Global Poverty Situation and Economic Analysis
【Overview】
He who shows mercy to the poor lends to the Lord, and the Lord will repay him for his good deed. (Proverbs 19:17)
No society can be prosperous and happy in which the majority of its people live in poverty and misery. (Adam Smith, 1776)
Social security can directly reduce poverty and make growth more "poor-biased." (OECD, 2010)
Our ideal is a world free from poverty. (World Bank Mission Statement)
1. The meaning of poverty
This article intends to introduce the universal poverty problem, what policies and measures should be taken internationally and nationally to reduce poverty, and how we can participate in poverty alleviation.
Poverty is a major social problem in all countries, and its severity depends on the country's level of economic development. Even rich and powerful advanced countries still have many poor people, including homeless people, who are the most vulnerable groups in society. All countries, whether developed or developing, attach great importance to their own poverty problems and are committed to reducing poverty.
Governments of various countries and international organizations such as the World Bank and the United Nations Development Program have poverty alleviation policies and plans. However, after half a century of hard work, there are still many people living in poverty, especially in less developed regions and countries. Sub-Saharan Africa and South Asia have the highest proportion of poor people. Poverty alleviation remains the future focus of various countries and international organizations.
There are many reasons for poverty. Firstly, there is insufficient production to feed everyone. Secondly, income and wealth are unevenly distributed. The rich enjoy luxury while the poor have no place to stand. In advanced countries, since the Industrial Revolution in the 18th century, mass production in factories, advances in agricultural technology, and increased food production have led to a significant increase in the wealth of ordinary people over a period of time. Coupled with the social welfare system, most people can enjoy a life of adequate food and clothing. , but there are still a small number of people living in poverty.
Most of the developing countries, especially the poorer ones, live with insufficient food and clothing, and it is still common for the entire country to be impoverished. No wonder some people say that the most important reason for people's poverty is living in poor countries, followed by living in rural areas. To get rid of poverty, a country needs economic growth, but the fruits of growth should be shared by all people, rather than falling into the pockets of a few. If everyone's income increases, absolute income can be increased and the proportion of poor people can be reduced.
Poverty can become a vicious cycle, or so-called poverty trap, in which poor people are trapped in persistent poverty and hunger, and it is difficult to get out of the situation unless they get help from others. Therefore, supporting the poor and helping the poor to become self-reliant and escape poverty is indeed a cause of concern.
2. Definition of poverty and poverty alleviation policies
The Chinese word "poverty" refers to extreme inadequacy, poverty and lack of money. Poverty in English also covers many aspects, generally referring to the state of lacking a certain amount of money or material things. Absolute poverty refers to the lack of basic necessities of life, including food, water, sanitation, clothing, housing, medical services and education. Relative poverty refers to uneven economic distribution. The income of the population is lower than a certain standard ratio. It can usually be estimated by some indicators, such as the Gini coefficient. The higher the index, the more uneven the income distribution. Can be used as an international comparison.
The first thing any poverty alleviation policy or measure faces is the identification of poor families, that is, the quantitative definition of poverty, in order to have a basis for determining relief standards. Usually, the poverty line (poverty) can only be established based on family income and the expenses required to maintain basic living. line). Since each country has different levels of economic development and price levels, most poverty lines are set by themselves.
The international community generally adopts the World Bank's estimated definition of "absolute poverty" and uses the inability to meet basic subsistence needs (living expenses or income per person per day) as the poverty line. The current standard is an income of US$1.25 per day (based on the 2005 purchasing power parity method). estimated to facilitate international comparison). Less than US$1.25 is extreme poverty; US$2 to US$5 is moderate poverty; if the average real income per person per day in the country or region is less than US$1.25, the gap between them is poverty Poverty gap, for example, if the income per person per day is US$0.87, the poverty gap is US$0.38. This indicator can be used as a government subsidy program to help the "absolutely poor" population at least reach the level of "extreme poverty".
