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Thread: The Poverty Trap

  1. #21
    conon394's Avatar hoi polloi
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    Default Re: The Poverty Trap

    Example 2:
    It used to be that women stayed at home, doing the housework, tending to the children, while the men were away at work.
    But it was not a problem because three generations of the same family shared the same home, so women were never alone and there were always more than one pair of eyes on the children.
    Today, the paradigm of the nuclear family requires a different approach, one of equitability in the distribution of housework and childcare burdens between the parents.
    We should all be able to imagine how thinly stretched a single mother must be.

    And this intergenerational fantasy works how in a modern diverse economy?

    I dunno maybe things work differently in Greece. But the fact my wife and I both goth trough undergraduate and graduate school was because our parents all had successful careers but those were fundamentally tied to where they lived. They were certainly not able to follow us about to four different states of the years we in school had we had kids. And even when we did we in yet another state - seeing as the most opportune jobs did not just magically appear where the bulk of families lived. And than of course when the day came where had to pick whose career looked the most promising and whose would likely take a hit we did that but that then two more different states. There was never time when economics did not dictate some intergenerational setup would have extremely costly - to the entire family.

    When I know that Nigerian-Americans are doing pretty well for themselves in the USA, while African-Americans of cracker culture are doing rather poorly in the same country, your argument collapses.


    Do tell and a link would be nice.
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  2. #22
    paleologos's Avatar You need burrito love!!
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    Default Re: The Poverty Trap

    Quote Originally Posted by conon394 View Post
    And this intergenerational fantasy works how in a modern diverse economy?
    Example 1 is an example of money not solving a problem, just changing the form of the symptoms.

    Example 2 is an example of people having to adapt their behavior in changing conditions.

    The intention is to show that tradition is a lot more about values and attitudes and not too much about rigid arrangements.



    Quote Originally Posted by conon394 View Post
    I dunno maybe things work differently in Greece. But the fact my wife and I both goth trough undergraduate and graduate school was because our parents all had successful careers but those were fundamentally tied to where they lived. They were certainly not able to follow us about to four different states of the years we in school had we had kids. And even when we did we in yet another state - seeing as the most opportune jobs did not just magically appear where the bulk of families lived. And than of course when the day came where had to pick whose career looked the most promising and whose would likely take a hit we did that but that then two more different states. There was never time when economics did not dictate some intergenerational setup would have extremely costly - to the entire family.
    It is impossible for me to disagree with any of the above.
    My disagreement is not with the things you are saying but with the things that are unthinkable to you.

    As life has become more expensive in our lifetimes, it should follow that living within downsized means is to downsize one's living.
    Especially if one intends to save and invest.

    I was told once by an uncle of mine that the first time he wore his pants with underwear was as an adult, when he started working for himself.
    He was "going commando" before that because he could not afford any underwear.

    People continue to flow to the USA and when they get there, their lives improve.
    If they find it in themselves to do whatever it takes to make things work, it's because they do not outsource their life's locus of control.

    Bottom line, poverty, however abject, is not a trap if you are willing to live like these people and work the long hours these people work.
    Now, you can argue that the reason the cost of living in the USA is as high as it is, is because of extortive profiteering by monopolies and oligopolies.
    I will not contest that but it would be a different thread.



    Quote Originally Posted by conon394 View Post
    Do tell and a link would be nice.
    On short notice only these:
    Link 1
    Link 2
    Link 3
    Link 4
    Link 5
    Last edited by paleologos; June 26, 2023 at 05:57 PM.

  3. #23
    Ludicus's Avatar Comes Limitis
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    Default Re: The Poverty Trap

    Quote Originally Posted by paleologos View Post
    Ultimately, the poverty trap is an intergenerational problem and as such it should be addressed with intergenerational solutions. Fortune helps those who help themselves.
    1 - Here is the criticism of the first part of your statement “the poverty trap is an intergenerational problem.”

    It is not an intergenerational problem “tout court”; (btw, you forgot to mention intragenerational mechanisms). Intergenerational solutions are not the sole answer, because the poverty trap is influenced by various factors such as inadequate education, limited access to healthcare, systemic inequalities, and lack of economic opportunities. For that reason, effective solutions must encompass interventions at multiple levels, including education, employment, social safety nets, and policy changes.

    2- On the second part of the sentence, “Fortune helps those who help themselves.

    You are saying that that individual effort alone is sufficient to overcome poverty. That’s not true, motivation/individual effort is not the sole determinant of one´s economic well-being. You don’t want to recognize that circumstances beyond an individual's control can impact their ability to improve their situation. You don’t want to recognize that social and structural factors, such as access to education, healthcare, social support, and economic opportunities, significantly influence an individual's ability to escape poverty. We need to take into account the systemic factors that contribute to its persistence.

    Once again, your perspective neglects the impact of systemic issues, such as discrimination, unequal distribution of resources, and social barriers that can limit opportunities for individuals or communities.
    Do you know that in 2021, the at-risk-of-poverty or social exclusion rate for young people aged 15-29 years was 25.3 % in the EU, corresponding to about 17.8 million young people?
    Do you know that in your country, the percentage of population at risk of poverty or social exclusion was 28.3% (2,971,200 people) in 2021, an increase of 0.9% an increase of 0.9% compared to 2020?

    When it comes to the relevance of intergenerational mechanisms, there are multiple aspects. For instance, there is a strong relationship between investments in public health, intergenerational capital transmission, and poverty traps.
    Intergeneration Human Capital Transmission and Poverty Traps

    public health investments are particularly effective, as they affect household income and schooling and allow for human capital transmission through generations. This role becomes particularly evident in contexts where adult mortality is high, as in less developed countries. Public policy may be crucial in avoiding poverty traps by supplying high-quality public education and reducing the need for private health expenditures that mainly burden low-income households…We show very little social mobility in societies with low school quality unless out-of-the-pocket health costs are affordable, which could correspond to a situation with high levels of public health investment. However, if public school and health investments are low, initially, poor households are prone to remain in a poverty trap. Indeed, improving adults’ life expectancy affects household income, leading to more schooling and the transmission of human capital from parent to child. Taken together, they confirm that health may differ from other types of human capital, as suggested by Grossman (1972), and that improving public health conditions may be more urgent than investing in education for promoting development (Hazan and Zoabi, 2006; Schultz, 1999). More generally, our results indicate the complementarity between health and education expenditures as in Clark and Royer (2013) and Sarkar and Sarkar (2016).
    Il y a quelque chose de pire que d'avoir une âme perverse. C’est d'avoir une âme habituée
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    Every human society must justify its inequalities: reasons must be found because, without them, the whole political and social edifice is in danger of collapsing”.
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  4. #24
    paleologos's Avatar You need burrito love!!
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    Default Re: The Poverty Trap

    Quote Originally Posted by Ludicus View Post
    1 - Here is the criticism of the first part of your statement “the poverty trap is an intergenerational problem.”

    It is not an intergenerational problem “tout court”; (btw, you forgot to mention intragenerational mechanisms).
    No I did not, this is from post #18 of this thread (mostly).
    Intergenerational mechanism that make the difference between families that start out the same.
    Parents enculturate their children,
    Culture informs first principles,
    First principles inform values,
    Values guide choices,
    Choices generate action,
    Action begets outcomes,
    Outcomes (re)formulate conditions,
    Conditions influence/reinforce culture.



    Quote Originally Posted by Ludicus View Post
    Intergenerational solutions are not the sole answer, because the poverty trap is influenced by various factors such as inadequate education, limited access to healthcare, systemic inequalities, and lack of economic opportunities.
    Let's take them one by one:

    Education.
    Parents who value education make certain their children get some.

    Access to healthcare.
    This is a matter of being civilized and most -I think all- European countries will not allow someone to die outside of the hospital because they don't have health insurance.

    Economic opportunities.
    Immigrants used to come to my country (mostly from Albania) and they would do jobs that most Greeks would not.
    Now they are home owners in two countries, their grit and hard work are undisputed.
    Opportunities are found by those who are looking.
    It's just some people believe they are too good for the opportunities at hand.
    "Fortune helps those who help themselves" means if you are looking for an opportunity you will grab the opportunity that is in front of you, instead of waiting for the opportunity you wish there was that may never come.

    Systemic inequalities.
    What on earth does that even mean?
    I can say that the Roma community in my country have the tendency to drop out of school to get married and start families that have a tendency to get large.
    They do that before they are even adults.
    Education is provided for them but they shun it.
    Whatever property they manage to built over their lifetimes is eventually apportioned to a larger than usual number of offspring.
    (There's your deficient intergenerational transmission of wealth, right there.)
    But none of the above is to be disparaged because "it's their culture" and who are we to judge their culture?
    I also know that the Roma are renowned for their commercial acumen.
    They contribute significantly to the overall entrepreneurship of the country.
    But not to their full potential.
    Maybe it's because they drop out of school to start families when their only source of income is hawking trinkets.
    Or maybe they should blame the system that their potential is unrealized.



    Quote Originally Posted by Ludicus View Post
    For that reason, effective solutions must encompass interventions at multiple levels, including education, employment, social safety nets, and policy changes.
    Let's take them one by one:

    Education.
    You cannot educate someone against their will, they need to value education and want it.
    (Unless you are the government of China and the "students" are not allowed to come out of the "school" until they have learned their "lesson".)
    We have twelve years of compulsory education over here, how many years is the compulsory education in your country?

