Main article: Poverty reduction
In politics, the fight against poverty is usually regarded as a social goal and many governments have institutions or departments dedicated to tackling poverty. One of the main debates in the field of poverty reduction is around the question of how actively the state should manage the economy and provide public services to tackle the problem of poverty. In the nineties, international development policies focused on a package of measures known and criticized as the "Washington Consensus" which involved reducing the scope of state activities, and reducing state intervention in the economy, reducing trade barriers and opening economies to foreign investment. Vigorous debate over these issues continues, and most poverty reduction programs attempt to increase both the competitiveness of the economy and the viability of the state.
[edit] Economic growth
World GDP per capita rapidly increased beginning with the Industrial Revolution.
The anti-poverty strategy of the World Bank depends heavily on reducing poverty through the promotion of economic growth.[103]. The World Bank argues that an overview of many studies shows that:
• Growth is fundamental for poverty reduction, and in principle growth as such does not affect inequality.
• Growth accompanied by progressive distributional change is better than growth alone.
• High initial income inequality is a brake on poverty reduction.
• Poverty itself is also likely to be a barrier for poverty reduction; and wealth inequality seems to predict lower future growth rates.[104]
[edit] Free market
Although the term 'free market' is essentially a misnomer, since all markets (regardless of whether they are national or domestic) function only via shared public infrastructure and are, accordingly, regulated by governments in a wide variety of ways, the rhetoric of 'free markets' and 'free enterprise' has won out in the public media over time. What are frequently described as free market reforms represent one strategy for reducing poverty, though not a strategy without its problems. For example, while the 20th century has seen noted reductions of poverty in India and China, both of those countries have also been sites of some of the century's most horrific corporate-sponsored human rights abuses. So, while hundreds of millions of people in the two countries 'grew out' of poverty (depending on how one measures poverty), mostly as a result of the abandonment of collective farming in China and the cutting of government red tape in India,
[105] tragedies like the Bhopal disaster[106] and massive deforestation throughout much of India[107] have more than tarnished such successes. Additionally, in China, the end of collective farming could not, properly speaking, be described as a move toward a 'free market,' since land ownership remained a question of state districting and management.[108] So, while shifts in market structure and values have definitely played a role in fostering economic growth in India and China, that growth has often come with serious, even shocking human and environmental costs.
Developing countries face a range of obstacles to trading competitively on international markets. Almost half of the budget of the European Union, for example, is directed to agricultural subsidies, which
primarily benefit large multinational agribusinesses who form a powerful lobby.[109] Japan gave 47 billion dollars in 2005 in subsidies to its agricultural sector,[110] nearly four times the amount it gave in total foreign aid.[111] The US gives 3.9 billion dollars each year in subsidies to its cotton sector, including 25,000 growers, three times more in subsidies than the entire USAID budget for Africa, although America contributes a sum far larger than the 3.9 billion dollars through other agencies.[112] Critics argue that agricultural subsidies in the developed world drain taxation revenue, increase the end-prices paid by consumers, and discourage efficiency improvements, while retaliatory trade barriers unfairly undermine the competitiveness of agricultural and other exports in those industries in which developing countries would otherwise have a significant comparative advantages.[37]
Bringing the market to remote, rural areas can bring farmers the information to produce more profitably.
