It is difficult to imagine living on an income of only
$1.90 per day. In the United States, $1.90 is the price of a bag of rice, a
twenty-ounce soda, or one gallon of gasoline. The idea is almost inconceivable,
yet ten percent of the global population in extreme poverty survives on $1.90
or less per day. As of 2015, 736 million people around the world live in
poverty. Nearly 20 percent live on $3.20 and approximately 40 percent on $5.50
daily. The number of people in poverty has declined from 36 percent in 1990 to
16 percent by 2010; however, this statistic will likely increase due to the
recent COVID-19 pandemic (United Nations, 2020). The World Bank estimates that
40 to 60 million more will enter extreme poverty this year due to possible
recession, job loss, acquired healthcare
expenses, education interruptions, and overall price increases due to the
pandemic. The number of people living on $5.50 per day could increase by 70 to
180 million (2020). The current economic climate only exacerbates the global
poverty crisis.
The United Nations set a goal to end extreme global
poverty by 2030 (2020). Many economists and scholars agree that poverty is a problem
that requires a solution, but there are various arguments for an effective
strategy. Some economists argue that income inequality is responsible for
poverty, while others assert that there is little causal correlation between
the two terms. Scholars deliberate whether income redistribution like universal
income is a viable option or financially unattainable. There is open debate
concerning the effectiveness, affordability, and sustainability of universal
income and social welfare systems. Some economists believe that money is only a
temporary solution. A problem this complex involves addressing the core causes,
one of which is limited upward mobility. People living in poverty require more
growth opportunities such as secondary education, employment, and accessible
income assistance programs to produce long-term results.
An Ethical Responsibility
Why is it
important to research the possible causes of poverty, the well-being of those
in poverty, and seek a solution? Many would argue that society has a moral
responsibility to those in need. For centuries philosophers sought to define
the concepts “good” and “ethical”, and many consider others’ welfare in their
philosophies. Deontology defines one’s ethical responsibilities as a duty.
Utilitarianism maintains that an ethically right decision is one that is best
for the greatest number of people. Confucianism stresses that the attributes of
a noble person include humility and compassion (Ahmad, 2013). Stoics advocate
treating others as equals with dignity. Cicero mentioned that humans should
help others as an act of virtue, Marcus Aurelius included it as one’s duty, and
Seneca defines this assistance as morally mature (Hill, 2015). Many
philosophers consider charitable acts as a moral act or indicative of a
virtuous person, including helping one’s neighbors.
Globalization
broadens the definition of one’s neighbor. People once separated by oceans and
miles are now connected faster than before through the internet and
technological devices. The existing global community requires a set of ethical
guidelines. Global ethic philosophers discuss the ethical implications of such
topics as terrorism, child labor, global warming, and food and water scarcity.
Global ethics acknowledges the need to assist people who are “disadvantaged,
economically, socially, politically, and culturally (Bhargava, 2006, p. 11). Those
in extreme poverty have limited access to food, sanitation, education, water,
and other essentials. Besides the lack of essentials necessary for survival,
they often experience a social stigma (Peterson, 2017). It is essential first to
identify the cause to determine a solution.
Income
Inequality
Many argue
that income inequality is a cause of poverty, while others say that it is a
result of poverty. Income inequality occurs when there is a noticeable
difference between the highest and lowest earners in a region. The Gini
coefficient measures a country’s income inequality. The Gini coefficient is an
average of the differences between all incomes within the data population. The
Gini coefficient ranges zero to one, where an average of zero represents completely
equal income, and one means that only one person makes all the income within
that country (Vilhjalmsdottir et al., 2018). It is highly improbable that any
country will ever measure zero or one on the scale. Based on the Organization
for Economic Co-operation and Development’s currently available data, the
countries range from 0.24 in the Slovak Republic to 0.62 for South Africa. The
United States is the seventh-highest with a Gini coefficient of 0.39 (2020).
The poverty rate for South Africa is the highest at 0.266, and the lowest is
Iceland with 0.054 (Organization for Economic Co-operation and Development,
2020). South Africa ranks the highest in both categories, but is that evidence
that income inequality affects poverty?
According
to one study which analyzed data from 731 counties within the United States,
researchers found that income inequality may lessen growth efforts to decrease
poverty. Researchers found statistically significant results that a one percent
increase in household income would raise approximately 600,000 top 633,000
people out of poverty with no change in income distributions; however,
increasing income inequality by one percent can dampen those efforts by 28
percent (Nasir & Mridha, 2017). So a widening of the income gap could
prevent approximately 170,000 people from rising out of poverty, who, with unchanged
circumstances would benefit from assistance.