    Employment.
    Most people don't want crappy jobs but most jobs are crappy.
    Immigrants accept to take crappy jobs because they come with humility and that humility enables them to be grateful for the opportunity to do a job that does not exist in their country.
    I don't have such kind of humility, if I did I would be a lot happier.
    One thing I don't do is blame "the system" for me not being more successful.

    Social safety nets.
    Like unemployment benefits for people who will not do crappy jobs?

    Policy changes.
    Would that, by any chance, be something top-down?
    Something that would remove the locus of control (whatever little is left in the EU) from the individual and place it on the hands of politicians?
    We tried that, the macroeconomic result of this attitude was the Greek sovereign debt crisis.
    We are still living the consequences of it as by the end of 2022, our debt to GDP ratio was 177.4%.
    If I have a child, the moment he/she comes to the world they will be in debt for $50,500, or €‎46,000.
    But I take it you are happy with the politicians in your country, so maybe you try such solutions over there and we will copycat whatever works.



    Quote Originally Posted by Ludicus View Post
    2- On the second part of the sentence, “Fortune helps those who help themselves.

    You are saying that that individual effort alone is sufficient to overcome poverty. That’s not true, motivation/individual effort is not the sole determinant of one´s economic well-being. You don’t want to recognize that circumstances beyond an individual's control can impact their ability to improve their situation. You don’t want to recognize that social and structural factors, such as access to education, healthcare, social support, and economic opportunities, significantly influence an individual's ability to escape poverty. We need to take into account the systemic factors that contribute to its persistence.
    All of the above is a big fat chunk of strawmanship and all of the minor points inside it have been discussed, this is beginning to become circular.
    Once more the meaning of "Fortune helps those who help themselves" is:
    If you are looking for an opportunity you will grab the opportunity that is in front of you, instead of waiting for the opportunity you wish there was that may never come.



    Quote Originally Posted by Ludicus View Post
    Once again, your perspective neglects the impact of systemic issues, such as discrimination, unequal distribution of resources, and social barriers that can limit opportunities for individuals or communities.
    Do you know that in 2021, the at-risk-of-poverty or social exclusion rate for young people aged 15-29 years was 25.3 % in the EU, corresponding to about 17.8 million young people?
    Do you know that in your country, the percentage of population at risk of poverty or social exclusion was 28.3% (2,971,200 people) in 2021, an increase of 0.9% an increase of 0.9% compared to 2020?
    I ignore none of that, I know life is not equal.

    There was discrimination against Albanians in my country and they rose above it, they overcame not in spite of discrimination, but because of it:
    Discrimination meant that they as immigrants would not have access to whatever social safety nets existed.
    So they made it their mission to help themselves by taking the opportunities that were available.

    As far as I am concerned, whatever privilege I enjoy is the fruit of the labor and sacrifices of a long line of ancestors.
    People who chose to consume less themselves so that they would bequest something to their children.
    And that example was followed by their children.
    And the only way for me to honor the consumeristic self denial of that long line of ancestors is by following their example.

    And that is an example of an intergenerational mechanism that makes the difference between families that start out the same:
    (My turn to be circular)
    Parents enculturate their children,
    Culture informs first principles,
    First principles inform values,
    Values guide choices,
    Choices generate action,
    Action begets outcomes,
    Outcomes (re)formulate conditions,
    Conditions influence/reinforce culture.

    And that is the essence of tradition.

    I cannot begin to fathom what kind of government expense can make people sacrifice for their children more (or less) than they would without government intervention.
    I know you mean well but here's one of life's hard realities that the partizans of politically instrumental compassion mongering will never admit to you:
    The more resources you allocate to bailing people out of the consequences of their bad decisions, the less likely it becomes for them to adapt their behavior.

    I am very well aware how callous that reads to a leftist but I'm talking about what works, however inadequately.
    You, on the other hand, are talking about things that read very soothing and comforting to the "downtrodden" but have never worked.



    Quote Originally Posted by Ludicus View Post
    When it comes to the relevance of intergenerational mechanisms, there are multiple aspects. For instance, there is a strong relationship between investments in public health, intergenerational capital transmission, and poverty traps.
    Intergeneration Human Capital Transmission and Poverty Traps
    That's you being circular again.
    But you are being circular in removing from the individual the locus of control.

    Nobody loves you more than you love yourself, nobody can.
    You would have people in need lay their hopes down to a bureaucracy that runs on other people's money.
    Where has that ever worked?

  5. #25
    paleologos's Avatar You need burrito love!!
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    Default Re: The Poverty Trap

    Quote Originally Posted by Ludicus View Post
    1 - Here is the criticism of the first part of your statement “the poverty trap is an intergenerational problem.”

    It is not an intergenerational problem “tout court”; (btw, you forgot to mention intragenerational mechanisms).
    No I did not, this is from post #18 of this thread (mostly).
    Intergenerational mechanism that make the difference between families that start out the same.
    Parents enculturate their children,
    Culture informs first principles,
    First principles inform values,
    Values guide choices,
    Choices generate action,
    Action begets outcomes,
    Outcomes (re)formulate conditions,
    Conditions influence/reinforce culture.



    Quote Originally Posted by Ludicus View Post
    Intergenerational solutions are not the sole answer, because the poverty trap is influenced by various factors such as inadequate education, limited access to healthcare, systemic inequalities, and lack of economic opportunities.
    Let's take them one by one:

    Education.
    Parents who value education make certain their children get some.

    Access to healthcare.
    This is a matter of being civilized and most -I think all- European countries will not allow someone to die outside of the hospital because they don't have health insurance.

    Economic opportunities.
    Immigrants used to come to my country (mostly from Albania) and they would do jobs that most Greeks would not.
    Now they are home owners in two countries, their grit and hard work are undisputed.
    Opportunities are found by those who are looking.
    It's just some people believe they are too good for the opportunities at hand.
    "Fortune helps those who help themselves" means if you are looking for an opportunity you will grab the opportunity that is in front of you, instead of waiting for the opportunity you wish there was that may never come.

    Systemic inequalities.
    What on earth does that even mean?
    I can say that the Roma community in my country have the tendency to drop out of school to get married and start families that have a tendency to get large.
    They do that before they are even adults.
    Education is provided for them but they shun it.
    Whatever property they manage to built over their lifetimes is eventually apportioned to a larger than usual number of offspring.
    (There's your deficient intergenerational transmission of wealth, right there.)
    But none of the above is to be disparaged because "it's their culture" and who are we to judge their culture?
    I also know that the Roma are renowned for their commercial acumen.
    They contribute significantly to the overall entrepreneurship of the country.
    But not to their full potential.
    Maybe it's because they drop out of school to start families when their only source of income is hawking trinkets.
    Or maybe they should blame the system that their potential is unrealized.



    Quote Originally Posted by Ludicus View Post
    For that reason, effective solutions must encompass interventions at multiple levels, including education, employment, social safety nets, and policy changes.
    Let's take them one by one:

    Education.
    You cannot educate someone against their will, they need to value education and want it.
    (Unless you are the government of China and the "students" are not allowed to come out of the "school" until they have learned their "lesson".)
    We have twelve years of compulsory education over here, how many years is the compulsory education in your country?

    Employment.
    Most people don't want crappy jobs but most jobs are crappy.
    Immigrants accept to take crappy jobs because they come with humility and that humility enables them to be grateful for the opportunity to do a job that does not exist in their country.
    I don't have such kind of humility, if I did I would be a lot happier.
    One thing I don't do is blame "the system" for me not being more successful.

    Social safety nets.
    Like unemployment benefits for people who will not do crappy jobs?

    Policy changes.
    Would that, by any chance, be something top-down?
    Something that would remove the locus of control (whatever little is left in the EU) from the individual and place it on the hands of politicians?
    We tried that, the macroeconomic result of this attitude was the Greek sovereign debt crisis.
    We are still living the consequences of it as by the end of 2022, our debt to GDP ratio was 177.4%.
    If I have a child, the moment he/she comes to the world they will be in debt for $50,500, or €‎46,000.
    But I take it you are happy with the politicians in your country, so maybe you try such solutions over there and we will copycat whatever works.



    Quote Originally Posted by Ludicus View Post
    2- On the second part of the sentence, “Fortune helps those who help themselves.

    You are saying that that individual effort alone is sufficient to overcome poverty. That’s not true, motivation/individual effort is not the sole determinant of one´s economic well-being. You don’t want to recognize that circumstances beyond an individual's control can impact their ability to improve their situation. You don’t want to recognize that social and structural factors, such as access to education, healthcare, social support, and economic opportunities, significantly influence an individual's ability to escape poverty. We need to take into account the systemic factors that contribute to its persistence.
    All of the above is a big fat chunk of strawmanship and all of the minor points inside it have been discussed, this is beginning to become circular.
    Once more the meaning of "Fortune helps those who help themselves" is:
    If you are looking for an opportunity you will grab the opportunity that is in front of you, instead of waiting for the opportunity you wish there was that may never come.



    Quote Originally Posted by Ludicus View Post
    Once again, your perspective neglects the impact of systemic issues, such as discrimination, unequal distribution of resources, and social barriers that can limit opportunities for individuals or communities.
    Do you know that in 2021, the at-risk-of-poverty or social exclusion rate for young people aged 15-29 years was 25.3 % in the EU, corresponding to about 17.8 million young people?
    Do you know that in your country, the percentage of population at risk of poverty or social exclusion was 28.3% (2,971,200 people) in 2021, an increase of 0.9% an increase of 0.9% compared to 2020?
    I ignore none of that, I know life is not equal.