For example, mobile phones could be used to do this, helping people in remote areas of the developing world. Farmers receive market information sent directly to their phones.[113] In Ethiopia, for example, remote farmers produce crops that may not bring the best profits. When they sell their products to a local trader, who then sells to another trader, and another, the cost of the food rises before it finally reaches the consumer in large cities. Economist Gabre-Madhin proposes warehouses where farmers could have constant updates of the latest market prices, making the farmer think nationally, not locally. Each warehouse would have an independent neutral party that would test and grade the farmer's harvest,
allowing traders in Addis Ababa, and potentially outside Ethiopia, to place bids on food, even if it is unseen. Thus, if the farmer gets five cents in one place he would get three times the price by selling it in another part of the country where there may be a drought.[114] Such schemes, while attractive, again give the lie to the term 'free market.' Gabre-Madhin's plan, for instance, is likely to require government support of some sort, since independent neutral parties can be as hard to come by in Africa as anywhere else in the world. Ultimately, as philosopher Noam Chomsky has argued, the idea of the 'free market' is something of a fantasy, since markets tend to either depend on massive government subsidies of everything from raw materials to transportation[115] or to consist largely of single corporations selling products to their own overseas branches, without those products (or the jobs associated with making them, ever going to citizens of poverty-stricken areas. In effect, this means that the word 'free market' acts as a sort of trick, used to convince people to support government spending that mostly benefits the very wealthy and that they would never otherwise support. It is for this reason that Chomsky has described free market capitalism as "socialism for the rich."[115]
The Global Competitiveness Report, the Ease of Doing Business Index, and the Index of Economic
Freedom are annual reports, often used in academic research, ranking the worlds nations on factors argued to increase economic growth and reduce poverty. Again, though, factors that may increase economic growth should neither be confused with factors that increase the freedom of markets nor simply assumed to benefit those living in poverty. This becomes clear with a glance at one of the world's strongest expressions of the 'free market': the United States health-care system, which functions with almost no government oversight, and under which 45 million of the country's 301 million citizens are uninsured.[116]
Perhaps not surprisingly, the U.S., long one of the world's greatest proponents of 'free markets' in poverty-stricken countries, itself has one of the worst records on domestic poverty among the industrialized nations, with nearly 16 million of its citizens living in what is termed 'deep poverty': earning half or less of the federal poverty line figure per year.[116]
One theory for reducing poverty suggests that raising tariffs and import substitution leads to greater wealth by protecting the country from the deeper inequalities of what is called free trade. This theory was practiced highly between the 1950s and 1970s, when it appeared to fail to develop wealth. The theory assumes a lack of trade barriers on incoming (often highly subsidized) goods from wealthier countries, considered by some economists a driver of poverty[citation needed]. Most countries have some history of import substitution and direct government protection of and investment in local industries, however, although that history is often troubled and difficulty-ridden. The theory claims that reducing tariff receipts can lower a major source of government revenue & spending, while raising tariffs may improve the terms of trade for the poor.[117] In contrast, a WTO study has shown that in practice often high tariffs lead to a stagnation of economic growth and development and the costs of the tariffs are borne most heavily on the poor.[118] The search for acceptable and appropriate market solutions to the problem of poverty continues, but one thing at least is certain: there are no markets that can be truly described as 'free,' and many of the markets described in this way leave untouched or actually worsen the conditions of poverty. At the very least, many analysts agree, blind faith in the 'free market' must be called into question, prompting re-examination of certain basic values.[119]]
[edit] Fair trade
Further information: Fair trade
Another approach to alleviating poverty is to implement Fair Trade which advocates the payment of a fair price as well as social and environmental standards in areas related to the production of goods.
[edit] Direct aid
• The government can directly help those in need through cash transfers as a short term expedient.
This has been applied with mixed results in most Western societies during the 20th century in what became known as the welfare state. Especially for those most at risk, such as the elderly and people with disabilities.
• Private charity. Systems to encourage direct transfers to the poor by citizens organized into voluntary or not-for-profit groupings are often encouraged by the state through charitable trusts and tax deduction arrangements. International Remittances sent by migrant workers to their families in developing countries provide an important source of income. This form of direct aid is around twice the size of official aid related inflows.
