Absolute poverty means not having enough food to eat, not having enough resources to survive. Relative poverty means not having enough money to allow you to participate in the social life of your community at the level that's considered 'normal' where you live.
Relative poverty does not mean having no food to eat; it's more about having no money to keep up with the Joneses.
The modern idea of social inclusion as a fundamental human right to be helped out of poverty introduces a whole new meaning of Deprivation and Want. You are deprived if you don't have a smart phone; you are living in conditions of want if your television only has free-to-view channels.
People define themselves by reference to other people, and it's really hard to feel part of the society if you don't have the same amount of stuff as the people you interact with. This is how the idea of 'poverty' came to mean making sure that everybody has an equal amount of stuff. So that they can all hang out together and nobody will feel excluded, right?
In societies where people actually don't have food to eat or clean water to drink, the word 'poor' can no longer be used with any degree of accuracy. After all, they don't need food and water simply because they need these things to feel socially included. For them it's more a basic matter of survival. So these people are now described as 'extremely poor', meaning they are probably going to die soon if nobody helps them. The word 'poor' can then be reserved for those in rich countries who are suffering from not having as much as other people in their society: not as many varieties of breakfast cereal, not as many toys for Christmas, not as many pairs of shoes or coats to wear, etc.
To give the most obvious example of how relative poverty leads to social exclusion, imagine someone in a rich country who doesn't have a nice interview suit to wear. He is probably going to remain unemployed forever, not because he lacks the capacity to do amazing work but simply because he lacks clothes that are as smart as those worn by most people. Most employers decide whom to hire by checking out their clothes. Therefore lacking clothes that are as nice as the clothes of other people will doom you to a lifetime of unemployment. Unemployment in turn leads to persistent poverty.
Tackling poverty therefore means that everyone should at least, as a bare minimum, have the financial means to get kitted out on Saville Row. Otherwise it's not fair, is it. Those who can afford fine clothes end up getting richer by the second, and those who are forced to wear cheap clothes from Primark or even worse from the charity shop never have a chance in life to get rich.
Some people are skeptical about the idea of relative poverty and prefer to focus on absolute poverty. So, a certain minimum subsistence threshold is identified and those falling below that threshold are poor. Nothing to do with comparing them to their neighbours, but simply asking whether they have enough to meet an agreed minimum standard of living. This is the approach of Maud Pember Reeves's Round About a Pound a Week (1913). Or in modern studies, examining the lives of those who get by on only a proportion of the average income.
This matters because identifying and defining 'the poor' is the first stage in deciding how best to help. Everybody wants to help 'the poor', right? We're just having a bit of trouble identifying them, that's all, because sometimes you might be in for a rude shock when you discover that you also don't have the stuff that is being raised for 'the poor' in your community. Nobody wants to raise money for the poor, only to discover that they themselves are even poorer than the poor folk they were trying to help. Like when you can't afford to take your family on holiday, and then discover that the charity you donate to uses the funds to take poor families on holiday. Huh? Very disconcerting. Or when poor people in rich countries discover they've been sending money to poor countries to line the pockets of privileged rich people who happen to live in poor countries. It's really not what anybody wants and this should be avoided if at all possible.
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