PovertyA unit for post-16 General RE

Suitable for use with NOCN framework and Extended Project

Unit: Poverty

…including issues surrounding economic development and fair trade

Section Two: Religious, political, social and cultural perspectives related to fair trade

Section One: Nature and causes of poverty, nationally and globally

Section Three: Case studies of poverty, including possible solutions

Section Four: Conclusions

Section One

The nature and causes of poverty,

nationally and globally

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Poverty is:

What is poverty?

Think about some of the signs that might alert you to the presence of poverty, whether in the UK or overseas…

…and try to define poverty in a sentence.

Insufficient food

Inadequate nourishment

Poor housing

Inadequate clothing

No access to clean drinking water

Poor sanitation

Poor education

Poor health

Unemployment

Vulnerability

Lack of power

Low status

“Persons, families and groups of persons whose resources (material, cultural and social) are so limited as to exclude them from the minimum acceptable way of life in the Member State to which they belong”.

The European Union’s working definition of poverty is:

Definitions change with time, but this is now the most commonly used definition of poverty in the industrialised world.

It recognises that poverty is not just about income but about the effective exclusion of people living in poverty from ordinary living patterns, customs and activities.

Absolute poverty is measured by comparing a person’s total income against the total cost of a specific ‘basket’ of essential goods and services. People with inadequate income to purchase this basket of items are considered to be living in absolute poverty.

Relative poverty compares a person’s total income and spending patterns with those of the general population. People with lower income who spend a larger portion of their income on a basket of goods and services, compared with a threshold typical of the general population, are considered to be living in relative poverty.Source: http://www.poverty.org.uk/summary/social%20exclusion.shtml

The World Bank defines absolute (or extreme) poverty as living on below US$1.25 a day, and moderate poverty as living on US$1.25 - US$2 a day. Based on these figures, half the world’s population – about three billion people - are considered poor, with one in six living in extreme poverty.

How is poverty measured?

• What are your own experiences of poverty?• Have you suffered absolute poverty or relative poverty?• What are your attitudes towards poverty and poor people?• How image-conscious are you?• How do you define “successful”?• What is your reaction when you see this picture?

• Jot down the first words that come into your head

• Describe how the picture makes you feel

On what are your attitudes based?© Depaul Trust

Pause for reflection

As most of those living in absolute poverty are in developing countries,

this is the main focus of this resource.

You will have studied the above question at GCSE. What can you remember?

Recall three Bible passages that have informed Catholic Social Teaching on poverty.

Give three arguments for and three against the statement: “There should be no rich Christians in the world while poverty exists.”

In this unit you will consider in particular what Catholic Social Teaching has to say about trade with relation to poverty.

What does the Catholic Church say about poverty?

Populorum Progressio (“On the development of peoples”) was an encyclical written by Pope Paul VI in 1967.

It addressed many of the global issues of his day, including poverty and hunger, the arms race, and unfair trade.

Read the following paragraphs about poverty from Populorum Progressio: 19-20, 32, 34, 42-44, 47, 49, 53, 75-76.

Name three contemporary issues for which Pope Paul’s teaching on poverty is still relevant.

What did Pope Paul consider far more important in the fight against poverty than the redistribution of money? Why?(See paragraphs 19-20, 42, 47)Is there anything about the language or tone of the writing

that reveals something of the attitudes of the time?

What does Catholic Social Teaching say about poverty?

There is enough in the world to supply the needs of every person,

so why does poverty exist?

Why do YOU think poverty exists?

Jot down your ideas

The Causes of Poverty

This is what some other people said…

“Earth provides enough to satisfy every man's need, but not every man's greed.” Mahatma Gandhi, Indian philosopher internationally esteemed for his doctrine of non-violent protest, 1869-1948

“No drug, not even alcohol, causes the fundamental ills of society. If we're looking for the source of our troubles, we shouldn't test people for drugs, we should test them for stupidity, ignorance, greed and love of power.”

P. J. O'Rourke, American political commentator, journalist, writer and humorist, b.1947

The poverty of our century is unlike that of any other.  It is not, as poverty was before, the result of natural scarcity, but of a set of priorities imposed upon the rest of the world by the rich.”

