Understanding Poverty
What is poverty?
Poverty is used to describe the state of people who lack resources to provide themselves with basic necessities they need to live. These basic necessities include food, water, shelter, and clothes. With the development in globalization over the years, it can be assumed that the majority of the world population could acquire these necessities. However, the modern world demands more than just these. Today, basic necessities also include services such as education, healthcare, telecommunication, and even transportation.
Moreover, poverty may be viewed through two different perspectives: absolute poverty and relative poverty. Absolute poverty pertains to people whose income falls below the line set by a country. People below this line have inadequate resources to meet their basic necessities such as food, water, and shelter. They also have little to no access to basic services such as education and healthcare. On the other hand, relative poverty pertains to people whose income falls below 50% of the country’s median income. This measure of poverty is bound to change since it depends on a country’s economic growth.
What are the key trends in global poverty and inequality?
Since basic necessities are now extended towards services that people are supposed to receive such as education, healthcare, telecommunication, and transportation, poverty now is not only measured through income and consumption. Other factors are now considered such as nutrition, child mortality, housing, electricity, and more. These indicators are included in the Multidimensional Poverty Index, which is supported by the United Nations Development Programme. The goal is to measure poverty across different dimensions which are health, education, and standard of living.
Inequality, on the other hand, is a product of poverty. People living in poverty who cannot afford necessities suffer. Their living conditions affect their chances and opportunities to improve their destitute lifestyle. Inversely, people in the upper classes who could afford their basic needs have the ability to improve themselves, giving them an advantage over other impoverished individuals.
In recent years, it can be seen that global poverty has lessened, however, it can also be seen that inequality had a steady increase. This means that despite the decreasing global poverty, many people around the world are still unable to meet their basic necessities which would allow them to improve and thrive. This could be rooted back in globalization and how trade affects the living standards of a country. As globalization drives economic growth and development in a country, it simultaneously results in inequality since most of the people who benefit from this are people who belong to the working class and the upper class.
Does capitalism eliminate or reinforce inequality?
Capitalism is a system wherein private companies control and drive the country’s trade and industry. Many people believe that this system only benefits the rich and debilitates the poor. So does capitalism eliminate or reinforce inequality? Yes, capitalism does reinforce inequality.
First off, capitalism promotes employment and increases the job opportunities available to the workforce. It provides a steady income for employed workers and enables them to afford their basic necessities. It also promotes competitiveness and drives companies in developing innovations that could help in potentially easing people’s daily lives.
On the other hand, capitalism also causes inequality. Since it promotes competitiveness, it also motivates companies to hire people who belong to the middle-class, upper-middle-class, and upper-class who had better education compared to people belonging to the lower class. This creates a disparity between the salaries of people belonging to different classes, which results in inequality. Furthermore, if inequality continues to foster in a country, more people will sink into poverty, and only a little percentage of the population will remain above the line of poverty.
Has globalization increased, or decreased global poverty?
In my opinion, globalization has indeed decreased global poverty, but it has also increased inequality. According to the National Bureau of Economic Research, evidence shows that export growth and foreign investments have helped in reducing poverty in Mexico, India, and Poland. Aside from these, many transnational companies that expand businesses in foreign countries, also provide more job opportunities for that country’s citizens.
On the other hand, globalization also promotes economic growth, which could lead to higher living standards that could be more costly. It also makes technological advancements faster and its worldwide spread easier. This becomes the privileged people’s advantage over the marginalized, which contributes to the inequality experienced all over the world.