Well, I wish I had an outright solution, but I don't. In my opinion, though, one of the major causes of poverty is substance abuse. Drug and alcohol abuse not only cause addicts to sink into poverty, but they also contribute to domestic strife, divorces, irresponsible relationships and countless other problems that cause children to be raised in poverty, often dependent on welfare, and so the cycle continues. I don't know what percentage of poverty would disappear if drug and alcohol addiction went away, but I'm guessing it would be very high. I think a good step the government could take would be paying for drug and alcohol rehabilitation (preferably through private rehab centers) rather than jailing addicts. To get the details, though, you'll have to get input from stekim or one of the other fiscal experts on the site (MerlinX, heikstheo and thedreamer, among others).

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"I am a Tory Anarchist. I should like every one to go about doing just as he pleased- short of altering any of the things to which I have grown accustomed." (Max Beerbohm)