John Berger, novelist, painter and art historian, b.1926.

“… the quest for profit at any cost and the lack of effective responsible concern for the common good have concentrated immense resources in the hands of a few while the rest of humanity suffers in poverty and neglect.”

Pope John Paul II, Lenten message 2003

Poverty is caused by a huge number of factors, often affecting those who are already the poorest and most vulnerable.

This happens to individuals and to social groups; It happens nationally and internationally.

• Accidents and natural disasters, with inadequate insurance

• Family breakdown

• Changes in government policy

• Employment-related problems eg. short-term job contracts, low pay, decline in local traditional industries, unemployment

• Social exclusion and no access to benefits or inadequate benefits

• Drink and drugs dependency

• Poor health (clinical, medical and emotional)

• Inadequate pensions

• Personal debt

Some causes of poverty in the UK are:

What is it like to be poor in the UK?

Personal experiences of poverty in the UK:

Every poor person experiences poverty in their own way, and their suffering is sometimes all-consuming, e.g. personal debt may greatly afflict the life of a single person or family.

Social poverty occurs when poverty is experienced by groups of people, eg. a workforce made redundant when a factory closes. Lower spending in the area may mean that local shops close, house values fall, health problems increase, family relationships break down, personal debt increases, crime levels increase, and house values fall again. This can create virtual “no-go” areas where private companies will not invest.

Go to: http://www.youtube.com/watch?v=cgH4zV2UQeE and watch “How the other half live” or another of the films on homelessness

Click the icon to view data and reports on Poverty in the UK poverty.org.uk/summary/uk.htm

• Income – Click ‘overall’ in the first column

• Housing – Click ‘homelessness’

• Housing – Click ‘overcrowding’

In 2008/09, how many people in the UK lived in low income households?

Are trends in homelessness rising or falling?

What proportion of people live in overcrowded conditions?

In cases of social poverty, whose responsibility is it to create change?

• Unfair trade

• HIV and AIDS

• Debt

• Conflict

• Unfair land distribution

• Natural disasters

• Lack of access to education

Some causes of poverty in developing countries are:

Click the icons for one person’s experience of poverty in Mexico:

Daniel’s was not the only family affected by the crisis. Poor farmers all over Mexico suffered. In other developing countries around the world there are similar stories, affecting whole populations.

Click the icon to view a fascinating interactive animation that shows global poverty and wealth changing over 200 years. http://www.gapminder.org/world

Name one of the main changes that has taken place.

What is it like to be poor in Mexico?

What has caused the current crisis?

How is Daniel’s family affected?

Poverty is complex; many aspects are interconnected. Some of its causes and effects make a cycle:

Now try your own mind map starting with

“HIV & AIDS” in the top box *

* Find clues in Play Fair 3: AIDS –

a development issue, available in

your school or from CAFOD.

Poor farming methods

Poor education

Health care

Low paid job/ no job

Food

Housing

Education

Less money for: Erosion

Poor crop

Less to sell

Hunger

Poverty

• According to a UN study, sub-Saharan Africa is worse off by US$1.2 billion due to the terms of trade effects generated by the Uruguay Round (a series of international trade negotiations from 1986-94)

• The average EU farmer receives the equivalent of US$16,000 per year in agricultural support, a hundred times more than the average annual earnings of the rural poor in sub-Saharan Africa

• Poor countries are paid low prices because of oversupply, rich country subsidies and rich country tariff barriers. You will hear more about this when we look at the WTO – World Trade Organisation.

Unfair trade is one of the main causes of poverty in developing countries

What does the Catholic Church say about fair trade?

Click the icon to find out what Catholic Social Teaching tells us about trade.http://www.cafod.org.uk/content/download/612/5806/file/Prayer_CST_on-trade_extracts.pdf

What might be “three golden rules for traders” based on the this?

1.

2.

3.

What does Catholic Social Teaching say about fair trade?

