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obama_state_of_the_union

President Obama mentioned poverty three times in his 2014 State of the Union Address.

“Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty.”

The two largest retailers in the world are Costco and Wal-Mart. Costco employees make more than $20 per hour, while Wal-Mart employees make about $12 per hour. Many Wal-Mart employees still live below the poverty line. When customers come in and spend more than an employee might make in a week, it doesn’t create a good environment for employee morale or happiness.

“In the coming weeks, I will issue an Executive Order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour – because if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.”

Obama also mentioned the profitability of Costco’s operation and urges other corporations to follow Costco’s example. With a company turnover rate of five percent among employees who have been at Costco for more than a year, and less than one percent among executives, the company is surely doing something right.

Obama says that Congress needs to get on board in order to increase the minimum wage, which is worth about 20 percent less today than it was in the 1980s.

“Across Africa, we’re bringing together businesses and governments to double access to electricity and help end extreme poverty.” Obama’s Young African Leaders Initiative strives to engage the next generation of leaders and strengthen partnerships between the U.S. and Africa.

Through this program, the U.S. has invested significant resources to enhance leadership and entrepreneurship in Africa. It has also invested financial resources, through USAID, to strengthen access to education, workforce training and skills development for young Africans entering the labor force. USAID has invested more than $100 million to help train the new generation of African leaders.

Haley Sklut

Sources: USA Today, Bloomberg Businessweek
Photo: Forbes

income_inequality_cartoon_money_USA
One of the most relevant issues in modern America is the overwhelming level of income inequality. The Barack Obama administration plans to establish 2014 as a ‘year of action’ and hopes to address the pressing issue of income inequality substantially.

Currently, 66% of Americans believe the government ought to take action to narrow the gap between upper and lower economic classes.

In addition to harming the middle and lower classes of society, income inequality also has a significant impact on federal debt. As more people move from the middle class to the lower class, federal welfare spending increases to accommodate, which contributes to the United States’ already tremendous debt.

However, bipartisan legislation has already been brought up that may do more harm to lower classes. Revisions made to the Farm Bill—“a five-year congressional funding program for agriculture and hunger programs”—will result in an $8.7 billion funding cut to food stamps for Americans over the next 10 years. The food stamp program (Supplemental Nutrition Assistance Program) aids one in seven people.

The Farm Bill revisions additionally secure government subsidies to Koch industry subsidiaries in biomass and exempts chemical runoffs from forestry sites from government regulation under the Clean Water Act. Lobby reports indicate that Koch industry lobbyists were heavily influential in the Farm Bill legislation.

The funding cuts are expected to impact 850,000 American households through the next decade. Unfortunately, the congressional measure also comes after a $5 billion reduction to the food stamp program on November 1, 2013.

The lower income populations of Pennsylvania and New Jersey are two of many states that anticipate significant harm. In Pennsylvania, “roughly 175,00 households will lose an average of $65 a month,” which can be particularly devastating for the poor.  A source quotes, “In New Jersey, an estimated 157,000 households will have their benefits cut.”

The Farm Bill legislation, signed by Obama, arrives surprisingly shortly after his recent declarations of action towards income inequality. It continues to subsidize large agricultural corporations at the expense of lower income individuals and will expect to provide difficulties for food stamp recipients over the course of the next decade.

– Jugal Patel

Sources: Philly, Huffington Post, ABC News, CNN, The Nation
Photo: RI Future

income_inequality
The World Economic Forum (WEF) meeting is occurring in Davos, Switzerland and there is one issue that is being presented as one of the largest challenges that has to be faced in the coming years.  Income inequality around the world is rising and experts say that it is going to become an explosive issue as time goes on.

Oxfam recently released an article that puts into startling perspective how significant an issue income inequality is becoming. Oxfam found that the 85 richest people on the globe have as much collective wealth as the poorest half of the world.  This is a staggering statistic. Oxfam goes on to point out that the richest one percent of the world holds an accrued wealth of $110 trillion dollars, while the 3.5 billion poorest people in the world posses roughly the same amount.

