Why Is There Poverty in Rich Countries - Research Paper Example

Poverty Introduction It is not surprising to find poor people in rich countries because not all people have the same income. Previously poor people were considered as individuals from the villages though the trend is changing due to changes in the economic growth. Most people facing the greatest impacts of poverty are children. For the past few years, children living in poor conditions have extended to a higher level in developed countries. Additionally, the situation is worst in developing countries especially African countries. Developed countries, especially the OECD countries are finding ways to reduce the trend of poverty among the young generation. Some countries are doing a lot to reduce the cases of poverty though they have not fully succeeded. In this case, this study tries to explain the existences of poverty in rich countries. It, also, describes the challenges of poverty globally. Poverty Adeola (2005) explains that poverty is a challenging situation where a family or an individual cannot attain the living standards of his or her society. Definition of poverty, however, varies some explains that poverty is the lack of funds though poverty is a greatest problem in a society. For example, we think that poverty is meant by having little or no money to spend or paying bills. However, poverty is more than what many of us perceive because it affects person’s life, causing a wide range of problems such as poor health and illiteracy. Poverty brings in social problems to the community such as crime, drug abuse, and suicide. Studies by Grant and Vidler (256) explain poverty in two different ways, absolute poverty and relative poverty. Absolute Poverty At this stage, a person is described to be in absolute poverty when his or her income is not enough to acquire basic needs such as food, shelter and clothing. On the other hand, relative poverty is when an individual is poor as compared to other people. Rich countries do have people without basic needs such as housing. For example, according to Grant and Vidler (256), there were almost 1600 people sleeping outside as per the statistics in the year 2000 in England. The authors point that such cases are more in the developing countries. Relative poverty, as described above, is a situation where a person is poor as compared to other people. For example, some people can afford, accommodation, television, but may lack video player and besides, they may only afford to travel once in a week. However, such individuals might be considered rich if they were citizens of developing countries. This shows the difference between relative poverty and absolute poverty. Estimation of Poverty Poverty has to be measured to ascertain its challenges. There are many ways of measuring poverty though none of which is considered official for ascertaining poverty. The government uses unemployment and inflation to measure the extent of poverty. Some countries, however, have developed standards for measuring poverty. Causes of Poverty The U.S. has for many years tried to eradicate poverty, but the state of poverty remains a challenge. Absolute poverty is the greatest problem in the U.S. because, as defined above, it is a situation where one lack basic needs. The United States is one of the richest countries in the world. The gap between the poor and the rich is a, however, the greatest challenge because it is ever rising. Statistics estimates show that close to 40 million people are poor in the U.S. as per the 2004 report by U.S. Census Bureau. Forty million is a big number that has led to many people asking questions about whether the people in that bracket are responsible, or the government itself should be accountable. They argue that a country like the U.S. that has been in the forefront in fighting poverty for ages should less number of poor people. Additionally, the U.S. or any other advanced economies like the UK have plenty of resources to deal with poverty. However, cases of poverty are still common in such countries just like the developing countries. Based on the view by analysts on the issue of poverty in rich countries, many have tried to address the causes and consequences of poverty. They have come up with different ideological orientations, models and disciplines to address poverty in rich countries. They have pointed out issues such as gender, ethnicity, class, and nativity as contributing factors to poverty in a society. Poverty was a global problem during the great recession though it is still a problem, the various program were launched in 1960s. Many people during were optimistic that poverty will soon go down or eliminated before the 21st century. The government with the help of other agencies launched programs and policies. For example, policies that dealt with job discrimination against minorities. In the U.S., the expansion of the economy in 1990s gave more hopes the policy makers and analysts that poverty would have been eradicated by the end of 20thcentury. Many were optimistic that every citizen in the U.S. will have access to basic needs such as clothes, food, and shelter. However, things came out differently at the start of the new millennium to date. There some issues that many people point out that they contributed to the increase in number of poor people in America. Some of the issues include terrorism, economic recession, and wars are said to have contributing to every rising case of