“What applies to national economies and to highly developed nations must also apply to trade relations between rich and poor nations. Indeed, competition should not be eliminated from trade transactions; but it must be kept within limits so that it operates justly and fairly, and thus becomes a truly human endeavour.” (Populorum Progressio, 61)

“ ‘God intended the earth and everything in it for the use of all human beings and peoples. Thus, under the leadership of justice and in the company of charity, created goods should flow fairly to all.’ All other rights, whatever they may be, including the rights of property and free trade, are to be subordinated to this principle.” (Populorum Progressio, 22)

“…trade relations can no longer be based solely on the principle of free, unchecked competition, for it very often creates an economic dictatorship. Free trade can be called just only when it conforms to the demands of social justice.” (Populorum Progressio, 59)

Read these quotations from Pope Paul VI:

Would you say that Catholic Social Teaching regards fair trade as a matter of charity, or of justice?

How would you summarise Populorum Progressio’s teaching on trade?

On the Vatican website, look at Populorum Progressio.

Read the following paragraphs about trade:

8, 22, 48, 56, 57, 58, 59, 61.

Relate each quotation to at least one biblical passage.

Section Two

Religious, political, social and cultural

perspectives related to fair trade

Does this represent a breakdown in traditional cultures?

Or a global sharing of advantages?

Globalisation: good or bad?

Globalisation is a fact of life:

Coca Cola in Angola, Nike trainers in the Philippines, Nestlé milk products in Russia, McDonalds restaurants in Slovenia, Manchester United football kits in Sierra Leone, Caribbean bananas in the UK, TV images from every part of the planet…

Globalisation is a result of international trade

How world trade developed

• From 3000 BC the first extensive trade routes were up and down the great rivers - the Nile, the Tigris and Euphrates, the Indus and the Yellow River. Maritime trade developed between Egypt and Minoan Crete and then westwards along the north African coast.

• From the 1st century AD, Roman roads and the Pax Romana gave merchants vast new scope within Europe. At the same time a maritime link opened up between India and China.

• During the 13th century guilds of merchants made use of safer travel to increase Europe’s prosperity, with some merchants like Marco Polo and his family travelling as far as Persia and China.

• From the 15th century maritime exploration led to trade in such goods as spices, silver, sugar and, horrifically, slaves. Powerful trading companies emerged, like the East India Company (granted a monopoly in 1600 on all English trade east of the Cape of Good Hope).

Goods circled the globe, traders benefited, but the colonies became sources of raw materials that were made into finished products by the “mother country”.

Colonies became the plantations and mines of the rich countries; any industry that might compete there was suppressed.

Some developing countries have never recovered from the effects of colonialism.

“Colonising nations were sometimes concerned with nothing save their own interests, their own power and their own prestige; their departure left the economy of these countries in precarious imbalance – the one-crop economy, for example, which is at the mercy of sudden, wide-ranging fluctuations in market prices.” (Populorum Progressio, 7)

• A capitalist view: “The global economy should rely chiefly on competition in a free market to determine prices, production and distribution of goods.”

• A socialist view: “The global economy should be based on collective or governmental ownership and administration of the means of production and distribution of goods ”

What are the benefits and shortfalls of these two viewpoints?

Which one most reflects your own viewpoint?Which model do you think world trade most closely

followed as it developed?

Gradually, through the centuries, some trading companies grew into multinational corporations (or ‘MNCs’) as they moved into resource extraction, then into manufacturing, services and financial services. Major food chains also grew, as faster transport facilitated transportation of perishable goods between countries.  

DEFINITION: MNCs are firms that control income-generating assets in more than one country at a time.    

FACT: Of the world’s top 200 economic players in 2001, 56 were countries and 144 were corporations.

FACT: General Motors, Wal-Mart, Exxon Mobil, and Daimler Chrysler all have revenues greater than the combined economic output (GDP) of the 48 least developed countries.

As world trade developed, world governments started to talk to each other about what could be done and to make trade agreements with each other…

Who makes the rules?

Today international trade rules are decided by the World Trade Organisation (WTO).

