The Poverty Cycle: The Mousetrap of the Modern Economic System

Mayyar Almubarak

Imperfections are inevitable in every economic system. However, this calls into question the  extent to which these imperfections should continue to be tolerated. When these imperfections begin to create divisions within our societies, and negatively impact the quality of life of individuals, it is plausible to assume that the time has come to make a change. In the modern economy, a cycle of poverty exists that traps victims in a vicious cycle of marginalisation and limits ambition. Why does this cycle of poverty exist? Is it possible to eliminate it altogether, or is it intrinsically integrated into the structure of the economy?

The poverty cycle, a persistent factor in the developed economy, is a trap wherein those who find themselves in poverty seem to be stuck in it. As a result, it is extremely difficult to access opportunities to pull themselves above the poverty line. It can be argued that the very existence of the poverty cycle is a direct result of inadequate access to educational resources - a strong correlation exists between those facing poverty, and members of society with low literacy rates, as ‘low levels of literacy result in low employment rates and lower wages. Not having literacy skills usually makes it impossible for an individual to break out of the intergenerational cycles of poverty’ (Lewis 186). Thus, this renders it almost impossible for those in poverty to make a change, because they do not possess the very basic foundational resources required to develop their skill set, and more importantly, they do not have the means to acquire these resources even if they wanted to.

It is evident that there is a paradoxical, systemic problem that creates a loophole for those living in poverty. Furthermore, this restricts the opportunities they are able to provide for their children, creating even larger barriers within the next generation as they are unable to fund their ambitions, thus putting a cap on their potential. How can this be fixed? Although it is clear that literacy rates play a vital role in perpetuating the persistence of the poverty cycle, one may question how heavy the burden of responsibility is on the individual; can it be argued that the fault lies solely on the system? With an ever-increasing cost of living, alongside a fixed insufficient minimum wage, the economy itself essentially paves the way for poor living standards - a fault incited by the state.

Moreover, class divisions and the wealth gap further perpetuate this issue: in essence, the rich get richer whilst the poor get poorer, and therefore, as the upper class betters their access to wealth-inducing opportunities, the working class remain stuck in a cycle of disinclusion and lack of access to resources. Evidently, this is out of the control of members of the working class as opportunities simply become out of reach - exhibiting the way in which the issue arises from the very structure of the system. This intensifies the other factors that contribute to the cycle of poverty, such as geographic marginalisation and social exclusion as a result of discrimination; both of which are out of the hands of individuals themselves, thus conveying the integral problems in the system itself that lead to the poverty trap. Therefore, as dangerous as the poverty trap is, the solution is not as basic as simply “getting educated”. Perhaps the reason behind this lies in the fact that the inequality of society persists even through the education system; in 2019 only 51% of disadvantaged pupils reached the expected standard in reading, writing and maths, compared to 71% for all other pupils. Moreover, the education system as a whole, regardless of class, can be said to lack strong ties with employment industries, thus ensuring that pathways are rarely formed between education and employment - hindering job opportunities. Even with an education, it is simply not enough to escape poverty. 

The solution might be to rely on external intervention, whether through the government or NGOs. Providing easy access to resources such as education and accessible job opportunities might help alleviate the pressure of poverty for individuals. Policies such as the Welfare Reform Act 2012 provide universal credit, and so are able to sustain people living in less fortunate circumstances. But this only goes so far. Inevitably, a change in the system is required, such as fixing the problem of economic inequality and class struggles, in addition to tackling root causes of disinclusion and discrimination. The very structure of the modern economy creates a separation in which class mobility becomes nearly unachievable, and rising above the poverty line requires resources that are simply not available to individuals. In a theoretical restructure of the economy, it might be possible to eradicate the very concept of the poverty trap through not pouring money and resources into a temporary fix, but instead fixing the already available resources - such as education, healthcare, and infrastructure - and making them more equally accessible to everyone in a society. For example, providing universal health care in addition to implementing income maintenance programs are possible first steps towards addressing the issue, ensuring that those in poverty never face the issue of being stuck in it, in addition to lifting them above the poverty line.

In conclusion, it is evident that the poverty cycle demonstrates that there is something inherently wrong with the system as a whole. Whilst it may be true that the poverty trap is not completely inescapable, this is very difficult to achieve individually, in addition to the fact that some people simply do not have the means to achieve this. Some possible solutions may exist that could help fix part of the issue, but this may solely rely on external factors due to the fact that the poverty cycle is a systemic problem. If, somehow, the system can be fixed, then it would be plausible to assume that the poverty trap - a by-product of the system - could also potentially be fixed. Overall, the modern economy requires intense structural changes, but the degree to which this is possible remains uncertain.