Why Do Rich Nations Have So Much Poverty?

This is a vital question.  Given capitalism’s track record of generating more wealth in the last century than all the rest of history put together, why, then, do the richest nations continue to have poor people, poor families, and an overall growth in poverty rates?

The answers to such queries are necessarily complex.  The rise of precarious employment that offers little in the way of benefits of financial security is an important development, as is the loss of bargaining power of workers in general.  With the “going global” movement among corporations in recent decades, big business has lost its connection with local communities and concentrates more on wealth creation in markets than on healthy economies and satisfied workers.  The lack of affordable housing and alarming rise in mental illness are signs that despite all that wealth, it’s not connected to our overall prosperity and happiness as nations.

To be sure, some of the wealthy nations are doing better than others, but poverty rates are still far too high and are not only entrenched in modern life but, in most cases, continue to climb.  

While financial markets have soared in recent years, the overall wealth of the middle-class has stagnated, leaving an increasing number of citizens feeling their prosperity has peaked and their future prospects have crested along with it.

All of this leaves us with two startling realities.  First, with more wealth in our nations than any time in history, it is no longer connected to the lives of average citizens.  And second, there is a pivotal distinction between modern capitalism and our economies.  We used to believe these were the same thing, but millions of citizens in affluent nations have grown suspicious that the former has largely abandoned the latter. Both governments and citizens themselves are running low on the revenue required to meet the basic needs of life. The result has been elected officials feeling increasingly ineffective and the electorate increasingly angry.

When wealth becomes separated for our collective values, like decency, fairness, openness, tolerance, equality and shared prosperity, it’s only a matter of time until civil society begins losing its cohesiveness.  Our history of linking capitalism with our democracy was successful only as we progressed and our institutions benefitted.  Now the two live in increasingly separate worlds.

And, so, we are left with our initial question: why so much poverty in a time of unprecedented wealth? 

If the rash of global studies coming out recently regarding the decline of democracy around the world mean anything, then wouldn’t one of the best ways to reduce the rate of diminishment be to eradicate poverty?  The signs, research, data and social trends all seem to be there to conclude that the secret to a healthier economy and society is to deal effectively with those abandoned by modern economies.

If the wealth generated within affluent nations is not inclusive enough to benefit all citizens, would it not stand to reason that any country wishing to reverse the decline of societal health would begin a comprehensive effort at poverty reduction?

Once we accepted that logic that poverty is a necessary evil, especially on a systemic scale, our economies began taking on water and over the decades that dead weight has threatened to undo much of our progress.  

 If money is the problem and we supposedly have lots of it, then why don’t we free up our economies for growth by investing it in those who have the greatest problems making ends meet?  That’s not what we’re doing at present and the effects of our financial ineffectiveness are now obvious everywhere.

Capitalism now views the unemployed or underemployed through the rigidity of the market and sees societal castaways as incidental to their efforts instead of essential problems to be dealt with and resourced.  In desiring smaller governments, lower corporate taxes, the ability to move wealth about the globe at will, the modern wealth creators have removed prosperity for ordinary people and two worlds at odds are now slowly emerging. 

The world has never been wealthier, so there should be no reason for people to be poor anymore in these nations.  And yet their ranks are growing.  Governments are left to deal with the problem while wealth generators have largely learned to live without government at all and feel little compunction to resource legislative bodies that are the only groups left having the power to establish regulations regarding wealth’s responsibility to societies in general.

The social costs of poverty are the greatest ones that any society can pay – not just in poverty, but the loss of hope, morale, a sense of optimism or a belief in the future. These are enormous burdens on any nation and will eventually bring them down if not addressed and resourced.

How will history view our generation, when it sees that all that wealth somehow missed the mark of social, intellectual, and ethical growth?  It will marvel that countries that classified themselves as rich tolerated being awash with poverty and its effects.  This wasn’t the way it was supposed to work and until we link our capitalism with our societal health once again, history might well pass us by.

Glen Pearson is a board member of the London Poverty Research Centre @ King's and is Co-director of the London and Area Food Bank

This blog post first appeared on January 16, 2019 at the following link: http://www.glenpearson.ca/2019/01/why-do-rich-nations-have-so-much-poverty/