    There was discrimination against Albanians in my country and they rose above it, they overcame not in spite of discrimination, but because of it:
    Discrimination meant that they as immigrants would not have access to whatever social safety nets existed.
    So they made it their mission to help themselves by taking the opportunities that were available.

    As far as I am concerned, whatever privilege I enjoy is the fruit of the labor and sacrifices of a long line of ancestors.
    People who chose to consume less themselves so that they would bequest something to their children.
    And that example was followed by their children.
    And the only way for me to honor the consumeristic self denial of that long line of ancestors is by following their example.

    And that is an example of an intergenerational mechanism that makes the difference between families that start out the same:
    (My turn to be circular)
    Parents enculturate their children,
    Culture informs first principles,
    First principles inform values,
    Values guide choices,
    Choices generate action,
    Action begets outcomes,
    Outcomes (re)formulate conditions,
    Conditions influence/reinforce culture.

    And that is the essence of tradition.

    I cannot begin to fathom what kind of government expense can make people sacrifice for their children more (or less) than they would without government intervention.
    I know you mean well but here's one of life's hard realities that the partizans of politically instrumental compassion mongering will never admit to you:
    The more resources you allocate to bailing people out of the consequences of their bad decisions, the less likely it becomes for them to adapt their behavior.

    I am very well aware how callous that reads to a leftist but I'm talking about what works, however inadequately.
    You, on the other hand, are talking about things that read very soothing and comforting to the "downtrodden" but have never worked.



    Quote Originally Posted by Ludicus View Post
    When it comes to the relevance of intergenerational mechanisms, there are multiple aspects. For instance, there is a strong relationship between investments in public health, intergenerational capital transmission, and poverty traps.
    Intergeneration Human Capital Transmission and Poverty Traps
    That's you being circular again.
    But you are being circular in removing from the individual the locus of control.

    Nobody loves you more than you love yourself, nobody can.
    You would have people in need lay their hopes down to a bureaucracy that runs on other people's money.
    Where has that ever worked?

  6. #26
    Ludicus's Avatar Comes Limitis
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    Default Re: The Poverty Trap

    I frequently hear those arguments that are put forward to deny the existence of the poverty trap. If I understood it correctly,

    1-One argument is that the poverty trap doesn't exist because poverty is solely an intergenerational problem caused by parents failing to educate their children, meaning they don't transmit "values and principles" to them.

    2-Another argument: the blame lies with the children who don't want to seize opportunities to escape poverty because, there are job opportunities for everyone, even if they are poorly paid, and the problem lies with people who are arrogant and think they're too good to accept any job.

    3-Another argument is that there are no systemic inequalities that contribute to the poverty trap. According to what you said, you don’t even know what that means

    4.Another argument is that lack of access to healthcare is not a problem contributing to the persistence of poverty because civilized countries don't let anyone die even if they don't have health insurance.

    I will examine the four arguments you brought up to refute the existence of the poverty trap and offer you a thorough critique of each one,

    1- Intergenerational Argument: This argument suggests that poverty is merely an intergenerational problem caused by the lack of education among parents who fail to transmit "values and principles" to their children. While education and the transmission of values are important factors in combating poverty, it is an oversimplification to attribute poverty solely to this factor. Poverty is influenced by a complex interaction of multiple factors, including limited access to educational opportunities, income inequality, discrimination, lack of access to basic resources, among others. Neglecting these other factors leads to a limited view of the reality and complexity of poverty.

    2- Job Opportunities and Individual Attitudes: This argument claims that there are job opportunities available for everyone, even if poorly paid, and that poverty persists due to the arrogance and refusal of individuals to accept any job. While it is true that there are job opportunities in different sectors, often the poorly paid opportunities are not sufficient for people to escape poverty. Moreover, the idea that people are rejecting these jobs out of arrogance is an unfair generalization. Often, the available jobs are precarious, of low quality, with poor working conditions, and inadequate benefits. Poverty is not simply a matter of lack of will or attitude of individuals but is also rooted in broader socioeconomic structures.

    3- Systemic Inequalities: The argument that there are no systemic inequalities contributing to the poverty trap demonstrates a objective lack of knowledge on the subject. Systemic inequalities refer to disparities that exist in areas such as access to quality education, employment opportunities, justice systems, income and wealth distribution, racial and gender discrimination, among others. These inequalities create structural barriers that hinder the escape from poverty for certain groups in society. Ignoring the existence of these inequalities is denying an important factor that contributes to the persistence of poverty.

    4- Access to Healthcare: The argument that limited access to healthcare does not contribute to the persistence of poverty because civilized countries provide medical assistance even without health insurance is an excessive generalization. While some countries have healthcare systems that provide some level of coverage for all citizens, many others face significant challenges in accessing adequate healthcare services. The lack of health insurance or inadequacy of healthcare systems can lead to the exclusion of vulnerable groups and hinder access to essential treatments. Health is a fundamental aspect that influences people's ability to escape poverty, and neglecting this factor disregards an important dimension of the poverty trap.

    To sum up, your arguments presented to deny the existence of the poverty trap are oversimplifications that ignore many of the complex factors contributing to the persistence of poverty. For you, it is clearly irrelevant to take into account the multidimensionality of poverty and acknowledge that its overcoming requires comprehensive approaches and policies that address structural inequalities and ensure adequate opportunities for all.
    --
    Esther Duflo, Nobel Prize in Economics, is well known for a breakthrough antipoverty work- the ability to fight global poverty- studying individual factors contributing to global poverty and performing experiments to determine individual solutions. Duflo’s research has shed light on the factors that contribute to the persistence of poverty and the mechanisms that perpetuate it. She emphasizes that poverty is a multidimensional issue influenced by interconnected factors such as education, health, access to credit, and institutional barriers. Her work highlights the existence of feedback loops that reinforce poverty. For example, poor health can lead to reduced productivity, which further hampers economic opportunities and perpetuates poverty. She argues that breaking these feedback loops is crucial for sustainable poverty reduction. Esther also explains how behavioral biases and cognitive limitations affect decision-making among individuals living in poverty.

    What is Poverty trap?


    Interview Jobless Benefits Don't Make People 'Lazy,' Nobel Laureate ...
    The Poverty Lab | The New Yorker

    People living in poverty are not in that position because they are too lazy to work. Even Warren Buffet recognizes, If you stick me down in the middle of Bangladesh or Peru or someplace, you’ll find out how much this talent is going to produce in the wrong kind of soil. I will be struggling thirty years later”.
    Il y a quelque chose de pire que d'avoir une âme perverse. C’est d'avoir une âme habituée
    Charles Péguy

    Every human society must justify its inequalities: reasons must be found because, without them, the whole political and social edifice is in danger of collapsing”.
    Thomas Piketty

  7. #27
    paleologos's Avatar You need burrito love!!
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    Default Re: The Poverty Trap

    Quote Originally Posted by Ludicus View Post
    ....If I understood it correctly,
    No you did not.



    Quote Originally Posted by Ludicus View Post
    1-One argument is that the poverty trap doesn't exist because poverty is solely an intergenerational problem caused by parents failing to educate their children, meaning they don't transmit "values and principles" to them.
    ...
    1- Intergenerational Argument: This argument suggests that poverty is merely an intergenerational problem caused by the lack of education among parents who fail to transmit "values and principles" to their children. While education and the transmission of values are important factors in combating poverty, it is an oversimplification to attribute poverty solely to this factor. Poverty is influenced by a complex interaction of multiple factors, including limited access to educational opportunities, income inequality, discrimination, lack of access to basic resources, among others. Neglecting these other factors leads to a limited view of the reality and complexity of poverty.
    No, I never said that.
    You are shuffling my words and this is not an honest treatment of my posts.

    I never said that "poverty is solely an intergenerational problem".
    I am certain I said that intergenerational poverty is caused by factors that are internal to a family line, such as values, assumptions, beliefs and expectations.
    My position is that poverty traps exist in the form of a feedback loops that I gave you and you simply refuse to comment on.

    I see people escape the poverty trap every day.
    It is the kind of people who understand that their lives are too short to wait for the government to solve their problems and take their fortunes in their own hands.



    Quote Originally Posted by Ludicus View Post
    2-Another argument: the blame lies with the children who don't want to seize opportunities to escape poverty because, there are job opportunities for everyone, even if they are poorly paid, and the problem lies with people who are arrogant and think they're too good to accept any job.
    ...
    2- Job Opportunities and Individual Attitudes: This argument claims that there are job opportunities available for everyone, even if poorly paid, and that poverty persists due to the arrogance and refusal of individuals to accept any job. While it is true that there are job opportunities in different sectors, often the poorly paid opportunities are not sufficient for people to escape poverty. Moreover, the idea that people are rejecting these jobs out of arrogance is an unfair generalization. Often, the available jobs are precarious, of low quality, with poor working conditions, and inadequate benefits. Poverty is not simply a matter of lack of will or attitude of individuals but is also rooted in broader socioeconomic structures.
    Again a subtle but significant misunderstanding on your part.
    I am certain that I made it clear that escaping intergenerational poverty usually takes more than a generation.
    But invariably the effort starts with a generation who make sacrifices for their children knowing that it will be their children and not themselves who will reap the fruits of such sacrifices.

    One of such sacrifices is doing difficult, unpleasant, unglamorous, often dangerous and underpaid jobs under horrid conditions.
    But to do that one has to accept that no help is coming from elsewhere.
    Such as the Albanians who came to my country when their borders opened for the first time and are doing very well now.
    You failed to comment on that.
    For as long as people are told that they are the victims of "systemic" forces and for that reason they are owed something, they will wait for that something.



