CROP Newsletter.

"Prevention of Poverty"
by S.M. Miller

Most poverty concerns are about its alleviation Today, preventing poverty should be the focus.

In high-income nations, social programs, the “welfare state,” to relieve poverty play a prominent role. In the apogee of these programs, many prevented poverty and some still do. Old-age pensions on an almost-universal basis kept the aged above a poverty line; child benefits aided all families, helping to keep some out of poverty, universal public services improved the level of living of all and helped people from falling into poverty (especially if poverty is defined in broader terms than income). The current direction in many high-income nations is to curtail the level of benefits, restrict access to them and require means-testing (which means first show the need and then the state may act to relieve want.) The result is that “welfare states” operate increasingly after-the-fact of poverty or near-poverty.

In lower-income or “emerging market” economies where social programs have been non-existent, marginal or decimated, the unfortunate direction is to cope haltingly and inadequately with emergencies, disasters, devastation, depletion. Only then are temporary measures undertaken to deal with the presumably unexpected. Even where long-term poverty and deep derivation characterize a region, little is done until an acute, destabilizing event strikes and starvation or homelessness are politically publicized. Late in the day, stop-gap measures may be introduced that provide little chance of bringing about the possibility of a secure, better-than-poverty condition.

A very different perspective is needed for both sets of economies if people are to be maintained at an above poverty level and if persistent, chronic poverty is to be at least reduced. Positive actions to prevent poverty from occurring are needed. In the current economic structures and policy framework of nations, prevention of poverty becomes more and more the primary need.

How can this goal be accomplished? “Economic growth” and “development” are inadequate concepts for what is needed. For some growth or development paths may increase rather than decrease poverty. High growth or development can be achieved by lowering exchange rates and thereby increasing the costs of imported goods, depressing inflation by increasing unemployment and lowering wage rates, reducing government subsidies for consumers, etc.

What is produced, how it is produced and where it is produced have important effects on the production or elimination of poverty. Knowing only rates of growth in gross domestic product does not tell us how many and who are employed at what income levels in what locales. These are essential questions in the quest to prevent poverty.

How, then, to move toward economic development paths that are more poverty preventive? Macro policies involve interest rates and money supply, exchange rates, and governmental budget deficits or surpluses which affect both the level of employment and the characteristics of the employed. If, for example, interest rates are low and loan funds are available, smaller enterprises employing less skilled and less well-paid labour are likely to be employed. High interest rates may not only increase unemployment levels but concentrate employment in firms and areas that are more solvent, worsening conditions in chronic poverty areas.

Selective economic policies can have strong effects on poverty. A good example is the United States which spends a sizeable part of discretionary federal governmental expenditures on military research and space projects. The result is high employment among specialised, technical, high-paid professionals and technicians. Recent efforts to improve the decaying quality of basic infra-structure of roads and bridges have not met with parliamentary approval despite the increased employment, better wages and more secure employment that would occur if lower-paying construction industries expanded. Military research and space activities benefit one sector of industry and one group of workers rather than other sectors or groups. If economic policies build, say, manufacturing and discourage the returns to agricultural industries which involve many low-income workers, then poverty is likely to continue or swell in agricultural regions.

The general point is that what government does, whether deliberately or not, in taxation, spending subsidies and the like affect how many and who are poor. Implicit in this outlook is that there is no one way to «growth» and «development.» The need, then, is to construct policies which prevent rather than maintain or worsen poverty.

The major objection to this mode of thinking is that economies would function much better in the long run if governments play a smaller and smaller role and markets flourish with minimal interference. That is a debatable proposition but even if true with the prominence of government in many nations as taxers, spenders and regulators, the impact today of what is done as macro or selective economic policies shapes poverty conditions.

With the great changes shaking many countries, poverty experts should turn to emphasising prevention of poverty. As nations overturn, modify or substitute new ways of “developing” or “growing,” the impact on poverty should become increasingly important in decision-making.

S. M. Miller is research professor of sociology, Boston College and director, Poverty and Inequality Project, Commonwealth Institute, 186 Hampshire Street, Cambridge, MA, USA, E-mail.