Trading Away Poverty

29 December 2007

In a New York Times letter-to-the-editor entitled Trading Away Poverty, Ignacio Sosa writes that free markets and trade can do more to fight poverty than donations to large organizations such as the World Bank.

I agree completely. Of course, we can both trade with and donate to poor communities. The two methods do not exclude each other.

Nonetheless, large donations do not usually help people or communities become self-sufficient. Donations often only provide temporary relief to the symptoms of poverty, and they can undermine local markets and increase dependency. To permanently escape poverty, poor people and poor communities need to develop economically so that they can become self-sufficient.

For example, the United States could do more to relieve Mexican poverty by reducing border restrictions. This would allow workers from the labor-intensive country of Mexico to immigrate to the United States, and investors from the capital-intensive country of the United States to invest in Mexico’s labor-intensive economy. This would create a win-win situation for both countries, in that each economy would get what it demands by voluntarily trading away what it has in excess.

Truly free markets allow for mutually beneficial agreements and trades, which leads to economic development and reductions in poverty.

What do you think? You can discuss this post and free trade’s relationship to poverty in this thread at the World Hunger and Poverty Forums. It is completely free, and all viewpoints are welcome.

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Many parents could provide their children with much better lives. These parents could create an enviornment more conducive to personal success for their child. Many of these parents live in poverty, and thus force their children to grow up in poverty.

Children who grow up in poverty have a much greater chance of ending up in poverty. We call that the poverty trap. These children go to lower quality schools. They lack good role models. They sometimes have to quit school to take care of their poor families. They grow up around violence, drugs, and other horrors. Born and raised somewhere else, these same children would not end up poor.

Poverty-stricken parents who let themselves fall into poverty and do not try to escape poverty have sentenced their children to a life of struggle that will likely include a lifetime of poverty. That seems like a very bad form of child abuse to me.

I wonder if we might want to come up with a way to remove these children from these poor homes. Unfortunately, we do not yet have a place to put these children. The state already has more unadopted children than it can handle.

Whatever we do, we need to find a way to get children away from parents that let themselves fall and remain in poverty.

Please note, I am not talking about parents who live in poverty but try to get out and try to take care of their children. I am talking about the apathetic, lazy, and neglectful parents who choose to not fight their hardest to get out of poverty. For example, consider the unemployed drug-abusing mother who does not even try to get a job, despite the horrors poverty does to her children.

If you have any suggestions on how to solve that problem, please post them in the Hunger and Poverty Forums. It’s completely free, and all viewpoints are welcome.

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Thanksgiving has just passed and the December holiday season has already begun. Charities and hunger relief organizations see a massive influx of donations and volunteering during these holidays, especially Thanksgiving and Christmas.

Unfortunately, the rest of the year, these same organizations usually need much more volunteering and donations, especially the volunteering because extra money can be saved.

Whether or not you choose to volunteer or donate during the holidays, I suggest you make a promise to yourself to donate or volunteer another time during the year. Maybe choose a random day way off from the holidays and write it in your calender as a day to volunteer.

At the risk of sounding like a slogan, let me point out that the needy are not just needy during the holidays.

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Many anti-poverty and anti-hunger efforts consist of simple, short-term acts of charity, such as soup kitchens or free-food picnics. Food Not Bombs, for example, often schedules public rallies where the volunteers provide food that everyone including the homeless and poor can come and eat for free.

Feeding a person a meal will fend off their hunger today, but it fails to provide a permanent solution. Obviously, people need their immediate needs met, or else they will not survive to ever escape poverty. For example, 18,000 children die every day from hunger.

Unfortunately, feeding them a meal will not solve the problem. If we feed each of those 18,000 children a meal today, we will then have 36,000 children starving tomorrow.

We need to include long-term solutions with our short-term efforts. The short-term efforts need to fulfill people’s immediate needs while simultaneously the long-term efforts help the people permanently escape poverty.

People can escape poverty through education and employment or business ownership. (The business owners often then provide more jobs for the others.) To permanently escape poverty, people need to get enough education that they can get a job (or start a business) that earns them enough income to afford food, clothes, shelter and healthcare, and also enough to pay off their student loans as well as secure their retirement. In places without socialized unemployment insurance, the person also must earn enough to pay for that.