However, this poverty line indicator is quite controversial, because many countries have different definitions of poverty, so they set their own national poverty line as the subsidy standard and adjust it with inflation. For example, in the United States, the absolute poverty line in 2010 was US$15.15 per person per day or US$22,000 per year for a family of four (standard example), and in 2013 it was US$23,492 per year for a family of four. The poverty rate decreased year by year in 1993, and then increased year by year after reaching 11.3% in 2000; in 2010, 15.1% of the population was classified as poor. 1 According to recent reports, the number of poor people in the United States reached 46.2 million in 2011 and 46.5 million in 2013, accounting for approximately 15% of the total population. 2 It can be seen that even advanced countries such as the United States still have many poor people.
Taiwan originally did not have a clear poverty line definition. Low-income households and low- and middle-income households were the main targets of social assistance, and the minimum living allowance standard was used to determine the amount of assistance. Since 1997, the average per capita median disposable income of 60% has been uniformly used to calculate the low-income population. In 2011, the Social Assistance Law was revised to increase subsidies for low and middle-income people. In 2012, the number of low-, middle- and low-income people was approved to be more than 639,000. In 2013, it increased to more than 696,000, accounting for only about 3% of the total population. Starting in 2014, the poverty line was adjusted for the first time after the law was revised, from NT$10,244 to NT$10,869 in Taiwan. It is estimated that the number of low- and middle-income households will rise to approximately 750,000 in 2014, accounting for 3.2% of the total population. 3
China's poverty line is set at a daily income of RMB 6.3, with the main poor population living in rural areas. According to data published by the National Bureau of Statistics of China in February 2013, 98.99 million rural residents lived below the poverty line in 2012 (approximately 10.2% of China’s total population), which was 23.39 million less than the figure in 2011. It is an interesting figure. Remarkable rate of progress. 4
3. International efforts to alleviate poverty
Reducing poverty is the main goal of many countries and international institutions, such as the United Nations and its subsidiary World Bank; the World Bank's mission statement is even engraved on the stone at its headquarters: "Our ideal is a world free from poverty." 5 After After years of back-and-forth discussions, on September 8, 2000, the United Nations issued the Millennium Development Goals and Targets (MDGs) at a summit meeting attended by representatives or heads of state of 189 member states. The MDGs set eight poverty reduction goals before 2015 in the new millennium. Under each goal, a number of specific targets (18 targets in total) and indicators (48 tentatively planned) are set. . The eight goals are: eradicating extreme poverty and hunger, universalizing primary education, promoting gender equality and empowering women, reducing child mortality, improving maternal health, fighting HIV, malaria and other diseases, and ensuring environmental sustainability. , and promote global partnerships for development.
The primary goal of the MDGs is to halve the proportion of people living in extreme poverty by 2015. The other seven goals are also relevant to reducing poverty. According to World Bank estimates, there were 1.91 billion extremely poor people in the world in 1990, the vast majority of whom were in developing countries, accounting for 43.11% of the total population, with the largest number in sub-Saharan Africa, South Asia, and Southeast Asia (China) (see Figure 1) . After hard work, it dropped to a new low of 22.7% in 2008; it is estimated to have dropped to 20.6% in 2010, reaching the Millennium Goal five years ahead of schedule. 6 Between 1990 and 2010, approximately 663 million people were lifted out of extreme poverty, but as of 2010, 1.22 billion people were still in extreme poverty, accounting for approximately 21% of the population of developing countries. 7
Figure 1: The World Bank estimates the declining trend in the ratio of extreme poverty to the total population.
Source: World Bank: World Development Indicators, 2013, p2.
Another statistic shows that the decline in the rate of extreme poverty is mostly due to improvements in mainland China (see Figure 2). The number of people living in extreme poverty in the world decreased by 721 million from 1981 to 2010, but most of the decrease occurred in mainland China, from 835 million in 1981 to 155 million in 2010 (a decrease of 680 million). million); other regions saw smaller decreases, with low-income countries even increasing from 249 million to 352 million. In terms of population ratio, the ratio in mainland China dropped from 84% in 1981 to 12% in 2010. India dropped from 60% to 33%, and low-income countries dropped from 63% to 44% (but due to higher population growth rates, the number of people in absolute extreme poverty increased instead). 8 Looking at individual countries, 59 of the 112 developing countries will achieve the goal of halving poverty. How to help these poor people escape poverty remains a challenge around the world.
