Wealth gap – Poverty trap

It will be interesting to know what new insights our local attendees at Davos will bring to the country, and how these will be put into practice to remove the few remaining pockets of poverty that exist here

The world is rich, but half of the world’s population is impoverished. According to an Oxfam report, the richest 85 people in the world have the combined wealth of the world’s 3.5-billion most impoverished.

The rich, famous and powerful have been meeting at the World Economic Forum in Davos, Switzerland now for many years. To cogitate about how to address that wealth gap and reduce poverty in the world, despite which both have been increasing.

It has never been the case that wealth and its possession are a bad thing – but poverty definitely is a bad thing. There are people who flaunt their wealth; but fortunately there are others among the wealthy, like Bill Gates, who are using their wealth to alleviate the burden of poverty in the most affected countries.

Thus, for example, one of the major burdens of poverty is rampant disease, usually infections and infestations. High on the list are tuberculosis and malaria, and the Bill Gates Foundation has facilitated the purchase of medicines for these diseases at affordable prices for several affected population groups in different countries.

The eradication of disease is an efficient way to start addressing the problem of poverty because disease can directly impoverish families, especially where the health systems are weak, and do not provide coverage to whole populations. Tuberculosis provides a stunning example. The victim is in ill-health and cannot work, treatment is of long duration and recovery slow and prolonged. If the victim is the sole breadwinner of the family one can see how it leads to their impoverishment.

But there are countries with better health systems and people are healthier, but still poverty exists. The reasons are many and lots of studies have been carried out across the world to find out the causes and address them. The fact that inequalities continue to rise and more people keep being thrown into poverty shows that despite all these studies, and interventions by different stakeholders, there are perhaps some root causes that are escaping detection.

After the Second World War, America devised a Marshall Plan to help rebuild Europe and restore the socio-economic situation of its populations. Many years later, a study was carried out to evaluate the impact of the Plan. A striking finding was that across certain countries, there was a band of the population that remained mired in their devastated condition despite all the help that was brought to their doorstep practically.

It was as if they were suffering from a kind of breakdown of their moral and social order that made them indifferent to their condition, and to any effort at helping them to get out of it. They were in a poverty trap and shut themselves out to their surroundings.

One definition of the poverty trap is that it is a spiralling mechanism which forces people to remain poor. It is so binding in itself that it doesn’t allow the poor people to escape it. Poverty trap generally happens in developing and under-developing countries, but it seems that even in the richer countries now (such as Italy), the number of poor is rising, and one wonders whether the phenomenon of poverty trap will not reach such countries too.

Although the poverty trap can be broken by planned investments in the economy and providing people the means to earn and be employed – in other words creating the conducive environment and providing equal opportunity for all sections of the population – such poverty alleviation programs should not be permanent. Otherwise, people will become dependent on such programs forever and may even go deeper down in the poverty spiral.

It will be interesting to know what new insights our local attendees at Davos will bring to the country, and how these will be put into practice to remove the few remaining pockets of poverty that exist here. A panel debate on the sidelines at Davos with India’s Finance Minister P. Chidambaram and some Indian heavyweights such as Sunil Mittal along with a great believer in India’s potential, Thomas Friedman, gave much food for thought and some down-to-earth indications of India’s way forward. Since we have not had the privilege of an equivalent discussion for Mauritius, we shall eagerly await news about some path-breaking development or event in Davos that will bring great benefit to the country.

* Published in print edition on 24 January 2014