Understanding Poverty

by Crypto Drive

In this article, allow me to share my understanding on this important topic based on my background as a son of an upland farmer, who also in his lifetime have tried to get out in the quagmire of poverty.  The insights I will be sharing is based on my life’s journey, some readings and practical experiences as former employee in government agencies and during my engagements with non-government organizations.

It has been said that in order not to remain poor, one has to understand what it is, and what are the causes of poverty. Those who intend to help the plight of the marginalized sectors, as well as those who are born in the middle class and at the higher level in the economic ladder having conscious desire not to become poor in their lifetime, might also need to learn a thing or two on this particular subject.

Those who are born with the proverbial “silver spoon” may not have encounter real poverty as they have not actually felt hunger pangs in their life. But those observant enough and have discernment of their surroundings and the general community environment, they may have seen and realized the sufferings of the poor. As they walk in the streets,  or while in front of their television sets and monitors watching news and live feeds.

Suffering of various degrees due to poverty is prevalent not only in less developed countries. Highly developed economies have also their blighted districts and slums. Marginalized segment of the global population ranges from indigenous people, farmers and fisherfolks, rural and urban poor. Including those civilians, families and communities that is caught in the cross fires of insurgency, rebellion and wars.

Definition and Extent of Poverty

For some people, poverty or being poor simply mean – no money.  Wikipedia defines poverty as the “state of having few material possessions or little income.”

While investopedia expounded that “poverty is a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living. Poverty means that the income level from employment is so low that basic human needs can not be met.”

So more than lack of money, being poor is about having without, or few material possesions, practically having an income that can not adequately meet the basic needs of an individual, or family. This is measured based on the minimum standard of living and poverty threshold.

Minimum standard of living is a minimum of necessities, comforts, or luxuries held essential to maintaining a person or group in customary or proper status, or circumstances, according to Merriam-Webster dictionary. But then, minimum standard of living varies among countries, communities and cultures.

Economist measures poverty condition of a particular place or country in terms of poverty incidence based on pre-determined poverty threshold.  The poverty threshold, or poverty line is the minimum level of income deemed adequate in a particular region or country. The poverty line is usually calculated by finding the total cost of all the essential goods, services and basic needs that an average person consumes in one year.

In October 2015, the World Bank updated the International Poverty Line (IPL), a global absolute minimum, to $1.90 per day per person (in PPP-Purchasing Power Parity), where it current stands (as of 2022), and also as of 2022, $3.20 per day in PPP for lower-middle income countries, and $5.50 per day in PPP for upper-middle income countries.

Based on latest figures of the World Poverty Clock (worldpoverty.io/worlddata.io) a total of 679,651,247 is living in extreme poverty as of July 7, 2022.  This is roughly equivalent to 8.5% of the total world population of 7,998,904,373 based on current population figures by countrymeters.info on this same day. 

While the United Nations Guiding Principles on Extreme Poverty and Human Rights define extreme poverty as being characterised by social exclusion and by an accumulation of insecurities in many areas of life: a lack of identity papers, unsafe housing, insufficient food, and a lack of access to health care and to education.

Causes of Poverty

But if we ask why poverty persist despite the abundance of money in this world, and many opportunities to earn it? The truth is that poverty, in its real sense is not just all about money. It has a lot of complex ramifications.

This is what Dr. Cielito Habito, former Philippine Socio-Economic Planning Secretary and Director-General of the National Economic and Development Authority said: “Most of us understand that poverty is much more than mere lack of income. Poverty has several dimensions, and economic poverty, while the most widely understood, is not the whole story. People can also be socially poor, environmentally poor, politically poor, culturally poor, or spiritually poor. Setting those aside, even just the economist’s view of poverty takes on several dimensions. To economists, poverty is rooted in lack of endowments, that is, lack of access to five forms of capital: financial, human, natural, physical and social.”

So again, on a plane economist view, poverty has several dimensions. To economists, the cause of poverty is the lack of access of various forms of capital. Lack of money, or financial capital is just one of these being the most known, and common perception of the great majority of people. Hence, poverty still remains a problem despite so many billions of government resources spent to address this social and economic problem.

It could be for this reason that the American political satirist, author and journalist Patrick Jake O’Rourke opines – “You can’t get rid of poverty by giving people money.”

Yes, giving money in the form of dole-out and cash transfer programs to the poor will not, and will never solve poverty. What is needed is for the poor to realize they are poor, understand why they are poor, then consciously desire and be fully determined to get out of such condition.

Helping people develop and enhance their human capital, their capabilities – knowledge, skills and attitude – towards improving their lives through proper education is one needed intervention. The nurturing and development of their capabilities has to be the very first step that every human being should undertake on their pursuit towards a prosperous life. Irrespective of their socio-economic roots and background.

By education, this doesn’t mean that it has to be formal education.  There are many successful and wealthy people who are not well educated academically. There are a number of billionaires who did not even have college education. It is commonly observed that even just the sheer personal desire to continuously earn and learn, together with the persistent effort to find various ways to improve their lives, spells out economic success for well-motivated individuals.

But it will be an advantage if a great majority, if not all people, will be formally educated and gain the needed knowledge, skills and capabilities to earn decent income for themselves and their families. Based on actual observations, a deficiency in proper education may also affect the access to other forms of capital like financial capital among others.

Human capital enhancement has to be in the forefront of any development initiatives. Foremost in this dimension is good health as everything, almost all the productive capacities of man is primarily dependent on physical and mental condition. Especially those whose livelihood is anchored on manual labor. In such case, without full physical functionality, income generation capability is affected.

In the financial realm, lack of access of financial capital sometimes limit a person capability to grab livelihood and business opportunities.  More so if there are existing barriers in terms of policies and various financing requirements that hinders timely availment by the disadvantage groups.