In April 2013, the World Bank set two new goals. The first is to eliminate extreme poverty in the next two decades. The specific target is that by 2030, the number of people in the world who only need to live on a basic living allowance of US$1.25 a day will not exceed 3%. . The second is the World Bank's strategy to promote shared prosperity, hoping that the income of the lowest-income people in each country will continue to increase in the next five years. 9
Figure 2: Extreme poverty rates have fallen, but many people remain in extreme poverty
Source: World Bank: World Development Indicators, 2013, p2.
Figure 3: World national income distribution in 1989 (represented by GDP)
The World Bank's first goal is to reduce the number of extremely poor people from 16% to 3%. This is an arduous project, especially in sub-Saharan Africa where the extreme poor population is about 400 million, and the extreme poverty population is as high as 500 million. of South Asia. Assuming that the world population is 8.5 billion in 2030, the number of extremely poor people cannot exceed 250 million. By then, the poor will still be concentrated in these two regions, each accounting for 40%.
4. Poverty and income distribution
Improving income distribution and increasing the income of the poorest people is the World Bank's second goal. If a country wants to reduce its poverty population, in addition to its economic growth rate, it also depends on its income distribution. If the fruits of economic growth are taken away by the rich, the poor still do not get much benefit. Income distribution, and even wealth distribution, therefore becomes important in reducing poverty.
In the early stages of development in advanced countries, real wages (after excluding inflation) increased and the government focused on the relative equality of income distribution, which created the ability of the middle class to consume large amounts, further driving more economic growth. However, in recent years, advanced countries have also faced increasingly severe problems of uneven income distribution and wealth distribution.
There are two types of income distribution. One is international income distribution, which means that rich and powerful countries have high incomes and poor countries have low incomes, as shown in Figure 3, resulting in a champagne glass-like income distribution (estimated based on gross domestic product, that is, Gross Domestic Product , GDP); a wealthy country that only accounts for 20% of the world's population has a national income of more than 80%.
The other is the distribution of income within a country. Every country has uneven income distribution. For the sake of economic justice and social fairness, most countries hope to narrow the gap in income distribution. However, in recent years, many countries have faced worsening income distribution problems.
▲The uneven distribution of wealth is more serious than the uneven distribution of income. How to create more wealth and benefit the poor is an important issue at present.
For example, in the United States, economists estimate that income distribution inequality has worsened significantly since 1980, and wage growth has been slow or even falling. The proportion of the population with the highest income in the country's total household income increased from 101T in 1980 to 2011T in 2011, reaching a record high, and still reached 19.31T in 2012. In 2012, the income growth rate of the 1% population with the highest income was 19.6%, while the income of the other 99% population only increased by 1%. 10
From 2009 to 2012, the household income of the top 1% population in the United States increased by 31.4%, while that of low-income earners only increased by 0.4%. The real income gap between the richest people and the poorest and middle-income people in various regions across the country has widened. The income of the richest people has grown rapidly, while the income of the poorest and middle-income people has grown slowly or even decreased.
Globalization and technological progress prevent wages from increasing. In a capitalist society, the tools of production are privately owned. In the past thirty years, the wealthy have monopolized the tools and technology of production, making profits at the expense of the labor of the working class and the natural environment. This process is closely related to the fact that American capitalism has long neglected industrial production and instead turned to speculation and a more dependent or derivative form of wealth accumulation.
Nobel Prize winner in economics Joseph Stiglitz said: "I am worried that it will become a vicious cycle; worsening inequality will weaken the economy, and worsening inequality will weaken the economy even more. Economic inequality enters the political economy, making Economic stability is even more difficult.”
