The Price of Poverty
This is part 3 of Gary’s meandering discussion of how to heal the American economy.
Last week we left off trying to fix poverty. This could be left to charitable endeavors, but usually the charitable demand exceeds the charitable supply. Why not just leave it there? Well, some agree with this notion. After all, even the Bible tells us that the poor will always be with us. So, they rationalize, why worry about it?
Others argue the domino effect of poverty. It can lead to lower education levels, and therefore less productive citizens, which would reduce the overall economy of our nation. Poverty also reduces the health of those who are impoverished. This can lead to the spread of diseases and shortened/less productive work output by those affected…again hurting the economy as a whole. Then there is the problem of poverty leading to desperation that can lead to crime, unrest, and even revolution. So, to the folks making these claims, fixing poverty is an investment.
Most countries, including ours, have leaned toward the latter argument (how much leaning varies greatly). The amount it would take to eliminate poverty exceeds the voluntary charitable giving of even our very philanthropic nation. So we come back to how to pay for the fix. One method is to force a minimum wage so that all workers can afford a certain standard of living. The other method is to provide that standard of living to those workers by taxing the wealthy and using the funds generated to provide services to the poor. The United States does both.
Yet fixing the problem of poverty tends to cause or exaggerate other issues. Either repair you pick will cause the cost of living for part of your society to go up; many will either need to pay more for products due to the artificially higher wages, or have less income to spend due to increased taxes. This is a shift of resources from the haves to the have-nots.
Every developed country (and most developing ones) does this to one extent or another. Perfection is never achieved, because no one knows what perfection looks like. To some only a complete leveling of resources across all people seems right. To others, it’s every person for themselves. There’s a lot of ground between those two positions, and for every step across it, someone is going to feel economic pain.
Therefore one key to getting the economy on track depends on knowing where the country wants to be in this continuum. I’m not going into that right now. Instead, I want to turn back and look at the standard of living issue.
You see, if you lower one person’s standard of living to lift another’s, you’ll likely create a little bit of resentment in the process. This can be smoothed over by making everyone’s standard of living go up. One way to do this is to lower the cost of the products that we all want and need.
So next week we’ll look at cheap labor overseas, and how it can make everyone happy.
This article was published under the title "There is no perfect way to plug hole in poverty"
in the WichitaFalls Times Record Newson July 4, 2010.
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