Another area
with considerable research is how income inequality affects one’s quality of
life and well-being. Higher income inequality may increase the emotional
problems for individuals in all income classes. In one study on emotional
problems of adolescents in Iceland, researchers found a possible correlation
between income inequality and anxiety. The participants reported increased stress
during a period of high income inequality, which decreased a few years later,
when the income inequality was lower. However, this increase in anxiety was more
prominent for those in poverty (Vilhjalmsdottir et al., 2018). However, money
is not necessarily the only factor in emotional wellness, happiness, and life
satisfaction. Researchers found that in developed countries, people reported
higher levels of well-being in countries with lower income inequality. In
contrast, people in lower-income classes in developing countries reported a
higher level of well-being. The researchers
hypothesized that the disparity is necessary as it represents economic growth
and may provide those in poverty with motivation and hope for advancement
(Rozer & Kraaykamp, 2014).
Income
inequality can indicate positive economic growth and expansion within a country.
China is a developing country that has experienced a widening gap over the last
four decades. A country may experience more income inequality with such rapid
economic growth. In China’s case, the cost of living increased significantly
faster than the country’s Gross Domestic Product (GDP). From 1952 until 1978,
the country record 6.7 percent for economic growth, while the income for households
rose only two percent (Shi, 2018).This economic progress lifted 84 million
people out of extreme poverty from 1981 through 2013 (Page & Pande, 2018).
However, the growth created a more considerable difference between low and
high-income earners. One way China is assisting those in poverty and lessening
the income gap, is by providing subsidies to families living in poverty (Shi,
2018). Economic growth and wage distribution
Universal Income
Many
countries assists groups of people who are in need. For example, Indonesia
offers scholarships, health insurance, and cash subsidies to those in poverty.
Peru also offers subsidized health insurance to those with a minimum income (Hanna
& Olken, 2018). Many of these government assistance programs have different
prerequisites to qualify for these programs, and those in need may not receive
the necessary benefits if the requirements. The limited access to these
programs is why some scholars propose a universal basic income to lessen income
inequality and reduce poverty. Universal Basic Income is an income
redistribution system in which the government disperses income to all individuals
independent of prerequisites (Suddath, 2018). Globalization and technology are
factors that many fear will make many current positions and job skills
obsolete. But why resort to providing income to everyone when the governments
could increase the minimum wage to a livable amount? Professor Oren
Levin-Waldman argues that universal income is inevitable. Even if a government
sets the minimum wage to a livable wage, companies will find ways to replace
workers with cheaper options due to advances in technology (Levin, Waldman, 2018).
Perhaps with globalization, that is the economic reality because why would
companies pay an employee fifteen dollars per hour when they can find laborers
in other countries for much less.
Several
countries have tested or implemented universal income modeled programs that
demonstrate it is beneficial for those in poverty. In China’s example, the
country integrated a minimum income system to support urban and rural citizens since
2003, which assists over seventy million low-income citizens (Shi, 2018). Spain issued a universal basic income
in light of the pandemic (Johnson et al., 2020). In a small scale study in Finland,
participants received $670 per month of basic income. Six hundred and seventy
dollars is not a life-changing amount of money, but the recipients reported an
alleviation of stress for meeting basic needs (Suddath, 2018). Furthermore, current
universal income programs reduce health and mental health inequities. Since the
1970s, Alaskan residents receive an income transfer through the Alaska
Permanent Fund. Since the implementation of those transfers, researchers have
observed a decline in low-birth rates by 14 percent (Ruckert et al., 2017). Similar
programs in other countries produce positive results. In Kenya, 24 percent of
youth reported fewer feelings of depression. In Manitoba, the need for healthcare
services decreased by 8.5 percent (Ruckert et al., 2017). Universal income has
the advantage of reaching every citizen over current social welfare systems,
and possibly improving mental well-being and physical outcomes, but what is the
cost of a universal income program?
Financial Considerations of Universal Income
Research
shows several possible ways that universal income may improve the economic
state and well-being of those in poverty. Still, researchers argue that a
universal system is not a financially feasible solution. Researcher Simon Cowan
estimates that the cost of this program is too high for reasonable taxation to
cover. According to his calculation of three different possible applications,
the cheapest program would require 100 billion dollars in government funding
(Cowan, 2017). Many argue that the government can recoup the required taxes from
corporate businesses. Per Cowan’s calculations, tax avoidance would only cover
five percent of the amount needed for a universal income program (2017).
