Open Future Image Poverty Elimination
Muhammad Yunus, economist, creator of the Grammeen Bank, says that, "Poverty is created. Poverty is caused by failure at the conceptual level, rather than any lack of capability on the part of people. ... The poor are like bonsai trees, which possess all the qualities of a larger tree, but are planted in too-small pots."

Why are People Poor?

There is a printable version of this page here.

The Poor are Disconnected

Poverty is caused by a network of disconnection. The causes are complex. Personal poverty probably has roots in family life, in the attitudes and values that the family pass on to their children. These values might be empowering or they may be toxic in the life of the young person who adopts them. If you have attitudes and a lifestyle that makes you stand out in a negative way, you may find it difficult to win acceptance in the mainstream of society. For instance if one lives in the United Kingdom, but strongly carries the values of a small tribal village in Pakistan, one might struggle to find a place in the new society. In the course of a life, one might become isolated from your family or social group for some reason. Perhaps a failure in education, maybe ill health or alcoholism, or a term in prison. Once you're out of the loop, finding your social path back into a helpful social circle might be very difficult. People who are seen to be active members of a community, normally find a way to earn a living in that community.

Of course there is an argument that most of the influences above are not about personal and family values alone, that there is a systematic process that is intended to produce an underclass, and to reinforce the advantages of the upper class.

Loss of the Common

In many societies the basics of life are provided by family lands and by the village common. One measure of your wealth is how seldom you have to depend on a market to live your life. In most places food is cheap and there is quite a lot of free food available. When that is not the case, food at the market can cost more money than people can easily earn. This is worst if water also has to be purchased. If the forest or a large natural common exists people can survive, but this land has today frequently been turned into farmland, and if the farm harvest (often a monocrop) fails because of flood, or drought, the consequence of lack of resilience is no food.

www link PovertyCure is an international network of organizations and individuals seeking to ground our common battle against global poverty in a proper understanding of the human person and society

Accepting Colonisation

Interestingly, when poor countries were controlled as a colony by a foreign power, one of the techniques of governance was to force the local people into the monetary system of the coloniser. The British for instance in Africa used a hut tax for this purpose. The tax doesn't have to be large. The purpose was to force the locals to accept the power of the coloniser, the power to impose the tax and the power to collect it. That leads on immediately to exploitation by encouraging mining, or by cash crop production. What it means to be "wealthy" has suddenly changed, now being wealthy is having the money of the coloniser. Some of the locals become the corrupt agents of the colonial master. This is a trap many countries are still in. The coloniser might have gone, but the corrupt local officials are still there.

Powerless Nations

The problem of disconnection also applies to whole nations. www link The poorest nations of the world are out of the loop. They don't have access to the sources of wealth, even if the natural wealth of the country is vast. This might cause us to wonder what the sources of wealth really are. In the near future we are likely to see tens of thousands of people displaced by food shortages and water shortages. With climate stress causing flood or drought, on a regular basis, famine can be expected, followed by disease outbreaks. Desperation is likely to lead to conflict. We can see this situation in www link Somalia today. Massive human migrations may become common.

Of course there is another possible cause of massive human migrations. www link Rising sea levels. The projection for that is half a meter in the next 100 years, with a rider, that this number is probably too low.

Empowering Women

One key to solving these problems in poor countries is to www link educate and empower women. Most of the real farmers in the world are women. If they have property right, access to finance, and access to markets, they are much less vulnerable. Farming needs to be economically and environmentally sustainable, and it also needs to support the wellbeing of the family. www link In India farmers are committing suicide in large numbers because the system is destroying them. In the USA the family farm has largely disappeared. France has used agricultural subsidies to maintain family farms. That's a good objective achieve by a faulty method.

Failure of Governance

Often local people are disempowered by ineffective and corrupt local government. Poor provision of roads, mismanagement of water, failure to prevent gangs from extorting funds from local merchants. There is often a lack of transparency in how decisions are made and how funds are used. There have been calls for public hearings and social audits in India, and of course Brazil is well known for the development of participatory budgeting.

Five Forms of Capital

One way to think about the causes of poverty is to study the five forms of capital. To be independent and prosperous a nation or a person need access to all of these forms of capital. The five forms of capital are:
spacer Built capital: Palau seeks to populate a deserted capital.
spacer Natural capital: Joshua Bishop - natural resource and environmental economist.
spacer Human capital Educating Human Capital for the future.
spacer Social capital: Michael Fairbanks on Cultural Capital.
spacerand Financial capital: Peter Schiff; "Irresponsible money printing is damaging the dollar."
If one earns a living by working in a job, as most people do, your employer is adding natural capital, built capital, social capital and financial capital, to your human capital. This increases your productivity, and hopefully the employers profits and your own income. If you are self employed you need to find your own sources of all those capital resources.

This Transition Isn't Understood

Child in DumpDeveloping countries need time and support to www link transition to sustainable development. When your main resource is human labour it's critical that the labour is well used. Built Capital has to be created, and natural capital preserved. Women and young people are the most vulnerable to lack of resources and inability to sustain themselves. There needs to be an active programme to include young people in the society and to prevent social problems that lead to the exclusion of women. This will help develop social capital. Better education and long lasting education is an important tool. That's a development of human capital.

In relatively rich countries like the USA, people are very confused about what causes poverty. Most people think that the reasons are mostly personal and that systematic reasons, like racism, exist but are not a major cause of poverty. I don't think there is good understanding of what is happening. What people say about individuals may be right in many cases. However, there is also a huge systematic change, not just in the USA, but in all of the developed world, where wages have become static and access to full time jobs has declined. Part time work, short term contract work, and low wage work in the service sector is growing. Since this process is happening in many counties it's clearly systematic and not about individuals. Of course in China, Thailand, Rwanda, Brazil and India, new jobs are being created, and wages, although very low, are rising. That's also systematic.

Confusion About the Causes of Poverty

The NPR/Kaiser/Kennedy School Survey about Poverty in America This is an old survey, (2001) but it illustrates very well www link the confusion of people in the USA, about the causes of poverty. The notes on this project say: "The results of this project are based on a nationwide telephone survey conducted in English and Spanish between January 4 and February 27, 2001, among a random representative sample of 1,952 respondents 18 years of age and older. There was an oversample of 546 respondents who were identified as having an income of less than 200% of the federal poverty level. Overall the sample included 294 respondents having an income of less than 100% of the federal poverty level, 613 having an income of between 100% and 200% of the federal poverty level, and 1,045 with an income above 200% of the federal poverty level. The results for all groups are weighted to reflect the actual distribution in the nation."

Open Future™ values comments supplied by our readers. Add your voice here.