The vicious cycle of poverty and why is it so hard to escape it?

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poverty trap

You need to feed your family, travel to work, and pay for your child’s school fees and other necessities. But you only have Rs.150 in your pocket. Does it seem like an impossible task? Yes, for approximately 800 million people in the world, it’s their reality. Nearly half of the world’s population that is more than 3 billion people, live on less than $2.50 a day. More than 1.3 billion live in extreme poverty less than $1.25 a day. Do you know that a billion children worldwide are living in poverty? According to UNICEF, 22,000 children die each day due to poverty.  

The burden of poverty upon society and individuals isn’t just economic or physical but causes the poor to suffer emotionally and spiritually as well. Poor people live under harsh conditions with minimum needs and lesser fulfillment. Poverty has created a void infeasible to eradicate. It has split the world into two halves- the rich and the poor. The richer half is getting rich each day and the other half is getting poor day by day. Going by the numbers, around 26 billionaires own as much wealth as 3.8 billion people in the bottom half of humanity, according to a report of Oxfam. The income of the rich is increasing by 12% and the income of the poor is reduced by 11% according to a report in 2018. Millionaires are turning into billionaires whereas the poor’s are turning into paupers.

The cycle of Poverty

A poor person once encountering poverty finds it extremely hard to break through and eventually these poor people are trapped into the cycle of poverty also known as the poverty trap. It means that poverty, once exists, remains so for generations.

poverty trap

For instance, you are unemployed and are only surviving under the benefit of government schemes that are paying for your utilities, rent, and food, but you barely pass by. Once you get a job that pays just enough to disqualify you from the benefits of schemes, you are left with only your salary. But this salary is not enough to cover the same costs as that you were receiving under the government schemes. To make things worst, you have to even pay for traveling to work adding more strain to your pocket. This way, now you are left with less money than what you had while you were unemployed.

According to economists, this is called the welfare trap which is affecting millions of people around the world. Families trapped under this cycle has access to limited or no resources like financial capital, education, or connections. This may even increase their poverty and the family may remain poor for their entire lives. This cycle then passes from generation to generation. But the irony of the poverty trap is that they stem from the very policies designed to counter poverty.

These government-initiated policies include healthcare, housing, and subsidies on food and energy. Though the policies are designed in particular to help poor people meet basic needs, they also trap people into poverty. Not because people misuse the benefits but because these benefits are immediately cut off when the people reach the threshold of eligibility despite the fact that what their income is or whether or not they are stable enough to remain there. This happens because these policies are aimed to ensure that the aid goes to those who need it the most.

poverty trap

There is no magic bullet to cure the problem at once but a more rational approach to it could be more beneficial. The sustainable development efforts taken by the countries have actually reduced poverty in Sub-Saharan Africa, South Asia, and Latin America. Some countries have allowed people to receive benefits for a given period of time after employment. Other has policies to ensure that the benefits phase out gradually as the income increases. However, these measures were not enough to push these people out of years-long poverty.

Perhaps a universal basic income could ensure that all the citizens receive fixed benefits regardless of their wealth or status. All people should be eligible for basic benefits like healthcare, childcare, education, or other subsidies on essentials. This way the income could supplement the benefits rather than replace them. Thus having a plan which is sustainable in its nature can actually recover the world from the poverty trap. Experts believe that zero extreme poverty is possible but it will need joint initiatives because poverty is not inevitable.

We just need to build a way to enact policies that will increase economic security and expand opportunities for all the people of society so that none of them fell into poverty in the first place.

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