Q: When was it founded? A: The WTO was founded in 1995Q: What was it based on?A: It grew out of a series of trade negotiations after the Second World

War called GATT (General Agreement on Tariffs and Trade). Q: Why was it founded? A: To help trade flow smoothly, freely and predictably by agreeing

international rules between countries.Q: How big is it?A: It has nearly 150 members and about 600 permanent staff based

in Geneva.

The Ministerial Conference is responsible for making policies.

• It meets every two years.

• It is made up of government ministers from member states.

How does the WTO work?

The General Council is below the Ministerial Conference in authority. It discusses issues and agrees common approaches with other countries.

• It meets in Geneva several times a year.

• It is made up of ambassadors from any member states that have delegations in Geneva.

So, now that we have an international organisation discussing and agreeing trade rules, all should be well? Not necessarily!

Only if:a) there is fair representation on the bodies that influence the decisions, and b) the rules and policies are designed to be fair to the least advantaged.

The Ministerial Conference At one Ministerial in Doha there were about 500 people in the EU delegation but only two from the Maldives, one from St. Vincent and no delegate at all from Haiti, the poorest Western nation.

Rich member governments have many permanent delegates in Geneva continually attending meetings. They fly in experts to help with particular issues.

The General CouncilVoting is based on one vote per member country. But in practice, all decisions are reached by consensus without a vote. So countries with fewer delegates, less money and less influence are vulnerable to arm-twisting by the big powers.

Nearly half of the least-developed country members of the WTO have no delegates in Geneva. Those that do, have only one or two people to cover the WTO and other international bodies based there.

“If you have a really open economy like ours, it's impossible to protect your farmers with WTO rules.”

A Latin American negotiator in Geneva

WTO policies: Trade liberalisation

The WTO encourages “trade liberalisation” or “free trade”. This means countries opening to trade from other countries without demanding the

payment of “tariffs” on imports.

Advantages: Free trade allows competition, meaning that the most efficient will gain the greatest share of the market, leading to goods and services being supplied at the lowest prices. It enables a country to specialise in production of those commodities in which it has a comparative advantage, and to further increase productivity.Source: Based on info found at http://hsc.csu.edu.au/economics/global_economy/tut7/Tutorial7.html#content

Disadvantages: Over-specialisation in one product can mean that a country’s economy is threatened when global market prices for that product fall e.g. in two years Ethiopia lost almost US$300 million, half its annual export revenues, due to the fall in world coffee prices. Free trade also leads to floods of cheap food imports in developing countries, which can wipe out the livelihoods of small-scale farmers e.g. maize prices received by poor Mexican farmers have halved since Mexico opened its borders to cheap US maize, causing havoc in the countryside. Source for coffee fact: Oxfam report Sep 2002 http://www.oxfam.org/sites/www.oxfam.org/files/coffee_0.pdf

WTO policies: Subsidies

Rich country agricultural subsidies allow rich countries to produce food at below the costs of production. This drives down prices and damages the livelihoods of farmers elsewhere.

Yet the WTO allows rich governments to carry on supporting their farmers with billions of dollars a year, e.g. the average European cow receives support of US$2.2 per day, more than the income of half the world's people. This gives northern agriculture a massive advantage over developing country farmers.

Watch “The Luckiest Nut in the World” video about world trade: http://www.youtube.com/watch?v=jtlYyuJjACw

“Cheap imports are coming in, destroying jobs. We are becoming beggars in our own country.”

One African ambassador

Subsidies to producers in North

Health care

Cheap goods flood markets in developing countries

Food HousingEducation

Prices of Southern goods fall Stored crops rot

Southern producers earn less to pay for:

Hunger

International trade rules

Tariffs on imports of goods from South

Producers in the South cannot afford to export

Poverty for many Southern producers and their families

Compare what you have learned about international trade with the previous slides on what the Catholic Church says about fair trade.

In what ways does international trade conform to and differ from the ideals of the Bible and of Catholic Social Teaching?

If you were a WTO delegate for the day, with a chance to address the General Council, what changes to international trade rules would you recommend in your speech?

