Economics and Business Forum

The poor and the rich

In Benjamin Franklin’s Almanak, we read questions and answers such as: Who is poor? The one who is not satisfied with what he has. Who is rich? Whoever is satisfied with one’s lot.

These are exceptional people and are judged by their psychological attitudes. In other words, this is a subjective and not an objective assessment of a person’s wealth.

Here, we must discuss mostly the objective assessment of poverty.

Usually, we assume that if in a country A, the per capita income is $10 000 and in country B is $20 000, then people in B are twice as rich as and as happy as in country A. When people in two countries are studied, a lot more is revealed than meets the eye.

A number of economists when asked why they took a degree in economics have answered that after seeing much poverty around, they wanted to know how it came about and how it can be dealt with.

They chose economics because they believed it had most of the answers to what were mysteries to most people.

Some of these economists after closely studying a variety of neighbourhoods concluded that the gross national product and the per capita income do not adequately measure people’s poverty.

Poverty manifests itself in a variety of ways. One of the economists who has been given recognition worldwide for studying poverty is Professor Amatya Sem, an Indian who has lectured in several universities in the West.

The following are the indices currently in use to assess the extent of poverty, especially in rural area:

1.     Basic need index: This indicates the social development of rural areas. It incorporates data on education, how many people are literate and how many children go to school? It also has a health status data such as how many doctors serve a population of 100 000, infant mortality rate, people’s access to health centres, safe water and sanitation and on average, how long do people live?

In rich countries, people live on average 70 years whereas in many developing and poor countries, the average lifespan is 50 years.

2.     The head count ration. This measures the income consumption of a household to an objective poverty line. You first decide and determine what material goods a household should have to live comfortably. It must consume food that provided so many calories; the range of food nutrients absorbed. When a household falls short of this package, it is said to be poor.

3.     The food security index (FSI). This looks into the question whether throughout the year, there is enough food in a country from which those facing starvation can be fed. It looks at the extent of food production going on in community or country, the growth per capita, daily energy, the variety of food consumed. Where households simply eat one staple food they suffer insecurity if rains fail to come and there is drought or if the staple food is reduced by pests and diseases.

Poverty these days is viewed as more than physical deprivation. It has social and psychological effects. The poor fail to achieve their full potential as citizens. They do not participate in decision making even when the decisions have more to do with them.

People are poor for a variety of reasons. Some are poor because they have inadequate land to cultivate whereas others because work on land as tenants. Where sharing cropping is the arrangement, they surrender most of their produce to land owners.

A number of apologists have contended that kwacha should not be devalued because the poor, especially those living in villages, will suffer.

They imply that those in urban areas can escape. Let them visit the supermarkets to see what has happened to prices of basic commodities such as washing and bathing soap. They will notice that prices have gone up by almost 30 percent. Apparently, some of shop owners are hedging or forestalling what they see as an investable second devaluation.

Hard times are certainly around; problems of the poor in rural and urban areas should be assessed and tackled together. It is in urban areas where demonstrations start.

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