    Quote Originally Posted by Ludicus View Post
    3-Another argument is that there are no systemic inequalities that contribute to the poverty trap. According to what you said, you don’t even know what that means
    I understand the meaning of "inequalities" and that they are and have been part of life forever.
    When my great great grand parents were striving in grinding poverty, rich people existed in that time too.
    I am a lot better off than them but I am not part of the 1%.
    There are still inequalities but that is no reason for me to not try for the best.

    Perhaps you can take the time and educate me on the difference between inequality and "systemic" inequality.
    Give me:
    A) A formal definition of "systemic" inequality.
    B) A description of the characteristics of "systemic" inequality that differentiate it from plain old inequality.
    C) An example of such "systemic" inequality (one that cannot be explained away by cultural differences).
    D) And an explanation why some people, starting from the same original position, can escape it while others cannot.

    And make it about Europe and North America.

    I know of the plight of the Dalit in India.
    The Indian caste system is indeed systemic inequality.
    I don't see such a thing in our part of the world.



    Quote Originally Posted by Ludicus View Post
    3- Systemic Inequalities: The argument that there are no systemic inequalities contributing to the poverty trap demonstrates a objective lack of knowledge on the subject.
    Or perhaps it only demonstrates a classically liberal outlook.



    Quote Originally Posted by Ludicus View Post
    Systemic inequalities refer to disparities that exist in areas such as access to quality education, employment opportunities, justice systems, income and wealth distribution, racial and gender discrimination, among others.
    These are plain old inequalities.
    I will single out "justice systems" and "racial and gender discrimination".
    Are you talking about different sets of laws for people of different races (apartheid)?
    We don't have that in the EU.
    The only gender discrimination in the EU that I am aware of is that women entrepreneurs are subsidized by 90%, while their male counterparts are subsidized by much less.
    This gynocentric favoritism has resulted in men entrepreneurs registering their new enterprises under their wives' names.



    Quote Originally Posted by Ludicus View Post
    These inequalities create structural barriers that hinder the escape from poverty for certain groups in society.
    No, they don't create barriers from escaping poverty, they are the result of poverty.
    You got the causality backwards.



    Quote Originally Posted by Ludicus View Post
    Ignoring the existence of these inequalities...
    Inequalities exist, they always did.
    The only reason to call them "systemic" is to guilt trip the naively conscientious into consenting to bigger government.



    Quote Originally Posted by Ludicus View Post
    ... is denying an important factor that contributes to the persistence of poverty.
    Poverty (in contrast to wealth) is itself inequality.
    It seems to me that your argument is that the cause of poverty is poverty (Your words being "Systemic inequalities...such as...income and wealth distribution...").
    If that was the case then poverty itself would be the trap.
    This would make "poverty" and "the poverty trap" two names for the same thing.
    Which would mean that the only solution would be radical -and without compensation- expropriation and redistribution of other people's arduously accumulated wealth.
    AKA Bolshevism.
    What seems to be your position increasingly looks like it could be summed up to: "There is evil in the world, give me power and I will make it go away".



    Quote Originally Posted by Ludicus View Post
    4.Another argument is that lack of access to healthcare is not a problem contributing to the persistence of poverty because civilized countries don't let anyone die even if they don't have health insurance.
    ...
    4- Access to Healthcare: The argument that limited access to healthcare does not contribute to the persistence of poverty because civilized countries provide medical assistance even without health insurance is an excessive generalization. While some countries have healthcare systems that provide some level of coverage for all citizens, many others face significant challenges in accessing adequate healthcare services. The lack of health insurance or inadequacy of healthcare systems can lead to the exclusion of vulnerable groups and hinder access to essential treatments. Health is a fundamental aspect that influences people's ability to escape poverty, and neglecting this factor disregards an important dimension of the poverty trap.
    Actually my argument was -and pardon me if I was not clear enough about it- that universal healthcare is a mater of civility.
    I believe -and I believe I am not wrong- that in Europe, Canada, Australia, New Zealand, South Korea, Japan (and for a good part of the USA) and other developed countries this level of civility has been reached.
    Yet, there are still poor people.
    Go figure.
    Also, I am arguing against the claim of a "poverty trap", not against the existence of poverty.
    And of course I understand that if you are poor and bedridden you will remain poor.
    There is no disagreement between us when it comes to the importance of a comprehensive healthcare system.
    The disagreement is that the healthcare argument does not explain why in the rich, generous and socialistic Sweden there are still intergenerationally poor families.



    Quote Originally Posted by Ludicus View Post
    To sum up, your arguments presented to deny the existence of the poverty trap are oversimplifications that ignore many of the complex factors contributing to the persistence of poverty.
    My arguments also are enough to question why poverty persists for some families, while other families escape it.
    Your avoidance of addressing this shines brightly through your posts.



    Quote Originally Posted by Ludicus View Post
    For you, it is clearly irrelevant to take into account the multidimensionality of poverty and acknowledge that its overcoming requires comprehensive approaches and policies that address structural inequalities and ensure adequate opportunities for all.
    I deny that inequalities are "structural".
    And I deny that "comprehensive approaches and policies" would have any long term effect without the coerced re-enculturation of the recipients of the big government's largesse.
    I am simply not prepared to authorize any inevitably bureaucratic government structure to forcibly re-enculturate anyone.

    Also, what does "adequate opportunities for all" really mean?
    That we all become CEOs?
    Opportunities exist and they are adequate to ameliorate but not eliminate poverty within one generation.
    They also are adequate to ameliorate poverty some more in the next generation and so on and so forth.
    If you want every person who is poor (by whose standard?) today to stop being poor today and are frustrated you don't see that happening that is another issue.



    About Esther Duflo:
    I am not prepared to watch an 80 minute long lecture at the moment.
    However,
    Quote Originally Posted by Ludicus View Post
    Esther also explains how behavioral biases and cognitive limitations affect decision-making among individuals living in poverty.
    She speaks of genes and memes.
    That's exactly what I've been telling you.
    But it seems you need to hear it from a lefty.
    Last edited by paleologos; June 29, 2023 at 02:39 AM.

  8. #28
    Ludicus's Avatar Comes Limitis
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    Default Re: The Poverty Trap

    Quote Originally Posted by paleologos View Post
    …I am certain I said that intergenerational poverty is caused by factors that are internal to a family line, such as values, assumptions, beliefs and expectations…I am certain that I made it clear that escaping intergenerational poverty usually takes more than a generation.…But invariably the effort starts with a generation who make sacrifices for their children knowing that it will be their children and not themselves who will reap the fruits of such sacrifices.
    Your statement implicitly denies the existence of poverty traps. The intergenerational poverty is not solely caused by inherent factors within the family line, such as moral values and expectations, and nothing else. Poverty traps are the structural and social obstacles that can hinder social mobility and perpetuate poverty across generations. The reality is that there are systemic and structural factors that can restrict opportunities for economic and social success for certain disadvantaged groups or families.
    To speak of "Bolshevism" when talking about the structural and social obstacles is completely off the mark.

    Quote Originally Posted by paleologos View Post
    Give me:
    A) A formal definition of "systemic" inequality.
    B) A description of the characteristics of "systemic" inequality that differentiate it from plain old inequality.
    C) An example of such "systemic" inequality (one that cannot be explained away by cultural differences).
    D) And an explanation why some people, starting from the same original position, can escape it while others cannot.
    And make it about Europe and North America.
    Read below.

    Quote Originally Posted by paleologos View Post
    About Esther Duflo:
    I am not prepared to watch an 80 minute long lecture at the moment.
    Recommended reading,

    1- "Poverty Traps" by Abhijit Banerjee and Esther Duflo (Handbook of Development Economics, 2007): provides an overview of various poverty trap models and empirical evidence supporting their existence. It covers topics such as agricultural productivity, health and education, and social networks, highlighting how these factors interact to create and perpetuate poverty traps.

    2-"Understanding Poverty" by Abhijit V. Banerjee and Esther Duflo (Journal of Economic Perspectives, 2011): discusses various aspects of poverty, including poverty traps.

    Esther Duflo talks about the nutrition-based poverty trap. Download File
    There is a relationship between wage and nutrition (how much better do you eat if you have a little more income) and a relationship between nutrition and productivity. (how much stronger to do you become if you have a bit more to eat).
    Another specific example is the study on the impact of deworming programs in Kenya.
    In their research, Duflo, Banerjee, and Kremer conducted a randomized controlled trial to evaluate the effectiveness of providing deworming treatment to schoolchildren. They found that parasitic worm infections were widespread among children in Kenya and could lead to health issues, reduced cognitive abilities, and hindered school attendance.
    The researchers collaborated with local health authorities to implement a deworming program in randomly selected schools. They compared the outcomes of the treatment group (schools where deworming was administered) with the control group (schools without deworming).
    The results of the study showed that deworming treatment had a positive impact on the well-being and education of the treated children. The children who received the deworming treatment experienced improved health, increased school attendance, and better educational outcomes compared to those in the control group.
    This study provided empirical evidence for the effectiveness of deworming programs in improving the lives of children in poverty-stricken areas. It demonstrated that a relatively simple and cost-effective intervention like deworming can have significant positive effects on health and education outcomes, which are crucial for breaking the cycle of poverty.
    The success of this research has contributed to the implementation of deworming programs in various countries and informed policymakers and organizations working on poverty alleviation strategies. It highlights the potential of evidence-based interventions to make a positive impact on the lives of individuals living in poverty.

