National Edition

John Hoffmire: How do we think about poverty?

Published: Monday, June 30 2014 9:00 a.m. MDT

Twelve-year-old, Kemi Olajuwon, who has to drop out of school some days to sell smoked fish and make money so there can be food in the house, and also for her school fees, displays her fish on the street in the Obalende area of Lagos, Nigeria, Tuesday, June 17, 2014. About 30 million primary school-aged children in sub-Saharan Africa are not in class, partially because of conflict and poverty, and progress to get them back to school has stalled.

Sunday Alamba, Associated Press

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Is it possible to eradicate poverty?

The answer to this question seems to have become more and more optimistic over the past several decades. Major advances in technology, education, health care and business practices have led to reduced poverty rates around the world. Although victory is still a long way off, it seems that we have a fighting chance in the battle against poverty.

The current trends are heading in the right direction, although the future is still uncertain. For example, in India, just under 22 percent of the population were below the poverty line in 2011-12, down from over 37 percent in 2004-05.

But are these trends good?

The vast majority of readers would find even the thought of this question puzzling and would answer with a collective and resounding “of course.” I could not agree more and join in the hope that the end of poverty is near.

However, it is important to realize that the answer to this question has not always been so clear. It was not that long ago that many people would have disagreed that poverty should be ended, assuming it were even possible.

A recent paper by Martin Ravallion, an economics professor at Georgetown University and a former research director at World Bank, explains the change in how we think about the poor over the past several centuries. He demonstrates that as recent as 150 years ago, poverty’s mere existence was seen as a key to overall economic success because it provided a key ingredient for growth: cheap labor. According to this philosophy, only through the services provided by the poor could wealth be created and sustained.

Much has changed throughout the past century to bring us to a new perspective. Recent studies have shown that poverty is detrimental to the overall economy and a drag on productivity. Additionally, events such as the Great Depression have demonstrated that circumstances outside of an individual’s control can and do contribute to widespread poverty, as opposed to the previously held belief that poverty was caused solely by the choices of the poor. As a result, increased attention and resources have been devoted to poverty alleviation.

Fast-forward to 2014, and the vast majority of people would agree that the end of poverty is a realistic goal and certainly a goal worthy of dedication from those who are fortunate enough to avoid its trap.

And yet the question could be posed, “Have we changed our perspective enough?” And more importantly, does our new-found perspective motivate sufficient and correct action in tackling this plague?

Although it seems momentum is in our favor and statistics provide an optimistic outlook, the path to prosperity for all may get more difficult as we get closer to the finish line. The way forward is certainly complicated and there is no one-size-fits-all solution for global poverty. In order to reach our goal, we need to double our efforts and increase our attention to the complexities of the situation of the poor domestically and across the globe.

Pope Francis expressed this complexity, and the need to think beyond merely economic terms, in a recent address to the Food and Agricultural Organization (FAO) at the United Nations. He said, “A way has to be found to enable everyone to benefit from the fruits of the earth, and not simply to close the gap between the affluent and those who must be satisfied with the crumbs falling from the table, but above all to satisfy the demands of justice, fairness and respect for every human being.”

John Hoffmire is director of the Impact Bond Fund at Saïd Business School at Oxford University and directs the School of Business and Poverty at the Wisconsin School of Business at UW-Madison. He runs Progress Through Business, a nonprofit group promoting economic development. Adam Turville, Hoffmire’s colleague at Progress Through Business, did the research for this article.

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