Poverty has always been the global problem. It is the main economic question and the objective of the study of economics since economics is the social science of the allocation of scarce resources to put it shortly. Poverty is the living condition in which the basic necessities (the minimum required quantities of the basic good mix for normal nourishment and protection for the biological body) in order to survive are not met regularly. Poverty has been the culprit of many world conflicts and revolutions. With poverty and poor living conditions, there will always be social unrest (crimes, strikes and insurgencies). However, in order to get the solution, we need to know its causes. There are 3 basic causes of poverty: Unemployment (and/or underemployment), Low Productivity and Inequitable Income Distribution. In this economic system we have currently, we live to work because we work to live. Subsistence farming/hunting is a thing of the past for most of us.
Since systems of ownership and jurisdiction have been structured in our society at the same time not everyone has the physical and human capital to produce food, we buy food instead. Since nothing is free in this world (not even when you play in your own backyard since you spend time and you incur an opportunity loss for not having to do something more productive), we have to work our butts off to earn the money that will give us the purchasing power. If you are in a place where there are low job opportunities, then you are in a big probability for poverty. It could be because the economy lacks businesses that could trigger employments. This is why investments are very important to the eradication of poverty. High population growth is also the culprit. When the speed of having more people (birth rate) exceeds the speed of the growth of businesses, then only a few privileged get to have the demand of few businesses.
Some countries have low unemployment rate but they still have high poverty incidence. This could be because of low productivity. When a country is more agricultural than industrial, most of the labor force are engaged in low productivity jobs. Low productivity jobs do not require higher level of skills and training. They are more experiential which could be easily taught with experience and guidance from an elder/mentor. Because of this they have lower expected returns or wages. Low productivity jobs also have lower value added in the total output of the economy. This simply means that the output of low productivity jobs have the least multiplier effect in contributing to the growth of the economy. If a country has higher productivity, not only that it benefits the workers, it also benefits the economy as a whole.
Developed countries are highly productive compared to the rest considering the high level of skill, talent and technology. However, poverty still exists. This is because of inequitable income distribution. No matter how developed or successful a country is, they must device a plan to restructure the present system where the rich get richer and the poor get poorer.
If you can observe, most underdeveloped countries are agricultural in nature. It has become a tradition, something that was passed on from many generations. This gave many of them a sense of pride not to move ahead from the old ways. Because most of them if not all live in rural areas, there is little recreation especially at night when there is no electricity. This gave them the most probable condition to try for babies. They always believe that with more children, they will have more workforce to help them with the farming; thus, giving them hope to progress. Some also believe that with more children, there is a higher probability for talented kids that could help them progress. Most people in the rural areas also have little access to health services that could give them family planning services. They are stuck in this sink hole which continues to worsen especially when they are reluctant to technological advancements.
To get these people out of the agricultural trap, the government must device a better agrarian reform, a better agrarian system that will empower farmers by giving them ownership of their land and opportunities to loan, have access to support systems and engage in entrepreneurial activities. By this way, the agricultural sector will be have more incentive to produce more; thus, increasing productivity which leads to higher returns. With a growing agricultural or resource sector, some of the farmers may now have the opportunity to venture into manufacturing of their agricultural outputs. These are the building blocks of industrialization which were accomplished by most of the developed countries today.
This high population hinders the possibility of better education since most of the children work in their early years and neglect their studies because they are living in survival. With higher population, the government funds for education are not sufficient to cover the majority. If they want to have more educated in the population, they sacrifice quality. The underdeveloped country must find a way to stabilize the high population growth and then get most of the youth to formal schooling.
Governments must invest more in education and upgrade its quality to produce more highly skilled and highly productive workforce. However, this highly productive workforce will be of no use without job opportunities. This is why governments put emphasis on job creation. A good economic environment stimulates job creation and that is to create conditions to attract investments (local or foreign). Macroeconomic stability and political stability are key. Political stability includes the low incidence of graft and corruption. Most poor countries are among the most corrupt list. This takes serious fiscal and monetary policy adjustments.
When a lot of people progress, some are still left behind. To prevent this inequitable distribution of wealth, the government must find ways to improve tax collection (progressive taxation) that will be most equitable to all income groups. Efficiency in tax collection (with the help of computer systems) must be improved to avoid abusive tax evaders who get away with their obligations. A better way to empower the lower income group and to bring the income gap closer is to promote microfinancing, technical and entrepreneurial endeavors. More loan opportunities and cooperatives for micro businesses will encourage the poor to engage in business.
The causes are all inter connected; thus, the solutions are also interconnected which should be dealt simultaneously. But this is no easy task. Many factors make the poker table more unpredictable. In the human world. there is always uncertainty. Wars and conflict because of social differences make it more difficult for a global initiative to combat poverty. The millennium development goals are too optimistic considering the present situation. It's hard to think about the possibility to at least significantly decrease the poverty incidence by at least 10% knowing that people are non satiated by nature. Even today, there still isn't a bold move to change things around because many people want to protect their political and economic interest before thinking of the welfare of others. Probably most of the renowned non profit organizations we know today might have their own motives which they cover with acts of charity. There is always some price to pay because nothing is free in this world.
Our simple needs and wants may also ruin the needs and wants of others. There is always an opposite reaction. Diamonds have always been the dream luxury good. There is high demand for these all over the world. What we do not know is that this demand fuels conflict in Sierra Leone. Because of our need to have a diamond ring for an engagement ring, we were able to encourage rebels to force farmers into hard labor for diamond hunting. This exploited the diamond market to finance their cause for control in their country. Many people died in this conflict in the expense of our hopes of having the perfect diamond ring sitting by the shop window.
Moreover, in the presence of climate change, conditions become harsher to stabilize economic growth. Dry spells hinder crop production. Earthquakes destroy infrastructure. When the economy becomes unstable, many people suffer.
There are many economics models to eradicate poverty however, the solution is still not clear. With ongoing issues of war, religion, race, discrimination, can we still work together to make the millenium goal (halving poverty incidence) by 2015? If we set aside our differences and allow transparency, will this be enough to stop poverty? Or is poverty a natural thing in the human world that should happen in order to negate prosperity? Is this the fate of the human race that we have to accept?
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