Oxfam’s report also pointed out that in the United States, the wealthiest one percent captured 95 percent of post financial crisis growth since 2009, while the bottom 90 percent have become poorer. The report goes on to point out how the wealthy have taken advantage of their wealth and created tax havens and other political means to ensure their wealth remains unaffected.

The Huffington Post released a report in which it found that the U.S. has the worst income inequality in the world. It cited the tax code as a huge reason  for the massive income inequality bracket in the U.S. The report also highlighted Wall Street as a reason for the U.S. having the world largest income inequality range. “The same politicians that have busily been slashing taxes on the wealthy have also been loosening fetters on banking, allowing the financial sector to swell to bloated size and mop up ever-more income while contributing ever-less back to the economy.”

Oxfam’s Executive Director, Winnie Byanyima, issued a statement saying, “Widening inequality is creating a vicious circle where wealth and power are increasingly concentrated in the hands of a few, leaving the rest of us to fight over crumbs from the top table.” She went on to say that with the WEF having income inequality as a hot button issue, the attendees will work personally to make sure that they are not taking advantage of various tax breaks and things of that nature as well.

The WEF is a amazing opportunity for many of the world leading figures to come together and begin to try and sort out many of the issues that plague our society.

 Arthur Fuller

Sources: Business Insider, Huffington Post, Huffington Post, Oxfam
Photo: WTW

Federal Poverty Level
The federal poverty level is a measure that is often cited yet seldom is it fully understood.  Currently, the federal poverty level is considered to be at about a $15,000 yearly income per two-person families and, of which, the extreme poverty threshold  is set to households that are living on less than $2 per day.  This definition is fairly controversial, and has been subject to change over the years based on a number of factors.  However, it is a key concept to understand, and not just for domestic policy but foreign affairs as well.

The federal poverty level, or threshold, has been in effect in its current state since the Kennedy Administration.  According to a paper by economist, Gordon M. Fisher, the level was initiated in order to understand the risks of living in poverty  and the affects of poverty on different groups of people.  During the Johnson Administration, the level was used as a target; particularly, during the administration’s War on Poverty.

The level was developed based on the cost of food for families at the time and what kind of nutritional diet a family would be able to have at different levels.  Under the first calculation of this threshold, done by an economist working for the Social Security Administration, the threshold was determined at $1,988 yearly income per two-person households.

Since its creation, while a number of revisions have occurred since the first set of calculations, the formula to determine the level has been an important factor in U.S. policy decisions.  When looking at global poverty, the extreme poverty measure is particularly important for the threshold has been used to set goals for anti-poverty measures.

The Millennium Project is one such measure that uses the federal poverty level calculations to influence foreign policy.  The project has a number of goals to keep the global economy move forward, but listed first on these goals is the effort to “eradicate extreme hunger and poverty.”  These goals were set in 1990 with initial targets set to hit these goals.

The initial target for the extreme poverty goal was to halve extreme poverty by 2015.  Reminiscent of Johnson’s War on Poverty, this goal looked to drive the force for a greater world society.  The goal actually was estimated to have been reached by 2008, an achievement that was praised as a major success for the Millennium Project.

Despite the fact that poverty levels are used by programs like the War on Poverty and the Millennium Project, the poverty threshold has a number of critics.  Popular criticisms are that the threshold is too low, as it still uses calculations from the 1960s, and are applied indiscriminately to very different regions.  Alternative poverty measures have been proposed by state governments and by groups such as the National Academy of Sciences.  Unfortunately, none have yet been adopted.

Federal poverty levels are important to understand considering they are most often used in discussions surrounding poverty.  The measures influence policy decisions and are used to track the path of the U.S. economy.  The indications are that extreme poverty is going down across the world, but what this says about actual poverty and what it says about the way it is measured could be debated in some corners.

