challenges in reducing poverty
Challenges in Reducing Poverty
We all keep whining about world poverty, but, if everyone hates it so much, why is it still prevalent in the global economy and why isn't everyone doing something to eradicate it? Well, poverty reduction is not as simple as formulating a 5 year plan to see drastic improvements! Things don't work like that because there are so many factors at play.
$$ Inefficient Growth The lack of a sustainable growth pattern with an upward and fast-increasing trend has also contributed to the inability to reduce poverty significantly and consistently. Growth and poverty are co-related. If poverty does not decrease, any significant economic growth becomes a distant dream. Whereas, if poverty shows a downward trend, economic growth will show a similar magnitude in rise. However, the growth rate of the country may increase irrespective of the same trend in poverty due to jobless recovery. Poverty is also associated with slow growth in income disproportionate with the rising population. $$ Not a National Priority May sound harsh, but it is true. Poverty Reduction may not always be the top most priority of governments. There are already so many economic and political issues that the subject of poverty reduction seems to be pushed behind. The current state of economic affairs under President Obama's administration is an appropriate example. Irrespective of the promises made, it could not overcome the challenges in reducing poverty. The government has always been divided, multitasking between providing health care and education, stabilizing financial markets, creating jobs, developing infrastructure and of course, bringing down poverty. Unsurprisingly, most economies struggle with the problem of tied down funds. As of September 2011, the U.S. Census Bureau released data stating that the poverty in the U.S. prevails at a rate of 15.1%. However, according to the research report Supplemental Poverty Measure that takes a broader approach to determine the poverty rate, the actual figure stands at 16%. $$ Costs Attached For an economy to successfully get rid of poverty, it must bear the cost of providing shelter, food, clothing and job opportunities to the segment of population that is below the poverty line. Also, the cost of provision of education and medical facilities rises. To make up for the funds required for these objectives, the burden is shifted to tax-payers by increasing the cost of education, food, and reducing disposable income, collectively causing economic distress in the long term. $$ More People, More Unemployment It is not an entirely controllable factor because unemployment is dependent on a variety of factors that determine its rate from year to year. When a portion of the population is unemployed, it implies that it may not necessarily have a dependable source of sustenance. In simpler words, there is no financial source to sustain a proper living au courant. Many people are, hence, homeless and hungry. Apart from recession, an economy's unemployment rate also rises when it fails to accommodate the increasing population of workforce as more citizens turn 18 each year. $$ High Food Price Index Food shortage has given rise to the problem of a high food price index. Food prices have significantly increased over the past few decades which has compelled consumers to shell out a lot more money for the same food that they consumed over 30 years ago. This may be attributed to the rising standard and cost of living. However, someone who is already struggling to make ends meet is further burdened by the increasing cost to satiate his appetite. Governments try to manage such a situation by releasing food stamps, making food available at cheap rates, and other subsidies to such households. This, however, takes away a major share of funds. Unfortunately, farmers have to cope with reduced earnings and it may drive them out of employment, further increasing poverty. $$ Lack of New Businesses If more people become consumers instead of producers, there will be a lack of supply to fulfill demand as well as lack of job opportunities to increase employment. It is impossible for the government to generate enough jobs annually to meet the employment requirements. To solve this problem, there is a need for more entrepreneurial start-ups that also employ the illiterate, uneducated or less-educated. If the difference between the number of ventures that are established is not significantly higher than the number of ventures that wind up each year, there will be a lack of sufficient job positions in the economy. $$ Reduction in Government Spending Cuts in government expenditure mean that there are fewer funds available for public welfare. Political instability arisen from such unfavorable economic events further discourages investors. Investments are the lifeline for short-term flow of capital. This prompts the government to obtain help through external borrowings. Unsurprisingly, the result is that the anti-poverty plan takes us back to square one. $$ Corruption Apart from the above factors posing as a challenge against poverty reduction, there is another crucial aspect that prevents economies from fully eradicating poverty - corruption. In fact, this is a taboo subject that often doesn't get the attention it deserves in the anti-poverty war. Greed and exploitation lead to unequal income distribution and poor countries are the worst affected by it adding insult to injury. Due to corruption, funds allotted by the government trickle down to the masses to mere tokens of what they were (overlooked in the Keynesian theory) which is why the funds employed for poverty reduction are inept and crippled irrespective of their proportions. This creates an unhealthy environment for businesses to thrive and corrodes the faith of the people in their own legal system. Seems like the national custodians of law are living in the Keynesian era. |