Living in Deficit

This is a guest post by Roy Myers

Poverty is spoken about as if it is a one-dimensional problem - the absence of money. However, the reality is that it is a corrosive condition that affects all aspects of a person’s life.

Being poor is not just having no liquidity, most often it means being in debt - owing money - and therefore not just having no cash, but having a deficit, and a what is more, a deficit that is always compounding.

This means that the poor are always running flat out with no hope of ever catching up; they have no safety net to deal with emergencies, like new tyres for the car, new shoes for the children, dentist and medical expenses.

It means living from hand to mouth, except frequently the hand can’t reach the mouth because it is often food that is sacrificed to meet the cost of housing, power and heating.

When buying food, the poor are driven to the apparently cheapest, which may be poor quality at disadvantageous prices because, of necessity, they buy in small, uneconomic quantities. 

This scenario continues into the purchase of other items. Having little money forces one to buy the cheapest, lowest quality item with the lowest life expectancy.

The corollary of living at a subsistence level is that there is no slack for recreation, sport, hobbies and holidays  -all of which adds to the other stresses of having no money.

Whilst poverty originates in, and reveals itself at the economic level, it is a corrosive social state which creates anxiety in individuals and strains relationships. It is economic rust, eating away at the social fabric. 

The problem for the poor is that there is no easy way out. It is a state of powerlessness often exacerbated by dependency on handouts and the conditions attached to them.

Poverty has an extreme effect on children. They may be malnourished, carry some of the tensions of their home and may feel inferior to their peers who have more than them. These factors affect their ability to learn and potentially inhibits their future prospects and, in this way, poverty reproduces itself.

Poverty is not good for society as a whole as, ultimately, the problems of poverty are borne more widely, whether they are economic, social, health or education related. Very obviously poverty is also both created and exacerbated by other social ills, most notably racism.

So why is there poverty in a prosperous society? Why are some people struggling whilst others have more wealth than they know what to do with? 

Wait a minute, is there a connection here? Are the wealthy rich at the expense of the poor?

• Who pays people wages they can’t live on?
• Who charges rents that people cannot afford without making other sacrifices?
• Who sells inferior food and goods to the poor?
• Who lends money at exorbitant interest rates to the poor?

In a mechanical analysis there seems to be a symbiosis in which the rich get rich and the poor get poorer.  At the level of loan sharks and food trucks the relationship is obvious but in wider society the connections are less direct and more easily obscured.

So, what are the strategic points of intervention for a society wishing to eradicate poverty?

Firstly, working people need to be paid enough to live on. Personally, I am in favour of a universal basic wage but the onus to pay a wage that people can actually live on, must rest with employers.

The poor are also taxed disproportionately to the better off. There should be tax free allowances to account for an individual’s circumstances and there should be no GST on basic foodstuffs or on local government rates, which is a tax on a tax that is passed onto tenants in increased rents.

Secondly, housing generally is too expensive and for many people, buying is simply not an option. Much of the housing stock is of poor quality which results in adverse effects on health and well-being, higher running costs, and there is no security of tenure, which is a huge stressor.

The answer is a significant development of social housing to provide reasonably priced, comfortable accommodation, which is economic to run. This would also take pressure off the housing market.

And thirdly, primary medical care and dentistry need to be reviewed in terms of cost and accessibility. In part this requires an overhaul of the entire edifice including the over-reliance on pharmacological responses within a symptomatic paradigm. Frankly, a lot of chronic medical issues currently treated with drugs would be resolved by an improved wider quality of life.