Another form of capital that is quite difficult to access among the poor is social capital.  This is the type of capital that is often overlooked by ordinary people, especially the poor that do not have any social interactions outside of their immediate families. Social connections is being harnessed masterfully by the rich and most businessmen to expand their influence for them to create more wealth. Hence the usual term use in this particular practice is “monetizing” social connections.

There are lot of cases that social capital, or connections facilitates access to financial capital. Like soliciting direct investments from families, relatives and friends, or accessing lending facility thru acquaintances. Or even just borrowing money from relatives to purchase basic goods among poor families. Affiliations not only facilitates business transactions, but also expedite employment placement in the government and the private sector enabling well connected families gain access to regular income opportunities.

Natural capital refers to the natural endowment in their immediate environment that can be accessed by individuals which they can use to produce food, and generate cash or non-cash income.  This includes the land and everything in it, water bodies and oceans. A person having a piece of land to till can plant crops and raise domesticated animals for their food requirement.  In archipelagic and coastal communities, livelihood of the local populace mostly depend on their fish catch and other inherent marine resources. For this reason, geographic location is also one factor that determines economic fate of people and communities.  Those living in humid highly fertile agricultural lands may have lesser productive challenge compared to the populace in the dry, arid, sandy desert lands.    

At this juncture, allow me to share my life experience. I was born in a farm family with a one hectare coconut land. At least we can eat food two, or sometime three times a day then. From the corn harvest, banana, cassava and other root crops planted under coconut. I can still remember that we can only have money to buy rice and canned sardines when my father can sell copra to local traders which usually happen every three months. But with my four siblings that time (eventually we became a family with 9 children), farm income is not really enough.

As a natural capital, the land that was inherited by my father from his parents can not adequately provide for his family. This compels him to seek for employment in the government being a high school graduate. The municipal mayor in our town he personally knew, give him the opportunity to work as a clerk.

So using the “human capital”, considering the knowledge and skills he had – using the typewriter, among others – and with a second grade civil service eligibility, he ended up to became a municipal treasurer later. In the middle seventy’s, our family was supposed to be out of the poverty cycle, until his untimely death in 1976. Then again we were placed back at the bottom of the economic pyramid. Our family is on a survival mode after that. I was able to finish my college education as a working student. Being the eldest, at that time I realized that completing or not my college education could spell out the possible future of my younger brothers and sisters. With the fact that my mother is a plain housewife until my father’s death.

Unforeseen tragedies can really place families in the lower middle class to fall below the poverty line, and those economically active poor households deteriorating further into extreme poverty.  This is the reason why natural and manmade calamities usually alters the economic condition of people as there financial, natural and physical assets and earning capacities are destroyed and hampered, if not totally dissipated.

Poverty situation is also aggravated with the lack of access to physical capital. Physical capital are those physical assets and infrastructures necessary to undertake productive activities.  Mechanisms, hard and soft infrastructures that facilitates socio-economic endeavors and entrepreneurial ventures to flourish. Roads, bridges, telecommucations and transportation facilities are vital physical capital. Along with the various services that goes with these assets that has to be accessible to every human being for them to be highly productive.

Physical capital also includes residential, apartment, commercial and industrial buildings of families, communities and business entities. For this reason, having possesions of and access to these capital assets along with its proper management can bring value and financial gains to the owners and/or users. In the case of commercial structures and public markets, entrepreneurs and vendors using these trading service facilities can undertake their operation gaining value for their respective businesses.

For this reason, it is imperative that governments desirous to uplift the economic condition of their constituents has to see to it that relevant infrastructure projects must meet the needs, and be enjoyed by the great majority. To bring comfort, safety and  efficiency thereby improving over-all productivity, depending on the purpose of its establishment.

Breaking Out of Poverty

Breaking out of poverty is one thing. Achieving a life of prosperity, and sustaining it is another story.

Actually, this is a challenge that is not easy to accomplish. For some people, this is a long way process that may take a lifetime to achieve. Depending on current socio-economic realities surrounding an individual, family or community. More so that there are so many factors that affect the dynamics of an economy.

History is replete with examples of people reaching the pinnacle of wealth, then eventually ending in poverty.  As there are also a number who started in life with nothing, then eventually became billionaires. For this latter breed, those aspiring to become one can draw their inspiration. That’s why it also helps to study biographies of people that inspires, as well as those whom we can learn a lesson or two for their failures.

For those who are priveleged to possess and have access to all these various forms of capital, what is needed is to nurture conscious effort to learn how to manage well these resources. To be a good steward of natural and physical assets is a must, wether they personally acquire these things, or these are being handed to them as legacy. Such that these will gain more value over time, continually generating income, and consistently building a life of sustained abundance and prosperity.

Those who are in this predicament and determined to break out of poverty, it is important to nurture a mindset towards living a prosperous life. Even if the present condition is quite a distant yet from it.

Over and above of developing capabilities, finding ways to access, or acquire various forms of capital, what is needed is to have a prepared mind. Adequate knowledge, understanding and determination, along with the right mentality. That can guide day to day decisions to make daily life better, and financially secure, whether at the personal or household level.

What matters most is a person’s readiness to grab opportunities every time it comes our way. Especially if it is within our power to get it.  Without that ready mind, it is very difficult to take hold of “once in a lifetime” opportunity that may come our way. That could be just around the corner.

Possibly like me, some people learn this lesson in life, the hard way.

In closing let,  let us learn something from my former supervisor who use to explain this lines to participants in our entrepreneurship development seminars – “If we are born poor, we can always blame our parents. If we die poor, we can blame only ourselves.”

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