The Organization for Economic Co-operation and Development (OECD), which represents advanced countries, also warned in 2012 of the negative effects of unequal income distribution in countries and recommended that countries adopt more aggressive tax laws and changes in spending plans. In addition, the International Monetary Fund (IMF) also warned that focusing only on economic growth and ignoring uneven distribution will also have a negative impact on economic growth. During the depression, the richest 10% population received a higher proportion of income, making wealth distribution more uneven and concentrated. The experiences of advanced countries and above are also coming to other countries, including Taiwan and Mainland China, and they need to plan accordingly.
But what is more critical is the uneven distribution of wealth, which is more serious than the uneven distribution of income. Income is the total income in a year, while wealth is the total wealth at a point in time, including real estate and personal property (financial assets). According to statistics, the richest 1% people in the United States own one-third of the country's wealth.
The adjustment of income distribution is one of the biggest problems in economic development. Because being rich equals having power, it is very difficult in a democratic society to influence rich and powerful people to redistribute their own income and wealth. Heavy taxes on people with high income and wealth will also cause domestic capital to flow out. Therefore, moderate inequality in income or wealth distribution is inevitable and necessary. The question is how to create more wealth so that the poor can also benefit.
5. Homeless people - disadvantaged, medium to disadvantaged groups
The most vulnerable of the poor may be the homeless (homeless, homeless or homeless), in the United States, there were an estimated 610,042 people in 2013, and an estimated 633,782 people in 2012, a decrease from 2007 government statistics. Estimates of the number of people who have ever lived on the streets range from 2.3 million to 3.5 million.
According to the survey, the homeless problem arises 72% because of the inability to find affordable housing, 52% because of poverty, and 44% because of unemployment. 11 According to an estimate by another civil society group in July 2013, the total number of homeless people was 1.75 million, with an average monthly income of US$348 per person. 28% people did not have enough food, 66% had problems with alcoholism, drug abuse, and mental disorders, and 30% became They have been homeless for more than two years, 40% are veterans, 22% women have suffered domestic violence, etc.
The population composition of homeless people is as follows: 44% are single men, 13% are single women, 36% are families with children, and 7% are unaccompanied children. If divided by ethnic group, African Americans are 50%, whites are 35%, and Latinos are 12%. The same report claimed that 31 million people in the United States were hungry or on the verge of starvation, and 9.3 million children relied on food stamps. 12 There is no formal survey on the number of homeless people in Taiwan. According to reports, it is estimated to be between 3,000 and 4,000 people. The reasons why they become homeless are similar to those shown in foreign literature. 13
6. Poverty Alleviation Policies and Suggestions
Faced with the deterioration of income distribution and the increase in poverty and elderly populations, most countries have mechanisms in place to provide assistance to low-income households below the poverty line. For example: The United States provides subsidies to low-income households, from food stamps to medical insurance. The United Kingdom has set up a "Social Exclusion Unit" in the Cabinet Office to allow people whose lives are affected by poverty and exclusion to receive subsidies. The Irish government has the "Office for Social Inclusion" (Office for Social Inclusion), which is affiliated with the "Department of Social Security" and is responsible for coordinating and promoting the implementation of poverty reduction plans. Other advanced countries have similar institutions. Taiwan also has similar institutions, with the central government and local governments cooperating to issue subsidies. However, a significant increase in the country's social welfare expenditure will also lead to rising national debt and abuse. Governments and parliaments in democratic countries often only consider votes, abuse populist policies, compete to increase social welfare, and rarely consider fiscal discipline. This is a very irresponsible approach.
In fact, to help the poor get out of poverty, we should not just rely on subsidies, but should take a more active approach. Here are some suggestions for your reference.
1. Determine who is poor:Who are the poor is the first priority in poverty alleviation work, and the targets of assistance must be clear to prevent social welfare programs from being abused. Empirical research shows that most of the poor are concentrated in rural areas, but most of the government's budget is spent in urban areas; subsidies are also biased towards the rich.