    Quote Originally Posted by paleologos View Post
    I will single out... "racial and gender discrimination"
    I’m afraid you can't. (What you mean by "Justice Systems"?)

    Quote Originally Posted by paleologos View Post
    Give me:
    A) A formal definition of "systemic" inequality...
    Formal Definition of Systemic Inequality:

    Systemic inequality refers to a pattern of structured and pervasive disparities that persistently affect various aspects of individuals' lives within a society. It is characterized by unequal distribution of resources, opportunities, power, and privileges, which are deeply ingrained in the social, economic, and political systems, as well as in the institutions and policies that govern them. Systemic inequality goes beyond individual prejudices and biases, as it is rooted in historical and structural factors that perpetuate unequal outcomes for certain groups of people based on their race, ethnicity, gender, socioeconomic status, or other protected characteristics.

    a) Since you asked, an example of systemic inequality that cannot be explained away solely by cultural differences is the racial wealth gap in the United States
    This wealth gap persists regardless of cultural differences and individual choices. Numerous studies have shown that even when controlling for factors such as education, occupation, and income, there are substantial differences in wealth accumulation between racial and ethnic groups. For instance, data consistently indicate that the median wealth of White households is significantly higher than that of Black or Hispanic households. This inequality is perpetuated through factors like discriminatory lending practices, limited access to quality education and job opportunities, and disparities in homeownership and inheritance, among others. The racial wealth gap is a clear example of systemic inequality as it is deeply rooted in historical and ongoing structural factors that disproportionately affect certain racial and ethnic groups, and it cannot be adequately explained away by cultural differences alone.

    b) Since you asked, one example of systemic inequality in Europe that cannot be solely explained by cultural differences is the gender pay gap. Women in many European countries still experience a persistent pay disparity compared to their male counterparts. This wage gap exists even when controlling for factors such as education, experience, and occupation. Numerous studies have shown that women in Europe tend to earn less than men, on average, for performing the same job. For instance, the European Institute for Gender Equality reported in 2020 that the gender pay gap in the European Union was around 14.1%, meaning that women earned, on average, 14.1% less than men per hour worked. These disparities persist across various industries and occupations. The persistence of this gap suggests that systemic factors contribute significantly to the inequality. These include occupational segregation, vertical segregation, unequal work-life balance, discrimination and biases. (We can talk about this in more detail)
    ---
    In fact, there are numerous studies that provide empirical evidence to understand the existence and impact of poverty traps. If you wish, I can point you to an extensive list of notable studies that have explored the existence and impact of poverty traps.
    In this world, poverty is not primarily/ exclusively a result of individual choices, lack of effort, or poor decision-making. Not anyone can overcome poverty through hard work and determination.
    What is behind your individualistic perspective are ideological and political beliefs that downplay the role of structural factors in perpetuating poverty.
    Some examples provided by you are the result of confirmations bias or overgeneralization of personal success.
    Those who deny the existence of the poverty trap usually try to selectively seek out evidence that supports their beliefs while disregarding or dismissing contrary evidence; those who have managed to overcome poverty through personal effort may assume that their experience applies universal. In fact, extensive research has demonstrated the impact of poverty traps on individuals and communities, refuting the denial of their existence with empirical evidence.
    Last edited by Ludicus; June 29, 2023 at 11:42 AM.
    Il y a quelque chose de pire que d'avoir une âme perverse. C’est d'avoir une âme habituée
    Charles Péguy

    Every human society must justify its inequalities: reasons must be found because, without them, the whole political and social edifice is in danger of collapsing”.
    Thomas Piketty

  9. #29
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    Default Re: The Poverty Trap

    @Ludicus:

    Make an effort to define the word "systemic" without using the word "structural" and also make an effort to define the word "structural" without using the word "systemic".
    As a matter of fact try to respond to my objections without using any of these words because all they mean is "it's not the individual's fault".


    For example, giving your kid asthma because you smoke inside the house is not the kid's fault.
    But it's not a "systemic" problem either, not even if five children arrive at the hospital every day for that very same reason.
    How about using the word "cultural" instead?

    If your salary can afford you to raise two children comfortably but instead you make five, then that might be a "poverty trap" that is not the children's fault.
    Is it the "system"'s fault?

    In post #20 I posted (among other things):
    Now, will you concede that culture is a determinant of escaping poverty faster than your neighbors, when all other things are equal?
    And
    will you concede that attitude is the only determinant of escaping poverty that is in the control of the interested parties?
    (Meaning that of the factors that lead people out of poverty, attitude is the one of which they are in control.)
    Your avoidance to comment on this was louder than anything else you posted.


    About the examples that you are giving:
    The race wealth gap has been exhaustively explained away as a consequence of cultural differences.
    There are African Americans who are doing very well and I gave you links to articles demonstrating that immigrants from Africa are also doing very well.
    But most importantly, if someone else has inherited asset from their parents and you have not that does not automatically put you in a "poverty trap".

    The "gender pay gap" has been shown to be a childbirth wage gap.
    Women who have not had children outperform men of equal age and education.
    Once they get married and have children, they take time off work while the fathers of the children take on more hours to make up for the lost income.

    If the "race wealth gap" and the "gender pay gap" are the only examples you can come up with, then it is evident to me that you and I don't just have a difference of opinion.
    We have a difference of facts.

    Quote Originally Posted by Ludicus View Post
    What is behind your individualistic perspective are ideological and political beliefs that downplay the role of structural factors in perpetuating poverty.
    Here you appeal to motive, that is you are dismissing the arguments by questioning the motives of the proposer.
    This is a sub case of the ad hominem fallacy.
    You go on to expand on it but it really does not contribute anything.

    I would like to conclude this by saying that I am not questioning the existence of poverty.
    Instead I am pointing out that some individuals escape poverty and others don't.
    And then I posit that the ones who escape poverty have a few things in common.
    And the one thing that they have in common, that is the most salient, is that they don't wait for the government to come and rescue them.
    They rescue themselves.

    I also was very clear and very deliberate in stressing that my ancestors did not escape poverty within one generation.
    Instead it took each generation of them a whole lifetime to up themselves just one notch.
    They started from serfdom.

    Serfdom is an example of a "systemic", or "structural" (these are synonymous, aren't they?) factor keeping people down that you did not bother to mention.
    Maybe it's because we have left it behind us.

    I also mentioned the caste system in India.
    You did not comment on that either, maybe it's because we don't have such a thing.

    I also mentioned the vast waves of immigrants that are risking their lives to come to Europe or North America to make a better life.
    They are trying to escape war, failed states and abject corruption.
    It could be argued -and I would not contest it- that war, failed states and abject corruption are systemic factors that are keeping people in abject poverty.
    But we don't have these in Europe or North America and that's why people from such countries are trying to come to ours.

    And that is ultimately the argument you cannot refute (and because of that I suspect you will pretend it was never made).
    The proof that we don't have "systemic"/"structural" economic oppression in Europe and the Anglo sphere is people risking their lives every day for the opportunity to live like us.


    From wikipedia, on Thanasis Antetokounmpo:
    On May 3, 2016, Antetokounmpo was named in the senior Nigerian men's national team training camp preliminary list for the 2016 Rio Olympics.
    He declined the offer, choosing instead to play with the senior Greek national team.
    I say that is a man giving his adoptive country a medal instead of the other way round.
    Thanasis and his older brother Giannis and the rest of their family did suffer discrimination and poverty.
    His parents left their first son in Nigeria in order to come to Greece.
    That's how driven they were.

    And this is how proud their sons are of their adoptive country:
    Spoiler Alert, click show to read: 


    Μπας και δούμε μια άσπρη μέρα...

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    Default Re: The Poverty Trap

    Since the post is going to be long, I prefer to split it into two.
    Part one.

    It’s a myth that income and wealth are determined completely by one’s own effort, perseverance, and choices. This is clearly not true. Here are a few notable studies that have explored the existence and impact of poverty traps,
    -Intergenerational Mobility: by Raj Chetty and Nathaniel Hendrenhas
    Research has found that children from low-income families in the US, from single-parent households or neighborhoods with weaker social networks tend to have lower mobility rates, suggesting the presence of a poverty trap.

    -The economics of poverty traps and persistent poverty: An asset-based approach. Carter, M. R., & Barrett, C. B
    The paper discusses various mechanisms through which poverty traps can operate. It examines the role of initial endowments and shocks, as well as the interplay between poverty traps and market failures. The authors emphasize that limited access to credit, insurance, and other financial services can hinder the accumulation of assets and perpetuate poverty.

    -
    Poverty Traps” by Samuel Bowles, Steven Durlauf, and Karla Hoff
    They argue that in situations where resources are scarce and there is a lack of infrastructure or public goods, individuals and communities may struggle to invest in productive activities that could lift them out of poverty. Without sufficient investment, economies remain stagnant, perpetuating the poverty trap. In certain situations, individuals facing adverse conditions, such as limited access to education, healthcare, or credit, may make suboptimal choices due to the constraints imposed by their environment. These choices, in turn, reinforce poverty and make it difficult to break free from it.

    -"Escaping Poverty Traps" by Michael Kremer and Jonathan Robinson
    The authors define poverty traps as self-reinforcing mechanisms that keep individuals or communities trapped in persistent poverty. These traps can be caused by a combination of factors such as limited access to education, healthcare, credit, and market opportunities, as well as social and cultural norms that perpetuate poverty across generations.

