This analysis of causes of poverty in the Watts section of Los Angeles (California) and other inner-city communities and of the effects of poverty on children considers exogenous factors that affect lives and behaviors, focusing on the situations of high school students. The first five chapters are arranged around issues cited by those who blame the poor for their own plight: (1) academic failure; (2) dysfunctional families (by dominant culture standards); (3) gangs; (4) substance abuse; and (5) stress, education, and the inner city. Causal factors for these problems are examined. Chapter 6 examines the 1992 upheaval in South-Central Los Angeles, the factors that lead to the violence, and what society can do. Chapter 7, the final chapter, offers suggestions for change that pertain to each of the areas previously discussed. The hopelessness in inner cities in the United States can only be combatted by an infusion of real hope manifested in a societal commitment to social change. (Contains 93 references.) (SLD)