Poverty is the state for the majority of the world’s people and nations.

The reasons for

poverty are various. The people might be lazy, made poor decisions; their own
government might have pursued policies that actually harmed successful development.
Such causes of poverty and inequality are no doubt real. But often less discussed are
deeper and more global causes of poverty.

Behind the increasing interconnectedness promised by globalization, are global

decisions, policies, and practices. These are typically influenced, driven, or formulated by
the rich and powerful. These can be leaders of rich countries or other global actors such
as multinational corporations, institutions, and influential people.

In the face of such enormous external influence, the governments of poor nations and
their people are often powerless. As a result, in the global context, a few get wealthy
while the majority struggle.

Some people claim that some countries are rich because of abundant natural resources.
That's absolute nonsense! Africa and South America are probably the richest continents
in natural resources, but are home to some of the world's poorest people. Countries like
England, Japan and Hong Kong are poor in natural resources, but their people are among
the world's wealthiest. Hong Kong even has to import its food and water.

The reason some countries are rich while others are poor is best explained by the amount
of economic freedom its peoples enjoy and the extent of government control over
economic matters. Don't make the mistake of equating economic freedom with
democracy. After all, India, politically, is a democracy, but economically it is mostly
unfree and poor, ranking 104th in economic freedom

To help our fellow man around the world, we must convince him to create the
institutional infrastructure for wealth creation. Foreign aid, International Monetary Fund
bailouts and other handouts are not substitutes. They just make political survival possible
for the elite whose self-serving policies keep a nation poor. Except for immediate disaster
relief, foreign aid is probably the worst thing the West can do for poor countries.

The reality unfortunately is that the gap between the rich and poor is widening. For
example:

• About 0.13% of the world’s population controlled 25% of the world’s assets in
2004.
• 20% of the world’s population consumes 86% of the world’s goods while 80% of
humanity gets just the remainder 14%.

Inequality and Health

A Canadian study also suggests that the wealthiest nations do not have the healthiest
people; instead, it is countries with the smallest economic gap between the rich and poor.
Poverty has also been described as the number one health problem for many poor nations
as they do not have the resources to meet the growing needs.

But poverty is not restricted just to developing countries. Industrialized nations are also
seeing a sharp increase in poverty. While the current form of globalization is resulting in
additional wealth, the disparities are sharp. Less people are turning out to be benefiting
while an increasing number are left behind.

World Hunger and Poverty

People are hungry not because of lack of availability of food, or “over” population, but
because they are too poor to afford the food. Politics and economic conditions have led to
poverty and dependency around the world. Addressing world hunger therefore implies
addressing world poverty as well. If food production is further increased and provided to
more people while the underlying causes of poverty are not addressed, hunger will still
continue because people will not be able to purchase food. Last updated Saturday, March
04, 2006

Food Dumping [Aid] Maintains Poverty.

Even non-emergency food aid, which seems a noble cause, is destructive, as it under-sells
local farmers and can ultimately affect the entire economy of a poor nation. If the poorer
nations are not given the sufficient means to produce their own food and other items then
poverty and dependency may continue. In this section you will also find a chapter from a
book which describes this situation in detail and looks at the myth that “more US aid will
help the hungry” as the chapter is titled.

We often hear leaders from rich countries telling poor countries that aid and loans will
only be given when they show they are stamping out corruption. While that definitely
needs to happen, the rich countries themselves are often active in the largest forms of
corruption in those poor countries, and many economic policies they prescribe have
exacerbated the problem. Corruption in developing countries definitely must be high on
the priority list, but so too must it be on the priority list of rich countries.

But poverty is not restricted just to developing countries. Industrialized nations are also
seeing a sharp increase in poverty. While the current form of globalization is resulting in
additional wealth, the disparities are sharp. Less people are turning out to be benefiting
while an increasing number are left behind.

