IN SEPTEMBER 2015, the United Nations (UN) adopted 17 Sustainable Development Goals (SDGs), each with specific targets that are to be achieved within a 15-year period or by 2030.
The 17 SDGs include eradication of poverty; zero hunger; good health and wellbeing; quality education; gender equality; clean water and sanitation; affordable and clean energy; decent work and economic growth; industry; innovation and infrastructure; reduced inequalities; sustainable cities and communities; responsible consumption and production; climate action; life below water; life on land; peace, justice and strong institutions; and partnership for the goals.
I asked some young people to write about one or several of these SDGs and connect them to economics and their own personal experiences. I am just so proud of them that at that young age, they can be very analytical and critical. I will be featuring their essays here in this column. Here are the first two.
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This first essay is written by Hazel (Yerin) Choi and she writes about NO POVERTY.
I think that this goal is the most important goal since there are many people in the Philippines who still live in poverty. Furthermore, the Gawad Kalinga group has inspired me to think that it is urgent to reduce the number of people in poverty in the Philippines.
In economics, poverty is a condition where people have very low or no income. Poverty eventually leads to unequal distribution of income when it is not resolved or when the number of people in poverty is not reduced.
There are two types of poverty: absolute poverty and relative poverty. Absolute poverty is when the basic needs are not met and the individual lives with lesser than $1.25 a day while relative poverty is when the individual receives a little lesser income compared to the average income level of the country. Both types of poverty are caused by several factors.
One factor which causes poverty is when an individual is born in a low income household. This will cause the individual to have no opportunity at first and may give the no incentive to earn money. This leads to a poverty cycle where the poor stays poor.
Another factor, which causes poverty, is when an individual has no or unfinished education. Without education, people won’t be able to be employed or won’t know how to use money wisely.
Furthermore, unemployment also can be a factor which causes poverty. Unemployment is when an individual is willing to work but is out work and searching for a work. When an individual is unemployed, they won’t be able to stably earn money. This will eventually lead to the inability to meet the basic needs of human such as shelter, food, water, and furthermore.
Lastly, poverty can be caused by natural disasters. In the Philippines, there are a lot of deadly typhoons in a year. These typhoons can lead to the destruction of houses and lead to shortage of food and water. Eventually, this also leads to poverty.
In order to successfully resolve or reduce the issue with poverty, the government can use two solutions. The first solution is to impose minimum wage. Minimum wage is when the government sets the wage above the equilibrium.
Since people stay in poverty when they earn low income, by setting a minimum wage and increasing the wage, it will be able to reduce the people who stay in poverty. This will give an opportunity to the lower income earners.
However, there are negative aspects of this solution. When minimum wages are imposed, the companies have to pay more to their employees, which lead to the increase of their cost. When the cost increases, the companies are given the incentive to reduce the cost through eliminating some of their employees. Eventually, this may lead to the increase of unemployment rate.
In order to prevent this, the government can use another solution after imposing the minimum wage. The government can give financial aid to the people who are unemployed, like that of the 4Ps. With this aid, an individual can be educated, which gives them the incentive to work and gives them the opportunity to be employed. In fact, the Gawad Kalinga is using the method of educating people in poverty in order to reduce poverty in the Philippines.
However, aid also has negative aspects. First of all, the financial aid given to the unemployed can be incorrectly used. For example, they can use the money to purchase drugs or smoking, which affects the society negatively (negative externality of consumption).
Furthermore, when the government gives these benefits, the government budget will decrease and the government won’t be able to use money for other purposes e.g. improvement of the infrastructure of the country.
However, with these negative effects of each of the solutions, I believe that the positive effects, people getting out of poverty, outweigh the negative effects.
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This second essay is written by James (Jewook) Jeong and he also writes about NO POVERTY.
“There are no poorness but poverty left in modern society.”
I believe this as a true, hard sentence that frankly exposes the problem of modern society.
What are the differences between poorness and poverty?
Well, poor is an economic state, but poverty includes psychological, or in layman’s term a “mindset.” At least for the term of poorness, there is a space for a “breath,” but for poverty it seems like a hopeless quandary like a trackless desert.
The memory of 1960s and 1970s were poor, but there was a sign of warmth in it. People were hungry but they were not alone. However, people who are poor in these days are definitely alone compared to those who were back in the 60s and 70s. Before, people were trying to lean on each other to get over their hump, but not anymore. In this state, poverty makes human life so miserable and strenuous.
In modern society, economic capacity of individual is an inevitable factor to consider in discussing poverty typically due to our economic structural system and poverty can newly defined as a severe constraint on normal living. It is a forced reduction in consumption, due to insufficient income and menacing surrounding conditions.
The extreme poverty leads to permanent and inescapable hunger, insufficient and unhealthy diet. Hunger and malnutrition weaken the body, the mind and the capability to work. It becomes a trap because of feedbacks between low occupability, low productivity, low income and hunger.
International aid is directed towards countries where hunger is widespread, but these aids are usually insufficient and not timely for people to overcome the poverty trap, and the dependence of the poor from the will of the donor.
Aside from this, there are other policies that the countries’ governments can implement.
First is to reduce unemployment. Unemployment is a major cause of poverty because the unemployed have little income, relying on state benefits.
Unemployment can be reduced through both supply-side policies, such as free training schemes for those who are structurally unemployed.
Second, they can use a more realistic progressive tax system. This system tends to charge higher income tax rates to those in high-income levels. This can be an effective way for reducing relative poverty.
However, critics argue higher income taxes may create a disincentive to work, leading to less output. This is because higher tax makes work less attractive and reduces the opportunity cost of leisure. Therefore, people may work less and enjoy more leisure. This is known as the substitution effect.
Yes, not every policy is efficient. That is the real problem of the “poverty” in modern society. This is the right time for governments and other non-governmental organizations around the world like the UN to think on how to end this vicious cycle.