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Defining Poverty Is Political. How?

Defining poverty is political. We have no idea what the term “poor” entails. The difficulty in defining ‘poverty’ is a recurring problem in both politics and academia. Meanwhile, economists distinguish between absolute and relative poverty. According to the UN, the first type is defined as “severe and ongoing deprivation of fundamental needs.”

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Defining Poverty

To determine absolute poverty is political, a minimal level of income is determined, for example, in dollars, that is required to ensure the most basic level of existence. The World Bank’s most used statistical approach for defining absolute poverty is the percentage of the population living on less than a dollar per day at 1985 values. Absolute poverty does not exist in Cyprus; the minimum guaranteed income is substantially higher than $30 per month in 1985 values or $200 today.

Poverty defined as relative to the income of other members of society. In the EU, it defined as the proportion of a country’s population that lives on less than 60% of the median income, which should not confused with the average income. The median income the money earned by the person exactly in the middle of the income distribution. Beginning with the lowest and ending with the highest. In other words, half of the population earns less than the median income, while the other half earns more.

Relative Poverty

The vast majority of economists and sociologists do not find the method of calculating relative poverty satisfactory. It is conceivable for average income to soar to stratospheric levels while relative poverty remains unaffected. If, for example, all Cypriots’ real incomes increased tenfold, the same relative poverty would continue because the share of income in comparison to the median income remained unchanged. Even if the lowest monthly wage was €8,000, ten times today’s minimum wage, opposition parties would still howling and raving despite having the highest average income on the planet, ten times the current level, because 29 percent of Cypriots were below the poverty line.

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Meanwhile, if we go back 100 years, we will see that there was no relative poverty. There may have been some absolute poverty. But this was not a major issue because of the assistance of what sociologists call the extended family. Apart from parents and children, extended families included cousins, aunts, uncles, grandparents, and so on, who all offered a safety net against absolute destitution. There was no such thing as relative poverty back then. It was a fair society. But who would want to go back to 1917 and live without electricity, vehicles, television, the internet, and hundreds of other modern conveniences?

Inequality In Society Is Also A Factor:

The distribution of national income should interest our curiosity more. In recent years, the economic slump has increased income disparity, which is to expected given that wages have fallen dramatically or have reached zero. However, if rapid and sustainable development is to achieved. The government must adopt a goal of more fair distribution of national revenue. It is worth mentioning a recent IMF report that made the following observations. First, inequality harms GDP growth; second, reducing inequality is associated with improved macroeconomic stability and more sustained economic growth.