Tag: extreme poverty

Microfinance is Saving the World’s Working Poor

By Ryan Lau | @agorists

In a world full of immense suffering, many see it as their job to try to alleviate it. In a number of such instances, governments take it upon themselves to try to solve the crises. However, their actions are not always effective. So, there is still a considerable market for private charities and companies to aid the poorest of the poor. Thus, the microfinance industry came to be.

What is Microfinance?

Microfinance is an economic practice where startups lend small amounts of money to small business owners to help them become more profitable. Though more of the poor are getting bank accounts, there are still many in third world countries without access. Moreover, even some areas with a bank do not allow women to open accounts, as many third world countries have yet to reach gender equality.

This poor reality is an iron chain on social mobility. Without basic access to lending and borrowing, it can be very hard for a poor family to start a small business and begin to increase their standard of living. Despite this, there is still hope for them, as microfinance is beginning to turn the tides.

A Method of Proven Success

SHARE Micro Finance Limited, a company based in India, lends women small amounts of money so that they may further their businesses. Each client receives only one payment equal to $50 to $100 in USD. The money may go towards buying them equipment to transport products. The women may also use it to begin moving their operations online.

So, what have been the results? A staggering 77% of these women have seen income increases. Over a third have risen their incomes enough to no longer be living in poverty. With these results, SHARE has become India’s largest microfinance industry, serving over 200,000 people.

SHARE is not alone in its success. Countless other stories throughout the developing world show similar increases. From Kenya to Colombia to Pakistan, microfinance is accelerating the path of families away from poverty.

A Home-building Industry

In Kenya, 36% of people live below the poverty line. Nairobi alone is home to a quarter of a million people without a roof over their heads. Clearly, there is an urgent need for these people to have more adequate housing. Once again, microfinance may be the clear answer.

Sandra Pietro, global director of operations and financial inclusion at Habitat for Humanity, believes microfinance is a clear way forward to improve housing access. She believes that without it, “It could take up to two generations for people to build their home incrementally”. In areas where life expectancy is low, this means they will never reap the benefit of decades of hard work.

With microfinance, women in particular are able to access loans to build their homes. With loans as little as $50 USD, these women are able to increase their quality of life. After giving three guarantors, they can obtain the deed to their new property.

This is only the first step to a long process, but without the spark, no fire is possible. Current banks rarely serve the poor, and thus, they need another option. Microfinance, for a growing number of poor men and women, is that option.


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Facing Poverty Directly, For a Change

By Craig Axford | United States

The UN’s special rapporteur on poverty, Philip Alston, has just issued a blistering report on poverty in the United States. He’s hardly the first to draw attention to this ongoing crisis. Given the lack of political will to do anything about it, he certainly won’t be the last.

Philip Alston’s findings follow a visit he made to the US in December of last year to assess what can only be described as a slow-motion social train wreck that threatens America’s long-term political stability. Included among his findings are some staggering statistics. For example, “the share of households that, while having earnings, also receive nutrition assistance rose from 19.6 percent in 1989 to 31.8 percent in 2015.”

The UN report is relatively short but attempts to use its 20 pages to describe some of the people and places behind the statistics it relies upon. Such efforts to humanize the data have become sadly uncommon within government publications in recent decades.

While we hear a lot about multimillion dollar bonuses and what percentage of wealth the top 1% control, personal stories about the poor and images of their unnecessary suffering are rare. Inequality is often substituted for the word poverty these days, with most of the attention drawn to data that shows how much the wealthy have as opposed to how little the poor are forced to make do with. As a result, it often sounds as though envy rather than justice is the motivation behind calls for change.

But extreme inequality is about far more than just you having more than me or vice versa. “If the only advantage of affluence were the ability to buy yachts, sports cars, and fancy vacations,” the Harvard philosopher Michael Sandel writes in the opening pages of What Money Can’t Buy: The Moral Limits of Markets, “inequalities of income and wealth would not matter very much. But,” Sandel continues, “as money comes to buy more and more — political influence, good medical care, a home in a safe neighborhood rather than a crime-ridden one, access to elite schools rather than failing ones — the distribution of income and wealth looms larger and larger.”

While more and more Americans go to work every day and require public help like Medicaid or nutrition assistance, those with the means to provide for themselves now increasing claim taxes are confiscation. The notion that taxes are a species of theft rather than the price to be paid for a politically stable society that fairly distributes opportunity to the greatest extent practicable is now orthodoxy among conservatives.

