popular since CK Prahalad introduced the idea through his book Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits in 2004, among many business corporations and business schools.[275][276] Kash Rangan, J