Eric Gustafsson

Sources: The New Yorker, Huffington Post, UN Millennium Project, Social Security Administration, Center for American Progress

Karl Marx Correct Income Inequality Communism Socialism Wealth Redistribution
Was Karl Marx correct? Considered one of the fathers of modern communism, Karl Marx is not exactly a celebrated figure in western culture. Nor is he well understood. It is not possible to provide an adequate summary of his political or economic theories in this space, but a general discussion of some of his ideas may prove beneficial to understanding the current global economic crisis and the growing crisis of income inequality. Whatever our preconceived notions about Marx may be, one cannot deny the thought-provoking nature of his ideas.

Marx envisioned history as a kind of evolution in the modes of production, each mode being defined or characterized by class struggle. Marx theorized that the capitalist mode of production relies on profits that are generated by the exploitation of workers’ time and labor. The desires of the workers–higher wages and better working conditions–will always be pitted against that of the capitalist, who seeks only to maximize profits.

Naturally, this idea is not popular in western societies where “free markets” and “capitalism” are considered canon. But Marx’s theories may need to be revisited. Since 2008, the world’s economies have experienced sluggish growth, stagnant incomes and widening gaps in income inequality. As a result, there is an increasing tension between the rich and working classes as evidenced by movements such as Occupy Wall Street and the fast-food workers’ strike in the United States and the garment workers’ protests in Bangladesh. Though these events garner little mainstream media attention, they are worth exploring and understanding.

If there is one Marxist idea that is particularly relevant today, it is this–capitalism will impoverish the working masses and concentrate wealth in the hands of a very small but very powerful class of über-rich individuals. According to a study by the Economics Policy Institute, between 1983 and 2010, 74 percent of the gains in wealth in the U.S. went to the richest 5 percent while the bottom 60 percent suffered a decline. There are plenty of troubling statistics like these that evidence a crisis of wealth inequality in the United States and across the world.

Marx wrote, “Accumulation of wealth at one pole is at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole.” Any objective view of global economics today can see how this statement makes practical sense.

This is not to say that Marx developed a perfect worldview or flawless economic theory. But perhaps the critical question is not whether Karl Marx was correct, but whether western policymakers are (at best) the victims of dogmatic groupthink or (at worst) well-compensated puppets of the über-rich.

To change current economic trends, people everywhere will need to come together to generate new ideas and begin thinking about alternatives to capitalism. Marx might be a good place to start.

– Daniel Bonasso

Sources: Time, Economic Policy Institute, Stanford Encyclopedia of Philosophy
Photo: Critical Theory

Turkey_Budget_reform
Many have called for the Turkish government to spend more of the national budget on social aid as poverty rates in Turkey are over the average for countries in the European Union. Current spending on social aid policies is a paltry 1 percent of Turkey’s budget. But in addition to establishing policies that help the impoverished, some are also questioning whether Turkey is doing enough to diminish the extreme income inequality.

Even though it has maintained a 5 percent annual growth and is experiencing rising employment, Turkey has one of the highest income inequality rates among the Organization of Economic Co-operation and Development (OECD) countries. This income inequality is largely due to educational problems. The poverty rate for the illiterate in Turkey was 30 percent in 2009, compared to the only .7 percent for those who graduated from a university. As a result, the many agricultural laborers are stricken with poverty. The reason for this is that the agricultural industry in Turkey accounts for 9 percent of its GDP, but is around 25 percent of overall employment.

The overall education levels need to improve in Turkey with the help of more social aid spending, but, most urgently, educational rates for girls also need to rise. The literacy rate of men is much higher than that of women, causing more women to face the risk of living in poverty.

Even though the country has gone through many phases of immigration, urbanization, population rises, and changes in family structure, the social services and aid policies have not been properly reformed to address changes adequately. The institution in charge of social spending, the Family and Social Policies Ministry, has not allocated more than 1.2 percent of the GDP on policies that combat income inequality and poverty. Many are calling for a change, the Turkish government needs to make more of an effort to engage in social intervention.

