Poverty Inequality and Development

POVERTY
Poverty is about not having enough money to meet basic needs including food, clothing and
shelter. However, poverty is more, much more than just not having enough money. The
World Bank Organization describes poverty in this way: “Poverty is hunger. Poverty is lack of
shelter.
What Are the Advantages of Being Poor?
Getting Assistance: When you are poor, you are able to get assistance from a variety of
sources, such as the government, community organizations, and friends and neighbors. See
a full description of options below.
Skill Development: People without money have the opportunity to develop many skills that
rich people will likely never be exposed to. Below, I explain several of these skills.
What Are the Disadvantages of Being Poor?
Dependency: You can become dependent on the help you receive. Most of the help uses an
income range as criteria for determining which people they are willing to help. If your income
is close to the outside range, it may be scary to try to increase your income because you
know you will stop getting help, and sometimes the amount of help you are receiving is
greater than the initial increase in income.
Low Esteem: Some people will look down on you because you are poor. They may think
you are lazy, fat, or stupid. Many people feel shame when they are poor.
Health Issues: When you are poor, you may forgo nutrition for calories just to save money.
By eating a lot of starches, you may gain weight. You may also have medical issues that are
unresolved because you cannot afford to go to the doctor for preventative checkups.
Limited Network: When you are poor, you tend to have a limited network. Poor people tend
to live around and mingle with other poor people. These people cannot afford to help you
very much since they are barely trying to make ends meet themselves. They also lack the
skills and network to help overcome poverty.
No Role Models: It is harder to get out of poverty because you don't have positive role
models to show you the way. If you don't see people going to jobs that they like, who are
able to buy the things they want, then you may not see the benefits of working. Even if you
know there are benefits, you may find it hard to learn how to write a resume or make
connections that help you find the resources you need to get out of poverty. (Although, with
the help of the internet, I hope that some of these resources are more available.)
Low Self-Esteem: Being poor can lower your morale and make you feel unworthy. When
people aren't willing to give you a job or pay you more, you may think your low income
determines how much you are worth as a person.
Growing Accustomed to Poverty: Even though you have the time to clean your house, you
may not have the motivation to do so. You may find that it is too expensive to fix many things
that go wrong in the house and let them go. Over time, you may habitually learn to live with
problems, even problems that are cheap and easy to solve. You may develop a mentality
that forgets that most problems can be solved. It is easy to get depressed under these
circumstances.
Not Getting Basic Needs Met: When you are poor, you have to do without many things that
you want, and sometimes even things you need.
Being Poor Is Expensive: Your credit may be bad because you are not able to pay your
bills on time, causing you to pay late fees and increased interest on loans, if you can even
qualify for loans. You might have to make decisions that are bad for you in the long term just
to get cash in the short term, from payday lenders, tax anticipation loans, check cashing
places, and pawn shops.
Stress: Poverty causes stress, and the stress will often be seen in relationships, as the
family members argue over how to best juggle the bills and deal with the problems.
INEQUALITY
Inequality means there is a gap between the highest income earners and the lowest income
earners. (inequality can also relate to wealth).
What caused inequality?
When evaluating whether inequality is beneficial or not, it is important to know the causes of
inequality. For example, if there is inequality of opportunity (e.g. people don’t have access to
education) this is a bigger problem than if it is inequality arising from different skills and
abilities.
Advantages of Inequality
1. Incentive effect.
If someone works harder and as a consequence receives a higher wage then this is not
market failure. The promise of a higher wage is essential to encourage extra effort. By
rewarding hard work, there will be a boost to productivity leading to a higher national output
– so everyone can benefit.
2. Entrepreneurs require rewards.

-Inequality is necessary to encourage entrepreneurs to take risks and set up a new
business. Without the prospect of substantial rewards, there would be little incentive to take
risks and invest in new business opportunities.
3. Trickle down effect.

- If some people gain extra income, then this can ‘trickle down’ to other people, e.g. if an
entrepreneur sets up a business he may become a millionaire, but also will create jobs and
provide incomes for other workers. There may be a gap between the highest and lowest
earners. But, the lowest earners are still better off than without the entrepreneur. (more on
trickle-down effect – which is quite controversial)
4. Fairness.
-It can be argued that people deserve to keep higher incomes if their skills merit it. If a top
footballer gets paid £100,000 a week, this is a reflection that people are willing to pay that
kind of money to watch him.
Disadvantage
Societies with pronounced economic inequality suffer from lower long-term GDP growth
rates, higher crime rates, poorer public health, increased political inequality, and lower
average education levels.
High levels of income inequality are linked to economic instability, financial crisis, debt and
inflation.
DEVELOPMENT
Development is a process that ensures good quality of life to all the people in terms of
happiness, harmony and satisfaction of essential needs. It is related to improvement,
progress and aspirations of people. This definition of development would benefit all the
sections of society as it shows the basic need approach.
Development is basically an economic concept that has positive connotations; it involves the
application of certain economic and technical measures to utilize available resources to
instigate economic growth and improve people's quality of life.
Development is not merely about economic growth within a country. It is, fundamentally,
about improving opportunities for the people who live there, especially for the poorest.
Benefits of developed country
* Higher Incomes
* Improved Government Finance
* Increased life expectancy
* Better education
* Reduced Poverty
Disadvantages
* Inflation
* Use of non reliable resources
* Inequality
* Congestion

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POVERTY

What Are the Advantages of Being Poor?

What Are the Disadvantages of Being Poor?

What caused inequality?

2. Entrepreneurs require rewards.

3. Trickle down effect.

Benefits of developed country

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