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| ==Causes== | ==Causes== | ||
| Many economists attribute the cycle of poverty to insufficient protection or recognition of property rights. If one's property can be stolen at any time, there is very little incentive to save and invest. More generally, lack of economic freedom is a major cause. As Ayn Rand wrote, "What the have-not's have not is freedom." | |||
| Another major cause is "pauperization." This is government payments to the poor for being poor. Social critics from Pierre Proudhon onward have warned that this only perpetuates poverty. Thomas Sowell has pointed out that families on welfare in the US show significantly less upward mobility than those poor who stay off welfare. | |||
| Lack of ], or human capital, is one of the biggest causes of the poverty cycle. Education in a modern ] is one of the conditions to achieving economic growth, as it increases skill. A maximised education would require devoted time and energy, or extra-curricular reading. Children who are from poor families and have to work cannot maximise their education, even if the education is free. It would also require a conducive and ] environment, which is often not available to the poverty-stricken. This is even worse in countries such as ] where public education in many areas is not available for free due to budget constraints. ] is often not free. These children thus often will not be able to break out of poverty because their reduced skillset reduces their potential income. With no means to provide a conducive educational environment for their children, the cycle begins again. | Lack of ], or human capital, is one of the biggest causes of the poverty cycle. Education in a modern ] is one of the conditions to achieving economic growth, as it increases skill. A maximised education would require devoted time and energy, or extra-curricular reading. Children who are from poor families and have to work cannot maximise their education, even if the education is free. It would also require a conducive and ] environment, which is often not available to the poverty-stricken. This is even worse in countries such as ] where public education in many areas is not available for free due to budget constraints. ] is often not free. These children thus often will not be able to break out of poverty because their reduced skillset reduces their potential income. With no means to provide a conducive educational environment for their children, the cycle begins again. | ||
Revision as of 18:23, 11 June 2005
In Economics and Sociology, the cycle of poverty is a social phenomena whereby the poor exhibit a tendency to remain poor throughout their lifespan and in many cases across generations.
The cycle of poverty has been described as a catch-22 and a feedback loop, as it occurs because the method to acquire financial resources efficiently to get out of poverty, productive capital, can only be obtained if the individual has financial resources in the first place. This often means the poverty-stricken find it extremely difficult to get out of poverty because they do not possess enough resources to invest in their own economic development.
The cycle of poverty has roots in ancient times and feudalism. Serfs and peasants on a landlord's land often had to pay most of their crops in tribute to their lord as rent or taxes, and were only allowed to keep enough for bare subsistence. Unable to maintain any savings to invest in human or physical capital to improve their own productivity and therefore income, peasant families would remain poor for generations.
Effect on Economic Growth
With the poor unable to maintain savings and invest in their own development, the cycle of poverty can lead to significant underinvestment in an economy. Consequently, productivity from the impovershed is significantly reduced, and economic growth is reduced. See: Growth theory.
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Causes
Many economists attribute the cycle of poverty to insufficient protection or recognition of property rights. If one's property can be stolen at any time, there is very little incentive to save and invest. More generally, lack of economic freedom is a major cause. As Ayn Rand wrote, "What the have-not's have not is freedom."
Another major cause is "pauperization." This is government payments to the poor for being poor. Social critics from Pierre Proudhon onward have warned that this only perpetuates poverty. Thomas Sowell has pointed out that families on welfare in the US show significantly less upward mobility than those poor who stay off welfare.
Lack of education, or human capital, is one of the biggest causes of the poverty cycle. Education in a modern knowledge-based economy is one of the conditions to achieving economic growth, as it increases skill. A maximised education would require devoted time and energy, or extra-curricular reading. Children who are from poor families and have to work cannot maximise their education, even if the education is free. It would also require a conducive and hygenic environment, which is often not available to the poverty-stricken. This is even worse in countries such as India where public education in many areas is not available for free due to budget constraints. Tertiary education is often not free. These children thus often will not be able to break out of poverty because their reduced skillset reduces their potential income. With no means to provide a conducive educational environment for their children, the cycle begins again.
Solutions
There are no complete solutions to the poverty cycle, and many proposed methods are undergoing experimentation. Universal public education and welfare are the most commonly used methods by modern governments, and have been implemented to some degree in cases since ancient times. Property rights in various forms are also typically applied to help break the cycle of poverty. These range from freeing serfs and allowing them to keep more of the product of their land to creating efficient legal systems that protect the acquired capital of the poor.
For example, mixed-income housing is being implemented in more and more cites as a possible solution to poverty issues. Mixed-income housing is an attempt to bring middle and lower class families together in the same neighbourhoods. This interaction between low and middle-income families helps the low-income families. The middle class residents can then help those less fortunate than themselves.
A gift economy such as that in anarcho-communism is also advocated by anarchists. This would mean total egalitarianism, rather than a sort of compromised position of welfare which many anarchists see as state socialism. This is naturally rejected by many of their more right-wing opponents.
Communists often cite the cycle of poverty as one of the reasons why capitalism is insufficient for human need.
See also: Culture of poverty
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