What we know about the causes of poverty.
Poverty has known and specific causes.
There, we said it.
The best research confirms that poverty is not a static phenomenon. Identifiable causes help generate, and regenerate, poverty. Knowing why people are experiencing poverty helps us to better design strategies to help. Research indicates that the causes of poverty can be grouped under three primary headings: disaster, failure and exploitation.
1: Disaster
A disaster is a sudden and powerful event that causes great damage or loss.
A disaster can be localized (such as a car accident) or widespread (like flooding). Poverty is triggered by disasters because of the damage to assets: physical assets will need rebuilding or replacing, while bodily assets will need medical attention. This costs money, and often lots of it. Recovering from disaster typically reduces a person’s ability to engage in otherwise income-generating activity.
Effective anti-poverty strategies will aim to prevent disasters and build resilience: the ability to recover quickly from these setbacks..
2: Failure
Failure is the inability to engage in productive activity that is conducive to meeting one’s needs.
For most of history, productive activity was connected to agriculture and the reliable production of food. In recent centuries, our shift to an employment economy means we need to effectively connect our knowledge and skills to a market, where we exchange our abilities for an income. Poverty is triggered by failure when we cannot engage in such an ability/income exchange: we cannot create something of enough value for someone to pay us adequately for it. In contemporary times, this failure happens largely through under-education and under-employment (though it must be accepted that one’s moral attitude may also play a part at times).
Effective anti-poverty strategies will aim to avoid failure by building productivity: the ability to engage in economically-advantageous activity that allows you to have your needs met.
3: Exploitation
Exploitation means to be adversely affected by the actions of someone more powerful: someone who uses their power for their own gain.
Intentional exploitation is frequently seen in communities with:
extractive (as opposed to inclusive or representative) political institutions
high corruption
failing rule of law
predatory financial practices
a tolerance for rent-seeking operations, and
a high level of violence and crime.
Exploitation via abandonment is a lesser known cause of poverty. Abandonment occurs when those in the community who are both powerful and have a reasonable responsibility for the welfare of others, withdraw their support. An example of this might be local governments who do not maintain or repair roads in poorer communities, or taxation policies that ensure wealthy school districts receive more funds, while poorer school districts are underfunded and under-resourced.
Exploitation is closely related to (but not synonymous with) economic, political and social inequality. Exploitation triggers poverty because people are no longer in control of their assets, abilities and, in some cases, bodies. Their productivity is controlled by someone else.
Effective anti-poverty strategies combat exploitation and enforce justice. This allows people to build self-determination: the ability to express choice and control over your own life.
Individually, each triggers not only a slide towards poverty, but creates a sort of corrosive vulnerability to additional triggers. This means that the presence of one increases the likelihood of the presence of a second and third (this is why early intervention, or even more importantly, prevention, is so powerful).
To effectively help people experiencing poverty, we must address these causes.