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CYCLE OF POVERTY

To have lasting economic development, the cycle of poverty must be broken

At the beginning of 2020, just over 588 million people are living in extreme poverty, meaning that approximately 7.7% of the global population lives below the international poverty line of $1.90 per day.


Put another way, 588 million people presently have a lack of basic assets and/or do not see a return on the assets they have. For most people, this forms a cycle of poverty that, without any outside intervention, they’re unlikely to break. They may have inherited this cycle from their parents, and are also likely to pass it on to their own children. What does this mean for ending poverty?


Here, we explain both what the cycle of poverty is and how we might end it, by looking at four types of poverty, the two factors that fuel poverty, and how we can address both to break the cycle.

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1 Ocassionally Poor.JPG
2 Cyclical Poor.JPG
3 Usually Poor.JPG
4 Always Poor.JPG
 
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“Poverty is relatively cheap to address and incredibly expensive to ignore.”

Clint Borgen, President of The Borgen Project

 

WHAT DRIVES POVERTY?

As noted above, while the different types of poverty are centered on lack of assets or lack of a return on those assets, they also suggest different causes and maintainers of poverty. The obstacles that keep a community in Hawaii in extreme poverty may be totally different than those keeping a community in Texas in extreme poverty. That said, we can boil all of this down into two key dimensions that, when combined, equal poverty: marginalization and risk. (Source: ConcernUSA.org)

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INEQUALITY

“It is not great wealth in a few individuals that proves a country is prosperous, but great general wealth evenly distributed among the people . . . It is the struggling masses who are the foundation [of this country]; and if the foundation be rotten or insecure, the rest of the structure must eventually crumble.”


–VICTORIA WOODHULL 1872

By inequality, we mean the systemic barriers that lead to groups of people without representation in their communities. In order for a community or country to work its way out of poverty, all groups must be involved in the decision-making process — especially when it comes to having a say in the things that determine your place in society. All types of systemic barriers (including physical ability, religion, race, and caste) serve as compound interest against a marginalization that already accrues most for those living in extreme poverty. (Source: ConcernUSA.org)

 

RISK

“I am weary seeing our laboring classes so wretchedly housed, fed, and clothed, while thousands of dollars are wasted every year over unsightly statues. If these great men must have outdoor memorials, let them be in the form of handsome blocks of buildings for the poor.”
–ELIZABETH CADY STANTON, 1886

Risk is the combination of a group’s level of vulnerability and the hazards they face. The more vulnerable a group is — and the more hazards they face — the harder it is to break the cycle of poverty. As noted above, risk often takes the form of emergencies: natural disasters, outbreaks of disease, and conflict all hit more vulnerable groups harder. (Source: ConcernUSA.org)

 
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THE ROLL OF UNIVERSAL LAWS

Kinetic Energy Meets Potential Energy

If you think of poverty as being "stuck" it is the Kinetic Energy (A) that will become potential energy when the Foundation (C) charges the community (B) with the momentum of the mission.

 
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KINETIC ENERGY

Energy which a body possesses by virtue of being in motion.

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POTENTIAL ENERGY

The energy possessed by a body by virtue of its position relative to others, stresses within itself, electric charge, and other factors.

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ENERGY IN MOTION

Objects in Motion   |   Objects at Rest

As Newton's first law states, "an object that is at rest tends to stay at rest, while an object that is in motion tends to stay in motion, with the same speed and direction." Motion needs an unbalanced force to act in order for change to occur. The Foundation acting on the Community is the unbalancing force the community needs to propel out of poverty. If the community stays balanced once it achieves its maximum energy, the line will stay above the income line and remain above poverty.

 

KINETIC CAPITAL COMMUNITY FOUNDATION'S APPROACH

“We must work together to ensure the equitable distribution of wealth,

opportunity, and power in our society.”
–NELSON MANDELA

The ultimate goal is to keep the line above the income level at all times. In order for that to happen we will use the concept of the Balanced Growth Theory of economics and apply it to the members' in the community. Cost of living, income level need to be addressed first to stabilize the financial aspect of the community member's current situation. At the same time, investments will be made to the community infrastructure and production capacity. In order for the community member to produce and generate income on an ongoing basis, investments in skills training and job readiness programs will increase their ability to produce. Once the micro-economy is established in the community with small businesses trading products and services, where the community members are employed and earning, they generate income giving them the ability to contribute monetarily and eventually be able to sustain themselves. With all of those things working together - the poverty line would rise and level out above the poverty line overtime, showing fewer dips.

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