    - "The Economics of Poverty Traps and Persistent Poverty: An Asset-Based Approach" by Chris Barrett
    -First, Barrett discusses the role of credit constraints and imperfect markets in perpetuating poverty.
    -Second, Barrett examines the intergenerational transmission of poverty and the importance of human capital accumulation. Barrett suggests that asset accumulation acts as a form of insurance, allowing households to better cope with unexpected events and recover from setbacks.
    - Finally, Barrett emphasizes the need for targeted policy interventions to address poverty traps effectively. He discusses various policy measures, including social safety nets, microfinance programs, and investments in human capital, as potential tools to promote asset accumulation and alleviate persistent poverty.
    ---
    -Banerjee and Duflo’s Poor Economics- this book explores the economics of poverty and presents insights from randomized control trials to understand the behavior of poor individuals and design effective anti-poverty policies. Pages 30-42, I quote,

    …Sachs and Easterly are both economists, and their differences, to a large extent, stem from a different answer to an economic question: Is it possible to get trapped in poverty? Sachs, we know, believes that some countries, because of geography or bad luck, are trapped in poverty: They are poor because they are poor. They have the potential to become rich but they need to be dislodged from where 30/591 they are stuck and set on the way to prosperity, hence Sachs’s emphasis on one big push. Easterly, by contrast, points out that many countries that used to be poor are now rich, and vice versa. If the condition of poverty is not permanent, he argues, then the idea of a poverty trap that inexorably ensnares poor countries is bogus. The same question could also be asked about individuals. Can people be trapped in poverty? If this were the case, a onetime infusion of aid could make a huge difference to a person’s life, setting her on a new trajectory. This is the underlying philosophy behind Jeffrey Sachs’s Millennium Villages Project. The villagers in the fortunate villages get free fertilizer, school meals, working health clinics, computers in their school, and much more. Total cost: half a million dollars a year per village. The hope, according to the project’s Web site, is that “Millennium Village economies can transition over a period from subsistence farming to self-sustaining commercial activity. On a video they produced for MTV, Jeffrey Sachs and actress Angelina Jolie visited Sauri, in Kenya, one of the oldest millennium villages. There they met Kennedy, a young farmer. He was given free fertilizer, and as a result, the harvest from his field. was twenty times what it had been in previous years. With the savings from that harvest, the video concluded, he would be able to support himself forever. The implicit argument was that Kennedy was in a poverty trap in which he could not afford fertilizer: The gift of fertilizer freed him. It was the only way he could escape from the trap. But, skeptics could object that if fertilizer is really so profitable, why could Kennedy not have bought just a little bit of it and put it on the most suitable part of his field? This would have raised the yield, and with the extra money generated, he could have bought more fertilizer the following year, and so on. Little by little, he would have become rich enough to be able to put fertilizer on his entire field. So is Kennedy trapped in poverty, or is he not? The answer depends on whether the strategy is feasible: Buy just a little to start with, make a little extra money, and then reinvest the proceeds, to make even more money, and repeat. But maybe fertilizer is not easy to buy in small quantities. Or perhaps it takes several tries before you can get it to work. Or there are problems with reinvesting the gains. One could think of many reasons why a farmer might find it difficult to get started on his own. We will postpone trying to get to the heart of Kennedy’s story until Chapter 8.
    But this discussion helps us see a general principle. There will be a poverty trap whenever the scope for growing income or wealth at a very fast rate is limited for those who have too little to invest but expands dramatically for those who can invest a bit more. On the other hand, if the potential for fast growth is high among the poor, and then tapers off as one gets richer, there is no poverty trap.
    Economists love simple (some would say simplistic) theories, and they like to represent them in diagrams. We are no exception: There are two diagrams shown below that we think are helpful illustrations of this debate about the nature of poverty. The most important thing to remember from them is the shape of the curves: We will return to these shapes a number of times in the book. For those who believe in poverty traps, the world looks like Figure 1. Your income today influences what your income will be in the future (the future could be tomorrow, next month, or even the next generation): What you have today determines how much you eat, how much you have to spend on medicine or on the education of your children, whether or not you can buy fertilizer or improved seeds for your farm, and all this determines what you will have tomorrow. The shape of the curve is key: It is very flat at the beginning, and then rises rapidly, before flattening out again. We will call it, with some apologies to the English alphabet, the S-shape curve. The S—shape of this curve is the source of the poverty trap. On the diagonal line, income today is equal to income tomorrow. For the very poor who are in the poverty trap zone, income in the future is lower than income today: The curve is below the diagonal line. This means that over time, those in this zone become poorer and poorer, and they will eventually end up trapped in poverty, at point N.The arrows starting at point A1 represent a possible trajectory: from A1, move to A2, and then A3, and so forth. For those who start outside of the poverty trap zone, income tomorrow is higher than income today: Over time they become richer and richer, at least up to a point. This more cheerful destiny is represented by the arrow starting at point B1, moving to B2 and B3, and so forth.


    Many economists believe, however, that the world usually looks more like Figure 2. Figure 2 looks a bit like the right-hand side of Figure 1, but without the flat left side. The curve goes up fastest at the beginning, then slower and slower. There is no poverty trap in this world: Because the poorest people earn more than the income they started with, they become richer over time, until eventually their incomes stop growing (the arrows going from A1 to A2 to A3 depict a possible
    Figure 2 looks a bit like the right-hand side of Figure 1, but without the flat left side. The curve goes up fastest at the beginning, then slower and slower. There is no poverty trap in this world: Because the poorest people earn more than the income they started with, they become richer over time, until eventually their incomes stop growing (the arrows going from A1 to A2 to A3 depict a possible trajectory). This income may not be very high, but the point is that there is relatively little we need or can do to help the poor. A onetime gift in this world (say, giving someone enough income that, instead of starting with A1 today, he or she start with A2) will not boost anyone’s income permanently. At best, it can just help them move up a little bit faster, but it cannot change where they are eventually headed.
    So which of these diagrams best represents the world of Kennedy, the young Kenyan farmer? To know the answer to this question we need to find out a set of simple facts, such as: Can one buy fertilizer in small quantities? Is there something that makes it hard to save between planting seasons, so that even if Kennedy can make money in one season, he cannot turn it into further investment? The most important message from the theory embedded in the simple diagrams is thus that theory is not enough: To really answer the question of whether there are poverty traps, we need to know whether the real world is better represented by one graph, or by the other. And we need to make this assessment case by case: If our story is based on fertilizer, we need to know some facts about the market for fertilizer. If it is about savings, we need to know how the poor save. If the issue is nutrition and health, then we need to study those. The lack of a grand universal answer might sound vaguely disappointing, but in fact it is exactly what a policy maker should want to know—not that there are a million ways that the poor are trapped but that there are a few key factors that create the trap, and that alleviating those particular problems could set them free and point them toward a virtuous cycle of increasing wealth and investment.



    This radical shift in perspective, away from the universal answers, required us to step out of the office and look more carefully at the world. In doing so, we were following a long tradition of development economists who have emphasized the importance of collecting the right data to be able to say anything useful about the world. However, we had two advantages over the previous generations: First, there are now high-quality data from a number of poor countries that were not available before. Second, we have a new, powerful tool: randomized control trials (RCTs), which give researchers, working with a local partner, a chance to implement large-scale experiments designed to test their theories. In an RCT, as in the studies on bed nets, individuals or communities are randomly assigned to different “treatments”—different programs or different versions of the same program. Since the individuals assigned to different treatments are exactly comparable (because they were chosen at random), any difference between them is the effect of the treatment. A single experiment does not provide a final answer on whether a program would universally “work.” But we can conduct a series of experiments, differing in either the kind of location in which they are conducted, or the exact intervention being tested (or both). Together, this allows us to both verify the robustness of our conclusions (Does what works in Kenya also work in Madagascar?) and narrow the set of possible theories that can explain the data (What is stopping Kennedy? Is it the price of fertilizer or the difficulty of saving money?). The new theory can help us design interventions and new experiments and help us make sense of previous results that may have been puzzling before. Progressively, we obtain a fuller picture of how the poor really live their lives, where they need help, and where they don’t. In 2003, we founded the Poverty Action Lab (which later became the Abdul Latif Jameel Poverty Action Lab, or J—PAL) to encourage and support other researchers, governments, and nongovernmental organizations to work together on this new way of doing economics, and to help diffuse what they have learned among policy makers. The response has been overwhelming. By 2010, J—PAL researchers had completed or were engaged in over 240 experiments in forty countries around the world, and very large numbers of organizations, researchers, and policy makers have embraced the idea of randomized trials.
    The response to J—PAL’s work suggests that there are many who share our basic premise—that it is possible to make very significant progress against the biggest problem in the world through the accumulation of a set of small steps, each well thought out, carefully tested, and judiciously implemented. This might seem self-evident, but as we will argue throughout the book, it is not how policy usually gets made. The practice of development policy, as well as the accompanying debates, seems to be premised on the impossibility of relying on evidence: Verifiable evidence is a chimera, at best a distant fantasy, at worst a distraction. “We have to get on with the work, while you indulge yourselves in the pursuit of evidence,” is what hardheaded policy makers and their even harder-headed advisers often told us when we started down this path. Even today, there are many who hold this view. But there are also many people who have always felt disempowered by this unreasoned urgency. They feel, as we do, that the best anyone can do is to understand deeply the specific problems that afflict the poor and to try to identify the most effective ways to intervene. In some instances, no doubt, the best option will be to do nothing, but there is no general rule here, just as there is no general principle that spending money always works. It is the body of knowledge that grows out of each specific answer and the understanding that goes into those answers that give us the best shot at, one day, ending poverty. This book builds on that body of knowledge. A lot of the material that we will talk about comes from RCTs conducted by us and others, but we also make use of many other types of evidence: qualitative and quantitative descriptions of how the poor live, investigations of how specific institutions function, and a variety of evidence on which policies have worked and which have not. In the companion Web site for the book, www.pooreconomics.com, we provide links to all the studies we cite, photographic essays that illustrate each chapter, and extracts and charts from a data set on key aspects of the lives of those who live on less than 99 cents per person per day in eighteen countries, which we will refer to many times in the book. The studies we use have in common a high level of scientific rigor, openness to accepting the verdict of the data, and a focus on specific, concrete questions of relevance to the lives of the poor. One of the questions that we will use these data to answer is when and where we should worry about poverty 41/591 traps; we will find them in some areas, but not in others. In order to design effective policy, it is crucial that we get answers to such questions right. We will see many instances in the chapters that follow where the wrong policy was chosen, not out of bad intentions or corruption, but simply because the policy makers had the wrong model of the world in mind: They thought there was a poverty trap somewhere and there was none, or they were ignoring another one that was right in front of them. The message of this book, however, goes well beyond poverty traps. As we will see, ideology, ignorance, and inertia—the three Is—on the part of the expert, the aid worker, or the local policy maker, often explain why policies fail and why aid does not have the effect it should. It is possible to make the world a better place—probably not tomorrow, but in some future that is within our reach—but we cannot get there with lazy thinking. We hope to persuade you that our patient, step-by-step approach is not only a more effective way to fight poverty, but also one that makes the world a more interesting place.
    Il y a quelque chose de pire que d'avoir une âme perverse. C’est d'avoir une âme habituée
    Charles Péguy

