The tired, the poor, the huddled masses

“Who are the poor, and what do they need? 1.1 billion people have less than $1 a day of income. This is officially designated ‘extreme’ poverty. Another 1.6 billion have between $1 and $2 a day; this is ‘moderate’ poverty. This large slice of humankind either cannot, or can just barely, meet their basic needs. Mostly they live in rural isolation or in urban slums, roughly 90 percent of them in three regions: East Asia, South Asia, and sub-Saharan Africa. There has never been any mystery about how to increase a country’s per capita income: simply invest capital in it, using a modicum of good business sense. However, if your citizens don’t have any income left over after meeting their basic needs, then you have no capital to invest in new means of production. And since the old means of production wear out—depreciate—they eventually produce even less income, so you are still further from having the necessary capital. . . . Why are some countries but not others caught in the poverty trap? It is not primarily a matter of Anglo-Saxon propriety or American ingenuity or Confucian dutifulness. Nor is it a matter of African fecklessness. Countries are poor . . . because they are landlocked or resource-poor or afflicted with unfavorable climates or disease ecologies (like the global malaria belt). Above all, they are poor because they have always been poor. Just as economic growth is cumulative and self-sustaining—a virtuous circle—economic stagnation is a vicious circle. This is evident above all in demographics and literacy. Poverty means high child mortality, which means high birth rates, which means both that women will not be educated for the work force (since they must spend the bulk of their lives raising children) and that there will not be enough money to educate all the children (leaving many illiterate). Economic growth invariably lowers birth rates and raises literacy rates.” – George Scialabba, “The End of Poverty”