How Poverty never ends?

If defined, poverty is a situation where an individual lacks sufficient resources to sustain a basic living. Poverty can further be categorized into two types: absolute poverty and relative poverty. Absolute poverty is far worse than relative because it is when an individual can not even afford to acquire basic necessities of life, namely food, water, shelter, and clothing. This type of poverty usually persists largely in developing and underdeveloped economies. Relative poverty, on the other hand, is when an individual's income is below the average in the country or the individual has fewer goods and services than average in the economy. This type is likely to be found in developed economies.

Poverty makes life much more difficult with fewer chances of poor children receiving higher education, people having several health issues for which they may not receive adequate treatment, and social seclusion arising due to income disparities may create social unrest and resentment towards the so-called superior, leading to increased crime rates, resulting in damage to property, loss of lives, etc. 

It is important to understand that poverty, if not eradicated, may persist from generation to generation as they may have fallen into the vicious cycle of poverty. There are mainly two reasons why many people may be trapped in poverty. 

Firstly, the poor are likely to receive poor education, or no education at all, paired with poor healthcare. This translates into lesser human capital as such workers have relatively very low productivity as lesser education means lesser skills and poor healthcare means the worker would be slower and less energetic and is likely to take more days off. This lower labor productivity means lower wages since wages are usually treated as a reward for productivity. Therefore, poor children, even when they grow up are likely to face poverty due to low incomes.  

Secondly, the low incomes of the poor mean they have less opportunity to save a portion of their income for future use and to invest. Less investment by the poor may also arise because of the unwillingness of commercial banks to lend since their profit maximization interests are not met because the poor usually require smaller loans which generates lower profits since the interest payment (usually a percentage of the principal amount) is low. Also, the poor have no significant credit histories, nor valuable assets to offer as collateral, hence risk for banks is high. In short, the poor are less likely to engage in any extra reward-generating activity and so are solely dependent on low incomes for their living and the development of the children's future. 

The government's efforts towards reducing poverty have in most countries been funded by the IMF, UN, World Bank, etc. Such organizations and the government themselves aim to end poverty by raising economic growth in the country ie. increase real Gross domestic product per head. For further clarification, it is the income per capita or the number of goods and services available to each individual in the economy. Governments are usually successful in increasing GDP per head but it is important to note that this metric is average so most of the increase in income may be concentrated in just the hands of a few, possibly the richest. Therefore, there is no guarantee that poverty has been reduced. However, the overall impression given in economic statistics is that of success and prosperity. 

This increase in GDP per head may have the opposite effect in the form of an increase in income disparities. This is the case in most countries. For example, a government aims to increase real GDP per head in a country where most of the poor are employed as woodcutters. The government invites foreign MNCs to operate in the country in an attempt to raise output and incomes. The MNCs exploit the wood resources to such an extent that they deplete them. They sell these products at higher prices than what the poor can afford usually because of the huge brand awareness that MNCs have. This helps MNCs earn high revenues and assists the government by raising output so figures of GDP per head increase which is used by the government in their next election campaign. Apart from this, the question arises what happened to the main aim that the governments encouraged MNCs for? To eradicate poverty. If you would have asked from the poor woodcutters they would have responded in agony that they lost their jobs because the MNCs brought in machines to cut trees, which was the only source of income they had and so some children die from hunger, the elderly are not diagnosed on time, there is no guarantee whether they would be able to eat food next time or would they have to starve, no education is provided to children and so they have no future and they are now forced to beg on the streets due to thier inability to find other jobs because they are occupationally immobile. the reduction in their incomes is seen as, lets assume, 5% fall in the GDP. But the MNCs contributed to raising output by 14% of the national GDP has resulting in a 9% net increase in GDP and so it is concluded intentionally that poverty has reduced since incomes increase when the raise in incomes is enjoyed by the MNC shareholders who are already the elite.

Such is the way that devils of corporatocracies and governments work.

The poverty of ‘economic growth’ | Poverty and Development | Al Jazeer