We have a long way to go, considering that even in the United States millions of college graduates live in poverty, millions of employed people live in poverty, and millions of children do not have enough to eat let alone have sufficient education.

Anyway, we can start by making sure soup kitchens, food rallies, and such also include long-term help such as job-training, education help, job fairs, and such.

You can help suggest ways to provide permanent solutions for poverty in the Hunger and Poverty Forums. It’s completely free, and all viewpoints are welcome.

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An article today from The Canadian Press reports that tougher welfare rules in Canada have proved effective at reducing poverty.

Generally, I oppose government-funded and government-managed welfare. Though, I do not want to abruptly abolish it, because many people and families depend on it. Of course, welfare helps cause this dependency. When we give people things for free, they become dependent on those gifts–much like a spoiled and overprotected child who never learns to take care of him or herself.

They tell us that if you give a man a fish you only feed him for a day, and that teaching him to fish feeds him for a lifetime. They forget to tell us the trouble that giving fish to a man can cause. If you give him the fish, he will never bother to learn to fish, and the other guy who is learning how to fish will stop and come ask you for free fish instead of learning.

We cannot end poverty simply by giving things away for free, and we cannot end world hunger by giving away food. At best, such methods will be ineffective. At worst, they will be counterproductive, by inspiring dependency and undermining self-sufficiency.

First of all, it may help to simply offer needy people loans rather than free gifts. In that way, we can enable them to get back on their own two feet without giving them charity. Unconditional charity is expensive and relatively ineffective.

Secondly, instead of just unconditionally giving poor people food, clothes, shelter and healthcare, I suggest we require that the recipients of the help either get education and job training, or seek employment. If they work at a job that does not pay enough, they either need to also get more education and skills training, or they need to look for a higher paying job. The point is that if the person can get a job that pays enough, they need to get it. If they cannot get a job that pays enough, they need to get more education so that they can get a job that pays enough.

If some people refuse to get an education or get a sufficiently paying job, then I suggest we refuse to help them. The only exception would be the few people who literally cannot earn their own income, such as the elderly, the mentally ill, and the severely disabled.

Supporting people in those ways will help lead to self-sufficiency and thus a permanent solution to poverty. Additionally, it will help us focus our efforts on people who are willing to help themselves, rather than wasting our efforts on people who are not willing to help themselves. To be cliché, we need to help people help themselves.

Andrew Carnegie said, “There is no use whatsoever trying to help people who do not help themselves. You cannot push anyone up a ladder unless he is willing to climb himself.”

In conclusion, I agree with the findings of the Canadian study. Tougher rules on welfare and charity can make them much more effective.

You can post your thoughts about my suggestions at the Hunger and Poverty Forums. It’s completely free, and all viewpoints are welcome. You can also post your own suggestions there.

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I have been doing community service at Foodshare on Tuesdays and Thursdays. I have been working at a produce warehouse. The workers and I sort fruits and vegetables, mostly bagging them up while throwing out the bad ones.

Foodshare is a great organization, in my opinion. I knew before doing the community service that they are one of the most efficient charities in Connecticut. Along with America’s Second Harvest, they are one of my two favorite charities to give monetary donations. I say this so you understand my next comments are not meant to be against them.

While sorting through these fruits and vegetables, I notice that many our bad, and even the ones that we do not throw away aren’t always in perfect condition and may go bad before getting wherever they are going. It seems like a waste to me.

This experience has made me decide to support the use of non-perishables to fight poverty and hunger. I understand the desire to provide the hungry with healthy food to fulfill basic nutritional needs, but couldn’t products like V8 Juice be used instead of fresh fruits and vegetables? Such less-perishable foods wouldn’t rot, and would also be easier to handle and ship around. For example, canned and bottled foods can be kept and packaged easier, and they won’t break or become damaged as easily as fresh fruits and vegetables.

I’m sure Foodshare and similar organizations work with such less-perishable goods, including canned and bottled goods. I know that I just happen to be assigned to a specific warehouse for fresh produce. However, I now think that the less fresh produce is used, the better.