[edit] Development aid
Most developed nations give development aid to developing countries. The UN target for development aid is 0.7% of GDP; currently only a few nations achieve this. Some think tanks and NGOs have argued that Western monetary aid often only serves to increase poverty and social inequality, either because it is conditioned with the implementation of harmful economic policies in the recipient countries [120], or because it's tied with the importing of products from the donor country over cheaper alternatives,[121] or because foreign aid is seen to be serving the interests of the donor more than the recipient.[122] Critics also argue that some of the foreign aid is stolen by corrupt governments and officials, and that higher aid levels erode the quality of governance. Policy becomes much more oriented toward what will get more aid money than it does towards meeting the needs of the people.[123] Victor Bout, one of the worlds most notorious arms dealers, told the New York Times how he saw firsthand in Angola, Congo and elsewhere
"how Western donations to impoverished countries lead to the destruction of social and ecological balance, mutual resentment and eventually war."[124] "Once countries give money, they control you." he says.
Supporters argue that these problems may be solved with better auditing of how the aid is used.[123] Aid from non-governmental organizations may be more effective than governmental aid; this may be because it is better at reaching the poor and better controlled at the grassroots level.[125] As a point of comparison, the annual world military spending is over $1 trillion.[126]
[edit] Improving the environment and access of the poor
Numerous methods have been adduced to upgrade the situation of those in poverty, some contradictory to each other. Some of these mechanisms are:
• Subsidized housing development.
• Education, especially that directed at assisting the poor to produce food in underdeveloped countries.
• Family planning to limit the numbers born into poverty and allow family incomes to better cover the existing family.
• Subsidized health care.
• Assistance in finding employment.
• Subsidized employment (see also Workfare).
• Encouragement of political participation and community organizing.
• Implementation of fair property rights laws.
• Reduction of regulatory burden and bureaucratic oversight.
• Reduction of taxation on income and capital.
• Reduction of government spending, including a reduction in borrowing and printing money.
[edit] Millennium Development Goals
Eradication of extreme poverty and hunger is the first Millennium Development Goal. One of the targets within this goal is the halving of the proportion of people living in extreme poverty by 2015. In addition to broader approaches, the Sachs Report (for the UN Millennium Project) [127] proposes a series of "quick wins", approaches identified by development experts which would cost relatively little but could have a major constructive effect on world poverty. The quick wins are:
• Directly assisting local entrepreneurs to grow their businesses and create jobs.
• Access to information on sexual and reproductive health.
• Action against domestic violence.
• Appointing government scientific advisors in every country.
• Deworming school children in affected areas.
• Drugs for AIDS, tuberculosis, and malaria.
• Eliminating school fees.
• Ending user fees for basic health care in developing countries.
• Free school meals for schoolchildren.
• Legislation for women’s rights, including rights to property.
• Planting trees.
• Providing soil nutrients to farmers in sub-Saharan Africa.
• Providing mosquito nets.
• Access to electricity , water and sanitation.
• Supporting breast-feeding.
• Training programs for community health in rural areas.
• Upgrading slums, and providing land for public housing.
[edit] Other approaches
The Copenhagen Consensus was an attempt to rank global welfare improvement programs in terms of their urgency and cost-effectiveness; Direct Aid to combat HIV infection was determined to be the top priority.
Some argue for a radical change of the economic system. There are several proposals for a fundamental restructuring of existing economic relations, and many of their supporters argue that their ideas would reduce or even eliminate poverty entirely if they were implemented. Such proposals have been put forward by both left-wing and right-wing groups: socialism, communism, anarchism, libertarianism, binary economics and participatory economics, among others.
Proponents of such taxes argue that absolute or relative poverty can be reduced by progressive taxation, a wealth tax, and an inheritance tax.
The IMF and member countries have produced Poverty Reduction Strategy papers or PRSPs.[128]
In his book The End of Poverty (ISBN 1594200459),[129] a prominent economist named Jeffrey Sachs laid out a plan to eradicate global poverty by the year 2025. Following his recommendations, international organizations are working to help eradicate poverty worldwide with intervention in the areas of housing, food, education, basic health, agricultural inputs, safe drinking water, transportation and communications.
[130]