Pause for reflection

CAFOD will often issue a press release when there have been recent developments on trade, for example:http://www.cafod.org.uk/News/Campaigning-news/Trade-white-paper-2011-02-09

Find out why CAFOD is campaigning for justice in the global food system, including empowering aid for small-scale farmers:http://www.cafod.org.uk/Campaign/Get-clued-up/Food

Section Three

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Is it possible to make trade fair?:

Case studies of poverty,

including possible solutions

The Fairtrade Foundation in Pakistan

The Fairtrade Foundation helps disadvantaged producers in developing countries. It licenses the Fairtrade Mark, an independent guarantee that a product meets standards set by Fairtrade Labelling Organisations International.

These standards stipulate that traders must:

• pay a price to producers that covers the costs of sustainable production and living

• pay a 'premium' that producers can invest in development

• make partial advance payments when requested by producers

• sign contracts that allow for long-term planning and sustainable production practices. 

Click the icon to watch an interview with Sher Ghazi, CEO of Mountain Fruits in Pakistan.

Video can also be found at http://youtu.be/Nb_bhZ9luQg

What financial difference has Fairtrade made to Mountain Fruits?

What non-financial differences has Fairtrade made?

© Fairtrade Foundation

Sher Ghazi explains Fairtrade to pupils during a visit to the UK

CAFOD in the Philippines

Click the icon to investigate further our work in the Philippines. http://www.cafod.org.uk/About-Us/Where-we-work/Philippines

Key challenges include:

• Conflict and peace300,000 people were displaced in the Mindanao region in 2000

• Economic exploitation Agricultural land being reclassified for commercial, residential or industrial use; mining in particular.

The Philippines is made up of a collection of islands.

Mindanao is its second-largest island.

CAFOD works in the poor central, north and western parts of the island.

Fact file

• In rural areas of the Philippines, half the population lives below the poverty line.

• The poorest rely heavily on agriculture, particularly rice growing.

• Farmers find it hard to make a living, as they are forced to compete with cheap, subsidised imported rice.

• If the WTO succeeds in forcing the Philippines government to further open its market to imported rice, the country will be flooded with cheap rice imports. The poorest farmers will be hit the hardest.

• The Philippines, and other developing countries, propose that they be allowed to protect those crops which are particularly important to poor farmers.

• This plan is being resisted by rich countries within the WTO.

Rodrigo Costanilla, a father of seven, farms one hectare, rented from a land-owning family. Two-thirds of the land is used to grow rice, the rest for fruit trees, vegetables, pigs and fish ponds.

Rodrigo says, “There is foreign rice in all the local markets and it’s not helping small farmers to increase their income. It’s

cheaper and people are not buying our rice, which is

higher quality and healthier. The good thing about small farms like mine is that the produce and income from the land is divided between lots of people, not just taken by one owner.”

“Rice is my livelihood, and if it were taken away from me it is really the equivalent of death.”

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Rice farmers call for trade justice

Rice farmers call for trade justice

Elizabeth Moteza is a director of a Social Action Centre in Zamboanga del Sur, Mindanao, which is supported by CAFOD.

Elizabeth says, “The WTO is a big enemy for us, as WTO policies do not benefit poor people here. Because of liberalisation

there is an influx of products from countries like Vietnam and the US to

the Philippines. This is driving the price down and making it impossible for small farmers to compete. Most consumers will choose cheap foreign rice over high quality local rice.”

The Social Action Centre works with small-scale rice farmers like Rodrigo, assisting them with low interest loans, technology and training. Elizabeth also campaigns to encourage more small-scale and chemical-free processes, for the good of the economy, the community and the environment.

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Rodrigo has been assisted by the Social Action Centre through training, low-interest loans and equipment, but his livelihood could be safeguarded if unfair international trade rules were changed. Therefore CAFOD, as well as supporting partners like the Social Action Centre in Mindanao, also tries to help poor farmers by campaigning for trade justice.

Click the icon to read an interview with Rodrigo Costanilla about the impact of trade rules on his work and life.http://www.cafod.org.uk/News/Campaigning-news/Rice-farmers

Changing of unfair international trade rules would have a far greater impact on poverty in developing countries than aid payments, debt cancellation or the Fairtrade Mark.

These changes can be achieved if the political will exists.