2. From poverty alleviation to poverty alleviation:For the poor in need, it is more important not only to provide relief, but to help them obtain the ability to make a living and obtain employment, especially the most vulnerable disabled people and single mothers who lack skills. Only "poverty alleviation" can easily lead to a mentality of dependence and difficulty in being independent. Therefore, the best way is to help the poor improve their ability to make a living, which can be called "poverty alleviation" or "support." Education, encouragement, and empowerment are ways to help the poor get out of poverty. Improved educational standards reduce poverty levels. According to the survey, white American children living in two-parent families where one parent has a high school education or above can avoid long-term poverty, but only poor black children living in single-parent families with no high school education can avoid poverty. 14
▲Only "poverty alleviation" can easily lead to a mentality of dependence and make it difficult to be independent. Education, encouragement and increasing skills are ways to help the poor escape poverty.
3. Promote financial education:The average person often lacks knowledge and practices about managing money. It is also important to educate the general public, especially low-income earners, on how to prepare budgets and control expenditures. The Organization for Economic Cooperation and Development (OECD), which represents advanced countries, began an intergovernmental project in 2003 to carry out personal financial literacy education (Financial Literacy). The US government accordingly established the Financial Literacy and Education Commission (Financial Literacy and Education Commission), and other governments such as the UK, Australia, Canada, and Japan also have similar institutions. Financial literacy education programs build emergency funds and encourage less debt and more savings and investments. 15 A 2012 report pointed out that Americans still feel that their debt is too high, but some people have set up emergency funds to prepare for emergencies. As expected, low-income families, low education, African Americans, and women all have lower financial abilities. 16 There are also several organizations in the Christian world that teach people about financial management, such as Crown Financial Ministries, which has branches in nearly 90 countries around the world and teaches Christians biblical principles and applications to avoid debt, increase donations, and invest in financial management. 17
4. Implement a fairer tax system:The government and Congress can adopt fairer, progressive tax laws that shift wealth from the richest to benefit the poor. Increasing the ratio of taxation to national income will help reduce debt and invest in economic construction. Changing the size distribution of income through progressive redistribution to asset owners (wealth). If appropriate redistribution policies can be adopted and a rich tax is levied (Buffett's suggestion), the government can transfer part of the budget surplus to low-income groups to provide basic living necessities and strengthen their livelihood skills, so that the income growth rate of the lowest-income group can exceed The growth rate of the richest class can improve income distribution in the long run and make society more peaceful.
5. Make good use of private power:However, the government's financial resources are limited, and too many social welfare services will tend to misuse resources. Therefore, poverty alleviation work should be shared by the private sector, especially religious groups, charities and other non-profit organizations to engage in poverty alleviation ministry.
7. The Bible’s Teaching on Poverty and Christians’ Responsibilities in Supporting Poverty Alleviation Ministries
The Bible mentions more than 300 verses about poverty or social justice, showing that God is a God who cares for orphans, widows, the poor, and the disadvantaged. Therefore, these are both the responsibility of Christians and the way to blessing.“Whoever shows mercy to the poor lends to the Lord, and the Lord will repay him for his good deed.” (Proverbs 19:17) The Bible has established a poverty relief system since the book of Exodus. People in God's family are required to take care of their poor brothers, not to bully the weak, and not to bend the integrity; during harvest, they must leave some crops or fruits for the poor who glean; if their brothers When you become poor and need something, you should help him or even invite him to live with you (refer to Leviticus 19:10 and 25:35).“You shall not mistreat a hired servant who is needy or needy, whether he is your brother or a sojourner in your city.” (Deuteronomy 24:14)God even said:“If you will obey the voice of the LORD your God and be careful to do all these commands that I command you today, there will be no poor among you.” (Deuteronomy 15:4)
But there will never be an end to the poor in the world, so we must always help the poor."There will never be an end to the poor in the land; therefore I command you, Loose your hand from your brothers who are poor and needy in the land." (Deuteronomy 15:11)The Lord Jesus also mentioned:"For the poor will always be with you, but I will not always be with you." (John 12:8)
▲We should always give a helping hand to the poor, and help those who are lacking.
