causes of poverty, culture, economics, education, health, philosophy, poverty, trade

The Causes of Poverty (29): Overview

In a previous post, I already mentioned some of the possible causes of poverty: bad governance, corruption, absence of the rule of law, lack of economic freedom, the resource curse, debt burdens, lack of education and healthcare, AIDS, war, poverty traps etc.

In other posts, I mentioned obesity, genetics, hereditary poverty, the Matthew effect and family structure:

Our research shows that if you want to avoid poverty and join the middle class in the United States, you need to complete high school (at a minimum), work full time and marry before you have children. If you do all three, your chances of being poor fall from 12 percent to 2 percent, and your chances of joining the middle class or above rise from 56 to 74 percent. (We define middle class as having an income of at least $50,000 a year for a family of three). Isabel V. Sawhill and Ron Haskins (source, source)

It seems that there’s no end to the possible causes of poverty. I’ve found a few other explanations, ranging from the silly, over the mildly interesting but obviously wrong, to the convincing. There’s one by Montesquieu according to whom people in hot places are simply too lazy to become rich:

Charles-Louis de Secondat, baron de Montesquieu

Charles-Louis de Secondat, baron de Montesquieu

In Europe there is a kind of balance between the southern and northern nations. The first have every convenience of life, and few of its wants: the last have many wants, and few conveniences. To one nature has given much, and demands but little; to the other she has given but little, and demands a great deal. The equilibrium is maintained by the laziness of the southern nations, and by the industry and activity which she has given to those in the north. (source)

Thomas Malthus

Thomas Malthus

According to Thomas Malthus, poverty is caused by overpopulation. Food and other resources are limited, and a population growth that exceeds a certain pace will inevitably hit a resource ceiling, and will result in decreasing standards of living, poverty, conflict over scarce resources, famine etc. More on overpopulation here and here.

Max Weber

Max Weber

Max Weber believed that protestant work ethic put protestant nations at an advantage compared to other nations. Certain values, such as the opinion that God will reward those who work hard and save money, or the belief in predestination—getting rich is a sign of God’s approval—make some nations rich and others, that lack these values, poor.

Jeffrey Sachs

Jeffrey Sachs

Jeffrey Sachs focuses on geography and weather. In the poorest parts of the world, the soil is nutrient-starved, making it difficult to produce food. Moreover, tropical climates foment disease, particularly malaria. The UK, on the other hand, the country where the Industrial Revolution started, has a fertile soil, a lot of coal, and good waterways.

Daron Acemoglu

Daron Acemoglu

Daron Acemoglu states that nations are not like children — they are not born rich or poor. Their governments make them that way.

People need incentives to invest and prosper; they need to know that if they work hard, they can make money and actually keep that money. And the key to ensuring those incentives is sound institutions — the rule of law and security and a governing system that offers opportunities to achieve and innovate. … if you wish to fix institutions, you have to fix governments. [People should be able to] enjoy law and order and dependable government services — they can go about their daily activities and jobs without fear for their life or safety or property rights. (source)

There are obviously many more explanations of poverty, both “exotic” and sensible ones. And regarding the latter, it’s extremely difficult to say which ones are more important. Poverty is surely one of the most complex and intractable problems facing humanity. However, if we look at the country that has been most successful in the reduction of poverty – China – then the last quote above seems to be the most convincing one. China still has institutional and legal weaknesses today, but it did start to develop only after it abandoned the follies of the Cultural revolution and communist rule in general, and started to protect property rights and build its government institutions. Which doesn’t mean that institutions are a “silver bullet” solution to the problem of poverty. There’s no such thing, unfortunately.

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9 thoughts on “The Causes of Poverty (29): Overview

  1. I’ll add another cause of poverty – economic overpopulation, as opposed to the resources overpopulation envisioned by Malthus.

    Unemployment, both in the U.S. and the world as a whole, marches ever higher because the field of economics doesn’t account for the relationship between population density and per capita consumption.

    Following the beating the field of economics took over the seeming failure of Malthus’ theory, economists adamantly refuse to ever again consider the effects of population growth. If they did, they might come to understand that once an optimum population density is breached, further over-crowding begins to erode per capita consumption and, consequently, per capita employment.

    And these effects of an excessive population density are actually imported when a nation like the U.S. attempts to trade freely with other nations much more densely populated – nations like China, Japan, Germany, Korea and a host of others. The result is an automatic trade deficit and loss of jobs – tantamount to economic suicide.

    Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!

    If you‘re interested in learning more about this important new economic theory, then I invite you to visit either of my web sites at OpenWindowPublishingCo.com or PeteMurphy.wordpress.com where you can read the preface, join in the blog discussion and, of course, buy the book if you like. (It’s also available at Amazon.com.)

    Pete Murphy
    Author, “Five Short Blasts”

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  9. Simple! NOBODY should earn more than 300.000 DOLLARS PER YEAR AND NOBODY SHOULD EARN LESS THAN 100.000 DOLLARS PER YEAR! NO WASTING MONEY IN WARS,- TRYING TO CONQUER OTHER WORLDS, TRYING TO SPY EACH OTHER! IDIOTS LIKE FOOTBALL PLAYERS OR MOVIE STARS OR MODELS, EARNING MILLIONS AND MILLIONS? YOU DONT EVEN NEED TO GO TO SCHOOL FOR ALL OF THAT! IT IS CRAZY! WHEN THERE ARE SOO MANY PEOPLE , CHILDREN WITHOUT FOOD,, EDUCATION,HOME, CLOTHES ETC. SO ILLOGICAL ! THE IDIOTS PAY MILLIONS FOR HOUSES IN HOLLYWOOD WITH SO MANY ROOMS THEY THEMSELVES SAY PROUDLY: MY HOUSE HAS 80 BEDROOMS I WILL NEVER USE HALF OF THEM!

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