Sunday, January 23, 2011
Global Poverty and Inequality
This article speaks on a very pertinent topic, global poverty and inequality. I found this topic to be fitting because as we discussed in class, equity(inequality of the distribution of income) is one of the five main institutions of an economic system. In almost all cases, inequality of distribution of income is an unavoidable way of life. Even for socialist nations who pride themselves on this very institution see some inequality, and for their lack of inequality comes at the expense of the entire nation being equally poor! So is inequality of distribution of income such an important issue? Some would say yes because as the gap between the rich and poor shrinks, entrepreneurship and general business activity increase, growing the economy efficiently and quickly. On the other hand, is it worth losing economic and social freedoms to ensure the success of this institution? I think not.
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5 comments:
Tim, I agree that losing the economic and social freedoms are not worth the immediate economic gratification that might be experienced through socialism. In addition, while socialism may appear to give beneficial results immediately, it has proven to be an unsuccessful economic system. The collapse of socialism can be attributed to the inability to gather all of the necessary information and the lack of incentives. With these two factors being extremely important for long term economic growth, socialism is not an appropriate economic system for any country to have when thinking about long term economic goals.
I also think that socialism has a negative effect on society and there is a better way of targeting income inequality. In order to shrink inequality and in the long run improve several aspects of society the current agenda needs to change but not into a socialist one. As we discussed in class, people pursuing their own self benefits society as a whole because of the invisible hand. A socialist agenda would go completely against that. I do think that every single country with a high income gap needs to focus on shaping up policies that help the poor but they need to do so without taking away the freedoms that every player in the market currently experiences.
Good article Tim, I found the particular part on Food aid to be the most interesting. Food dumping can actually be very destructive on the economy of the recipient nation and contribute to more hunger and poverty in the long term. When free or subsidized food is distributed into a foreign country, the small businesses and farmers are directly effected. Consumers no longer have the need to buy food, causing prices and income to drop.
I agree with you that even distribution of income among people would be absolutely a disaster for any economy. I'm not exactly a fan of a socialist state (pardon my bias). I do believe that we should increase the standard living for each individual instead of distributing the even income. Plus, at the same time, it would allow people who would come after their own interests would definitely benefit the society. Maybe political instability plays a part in impoverished countries for foreign investors as well as economic aid etc.
Tim, i believe that some freedoms should be given up by the riches 5 percent of Americans to compensate for the poorest 20 percent of Americans. Socialism definitely isn't the answer but increased intervention by the government could yield greater welfare to society.
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