    Every human society must justify its inequalities: reasons must be found because, without them, the whole political and social edifice is in danger of collapsing”.
    Thomas Piketty

  11. #31
    Ludicus's Avatar Comes Limitis
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    Default Re: The Poverty Trap

    Part two.
    Paleologos, when we realize the reality of poverty, it is more appropriate to put aside moral admonitions.

    Page 81,

    …Orwell captured this phenomenon as well in The Road to Wigan Pier when he described how poor families managed to survive the depression. Instead of raging against their destiny, they have made things tolerable by reducing their standards. But they don’t necessarily reduce their standards by cutting out luxuries and concentrating on necessities; more often it is the other way around—the more natural way, if you come to think of it—hence the fact that in a decade of unparalleled depression, the 78/591 consumption of all cheap luxuries has increased.34 These “indulgences” are not the impulsive purchases of people who are not thinking hard about what they are doing. They are carefully thought out, and reflect strong compulsions, whether internally driven or externally imposed. Oucha Mbarbk did not buy his TV on credit—he saved up over many months to scrape enough money together, just as the mother in India starts saving for her eight-yearold daughter’s wedding some ten years or more into the future, by buying a small piece of jewelry here and a stainless-steel bucket there. We are often inclined to see the world of the poor as a land of missed opportunities and to wonder why they don’t put these purchases on hold and invest in what would really make their lives better. The poor, on the other hand, may well be more skeptical about supposed opportunities and the possibility of any radical change in their lives. They often behave as if they think that any change that is significant enough to be worth sacrificing for will simply take too long. This could explain why they focus on the here and now, on living their lives as pleasantly as possible, celebrating when occasion demands it.

    Further reading of this book explains in detail what the nutrition-based poverty trap is, the health trap, why schools fail, do the poor control their fertility decisions, children as financial instruments, the familiar model, the hazards of being poor, where are the insurance companies for the poor, why poor people don’t want insurance, the not so simple economics of lending to the poor, does microcredit work, why the poor don’t save more, savings and self-control, getting out of the trap, the business of the poor, “good jobs”, politics, against political economy, and more.
    ---
    An excerpt from the conclusion,
    …As this book has shown, although we have no magic bullets to eradicate poverty, no one-shot cure-all, we do know a number of things about how to improve the lives of the poor. In particular, five key lessons emerge.
    First, the poor often lack critical pieces of information and believe things that are not true. They are unsure about the benefits of immunizing children; they think there is little value in what is learned during the first few years of education; they don’t know how much fertilizer they need to use; they don’t know which is the easiest way to get infected with HIV; they don’t know what their politicians do when in office. When their firmly held beliefs turn out to be incorrect, they end up making the wrong decision, sometimes with drastic consequences—think of the girls who have unprotected sex with older men or the farmers who use twice as much fertilizer as they should. Even when they know that they don’t know, the resulting uncertainty can be damaging. For example, the uncertainty about the benefits of immunization combines with the universal tendency to procrastinate, with the result that a lot of children don’t get immunized. Citizens who vote in the dark are more likely to vote for someone of their ethnic group, at the cost of increasing bigotry and corruption. We saw many instances in which a simple piece of information makes a big difference. However, not every information campaign is effective. It seems that in order to work, an information campaign must have several features: It must say something that people don’t already know (general exhortations like “No sex before marriage” seem to be less effective); it must do so in an attractive and simple way (a film, a play, a TV show, a well-designed report card); and it must come from a credible source (interestingly, the press seems to be viewed as credible). One of the corollaries of this view is that governments pay a huge cost in terms of lost credibility when they say things that are misleading, confusing, or false.
    Second, the poor bear responsibility for too many aspects of their lives. The richer you are, the more the “right” decisions are made for you. The poor have no piped water, and therefore do not benefit from the chlorine that the city government puts into the water supply. If they want clean drinking water, they have to purify it themselves. They cannot afford ready-made fortified breakfast cereals and therefore have to make sure that they and their children get enough nutrients. They have no automatic way to save, such as a retirement plan or a contribution to Social Security, so they have to find a way to make sure that they save. These decisions are difficult for everyone because they require some thinking now or some other small cost today, and the benefits are usually reaped in the distant future. As such, procrastination very easily gets in the way. For the poor, this is compounded by the fact that their lives are already much more demanding than ours: Many of them run small businesses in highly competitive industries; most of the rest work as casual laborers and need to constantly worry about where their next job will come from. This means that their lives could be significantly improved by making it as easy as possible to do the right thing—based on everything else we know—using the power of default. options and small nudges: Salt fortified with iron and iodine could be made cheap enough that everyone buys it. Savings accounts, the kind that make it easy to put in money and somewhat costlier to take it out, can be made easily available to everyone, if need be, by subsidizing the cost for the bank that offers them. Chlorine could be made available next to every source where piping water is too expensive. There are many similar examples. Third, there are good reasons that some markets are missing for the poor, or that the poor face unfavorable prices in them. The poor get a negative interest rate from their savings accounts (if they are lucky enough to have an account) and pay exorbitant rates on their loans (if they can get one) because handling even a small quantity of money entails a fixed cost. The market for health insurance for the poor has not developed, despite the devastating effects of serious health problems in their lives because the limited insurance options that can be sustained in the market (catastrophic health insurance, formulaic weather insurance) are not what the poor want. In some cases, a technological or an institutional innovation may allow a market to develop where it was missing. This happened in the case of microcredit, which made small loans at more affordable rates available to millions of poor people, although perhaps not the poorest. Electronic money transfer systems (using cell phones and the like) and unique identification for individuals may radically cut the cost of providing savings and remittance services to the poor over the next few years. But we also have to recognize that in some cases, the conditions for a market to emerge on its own are simply not there. In such cases, governments should step in to support the market to provide the necessary conditions, or failing that, consider providing the service themselves. We should recognize that this may entail giving away goods or services (such as bed nets or visits to a preventive care center) for free or even rewarding people, strange as it might sound, for doing things that are good for them. The mistrust of free distribution of goods and services among various experts has probably gone too far, even from a pure cost-benefit point of view. It often ends up being cheaper, per person served, to distribute a service for free than to try to extract a nominal fee. In some cases, it may involve ensuring that the price of a product sold by the market is attractive enough to allow the market to develop. For example, governments could subsidize insurance premiums, or distribute vouchers that parents can take to any school, private or public, or force banks to offer free “no frills” savings accounts to everyone for a nominal fee. It is important to keep in mind that these subsidized markets need to be carefully regulated to ensure they function well. For example, school vouchers work well when all parents have a way of figuring out the right school for their child; otherwise, they can turn into a way of giving even more of an advantage to savvy parents. Fourth, poor countries are not doomed to failure because they are poor, or because they have had an unfortunate history. It is true that things often do not work in these countries: Programs intended to help the poor end up in the wrong hands, teachers teach desultorily or not at all, roads weakened by theft of materials collapse under the weight of overburdened trucks, and so forth. But many of these failures have less to do with some grand conspiracy of the elites to maintain their hold on the economy and more to do with some avoidable flaw in the detailed design of policies, and the ubiquitous three Is: ignorance, ideology, and inertia. Nurses are expected to carry out jobs that no ordinary human being would be able to complete, and yet no one feels compelled to change their job description. The fad of the moment (be it dams, barefoot doctors, microcredit, or whatever) is turned into a policy without any attention to the reality within which it is supposed to function. We were once told by a senior government official in India that the village education committees always include the parent of the best student in the school and the parent of the worst student in the school. When we asked how they decided who were the best and worst children, given that there are no tests until fourth grade, she quickly changed subjects. And yet even these absurd rules, once in place, keep going out of sheer inertia. The good news, if that is the right expression, is that it is possible to improve governance and policy without changing the existing social and political structures. There is tremendous scope for improvement even in “good” institutional environments, and some margin for action even in bad ones. A small revolution can be achieved by making sure that everyone is invited to village meetings; by monitoring government workers and holding them accountable for failures in performing their duties; by monitoring politicians at all levels and sharing this information with voters; and by making clear to users of public services what they should expect—what the exact health center hours are, how much money (or how many bags of rice) they are entitled to. Finally, expectations about what people are able or unable to do all too often end up turning into self-fulfilling prophecies. Children give up on school when their teachers (and sometimes their parents) signal to them that they are not smart enough to master the curriculum; fruit sellers don’t make the effort to repay their debt because they expect that they will fall back into debt very quickly; nurses stop coming to work because nobody expects them to be there; politicians whom no one expects to perform have no incentive to try improving people’s lives. Changing expectations is not easy, but it is not impossible: After seeing a female pradhan in their village, villagers not only lost their prejudice against women politicians but even started thinking that their daughter might become one, too; teachers who are told that their job is simply to make sure that all the children can read can accomplish that task within the duration of a summer camp. Most important, the role of expectations means that success often feeds on itself. When a situation starts to improve, the improvement itself affects beliefs and behavior. This is one more reason one should not necessarily be afraid of handing things out (including cash) when needed to get a virtuous cycle started. Despite these five lessons, we are very far from knowing everything we can and need to know. This book is, in a sense, just an invitation to look more closely. If we resist the kind of lazy, formulaic thinking that reduces every problem to the same set of general principles; if we listen to poor people themselves and force ourselves to understand the logic of their choices; if we accept the possibility of error and subject every idea, including the most apparently commonsensical ones, to rigorous empirical testing, then we will be able not only to construct a toolbox of effective policies but also to better understand why the poor live the way they do. Armed with this patient understanding, we can identify the poverty traps where they really are and know which tools we need to give the poor to help them get out of them. We may not have much to say about macroeconomic policies or institutional reform, but don’t let the apparent modesty of the enterprise fool you: Small changes can have big effects. Intestinal worms might be the last subject you want to bring up on a hot date, but kids in Kenya who were treated for their worms at school for two years, 493/591 rather than one (at the cost of $1.36 USD PPP per child and per year, all included), earned 20 percent more as adults every year, meaning $3,269 USD PPP over a lifetime. The effect might be lower if deworming became universal: The children lucky enough to have been dewormed may have been in part taking the jobs of others. But to scale this number, note that Kenya’s highest sustained per capita growth rate in modern memory was about 4.5 percent in 2006–2008. If we could press a macroeconomic policy lever that could make that kind of unprecedented growth happen again, it would still take four years to raise average incomes by the same 20 percent. And, as it turns out, no one has such a lever. We also have no lever guaranteed to eradicate poverty, but once we accept that, time is on our side. Poverty has been with us for many thousands of years; if we have to wait another fifty or hundred years for the end of poverty, so be it. At least we can stop pretending that there is some solution at hand and instead join hands with millions of well-intentioned people across the world—elected officials and bureaucrats, teachers and NGO workers, academics and entrepreneurs—in the quest for the many ideas, big and small, that will eventually take us to that world where no one has to live on 99 cents per day.
    Il y a quelque chose de pire que d'avoir une âme perverse. C’est d'avoir une âme habituée
    Charles Péguy