Another researcher, David Colander, estimates that providing 20,000 dollars per
household would require 2.4 trillion dollars (2019. The taxes currently collected
are only 1.8 trillion. Like Cowan, Colander also notes that taxation of those
households earning an income over 150,000 annually will not make up for this
deficit of funds (2019). According to these costs, universal income is not a
workable solution without considerable adjustments to the tax tables.
Proposed
Solutions
The United
Nations recognizes poverty as “the greatest global challenge facing the world
today” (2020, para. 1). Financial assistance only alleviates poverty partially,
as these individuals also require growth and upward mobility opportunities.
Without upward mobility, these individuals have few ways to advance beyond
poverty. Individuals in poverty need the same opportunities, such as advanced
educations, employment, and financial inclusion, to advance beyond poverty in
the long-term.
One’s
ability to obtain education impacts one’s economic standing. For example, many
studies demonstrate that children who grow up in poverty are more likely to
remain in poverty throughout their adulthood (Duarte et al., 2018). Researchers
look to multigenerational poverty to understand the conditions that exist to
prevent families in poverty from advancing. One study on multigenerational
poverty in Spain found a significant correlation between attaining secondary
educations and whether one’s parents also completed that level (Duarte et al.,
2018). The cost of education may be a significant factor. According to the U.S.
Department of Education, the cost of tuition of secondary education in 2017 for
public, private nonprofit, and private-for-profit colleges ranged from $17,237
to $44,551 (2019). The cost of college is
essentially an unattainable possibility for those surviving on $5.50 or less per
day. However, without an education, it
is difficult for one in poverty to flourish economically.
Another
issue for those in poverty is unemployment and job availability, which
education can help accommodate. Education provides an opportunity for higher
wages and more job security overall. According to the U.S. Bureau of Labor
Statistics, people with a Bachelor’s degree earn an overage of 40 percent more
per week, $1,248, than those with a high school diploma, $746. Individuals with
a doctorate earn $1,883 on average weekly, which is 250 percent more than those
with only a high school diploma (2019). The unemployment rate for full-time
workers over age 25 also steadily declines with higher education. The
unemployment rate for people with less education than a high school diploma is
5.4 percent, 3.7 percent for those with a high school diploma, 2.2 percent for
those with a Bachelor’s degree, and only 1.1 percent for those with a Doctorate
(U.S. Bureau of Labor Statistics, 2019). This data indicates that continued
education can increase wages and job security.
Financial
inclusion is another component of poverty reduction. Many people who live in
poverty, especially in developing countries, have little or no access to
financial programs that may help them grow economically. People without access
to financial services such as banks and loans miss opportunities to save,
invest, obtain loans, and accumulate wealth. Researchers analyzed the available
data from 116 countries from 2004 through 2016 and found that financial
inclusion has a significant influence on the reducing poverty, especially when
combined with economic growth (Omar & Inaba, 2020). Therefore, developing
countries experiencing growth should offer affordable and accessible financial
services for citizens with low-income to aid in reducing poverty.
Conclusion
One-third
of people who live in poverty are under 18 years old and under-educated (The
World Bank, n,d.). The number of children in severe poverty could potentially
reach over 160 million by 2030. The widening income gap is an indication that
the income is distributed unevenly within a country, but the number in poverty
requires critical attention. It is
impossible to eradicate income inequality, as complete income inequality is not
possible under current economic climates, but there are ways to reduce poverty.
Individuals in poverty require financial assistance to obtain the essentials
but also need education and employment opportunities to advance. Since
universal income is not economically sustainable, countries should implement or
restructure the current social programs to reach and include all individuals in
poverty. Additionally, those in poverty need access to higher education, which
will improve unemployment by increasing job security. Ten percent of the global
population lives in extreme poverty, many lacking the necessities to survive.
Ethically and globally, society cannot ignore this struggling population.
Evaluation
of the Evidence
There is no known bias to report in the information provided. The sources referenced within the paper were all published within the last five years, except for the articles about globalization. The weaknesses of the research are that it is difficult to approach the concept of global poverty as though it has one universal solution. Every country has different programs to assist those in poverty. One program that is successful or affordable for one country may not apply to other countries. Countries have differing political and economic climates that may require alternative solutions. This research highlights areas where most living in poverty will benefit. Additional research is recommended for specific countries.
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