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What can governments do to end poverty in their countries? Is a solution possible under capitalism?

Hello, I come from Argentina, and in my country, poverty is an issue we still can't eradicate, even though extreme poverty has been around for many decades now.

What still baffles me is the fact that although the Government gives away money to those with reduced incomes, poverty is as bad as always. Poor people can now (at least) fulfill their basic needs, but they have now become dependant on the Govt to give them the necessary resources for life (and politicians do not care about this, since this way they can keep on "buying" their votes with cash). They don't have jobs (and some do not even bother to find one) and most still live in slums under really poor conditions. So, it's obvious this solution is only benefitial in the short run... eventually the Government is going to run out of money and we'll still have the same number of people in the streets.

Moreover, I read yesterday how India is going to start doing the same thing, but I guess that probably won't go anywhere either.

Now, what do you think is the solution to stop this vicious circle of poverty? What is your Government doing about it?

Bear in mind that Latin America has just extreme poverty levels (not as much as Africa), but still much more than the First World countries. At least in my country there is a surprisingly high number of slums (check some photos in wikipedia: http://es.wikipedia.org/wiki/Villa_miseria )

In my opinion, emphasis should be made on giving labour to these people outside-the-system. But for that, we need to offer public AND quality education. Yet I'm conscious that a malnourished child is not going to be able to be properly educated, is he?. So what can we do to ensure that child will have a better future? It's difficult to come up with a solution, but we're in the 21st Century now, it's about time we stopped poverty.

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    Jan 2 2013: As you said, education is key. In my country we have a very similar problem and the government needs to somehow find a way to fund an extensive, quality education system.

    I personally think that to bring around such a system into play the gov. needs to somehow produce a "want" within the students to get a good education. We have hundreds of examples of children as young as 10 years old who walk over 10km to get to school on an empty stomach and then finally achieve their distinctions and can get a decent job. We need more students like that but the problem in my country is that most of the students do not take it seriously and end back up in poverty.

    If the government can create this "want" within these children, even if they cant extend their school network, then at least there will be a continual stream of kids who can escape the poverty cycle and before they are able to create this want they are need going to be able to break the cycle no matter how many schools they have

    I'm not sure if a similar problem exists in other countries but in mine this is a major issue

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