But social aid policies are of no use if not managed properly. Turkey should to transfer policy implementation to local authorities instead of the current system of having social aid policy centrally controlled. If funds are managed by individual provinces, funding and resources can be more efficiently utilized, and efficaciously target poverty and income inequality within the region.

Over the last few years, Turkey has experienced significant growth, however more than a quarter children in the country still live in poverty. Even though the total percentage rate of poverty has dropped around 8 points, the fact is that still a fifth of the population is impoverished. Turkey has been investing in sustainable technology and building urban centers, but, to fully prosper, it will have to do more than flash signs of wealth and development. A budget reform in Turkey to reallocate more resources to boosting education and employment will decrease poverty and bridge the income inequality gap in the country.

– Rahul Shah

Sources: Today’s Zaman, The Guardian, Hurriyet Daily News

thailand_tribes_poverty
Thailand is often known as the land of beautiful beaches, burgeoning tourism, and The Hangover 2. But that’s not quite the whole picture. While Thailand has seen great developmental leaps over the past 20 years, the country still faces challenges with poverty and more recently growing inequality in Thailand.

At the surface, Thailand appears to lie in a positive, growing position. Starting in 1990, the poverty level decreased from 27 percent to 9.8 percent, in just 12 years. The number of chronically underweight children dropped to half its previous measurement in this same time period. Access to education and literacy rates continue to improve annually.

The problem lies in the fact that this growth has been concentrated in cities and urban areas, leaving the rural communities and hill tribes to suffer. Nearly one million children lack documents proving their birth registration. This means the Thai government does not recognize them as citizens, preventing them from receiving any governmental benefits and recognition of their basic human rights.

While unemployment stands at a promising 2 percent rate, child labor remains a fact of life for many, with an estimated 818,000 children aged five to fourteen generating income for their families. As Thailand’s economy continues to grow from increased international trade and as educational standards increase, this number is expected to fall.

Issues with water sanitation have continued to create health problems for 4 percent of the country, with the majority of that 4 percent consisting of rural communities without proper sanitary technology or regulations. This lack of clean water leads to malnutrition and the spread of disease through bacteria.

Human trafficking continues to stand out as significant problem for the Thai people. This underground industry leads to thousands of kidnapped people who are then forced into modern day slavery, in the form of prostitution or forced labor. The popularity of prostitution in the country also contributes to the spread of HIV and AIDS, currently afflicting more than 610,000 people.

Currently 9.8 percent of the population lives under the poverty line. This percentage is largely concentrated in the rural outskirts of the country. This demographic consists of small farmers, without access to education. In contrast, many citizens in the urban areas of Thailand have benefited from the job creation generated by the country’s growing international economy.

Geographically, the struggling sections of the country lie on the borders, with the hill tribes in the far northern and far southern regions remain left behind as the rest of Thailand has progressed over the last two decades. These isolated areas see the greatest problems with hunger, with women and children’s health in particular struggling with malnutrition and mortality rates. Without access to proper medical care, little improvement is being made and disease continues to spread. Similarly, a lack of education prevents these remote areas from growing economically.

While Thailand certainly has achieved great progress in meeting its problems with poverty, there remains much work to be accomplished. The growing disparity in both wealth and basic human rights must be addressed and the country must unify even its most distant regions in order to continue to move forward in its developmental journey.

– Allison Meade

Sources: World Vision, Central Intelligence Agency
Photo: Bunnie Blog

Brazil World Cup
Income inequality is at the heart of the protests currently raging across several Brazilian cities. Originally, the protests were about the twenty-cent price hike for bus fare. Eventually, however, they turned into protests about everything that’s wrong in Brazil.

Next year’s World Cup has added to the public dissent. Brazil’s rampant political corruption has resulted in huge expenditures. The government has spent twice the amount as Germany and South Africa spent on the World Cup.