If you want to discuss the usage of fresh produce, or discuss this post, please join my Hunger and Poverty Forums. It’s completely free, and all viewpoints are welcome.

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Earned-Income Tax Credit

5 September 2007

A recent Washington Post editorial addressed Michael Bloomberg and the earned-income tax credit. I include an excerpt:

Mayor Michael Bloomberg says he is not running for president. Yet that didn’t stop him from coming to Washington last week to promote an expansion of the earned-income tax credit as the next phase in the war on poverty. The EITC has been around since 1975 and is widely considered the single most important and effective policy for reducing poverty. According to a 2006 report from the Brookings Institution, “In 2003, the EITC lifted 4.4 million people in low-income, working families out of poverty, more than one-half of them children.” Mr. Bloomberg is right to focus on its expansion.

In a speech at the National Press Club, Mr. Bloomberg, a billionaire former Democrat, former Republican and now independent who many believe is mulling a White House bid, noted that welfare reform and the EITC “incentivized work among women with young children.” But, he said, “fathers are missing from our strategy to drive down the poverty rate.” He proposed to triple the size of the maximum credit received, to $1,236 per year, and to eliminate the marriage penalty now at work. He would raise the maximum income for EITC eligibility from $12,100 to $18,040 and lower the qualifying age from 25 to 21, to make stable employment more attractive to young men. And he would make the EITC expansion off-limits to fathers who are behind on child-support obligations.

As far as government policies go, the earned-income tax credit has a lot of potential. I support almost anything that reduces taxes for the working class.

Most of all, I agree with Bloomberg’s point about fathers. Missing fathers contribute to poverty, especially that amongst children and single mothers.  Incentives such as the EITC can help get more fathers to take care of their children. Unfortunately, no government program will get rid of all deadbeat dads. Plus, some children become fatherless other ways, such as when their fathers die or go to jail.

Let’s not let children suffer in poverty because of their fathers’ absence.

We can fully put a stop to this by changing the way society works so that children do not require a father to grow up in proper conditions. In other words, we can make sure children do not need financial support from their parents. We can do this by making sure all children have direct access to food, clothes, shelter, healthcare and education. I suggest doing this by making sure all children can get student loans for boarding schools which would not only provide education but also would provide food, clothes, shelter, and healthcare.

If all children can have their needs met without the financial support of their parents or deadbeat father, and if the children get a quality education, then they will not fall into the poverty trap. As adults, with their quality education, they will have the ability to get a job that pays them enough to fully support themselves, which includes paying off the student loans.

I agree with penalizing deadbeat dads. I agree with offering incentives for parents to take care of their children. However, if we want to end poverty for all children, we have to help children directly, because the world will always have deadbeat parents no matter how many incentives and penalties we impose.

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A Poor Mindset

29 August 2007

Today, I read the most interesting article about poverty that I’ve read in a long time. In the recent article, Steven Pearlstein explains the ideas of Charles Karelis in regards to the seemingly counterintuitive behaviors common to poor people. I include an excerpt:

The reason the poor are poor is that they are more likely to not finish school, not work, not save, and get hooked on drugs and alcohol and run afoul of the law. Liberals tend to blame it on history (slavery) or lack of opportunity (poor schools, discrimination), while conservatives blame government (welfare) and personal failings (lack of discipline), but both sides agree that these behaviors are so contrary to self-interest that they must be irrational.

[...]

If you and everyone around you are desperately poor, maybe it’s perfectly rational to think that an extra dollar or two won’t make much of a difference in reducing your misery. Or that you won’t be able to “study” your way out of the ghetto. Or that if you find a $100 bill on the street, maybe it’s logical to blow it on one great night on the town rather than portion it out a dollar a day for 100 days.

On the other hand, maybe the point at which people are most willing to work hard, save and play by the rules isn’t when they are very poor, or very rich, but in the neighborhoods on either side of the point you might call economic sufficiency — a motivational sweet spot that, in statistical terms, might be defined as between 50 percent ($24,000) and 200 percent ($96,000) of median household income. And if that is so, then maybe the best way to break the cycle of poverty is to raise the hopes and expectations of the poor by putting them closer to the goal line.