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Conclusions

Section Four

Tackling global poverty

During the Make Poverty History campaign in 2005, developing countries were promised debt cancellation and better aid, but much more remains to be done.

Debt cancellation

Because of the promises made in July 2005, 18 countries are eligible to share cancellation of up to US$1bn per year.

This compares to a minimum US$10bn needed to help poor countries meet the Millennium Development Goals.

Major issues remain around which countries and debts are eligible for relief, conditions attached to the policies and the lack of an independent arbitration mechanism.

“A dialogue between those who contribute aid and those who receive it will permit a well-balanced assessment of the support to be provided… Developing countries will thus no longer risk being overwhelmed by debts whose repayment swallows up the greater part of their gains.”

(Populorum Progressio, 54)

Better aid

The 2005 G8 leaders committed to provide an extra US$48 billion a year by 2010, including between US$15 - US$20 billion of new commitments. If this promise had been kept and delivered without imposing economic conditions, millions of lives could be saved.

However, these aid pledges were not on the scale needed to make poverty history, and the rate of progress towards the target of each rich country giving 0.7% of their GDP in aid is still far too slow.

Secondly, debt-cancellation was offered to the poorest 40 countries on condition that they engage in economic reforms that would remove barriers to private investment by richer countries. In effect, the poorest countries faced being coerced into implementing more of the same economic policies which the Make Poverty History campaign cited as problems, and which allow rich countries to profit from poverty.Sources http://www.open.ac.uk/technology/mozambique/pics/d135461.pdf http://www.makepovertyhistory.org/response.shtml

“While it is proper that a nation be the first to enjoy the God-given fruits of its own labour, no nation may dare to hoard its riches for its own use alone.”

(Populorum Progressio, 48)

Fairer trade

The 2005 G8 failed to take decisive action on trade. Yet reforming international trade rules can make a far greater difference to developing countries than either debt cancellation or aid payments.

FACT: It has been estimated that developing countries lose £475 billion a year due to unfair trade rules.(Source: CAFOD MPH quiz, Secondary MPH Pack)

Agencies like the Trade Justice Movement and CAFOD have asked rich country governments to:

–allow developing countries to shape trade policies that protect vulnerable farm sectors and promote national industries, e.g. charge tariffs to stop the flood of agricultural products and industrial goods which can destroy local businesses.

–allow countries to choose the best policies for poor people and the environment in services such as water, health and education, e.g. take measures to disallow unfair competition from multinational corporations in developing countries.

In July 2006, world trade talks were suspended due to the failure of rich countries to agree to meet developing countries’ demands on agricultural reform.

At the time, CAFOD’s trade analyst, Matt Griffith said:

"The fear is that this collapse will give added momentum to bilateral talks in which poor countries have less chance of ensuring their development needs are put first.

The WTO allows developing countries the opportunity to stand together for a deal that works for them. In smaller groups they will have less power to stand up to rich countries."

Research the current state of world trade talks (known as ‘the Doha Round’) and cotton trading in four African countries.http://www.fairtrade.org.uk/includes/documents/cm_docs/2010/f/2_ft_cotton_policy_report_2010_loresv2.pdf

Make a difference

Find out how you can help to make trade fairer at:• www.cafod.org.uk• www.fairtrade.org.uk• http://tjm.org.uk/

Find out about homelessness in the UK at:• www.depaultrust.org

Find out about Populorum Progressio and livesimply at:• www.catholicsocialteaching.org.uk

Assignment titles

1. Write an essay: “How can trade be both a cause of and a solution to extreme poverty?”

Hints!– Recommended length 1,500-2,000 words

– Show that you have weighed up both sides of the argument

– Include relevant quotations from scripture and from Catholic Social Teaching

2. Prepare a presentation, explaining fair and unfair trade.

3. Design a display board to promote Fairtrade in your school.

Credits

Picture credits:Annie BungerothJohn Zammit/Fairtrade Foundationand Depaul TrustIllustration: Claire Bogue

Second edition: Summer 2008

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CAFOD is a member of Caritas InternationalRegistered Charity No. 285776