Wed, Sep 12, 2012 page8

• Innovating to eradicate poverty

  • By Lee Wo-chiang 李沃牆
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  The gap between the rich and the poor has been around a long time and it is something that countries around the globe are still struggling with. The Directorate-General of Budget, Accounting and Statistics (DGBAS) recently released its annual “Survey of Family Income and Expenditure” report, which showed that last year, the average yearly household income for the nation’s 7,959,800 households was NT$1.158 million (US$39,000). The top 20 percent had a yearly disposable income of NT$1.827 million, while the bottom 20 percent had only NT$296,000. This translates into a 6.17-times difference in disposable income between the top and the bottom quintiles, a slight drop compared with two years ago.

  However, the average negative savings, or debt, among the 20 percent lowest income earners reached NT$29,308, an increase of NT$8,783 from 2010. If we were to add in the central government debt per capita of almost NT$210,000, these figures would be truly discouraging. According to the DGBAS, part of the reason for the negative savings rate over the past five years is the head of the family often lives off previous savings or pension payments after retirement. However, a closer look shows that other factors, such as years of stagnant salaries, a rising unemployment rate and soaring consumer prices, are also to blame.

  Objectively speaking, the wealth gap has become a cliche. It exists in every country, and it is an especially serious problem in China. It is not very surprising, then, that the issue has been heavily politicized by populists. The government must not only concentrate on the “old poor” among low-income earners or those who live on the poverty line; it must also pay attention to the “new poor,” also referred to as the “working poor.” The old poor refers to a minority of disadvantaged individuals who are unable to find employment due to age, disability or sickness, while the new poor refers to people affected by structural unemployment or unstable employment as a result of structural economic changes. It has been estimated there are approximately 2.1 million of these marginalized workers without any formal employment.

  The new poor are not unemployed and they do not belong to low-income families. They face another form of poverty because the government has largely ignored their plight. Apart from the old poor and the new poor, there is also a group referred to as the “busy and poor” (窮忙族): those who earn less than NT$30,000 per month. According to the DGBAS’ “Manpower Utilization Survey” last year, almost 30 percent of office workers — or more than 2.26 million people — receive an average monthly salary of less than NT$25,000, while about 40 percent — or 3.6 million people — receive less than NT$30,000. These figures show that the group of working poor is increasing as a result of low pay, and their dissatisfaction is a great worry for society.

  Indian independence leader Mahatma Gandhi once said: “Poverty is the worst form of violence.”

  Poor people have the right to improve their lives and the government should be duty-bound to do so. However, eradicating poverty does not only require effective measures designed for specific problems; innovative thinking is also necessary.

  Late Inventec vice chairman Sayling Wen (溫世仁), who spent a lot of effort trying to reduce poverty among farmers, said: “Poverty reduction offers a huge market.”

  Apart from using information technology, Wen used other important methods, such as improving agriculture, moving away from spread out and scattered living toward closer and more concentrated living in rural areas, as well as changing economic structures, to reduce poverty in an agricultural village in China’s Gansu Province. These measures helped alleviate poverty and created business opportunities. Perhaps we could learn from his creative methods.

  The founder of the Grameen Bank — the bank of the poor — Muhammad Yunus, who won the 2006 Nobel Peace Prize, was recently invited to visit Taiwan. Yunus used the collective power of a non-profit organization to provide the poor with micro-loans of between US$50 and US$100 without any collateral, allowing them to buy chickens to lay eggs, cows to produce milk or weave straw mats to sell. This helped the poor through tough times to escape poverty. As many as 8.4 million people have benefited from his program.

  We cannot pretend that Taiwan’s economy is unaffected by the slowing world economy. A few days ago, the DGBAS revised its GDP growth forecast for this year for the eighth time, cutting it by 0.42 percentage points to 1.66 percent from the 2.08 percent it predicted at the end of July. The sluggish economic growth and the wealth disparity will continue to worsen and the prospect of an increasingly polarized society living in two different worlds is worrying. Political parties must not get caught up in petty arguments and politicizing these problems. Instead, they need to come up with new policies and try to improve things as soon as possible.

  Yunus said: “One day our grandchildren will go to museums to see what poverty was like.”

  The only way to bring this about is through innovation.

  Lee Wo-chiang is a professor in Tamkang University’s Department of Banking and Finance.

  Translated by Drew Cameron
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