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Causes of Poverty

Causes of Poverty

Poverty is the inability of a person to fulfill his/her basic needs. Various factors like employment, education, resources, and governance result in poverty. Here's more...
Aastha Dogra
Businessman on Big Piggy Bank
Poverty today is a major global issue. It can be explained as the inability of a person to fulfill his/her basic needs like food, shelter, clothing, health, and education. Poverty is not limited to the continents of Asia and Africa anymore. In fact, as per census figures 2013, one is six Americans live in poverty, which is the biggest economy in the world. It is one phenomenon which is found in each and every corner of the world, although, the causes may differ from country to country.

Reasons for Poverty

Unequal Distribution of Resources
One of the most vital reasons cited by many organizations is unequal distribution of resources. According to the European Anti-Poverty Network, high level of poverty in the European Union is because of the way society is organized and resources are allocated. It is the result of lack of equality. Same applies to many other countries in the world, including India, China, and the U.S.

Lack of Proper Governance and Corruption
In many countries, there is widespread corruption among its political class. Most of the money aimed at welfare of the poor, lands in the pockets of politicians. When poor people do not benefit from education or employment programs meant for them, they continue to wallow in poverty. Besides this, the political-bureaucaratic-business nexus resulting in large amount of corruption is pushing more people into poverty. Businesses seek more resources for growth, and the government which is represented by politicians and executed by bureaucrats facilitate allocation of resources, results in the formation which work only for its own benefit.

If you look at any of the underdeveloped countries, the literacy rates will be very low. Lack of education means lack of employment avenues, thus leading to no income in the future, and unemployment coupled with poverty. This is also applicable to the illiterate population in developed countries.

Immigration or moving away from one's own homeland to another city or country, in search of employment, leads to poverty among the native citizens. Immigrants, many a time, are ready to work on low wages, and this leads to natives losing their jobs, and that pushes them into poverty. However, many organizations and scholars counter it. According to them, immigrants take jobs which natives do not like.

Poverty in America

High Living Costs and Low Income
Living costs are rising heavily, however, income of employed people is falling due to low wages, and this is putting a strain in managing the daily affairs of an individual. With falling income, many families are left with very less money to spend on health and food, as most of their income is spent on household costs.

Changes in Business Scenario
Another cause behind poverty in the U.S. is the change in the business scenario. A couple of decades ago, manufacturing industries like steel, textile, and auto companies flourished, which employed a lot of people. But now, the focus is more on information technology and health care, both of which employ only skilled and trained people. Besides, many of the jobs are being outsourced to India and other countries, resulting in the loss of jobs at home.

Lack of Education
Certain communities in America, such as Hispanics and Blacks, see a higher dropout rate in education as compared to others. When proper education is not given, people are unable find employment, thus leading to widespread poverty in these communities. This is also the result of university education getting costlier, which is highly becoming out of bounds for many students from poorer families.

Political Factors
Different political factors and decisions by lawmakers also affect the chances of a person to have access to basic needs. Recent government decisions about reducing the aid given to unemployed and poor people have resulted in the increase of people going below poverty line. Reduction in the federal assistance in housing programs and various social services has resulted in poverty among many people.

According to many economists, poverty in the U.S. could be reduced if there are enough jobs for the population, and the current scheme of taxation which doles out tax-breaks to wealthy individuals could be altered into equal taxation or more taxes for the rich.