Even in places such as Europe and USA, poor people still do not seem to get enough
attention or resources to help alleviate their problems. For example, consider Britain:

• Even though Britain is one of the most affluent members of the European Union
(EU), a report shows that UK is the worst place in Europe to be growing up if you
 are poor, as more children are likely to be born in to poverty there, compared to
elsewhere in the EU.
• The UK National Office of Statistics also shows that disparities between rich and
poor continue to grow in UK, as reported by a UK newspaper, The Independent,
April 2000.
• Priorities of the Labour Party government have often been questioned (as with
priorities of any party) but highlighted by how at the turn of the century, some
150,000 people were homeless in Britain, yet the government helped build the
Millennium Dome, that cost over a billion US dollars.
• Andrew Simms, policy director of the New Economics Foundation in an article
mentioned further above about inequality notes that

Crime and unhappiness stalk unequal societies. In the UK the bottom 50% of the
population now owns only 1% of the wealth: in 1976 they owned 12%. Our
economic system’s incentive structure, instead of “trickle-down”, is causing a
“flood-up” of resources from the poor to the rich. Inequality leads to instability,
the last thing the country or world needs right now.

Even the former hardline conservative head of the International Monetary Fund,
Michel Camdessus, has come to the conclusion that “the widening gaps between
rich and poor within nations” is “morally outrageous, economically wasteful and
potentially socially explosive”.

As another example, the U.S. is worth looking at as well.

• It may be surprising to most people to realize that USA, the wealthiest nation on
Earth, has the widest gap between rich and poor of any industrialized nation, and
disparities continue to grow. And inequality within the nation is quite sharp. (See
also this article and this article about how the media deals with such issues.)
United For a Fair Economy reported that for 1998 almost 70% of the wealth was
in the hand of the top 10%. In another report, they mention that the gap has
widened in recent decades. “In 1989, the United States had 66 billionaires and
31.5 million people living below the official poverty line. A decade later, the
United States has 268 billionaires and 34.5 million people living below the
poverty line-about $13,000 for a three-person family.”
• Even during the “booming economy” (for some in society, not all) in the late
1990s and early 2000, there was an increasing gap between the rich and poor.
Even into 2002, fighting poverty appears not to have been a major election
campaign issue as with recent previous election campaigns.
• While health and education are key to any economy or nation to grow and be
strong, both of these suffer issues of access, equality and pressure to cut back
(including elsewhere around the world as discussed in the structural adjustment
part of this site).
o For example, as a summary of a report titled Economic Apartheid in
America mentions, “that the United States is the only industrialised nation
that ‘views health care as a privilege, not a basic human right.’”.
 (Unfortunately the report itself not available on the Internet, but is
produced by United for a Fair Economy where you can see many extracts
and similar reports.)
o In addition, as good education is linked to a strong economy, Business
Week reports (February 14, 2002) on a study that analyses OECD data
from 1994 to 1998, and summarizes that “the literacy of American adults
ranks 10th out of 17 industrialized countries.” In addition, the issue of
inequality was highlighted: “More troubling, the U.S. has the largest gap
between highly and poorly educated adults, with immigrants and
minorities making up the largest chunk of those at the bottom.” While
Business Week concentrates on the U.S. they also point out that “Despite
the mediocre U.S. ranking, it still beat out most of its major trading
partners except Germany, including France, Britain, and Italy. (Japan
didn’t participate [in the study].)”

And it isn’t in just these two industrialized nations that these problems persist. A
Guardian news report, for example, shows that certain types of poverty in various
European cities can be regarded as worse than in some other parts of the world which one
would not normally think would compare with Europe, such as India.

• Half the world — nearly three billion people — live on less than two dollars a
day.
• The GDP (Gross Domestic Product) of the poorest 48 nations (i.e. a quarter of the
world’s countries) is less than the wealth of the world’s three richest people
combined.
• Nearly a billion people entered the 21st century unable to read a book or sign their
names.
• Less than one per cent of what the world spent every year on weapons was needed
to put every child into school by the year 2000 and yet it didn’t happen.
• 1 billion children live in poverty (1 in 2 children in the world). 640 million live
without adequate shelter, 400 million have no access to safe water, 270 million
have no access to health services. 10.6 million died in 2003 before they reached
the age of 5 (or roughly 29,000 children per day).

Inequality is increasing around the world while the world appears to globalize. Even the
wealthiest nation has the largest gap between rich and poor compared to other developed
nations. In many cases, international politics and various interests have led to a diversion
of available resources from domestic needs to western markets. Historically, politics and
power play by the elite leaders and rulers have increased poverty and dependency. These
have often manifested themselves in wars, hot and cold, which have often been trade and
resource-related. Mercantilist practices, while presented as free trade, still happen today.
Poverty is therefore not just an economic issue, it is also an issue of political economics.