I highly recommend reading the whole article by Steven Pearlstein. Finally, I got to read an article written outside the bipolarized political partisanship so common to any discussions about political economics. I like how Pearlstein described the partisan ideas of the left and right, and the stale and unproductive debate between them.

In regards to the excerpted portion, I think it did a great job in explaining the mentality that causes poor people to not fight harder to get out of poverty. Unfortunately, poverty arouses feelings of hopelessness and discouragement. With limited opportunity, poor people will not receive the same benefits as more privileged people when they do the same amount of work. For example, working hard at an inner-city public school won’t get a person even close to as much as working hard at a high-class private school. That seems very discouraging.

Of course, this reminds me of the importance of positive role models. Among the many benefits they offer, positive role models show others, namely children, the possibility of success. The existence of positive role models offers children a tangible example of what hard work and dedication can do, which can help replace hopelessness with hope and replace discouragement with motivation.

Of course, poor people, namely children, actually need to have a reasonable route to success. I say reasonable route, because it won’t work if only exceptional children can escape poverty. It needs to apply to the rule, not to the exception.

I suggest offering full student loans to anyone who wants them. These student loans need to completely fund high-quality education, job training, and then job placement, as well as food, clothes, shelter, and healthcare the entire time. Such student loans would offer everyone a viable route to success.

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Katharine Hall And Jo Monson posted an article about South African Poverty. They say that help for poor children ends too early.

In South Africa the majority of children are born into poor households. Poverty is associated with unemployment and exacerbated by low levels of education, and so the stage is set for yet another generation to remain trapped in poverty.

There are a number of government programmes designed to support children in households with little or no income. These include the child support grant, free schooling in poor areas, a school fee exemption policy and a national school nutrition programme. But at present, children aged 14 to 17 are excluded from the range of government policies, targeted toward younger age groups.

Teenagers are at an important developmental phase. Investment in their wellbeing and especially their education will have positive effects on their lives and may help break the cycle of poverty.

Read entire allAfrica article by Hall and Monson.

Sadly, these children have potential, but the lack of adequate access to necessities, such as education, food, clothes, and shelter, traps these children into poverty.

Unfortunately, this problem exists all over the world. Even in the United States, half of all children born into poverty will remain in poverty. These means that they remain in poverty not because they as a result of never receiving a fair chance to reach their potential.

We need to put an end to this non-meritocratic classism. We need a world in which all people have opportunity. We can create such a world by providing all children access to food, clothes, shelter, and education.

What do you think?

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Emergency aid has saved millions of lives, but such help provided over longer periods might destabilise markets, create dependency on imports and delay reforms needed to lift domestic output, the U.N. Food and Agriculture Organisation (FAO) said in a report.

“Reforms to the international food aid system are necessary but they should be undertaken giving due consideration to the needs of those whose lives are at risk,” FAO said in its report on the state of food and agriculture in 2006.

“Whenever possible, it is always better to teach and help people to fish rather than to give them fish,” FAO Director General Jacques Diouf said.

About 854 million people around the world lack enough food to lead active and healthy lives and more than 90 percent of them are chronically hungry, the FAO said.

Food aid needs to focus on emergencies and target only those who really need it, while longer-term efforts should aim at building the funds, skills and other conditions required to revive local agriculture and trade.

“Although the moral imperative to provide assistance to people suffering from extreme hunger is undeniable … some ask whether such aid may in fact be counterproductive to longer-term sustainable reductions in hunger and poverty,” the agency said.

FAO said it favoured selling food aid where possible on local markets to raise funds for development and urged donors to switch to targeted cash assistance and food vouchers when food was available locally.

Read entire report by Svetlana Kovalyova.

I agree so much with the points made in the above article. Throwing food or money at the problem usually makes it worse. Society needs to give poor and hungry people the opportunity to help themselves, both collectively and individually as individuals and communities. Surges of food aid undermines the local markets by under-pricing local farmers and food stores. Instead of treating people like children, we need to work together with them to find mutually beneficial solutions, through such means as student loans, business loans, and employment.

What do you think?

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Children suffering from Poverty