poverty in the United States. Additionally, scholars point out that globalization, layoffs, outsourcing, and deindustrialization are also contributors of poverty. Such factors have affected children, minority groups, and women. Poverty has further gone to unimaginable level with the rising job loss, increase unemployment and the loss of safety net programs. In 20th century, the description of poverty was quite different from what we see in the 21st century. Many of us are well aware of the consequences of poverty because some are obvious. For example, poverty, as we know, limits one from having better living standards. The next paragraph reviews the causes and consequences of poverty. In most cases, the level of poverty is defined by the level of income achieved or distributed. As such, some people are poor because of unemployment, low wages, sickness, poverty trap, and age. Other contributors to poverty are single parenthood and reluctance to acquire benefits (Adeola 2). The Effects of Poverty Scholars point out that absolute poverty is the worst poverty based on the implications for persons in a society. The poor experience mental and physical health and so they experience a reduction in the life expectancy. People who suffer a lot from poverty are children because they fail to access education. Rank (17) points out that close to half of the United States children are from poor families. The author insists that the significant percentage of children in the U.S. is from families that uses food stamps in their lifetime. In this case, life expectancy in some places in the U.S. is shorter. For example, in comparison with Bangladesh, Harlem reports low life expectancy. Studies reveal further that close to 60% of the U.S. population owns only 1% of the financial wealth. It is also revealed that children from Africa-American families experiences high poverty in their lifetime. Scholars point out various reasons as the cause of poverty. Some have argued that the society is to blame for the increasing poverty. The blame is based on the fact that there has been failure to act in effort to address the issue of poverty. In the United States, researchers on the issue of poverty explain that poverty is as a result of personal failures and shortfalls. Such inadequacies, according to the research, include failure to work hard, making poor decisions and failure to get skills needed in the job market. As such, poverty is seen from the personal point of view. In other words, poverty affects individuals who fail to work hard. It is, therefore, clear that those who work hard are rewarded while the people who fail to acquire necessary needs such as education languish in poverty. Poverty in the United States The U.S. is among the top countries economically with plenty of resources to address cases of poverty. A study by Islam, Jenny and James (653) reveal that the real per capita income in the U.S. increased to 175% between 1960 and 2000. On the other hand, poverty fell significantly by half right from 22% to 11%. The increase in the economy, as defined by the statistics mentioned, is a good progress for the U.S. economy. Nonetheless, the issue of poverty remains as the greatest threat in some parts of the United States as revealed by the Figure below. Sources: Islam, Jenny and James (654) The counties that have experienced extreme poverty since 1960s are indicated by the blue color. The poverty rates in those counties are in excess of 20%. In addition, the counties described in the figure as persistently poor areas represent 11% of the United States counties. Some of those regions include the Black belt, Appalachian Kentucky, “Colonias” in Texas and the reservations for Native Americans. The level of poverty in those regions is high though they differ geographically, economically and ethically. Islam, Jenny and James (654) explain that the technological and economic income differences in those regions may have been the cause of income differences in the regions with high level of poverty. The authors further argued that the regions differ in growth rate as a result of disparity of cultures and geography. However, their study gives three explanations as to why some parts of the U.S. shows different levels of poverty. The first point is the differences in factors of production, some of the factors include physical capital and human capital. The second point is determined by the use of factors of production indicated above. The third point is the level of productivity as defined by the culture, geography, and historical institutions. The study further explains that there has been a close relationship between historical factors of productivity and chances of becoming poor in early 20th century. The cause of such increase in poverty in 20th century is attributed to low levels of capital. For example, research shows that the level of poverty in poor counties in early 20th century was three times higher than counties with the low level of poverty. The results of previous shortfalls in human capitals have persisted to date (Islam, Jenny and James 655). In early 1960s, the poverty rates in the U.S. were minimal. Poverty, however, was rampant in southern parts of the U.S. the rates were estimated at 50% in South. Other parts of the U.S. reported low levels of poverty. For example, the Plains states and the Midwest indicate poverty rates of 20-30%. Poverty rates, however, changed significantly as a result of the economic growth and