This month the U.S. celebrated the 50-year mark for its domestic War on Poverty. Pundits from the left, right, and everywhere in between opined on the relative successes and failures of this war, launched in 1964 by President Lyndon Johnson. In The Atlantic, for example, Zachary Karabell writes that the arguably low reduction in the “poverty rate” (from 19% to 15%, costing trillions of dollars) was not the best way to gauge success. Noting the changes in conditions of poverty over the last 100 years in the U.S., Karabell argues that the very existence of a safety net, inadequate as it may be, has contributed to the changing character of poverty in the country. The safety net, he contends, “much of which is not well-captured in the per capita income statistics that are used to assess the poverty rate,” created “a set of expectations about the minimum level of necessities that all Americans deserve. That minimum – consisting of adequate shelter, food, heat and air conditioning, public education, and access to healthcare for the elderly – is a reality today.” I would argue that this minimum is certainly not universally accepted and that the terrific problems associated with this safety net leave much to be desired.
Nevertheless, I do think that Karabell is on to something. His underlying contention that progress in poverty alleviation should be measured differently is worth considering. In fact, many in the domestic poverty issues arena have been advocating just this. Globally, too, present strategizing is beginning to operate departing from this very premise.
If poverty is not just a number but a lack of opportunity to access better life conditions, then processes for reducing poverty become both more complex and more open to innovation. Not only that, but poverty as a measurement becomes more intrinsically connected to wealth; that is to say, poverty becomes a factor of the relative equity of opportunity between those with and without means to access these opportunities independently. Poverty, in short, becomes less of an absolute. And that is where it gets dicey.
Let’s take Latin America as an example and look at a recent article in The Economist that addresses poverty in the region. The number of Latin American and Caribbean people living below “extreme poverty,” defined, in this instance, as below U.S. $2.50 per day for an individual, has been steadily decreasing. The number of people living in moderate poverty, between $2.50 and $4 a day, has been decreasing as well. Observers trace much of this decrease to overall economic growth, which has begun to steadily slow. The World Bank has identified about 2.8 billion people that are considered vulnerable, a “fragile middle class.” In Latin America, this middle still makes up the largest economic group.
The aforementioned slowdown in economic growth will have two effects. First, the total income rise for the bottom of the population will slow and the fall in income inequality--which has not been falling particularly fast, as Latin America remains “the world’s most unequal region along with sub-Saharan Africa”--will slow even more. Given that the slow-down in economic growth means that poverty reduction efforts cannot depend on projected economic growth alone, alleviating inequality, the article argues, might require structural solutions that must balance the need to have rich Latin Americans pay a fairer share of taxes, the revenue of which can be invested in education, health, and other initiatives, while ensuring that increase taxes do not stunt investment that could generate economic growth. This balancing act should sound familiar to a U.S. audience.
Notwithstanding the fact that the author of the Economist article departs from the premise of a base poverty figure versus a more-holistic poverty measure, the substance of the argument is sound. Poverty’s structural components cannot be remedied long-term by economic growth because the essence of poverty is a consequence of economic stratification. We should be focusing, then, on diminishing inequality between these strata. Projects like YouthSave that create future opportunity while protecting against economic shock are precisely the types of poverty alleviating measures that address poverty’s structural underpinnings.
