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Poverty

August 2, 2022

Poverty is something that exists in every country around the world, including this one.  Nonetheless, when we speak about global poverty, African nations are frequently front of mind.  There are many not for profits and NGOs dedicated to missions to Africa, and requests for sponsorships are plentiful.

The UN and its organs including the World Economic Forum and the World Bank have proposed a single global definition for poverty – $1.90 per day.  If that value were accepted universally, it would raise billions of people out of poverty.  We have blogged about shifting definitions of poverty in the past and how ineffective both the Low Income Cut Off (LICO) and Basket of Goods concepts are, you can read those by using the search feature on our blog page.

We live in a strange time indeed, one in which scientific facts and fundamental truths are being redefined for political reasons.  One of the most relative definitions to this blog is changing the long established definition of a recession which is generally two consecutive quarters of declining GDP.  Another is the definition of poverty, which can be based on a variety of standards from half of the median income to the LICO.

Changing definitions is a form of gaslighting used by politicians to create the illusion of government doing a better job than it is.  If people in sub-Saharan Africa were to get a $1.90 per day the significance would be strikingly different than if the same funds were given to Canadians.  After all, $57.79 per month in Canada would not buy one basket of groceries, while for subsistence farmers in underdeveloped nations it may all be saved – they have nowhere to spend it anyway.

Let’s propose a different definition “the ability to pay all of one’s bills on time without having to borrow money to do so”.  Such a definition would have its share of problems too, but it would be more realistic, assuming the individual is not living extravagantly.  Even the Superintendent of Bankruptcy is well aware of the impact of inflation and the increasing cost of living on Canadian Consumer Debtors.  The reporter in the linked story conflated Statistics Canada data for median individual income with median household income (a common occurrence).

Shakespeare famously said, “a rose by any other name should smell so sweet”, a very appropriate expression as regardless of how politicians define poverty, they don’t live in it.  Changing definitions may translate to political gains, but without an impact on reality.  In Ontario about 500,000 people depend on general welfare.  Welfare for a single person in Ontario is currently a little more than $600 per month – forcing them to live in abject poverty.

The point about standardizing definitions for global poverty is that in some countries, poverty is not always simply a question of access to money, it may mean access to clean drinking water.  In some famine and drought stricken countries, water is far more important than money.  In fact, here in Canada we have disproportionate numbers of indigenous people both living in poverty and without access to clean drinking water.

Using our proposed new definition (“the ability to pay all of one’s bills on time without having to borrow money to do so”) we may find that poverty in Canada would increase dramatically.  Seniors who do have the luxury of a private pension plan are universally living in poverty in this county – some are fortunate enough to live in income geared rental accommodations, but many are using food banks and other forms of non-governmental charities just to get by.  Many poor people use payday loan companies to get from week to week or month to month – in some cases they get caught up in paying over their entire monthly income to reborrow their paycheck for the next period.

Folks at the lowest end of the socioeconomic spectrum are more susceptible to getting caught up in rolling over their income each month to pay for the prior month’s cash advances and to have money for the current month’s necessities.  Proposals and bankruptcies can provide great solutions for ending debt dependency and freeing up some monthly cashflow that would otherwise be used to service debts.  Insolvencies can be really helpful to elevate people out of debt, but they do not resolve the problem of poverty.