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Cycle of Poverty

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Ramos Wilfredo
March 23, 2018

In a political science class, I referred my students to the case of Singapore and mentioned how one of the key differences between Singapore and Puerto Rico was that in Singapore they did not base their economy on economic aid, as Angel Collado M.B.A. from Syracuse University, very well stated in his book Successful Sovereignty (2009). But one of my students then asked me — how is it possible that social aid is negative?

Dambisa Moyo, PhD in Economics from Oxford, a Masters from Harvard, and author of the Book Dead Aid (2009) distinguishes between three types of aids: emergency aids, which is the one that is destined to help in extreme cases, such as natural catastrophes; charitable aid, which is channeled through small NGOs to carry out small development projects; and systematic aid, which is granted from government to government, which this represents hundreds of millions of dollars, that, according to Dambisa Moyo, must disappear.

What causes this type of help? One of the problems of social aid is that politicians give up or stop doing their job once they receive it. They only seek more aid and base their period in power by the amount of aid they get or give (dependency) instead of developing a work culture. Politicians use social aids as a method of campaign and personal gain — not as a way to develop a sustainable economy. In the long term, this leads to citizens to enter a cycle of poverty, because receiving social aids without generating a working culture does not generate capital and economic development for society.

This is why there are many cases of corruption—the resources are improperly used instead of going to the creation of jobs or capital by the government. A social aid that is not directed to produce these effects generates more dependency, and therefore more poverty, and more poverty implies more help, and again we close the vicious cycle. We have been without positive results in an economy based on aid for years and we must question ourselves about what we have done. In fact, an economy cannot emerge from poverty if it is based primarily on receiving aid.

The aid must encourage the creation of jobs, not hinder them. In other words, if an individual who works 40 hours a week at 7.25 dollars an hour and earns more or an equal wage in charity (aid) from the state, it is probable that he or she would withdraw from the labor force. Therefore, the labor force decreases, the employers of local companies do not get the sufficient employees (because they cannot compete with the help of the government or with the companies that are not local) and since there is no available labor force, productivity decreases, and therefore poverty and social dependency increases.

From a moral and spiritual point of view we must remember: “By the sweat of your face you will eat bread until you return to the ground, for from it you were taken; for you are dust, and to dust you shall return.” When an individual is not allowed to make a living, this goes against their dignity. Therefore, social dignity is closely related to labor duties.

In fact, a politician who, for example, implements a measure in which people have to work to receive aid, probably due to the culture of dependency that they themselves have created it would fail. This measure would cost a huge number of votes, because it will fall on the same trap that politicians have create, the Cycle of Poverty.

In 2016, President Barack Obama and Congress approved the Puerto Rican Oversight, Management and Economic Stability Act (PROMESA), which included the creation of an independent financial oversight board, a process for restructuring debt and expedited procedures for approving critical infrastructure projects to combat the Puerto Rican government-debt crisis.

Author: Ramos Wilfredo (MPA) Master Public Administration from Pontifical Catholic University of Puerto Rico. Professor of the Human and Art Department at Pontifical Catholic University since 2011.

Director of the Human and Art Department from 2013 to 2015 at Pontifical Catholic University

[email protected]

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