    Every human society must justify its inequalities: reasons must be found because, without them, the whole political and social edifice is in danger of collapsing”.
    Thomas Piketty

  12. #32
    paleologos's Avatar You need burrito love!!
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    Default Re: The Poverty Trap

    The original post in this thread linked to an article about "poverty trap" in the USA.
    It does, however, say that this has been studied mostly in "underdeveloped" countries.

    If you live in an "underdeveloped" country then your country can be the poverty trap, provided you are not escaping it.
    My previous answers were about people escaping their underdeveloped countries to come to the developed world and live decent lives.
    If you are born in the USA and complain about the "poverty trap" when immigrants from Africa are doing better than you right next to you then something is wrong with you.

    If you want to re-post here a thousand dissertations about poverty in Africa, you can do that and then we can argue about how Africa is a poverty trap.
    Or you can say that Africa is a rich continent but because of corruption it's peoples remain poor.
    And then I would argue how corruption is a cultural thing.

  13. #33
    Ludicus's Avatar Comes Limitis
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    Default Re: The Poverty Trap

    Quote Originally Posted by paleologos View Post
    My previous answers were about people escaping their underdeveloped countries to come to the developed world and live decent lives.
    In addition to all the examples I've already mentioned: Research on poverty in Bangladesh debunks the idea that individual choice or failure is the explanation. It is a poverty trap.

    That said, there is also analytical and empirical literature on middle-income trap: Caught in the Middle? The Economics of Middle-Income Traps*
    Il y a quelque chose de pire que d'avoir une âme perverse. C’est d'avoir une âme habituée
    Charles Péguy

    Every human society must justify its inequalities: reasons must be found because, without them, the whole political and social edifice is in danger of collapsing”.
    Thomas Piketty

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    alhoon's Avatar Comes Rei Militaris
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    Default Re: The Poverty Trap

    Quote Originally Posted by Ludicus View Post
    In addition to all the examples I've already mentioned: Research on poverty in Bangladesh debunks the idea that individual choice or failure is the explanation. It is a poverty trap.

    That said, there is also analytical and empirical literature on middle-income trap: Caught in the Middle? The Economics of Middle-Income Traps*
    If anything, we have also seen ample evidence that the rich people have put in place systems and created dependencies thanks to the number of people they employ which forces the government to bail them out.
    It's... the upper income trap! It is quite hard to drop from the 0.01% to below the 1%. You may drop from 600-millions net worth to "just" 30 millions, but you aren't becoming a peasant.
    alhoon is not a member of the infamous Hoons: a (fictional) nazi-sympathizer KKK clan. Of course, no Hoon would openly admit affiliation to the uninitiated.
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    Ludicus's Avatar Comes Limitis
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    Default Re: The Poverty Trap

    Quote Originally Posted by alhoon View Post
    If anything, we have also seen ample evidence that the rich people have put in place systems and created dependencies thanks to the number of people they employ which forces the government to bail them out.
    It's... the upper income trap! It is quite hard to drop from the 0.01% to below the 1%. You may drop from 600-millions net worth to "just" 30 millions, but you aren't becoming a peasant.
    In fact, we can say that there is "upper income trap". I wholeheartedly agree with you.
    More precisely, Piketty's and other data show that income and wealth concentration typically increases, the higher the position in the hierarchy...
    Last edited by Ludicus; November 14, 2023 at 01:57 PM.
    Il y a quelque chose de pire que d'avoir une âme perverse. C’est d'avoir une âme habituée
    Charles Péguy

    Every human society must justify its inequalities: reasons must be found because, without them, the whole political and social edifice is in danger of collapsing”.
    Thomas Piketty

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    Default Re: The Poverty Trap

    All those poor (figuratively) millionaires. They won't ever get the middle class experience...
    alhoon is not a member of the infamous Hoons: a (fictional) nazi-sympathizer KKK clan. Of course, no Hoon would openly admit affiliation to the uninitiated.
    "Angry Uncle Gordon" describes me well.
    _______________________________________________________
    Beta-tester for Darthmod Empire, the default modification for Empire Total War that does not ask for your money behind patreon.
    Developer of Causa Belli submod for Darthmod, headed by Hammeredalways and a ton of other people.
    Developer of LtC: Random maps submod for Lands to Conquer (that brings a multitude of random maps and other features).

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    Default Re: The Poverty Trap

    The article is talking about generational poverty.

    So why not just stop having kids? If someone is poor and he doesn't have kids, his poverty ends the day he dies. Global poverty can be rooted out in one generation by this simple step.


    But of course it won't happen because many parents are selfish and irresponsible.
    Last edited by AqD; November 25, 2023 at 10:59 AM.

  18. #38
    Ludicus's Avatar Comes Limitis
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    Default Re: The Poverty Trap

    We cannot be arrogant, disregarding the luck factor, which counts for a lot. Sociologist Michael Young used the term "meritocracy" in a 1958 book titled "The Rise of Meritocracy" with a pejorative sense. Young reacted to a change in the British social system: the aristocracy was crumbling, giving way to a merit-based system, where talented children from lower classes, through education and their efforts, could rise in the social hierarchy.

    For Young, the new system would be unequal, like the aristocracy, but the difference is that it contained a moral basis to justify inequality. In meritocracy, the lower status was no longer considered a misfortune of fate but a fair result of demonstrating talents and individual efforts. People in worse situations were no longer in them due to a lack of opportunities but because they were truly inferior.
    As Michael J. Sandel wrote, "the meritocratic ideal is not a remedy for inequality but a justification for inequality." Even though it is possible to mitigate opportunities' inequalities, for example, through quality public education, such good and necessary measures do not truly make the starting line equal for everyone.

    Taking luck into account has political and social consequences: if we think the poor are to blame for being poor, we are telling them that they are, in fact, inferior, not just unlucky in some way. Recognizing the role of luck invites us not only to support solidarity and wealth redistribution measures but also not to humiliate the disadvantaged with the meritocratic mantra.

    Even if we admit that individuals who, by sheer luck, have more advantageous natural characteristics (intelligence and physical performance), the differences between human beings seem to be too small to justify the colossal differences observed, notably in income and wealth.
    Il y a quelque chose de pire que d'avoir une âme perverse. C’est d'avoir une âme habituée
    Charles Péguy

    Every human society must justify its inequalities: reasons must be found because, without them, the whole political and social edifice is in danger of collapsing”.
    Thomas Piketty

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