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Poverty is the state for the majority of the world’s people and nations. The reasons for poverty are various. The people might be lazy, made poor decisions; their own government might have pursued policies that actually harmed successful development. Such causes of poverty and inequality are no doubt real. But often less discussed are deeper and more global causes of poverty.

Behind the increasing interconnectedness promised by globalization, are global decisions, policies, and practices. These are typically influenced, driven, or formulated by the rich and powerful. These can be leaders of rich countries or other global actors such as multinational corporations, institutions, and influential people.

In the face of such enormous external influence, the governments of poor nations and their people are often powerless. As a result, in the global context, a few get wealthy while the majority struggle.

Some people claim that some countries are rich because of abundant natural resources. That’s absolute nonsense! Africa and South America are probably the richest continents in natural resources, but are home to some of the world’s poorest people. Countries like England, Japan and Hong Kong are poor in natural resources, but their people are among the world’s wealthiest. Hong Kong even has to import its food and water.

The reason some countries are rich while others are poor is best explained by the amount of economic freedom its peoples enjoy and the extent of government control over economic matters. Don’t make the mistake of equating economic freedom with democracy. After all, India, politically, is a democracy, but economically it is mostly unfree and poor, ranking 104th in economic freedom

To help our fellow man around the world, we must convince him to create the institutional infrastructure for wealth creation. Foreign aid, International Monetary Fund bailouts and other handouts are not substitutes. They just make political survival possible for the elite whose self-serving policies keep a nation poor. Except for immediate disaster relief, foreign aid is probably the worst thing the West can do for poor countries.

The reality unfortunately is that the gap between the rich and poor is widening. For example:

  • About 0.13% of the world’s population controlled 25% of the world’s assets in 2004.
  • 20% of the world’s population consumes 86% of the world’s goods while 80% of humanity gets just the remainder 14%.

Inequality and Health

A Canadian study also suggests that the wealthiest nations do not have the healthiest people; instead, it is countries with the smallest economic gap between the rich and poor.

Poverty has also been described as the number one health problem for many poor nations as they do not have the resources to meet the growing needs.

But poverty is not restricted just to developing countries. Industrialized nations are also seeing a sharp increase in poverty. While the current form of globalization is resulting in additional wealth, the disparities are sharp. Less people are turning out to be benefiting while an increasing number are left behind.

World Hunger and Poverty

People are hungry not because of lack of availability of food, or “over” population, but because they are too poor to afford the food. Politics and economic conditions have led to poverty and dependency around the world. Addressing world hunger therefore implies addressing world poverty as well. If food production is further increased and provided to more people while the underlying causes of poverty are not addressed, hunger will still continue because people will not be able to purchase food. Last updated Saturday, March 04, 2006

Food Dumping [Aid] Maintains Poverty.

Even non-emergency food aid, which seems a noble cause, is destructive, as it under-sells local farmers and can ultimately affect the entire economy of a poor nation. If the poorer nations are not given the sufficient means to produce their own food and other items then poverty and dependency may continue. In this section you will also find a chapter from a book which describes this situation in detail and looks at the myth that “more US aid will help the hungry” as the chapter is titled.

We often hear leaders from rich countries telling poor countries that aid and loans will only be given when they show they are stamping out corruption. While that definitely needs to happen, the rich countries themselves are often active in the largest forms of corruption in those poor countries, and many economic policies they prescribe have exacerbated the problem. Corruption in developing countries definitely must be high on the priority list, but so too must it be on the priority list of rich countries.

But poverty is not restricted just to developing countries. Industrialized nations are also seeing a sharp increase in poverty. While the current form of globalization is resulting in additional wealth, the disparities are sharp. Less people are turning out to be benefiting while an increasing number are left behind.

