Blowing hot air into the poverty balloon.?

Question

Does anyone here agree that although there are seemingly many policies put in place to curb poverty, very few bodies or individuals actually care whether the outcome of these policies have real effects on the people who really need them? It seems it is something people want to take care of, but don't want to get their hands or pockets dirty while at it.

Answer 1

its easier to control the poor.

Answer 2

Actually, I disagree. I think generally people do care about the poor and protection from poverty. However, there is a pragmatic reality that not much can be done other than ameliorate the issue in the short run. In the long run, education is the only real limit on poverty and it is in the self interest of the rich to educate the poor to limit their poverty since limiting poverty increases wealth.

I am not simply touting education, it is an economic reality that education is the determinant of wealth. I will provide the math below.

Let's assume that at any static point there are three inputs to production, whether that production is a service such as a movie, psychologists visit, or more traditional production such as manufacturing. The three inputs are labor, physical capital such as machines, land and buildings and factor inputs such as raw materials. There is a technologically optimal arrangement of inputs. If a firm is there, then its maximum output is forever defined by its inputs. Therefore the wealth produced is defined by wages plus profits. For it to increase wealth it must be able to produce more output FOR THE SAME INPUTS. This is the knowledge multiplier. Educated workers can find ways to innovate work making their work less costly, permitting some of the cost reductions to go to consumers and the difference to owners and workers. The difference is reflected in wages and profits. Historically the ratio of wages to profits tends to be stable with the vast bulk going to workers. When you see high paying industries you are seeing high wealth adding industries.

Now, since the beginning of the nineteenth century the US has had an education based wealth change per unit of input of 10X or its knowledge multiplier. The Asian Tigers are at about 2X. Poor countries are around 1X. Some, such as Afganistan, have lost ground.

You eliminate poverty by making people learn how to behave more productively. I have a colleague who trains people in Nigeria. It is very difficult. So many inculturated behaviors are acquired in childhood that limit the ability to be productive. American children learn all kinds of things that are so subtle but important that people take them for granted.

For example, when soccer moms run from pillar to post managing a tight schedules from soccer to baseball to dinner to clubs, what they are really doing is teaching time management. There are time/value trade offs. Just singing the ABC song is very valuable. Allowances teach basic money management. Our school system is designed to be an industrialized component with children in and education out in a manufactured education based system.

People are made wealthier by making their time more valuable to others. If I produce $10 per hour worth of goods but my employer pays me $11 per hour, my employer will go out of business. However, if my customers will pay $20 per hour for my services I can command a much higher wage. In a normal US environment, I should command $14 per hour at a $20 per hour customer payment level, with most of the remaining money going to materials costs and taxes. I think profit is around $.50 to $1.00

Lots are being done to elminate poverty, but it isn't obvious that it is occuring. Oxfam recently did a study with a major company and to Oxfam's surprise the major firm, which was seen as a predator was found to dramatically reduce local poverty but that the relationship was so subtle and complex that it wasn't seen in the forefront.

Answer 3

Sophisticated question but brother, to uproot poverty we need long term programs which may cost so much for us.