It is predicted that FIFA will make over one billion dollars from the tournament, but Brazil will benefit very little. Originally, it was presumed that the Cup would be paid for by private investors and corporations, and that the public funds would go toward bettering the existing infrastructure. But then the Brazilian government lent money to build brand-new stadiums. Essentially, the government is spending billions of dollars on a private event that is so expensive that only the rich can attend.

It has become a bit of a paradox — a country that is a symbol of soccer to many has turned against the sport’s largest event. The huge public expenditure has left the people wondering: why can the country invest millions on a soccer tournament but can’t seem to find funds to fix the broken healthcare and education systems?

The independent protestors have balked at any specific political party that has tried to claim leadership in the demonstrations, preferring instead to remain a party-free dissident entity. Even the large Workers Party was shooed away.

The impact of the country-wide protests have already been felt. President Dilma Roussef went on TV and invited protestors into the head of the government to talk about what’s going on. She met with the Movimento Passe Livre, the university free fare group that started the protests, and ultimately ceded the twenty cent transport fare increase.

While the positive impacts have been felt, it is doubtful that any more progress will be made on the issue. With so little political cohesiveness within the demonstrators themselves, it appears that the dissidence will continue into the foreseeable future.

– Kathryn Cassibry

Sources: Fair Observer, The Guardian

poverty-reductionThe gap between rich and poor is widening. It takes money to make money, and so inequality is becoming exacerbated as the rich get richer.

Rising inequality has impeded efforts to eliminate global poverty. With a greater share of wealth being captured by those in the highest income bracket, the amount reaching the lowest is continually decreasing. Two nations with equivalent GDP growth rates could have drastically different levels of poverty depending on income equality. For example, in India, the net worth of 46 billionaires is $176 billion. This number represents 12% of the GDP of India, as opposed to 1% fifteen years ago. Half of that amount would be enough to eliminate absolute poverty in India.

The irony of this unchecked growth of the upper classes is that eventually it can result in a restriction of growth. Extreme inequality slows the development of markets and limits investment opportunities for the poor. Inequality also diminishes the political power of the poor. This skewing of power can reduce government efficiency and allow for tax evasion by the wealthy, limiting the government’s ability to invest in necessary infrastructure to sustain growth.

If we’re to see success in the fight against global poverty, then rising equality must be allowed to play its part.

– David Wilson

Source: The Guardian
Photo: Global Post

Israel Has the Highest Poverty Rate in the Developed WorldA study by the Organization for Economic Cooperation and Development (OECD) reported that out of 34 developed countries, Israel has the highest poverty rate. The newspaper disclosed that 20.9% of Israeli citizens are currently living in poverty. In addition to staggeringly high numbers of impoverished people, Israel also has one of the largest inequality gaps in the developed world.

The OECD speculates that these struggling economic times have greatly contributed an increase in poverty rates as well as a greater gap between the rich and poor. The organization notes that the inequality gap grew more in the past three years than in the twelve years before then.

As expressed in OECD’s report, “With higher unemployment and lower returns from capital, the crisis not only weighted heavily on incomes from work and capital but also made their distribution more unequal.” There are only a few other countries that are rated higher than Israel in income inequality: Chile, Mexico, Turkey, and the United States.

Israeli Prime Minister Benjamin Netanyahu has recently been under scrutiny over his prodigal spending habits with taxpayer money. Among his expenses have been an 80% pay raise for himself and a $127,000 cabin for a trip to London. The struggling Israeli population heavily criticized his actions. The Prime Minister also plans to cut funding for benefits and child allowance, which is likely to put even more families below the poverty line.

Israel is among those developed countries that are particularly struggling with a massive inequality gap. The Israeli government must step in and create policies that will bring these people out of poverty and shorten the gap between the rich and poor.

– Mary Penn

Source: Huffington Post
Photo: Christoin