Even in places such as Europe and USA, poor people still do not seem to get enough attention or resources to help alleviate their problems. For example, consider Britain:

  • Even though Britain is one of the most affluent members of the European Union (EU), a report shows that UK is the worst place in Europe to be growing up if you are poor, as more children are likely to be born in to poverty there, compared to elsewhere in the EU.
  • The UK National Office of Statistics also shows that disparities between rich and poor continue to grow in UK, as reported by a UK newspaper, The Independent, April 2000.
  • Priorities of the Labour Party government have often been questioned (as with priorities of any party) but highlighted by how at the turn of the century, some 150,000 people were homeless in Britain, yet the government helped build the Millennium Dome, that cost over a billion US dollars.
  • Andrew Simms, policy director of the New Economics Foundation in an article mentioned further above about inequality notes that

Crime and unhappiness stalk unequal societies. In the UK the bottom 50% of the population now owns only 1% of the wealth: in 1976 they owned 12%. Our economic system’s incentive structure, instead of “trickle-down”, is causing a “flood-up” of resources from the poor to the rich. Inequality leads to instability, the last thing the country or world needs right now.

Even the former hardline conservative head of the International Monetary Fund, Michel Camdessus, has come to the conclusion that “the widening gaps between rich and poor within nations” is “morally outrageous, economically wasteful and potentially socially explosive”.

As another example, the U.S. is worth looking at as well.

  • It may be surprising to most people to realize that USA, the wealthiest nation on Earth, has the widest gap between rich and poor of any industrialized nation, and disparities continue to grow. And inequality within the nation is quite sharp. United For a Fair Economy reported that for 1998 almost 70% of the wealth was in the hand of the top 10%. In another report, they mention that the gap has widened in recent decades. “In 1989, the United States had 66 billionaires and 31.5 million people living below the official poverty line. A decade later, the United States has 268 billionaires and 34.5 million people living below the poverty line-about $13,000 for a three-person family.”
  • Even during the “booming economy” (for some in society, not all) in the late 1990s and early 2000, there was an increasing gap between the rich and poor. Even into 2002, fighting poverty appears not to have been a major election campaign issue as with recent previous election campaigns.
  • While health and education are key to any economy or nation to grow and be strong, both of these suffer issues of access, equality and pressure to cut back (including elsewhere around the world as discussed in the structural adjustment part of this site).
    • For example, as a summary of a report titled Economic Apartheid in America mentions, “that the United States is the only industrialised nation that ‘views health care as a privilege, not a basic human right.’”. (Unfortunately the report itself not available on the Internet, but is produced by United for a Fair Economy where you can see many extracts and similar reports.)
    • In addition, as good education is linked to a strong economy, Business Week reports (February 14, 2002) on a study that analyses OECD data from 1994 to 1998, and summarizes that “the literacy of American adults ranks 10th out of 17 industrialized countries.” In addition, the issue of inequality was highlighted: “More troubling, the U.S. has the largest gap between highly and poorly educated adults, with immigrants and minorities making up the largest chunk of those at the bottom.” While Business Week concentrates on the U.S. they also point out that “Despite the mediocre U.S. ranking, it still beat out most of its major trading partners except Germany, including France, Britain, and Italy. (Japan didn’t participate [in the study].)”

And it isn’t in just these two industrialized nations that these problems persist. A Guardian news report, for example, shows that certain types of poverty in various European cities can be regarded as worse than in some other parts of the world which one would not normally think would compare with Europe, such as India.

  • Half the world — nearly three billion people — live on less than two dollars a day.
  • The GDP (Gross Domestic Product) of the poorest 48 nations (i.e. a quarter of the world’s countries) is less than the wealth of the world’s three richest people combined.
  • Nearly a billion people entered the 21st century unable to read a book or sign their names.
  • Less than one per cent of what the world spent every year on weapons was needed to put every child into school by the year 2000 and yet it didn’t happen.
  • 1 billion children live in poverty (1 in 2 children in the world). 640 million live without adequate shelter, 400 million have no access to safe water, 270 million have no access to health services. 10.6 million died in 2003 before they reached the age of 5 (or roughly 29,000 children per day).

Inequality is increasing around the world while the world appears to globalize. Even the wealthiest nation has the largest gap between rich and poor compared to other developed nations. In many cases, international politics and various interests have led to a diversion of available resources from domestic needs to western markets. Historically, politics and power play by the elite leaders and rulers have increased poverty and dependency. These have often manifested themselves in wars, hot and cold, which have often been trade and resource-related. Mercantilist practices, while presented as free trade, still happen today. Poverty is therefore not just an economic issue, it is also an issue of political economics.