Progressives have inadvertently lent credence to the confiscatory view of taxation by focusing so much attention on the top 1% and what their tax rate should be, instead of speaking directly about the struggles so many Americans are experiencing. Indeed, US politicians from across the political spectrum speak relatively rarely about poverty directly, a fact which did not go unnoticed in Philip Alston’s UN report. “One politician remarked to the Special Rapporteur [Alston] on how few campaign appearances most politicians bother to make in overwhelmingly poor districts, which reflects the broader absence of party representation for low-income and working-class voters.”

Obviously, there’s going to be a very strong connection between a society’s priorities and its tax code. But by focusing so much on the gap between the rich and the poor and largely ignoring the actual conditions the poor endure, poverty is distorted into an abstraction. It’s almost as though many politicians think families care more about Bill Gates net worth than they do about putting food on the table and being able to go to the doctor without having to think about bankruptcy.

These days Democrats, in particular, tend to talk as though it’s self-evident that income inequality is the source of most of our greatest social ills, and that a simple adjustment to the minimum wage or increase in the Earned Income Tax Credit will do the trick. But it isn’t obvious to those living in gated communities, nor is solving the systemic problems that give rise to poverty that simple.

The wealthy no longer see poverty directly. Indeed, they’ve intentionally shielded themselves from it. When they do read or hear about the poor the message is often delivered through an ideological filter that casts them as lazy, drug-addled, and criminal. Until the elite are again connected to their communities, any steps taken to close the gap between them and the working class will be grudging and temporary.

The anthropologist Jared Diamond has pointed out that one of the most consistent characteristics found within societies that have experienced collapse has been the segregation of the wealthy from the communities that surround them. He laments the fact that history is by all appearances repeating itself. Writing for ABCScience in 2003, Diamond states that “In much of the rest of the world, rich people live in gated communities and drink bottled water. That’s increasingly the case in Los Angeles where I come from.” Diamond concludes that as a result “wealthy people in much of the world are insulated from the consequences of their actions.”

We’re not going to get the rich or the decision-makers over whom they have so much sway to see the light by reminding them endlessly that they make many times more than the poor. They know that already, and from their current perspective, it looks to them as though they’ve earned every penny.

Those with power and means need to be reminded regularly and directly what the day-to-day lives of people living in poverty are like. We must not be shy about asking those sheltered behind gilded gates what choices they would make on a minimum wage budget. We must insist at every opportunity that they put themselves in the shoes of the people they spend a lot of resources hiding from.

It was precisely this kind of invitation that led Senator Robert Kennedy to leave the safe confines of a Senate hearing room for his 1967 poverty tour. According to University of Mississippi journalism professor Ellen Meacham, “Senator Bobby Kennedy was on the Senate Subcommittee on Employment, Labor, and Poverty, tasked with assessing President Johnson’s policies.” During those hearings “Marian Wright, a 27-year old NAACP lawyer and the first African American woman admitted to the Mississippi Bar testified before the committee on behalf of Head Start — a program that had nearly lost its funding. During the hearing, she went off topic and discussed the overwhelming poverty plaguing the South — and invited the senators to it see for themselves.” RFK took her up on that invitation and the rest is history.

We no longer insist our elected officials, let alone the wealthy, visit the homeless to hear their stories. We don’t demand that those charged with making policy visit poor inner city clinics or struggling rural schools. Even philanthropists usually decide where to send their money by reading grant proposals instead of visiting the people their money is supposedly meant to help. We talk like policy wonks and argue as though if only the top 1% took a pay cut poverty would vanish. Most of us may not live in gated communities, but our rhetoric about poverty has become guarded and sterile.

Across both the political and the class divide poverty is now a faceless phenomenon addressed through platitudes, if it is discussed at all. We debate raising the minimum wage to $15 an hour, offering additional tax credits, and perhaps closing a few small loopholes without ever looking anyone in the eyes. We either demonize the wealthy or stereotype the poor because its easier for a culture to cope when responsibility can be shared by villains twirling their mustaches and lazy victims who refuse to get a job.

In any case, both the left and right have assuaged their guilty consciences by turning away. That they’ve turned in different directions is of little moral consequence. No one talks of “compassionate conservatism” anymore. There are no longer any Eleanor Roosevelts or RFKs doing tours of poor communities.

Even good policy decisions won’t endure within a culture that refuses to look poverty in the face. Inequality isn’t an injustice because some have too much. It’s an injustice because so many have too little in a land that has enough for everyone with lots to spare. Those people have names, and they know the elite have forgotten what they are.

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