increase in the income support as a result of Great Society programs started by Johnson’s Administration. With time, the poverty rates in the U.S. fell significantly though the southern part of the U.S. maintained a rate of 40%. The level of poverty dropped, however, from 1970s to 1990s. Nonetheless, the counties indicate on the figure above still have rates of poverty estimated to be four times higher than the countries level of poverty. Smith argues that the level of poverty in Western countries has risen significantly in the past few years as a result of the austerity measures, rising cost of fuel, and recession. Other issues attributed to rising cases of poverty in developed countries are cuts on welfare benefits. Some countries in the European Union have experienced rising level of poverty with researchers pointing out that austerity measures are the cause of poverty. Spain is among a few countries that were hit highly by the recession in 2011. As a result of that, the level of poverty increased from 19.7% to 21.8% between 2007 and 2011. Some countries in the Eastern part of Europe such as Lithuania and Latvia were also hit hard by the recession. The result is that the level of poverty increased to an extent where children are at risk in such countries. Netherlands and Czech Republic have a notable rate of poverty as poverty stands at 10%. Increasing the cost of fuel is one among many factors that have contributed to poverty in European Union. Smith Point out that the cost of fuel has increased by 52% from 2001. The high cost as indicated by the reports has made it impossible for many people to obtain fuel. For example, in the UK 77% of the people with high income obtained fuel while only 47% of the people with low income bought fuel. The study concludes that individuals with less income were affected by the cost of fuel. The cause of poverty in the EU is the austerity measures that have led to cuts in welfare spending. A study by Smith indicates that welfare benefits are good for the economy. The argument is based on the fact that welfare benefits increases consumer spending and leaves one with confidences. Furthermore, it is indicated on Smith study that the increasing level of poverty in the EU is closely related inequality. In this case, the poor people are poorer while the rich are richer as indicated by the huge difference in their income. For example, the income of the rich is nine times higher than the income for the poor though in some countries the trend is lower. Based on the Gini coefficient, determination of inequality ranges from 0 to 1. Gini coefficient indicates that it was 0.28 in 1980s, but it increase by 10% as per 2000 to 0.31%. Based on the study, it is clear that poverty is a global issue and not only in the U.S. and developing countries. There are rich countries in Africa that have had plenty of resources for many years. Nigerian country has plenty of resources that can meet the needs of the population. Close to 60% of the Nigerians are poor though the trend was lower in 1980s; the poor in 1980s were only 30%. The living standards globally have changed to a new level since 1970s. However, Nigerians have had stagnated living standards. Nigeria has, however, continued to become rich as a result of mining natural resources such as petroleum. The poor are mainly from rural areas though the government is doing its best to help farmers. It is a step forward to reduce the rising poverty. Unemployment is another issue that the state of Nigeria has tried to eradicate through entrepreneurship. As indicated earlier above, the issue of poverty is a global problem that touches every state in the world regardless of its economic status (Poverty in Nigeria). Conclusion Poverty is a greatest issue globally that should be addressed by all means. The study clearly points out that poverty is not only common in developing countries; poor people are also from rich countries. Research also shows that previous shortfalls are blamed on levels of poverty in many countries because some people who are been poor remain poor for many years. It is also shown that some people are poor because they cannot work to make their lives better. Research shows that people who work had to achieve the needs such as skills improve their living standards. Works Cited "Child Poverty In Rich Countries, 2005, Part I." International Journal Of Health Services: Planning, Administration, Evaluation 36.2 (2006): 235-269. Medline Complete. Web. 26 May 2015. “Poverty in Nigeria Rich Country, Poor People.” Research for Social & Economic Development. April 2013. Web. 28 May 2015. Print. Adeola, Francis O. "Introduction. Poverty: Causes and Consequences." Race, Gender & Class 12.2 (2005): 3-9. ProQuest. Web. 26 May 2015. Grant, Susan and Vidler Chris. Economics in Context. London: Heinemann, 2000. Print. Islam, T. M. Tonmoy, Jenny Minier, and James P. Ziliak. "On Persistent Poverty In A Rich Country." Southern Economic Journal 81.3 (2015): 653-678. Business Source Complete. Web. 26 May 2015. Islam, T. M. Tonmoy, Jenny Minier, and James P. Ziliak. "On Persistent Poverty In A Rich Country." Southern Economic Journal 81.3 (2015): 653-678. Business Source Complete. Web. 26 May 2011 Rank, Mark R. "Rethinking American Poverty." Contexts Spring 2011: 16-21. ProQuest. Web. 26 May 2015. Smith David. Rich Nations, Poor People: The Cause For Rising Poverty In The Western World. Economic Watch. 23 November, 2011 Web. 28 May 2015. Print. Read More