As mentioned above, to take care of the poor, the government alone is not enough because the government has limited financial resources. The church and Christians have the responsibility to participate in the work of supporting the poor and caring for the vulnerable, so that we can become angels of love and blessed examples. In addition to donating money, you can also participate in volunteer work to help poor families obtain additional resources (such as subsidies from the government and social groups). You can also teach poor families how to manage money according to biblical principles, and try to prepare budgets and control expenditures with limited resources. Reduce financial stress, increase income, and ultimately escape poverty.
▲The government’s financial resources are limited, and churches and Christians have the responsibility to participate in helping the poor and taking care of the vulnerable.
(Image source: http://www.gxte.gov.cn/Item/Show.asp?m=1&d=6365)
The rate of Christian giving to charity is still very low. In the past few decades, only 5% to 7% people in the United States have observed tithing, and the total value of all donations to charities (including religious groups) has only amounted to about 2% of the gross domestic product (GDP). Most of them are religious. People give. 18 Among the families who donate to charities, nearly three-quarters of the families donate to religious-related institutions. About 40% families donate to churches. Most of the other non-church non-profit organizations also have religious backgrounds, which shows that they have religious beliefs. People are still relatively generous in donating, which is a good sign, but there is still room for improvement. In addition to donating to churches and gospel institutions, Christians should also donate more to charities that care for disadvantaged groups, especially Christian charities. 19
- Note
1. National Poverty Center: Poverty in the United States, Frequently Asked Questions, www.npc.umich.edu/poverty/
2. US poverty rises despite economic recovery, www.reuters.com/article/2013/09/17/us-usa-economy-poverty-idUSBRE98G0PN20130917
3. Taiwan United Daily News 2-26-2014
4. The Economist: China's poor World-class poverty (www.ltaaa.com/wtfy/7853.html)
5. World Bank: go.worldbank.org/4DO5SXV2H0
6. World Bank: World Development Indicators 2013, p2
7. World Bank: Poverty Overview, www.worldbank.org/en/topic/poverty/overview
8. World Bank: The State of the Poor: Where Are The Poor, Where Is Extreme Poverty Harder to End, and What Is the Current Profile of the World's Poor? Economic Premise, 10/2013. ( siteresources.worldbank.org/EXTPREMNET /Resources/EP125.pdf)
9. World Bank: Poverty Overview, www.worldbank.org/en/topic/poverty/overview
10. AP: Income inequality: Top 1 percent took record share of 2012 US income, 9/10/2013, www.oregonlive.com/today/index.ssf/2013/09/income_inequality_top_1_percen.html
11. en.wikipedia.org/wiki/Homelessness_in_the_United_States. 2013 numbers are available at www.nytimes.com/2013/11/22/nyregion/january-tally-of-homeless-population-found-13-jump-in-city-us-data-say.html?_r=0
12. Homelessness/Poverty Stats, www.statisticbrain.com/homelessness-stats; source: National Law Center on Homelessness and Poverty.
13. Fang Xiaoding: Overview of homeless people in Taiwan and social controversies, Taiwan Legal Aid Foundation, Legal Aid Newsletter Issue 32, www.laf.org.tw/tw/b3_1_2.php?msg1=34&msg2=404&PHPSESSID=afnppvpqt78jppggomvk3e1lu0
14. Linda Gorman, Why Poverty Persists, National Bureau of Economic Research, www.nber.org/digest/jun06/w11681.html
15. en.wikipedia.org/wiki/Financial_literacy
16. See Financial Capability in the United States, 2012 Report of National Findings, by FINRA Investor Education Foundation, www.usfinancialcapability.org/downloads/NFCS_2012_Report_Natl_Findings.pdf
17. See www.crown.org and www.crown.org.tw
18. Giving USA: www.charitynavigator.org/index.cfm?bay=content.view&cpid=42 - 19. Nearly three-quarters of household charitable giving goes to organizations with religious ties, new study finds, www.philanthropy.iupui.edu/news/article/jumpstart
Author profile Wen Yingqian, honorary professor of Donghua University in Taiwan, director of the American Chinese Outreach Ministry of Crown Financial Ministries, retired senior economic expert of the World Bank, former professor of the Department of Economics of Donghua University in Taiwan, distinguished professor of Yuanze University, and the Central Bank director.