Why do people act like economic laws are like the laws of physics to justify poverty?

Question

Economy is man made so we can decide HOW we make it.Even in a free market Economy doesn't grow on trees,we make it,so if we want we can decide to have a decent minimum wage,right?

1 out of 6 Americans depend on programs for poor
Many Americans are falling deeper into depths of poverty.

WASHINGTON — The percentage of poor Americans who are living in severe poverty has reached a 32-year high, millions of working Americans are falling closer to the poverty line and the gulf between the nation’s “haves” and “have-nots” continues to widen.

The plight of the severely poor is a distressing sidebar to an unusual economic expansion. Worker productivity has increased dramatically since the brief recession of 2001, but wages and job growth have lagged. At the same time, the share of national income going to corporate profits has dwarfed the amount going to wages and salaries. That helps explain why the median household income of working-age families, adjusted for inflation, has fallen for five straight years.

These and other factors have helped push 43 percent of the nation’s 37 million poor people into deep poverty, the highest rate since at least 1975
http://1mc.us/main/news/2007/02/27/1-out-of-6-americans-depend-on-programs-for-poor/

Answer 1

Here's an example I like to use.

Imagine the NFL without the draft that favors the weaker teams and without a salary cap.

Without these, a handful of NFL teams would eventually dominate, recieve a higher share of revenue, and then be able to use that money to keep all their best players and buy all the best new ones. Come next season, they will become a better tream and keep winning more games. All the other teams will have losing records, will make less money, and will not be able to compete at all after a while. They will be stuck in a cycle of mediocrity.

The same holds true in economics. In laisez-faire economics the rich get richer and the poor get poorer. You need a regulated meritocracy where those who suceed get richer, but at the same time, a higher percentage of their income is taken and spent on social programs (education & job training for example) so that those that are less well off are able to get back up and remain competitive.

A large professional middleclass unlocks the full potential of a nation.

Answer 2

This is the direction that this Administration means to go. And that is to put the "already" poor into such despair of receiving no help of any kind. But it's not just ending there. This administration has yet another plan of puttting the middle class also into the depths of poverty. (the ones who pay most of the taxes in this nation). And what is so sad, is that a lot of those who still call themselves Republicans, don't realize, that this is going to happen to them.
There will be no upper middle, lower middle or even rich Americans. There will only be 2 groups, and that are the extremely wealthy (who are working hard today to get our hard earned money into their pockets) and then the poor. There will be no in betweens. I just hope we all don't sit around like sheep, waiting to be brought to slaughter.

I feel their will be another Revolution. The "hard" working American is being tired of being told what they can or can not have, by the so very few wealthy.

I knew that I couldn't be the only one who was seeing our economy going out of control.

Answer 3

Interesting question. The problem as I see it that the free uncontrolled market in America is creating poverty.
What exactly is poverty? Can it be measured in lack of wealth or amount of debt?
In the early 20th century, coal mining companies took advantage of their workers. Coal miners were forced to rent a company house, shop in the company store. Everything these people needed to live, they were required to buy from the company store. The coal companies allowed these workers to buy on credit. These miners with little education always ended up with credit accounts far beyond their means to pay off. They would end up working their entire life paying their debt to the coal company.
At the end of their working life, they had nothing to show for years of hard labor.
Today we don't have coal mines. But, credit card companies and subprime lenders are doing exactly the same thing. People who don't know any better are getting shackled with debt that will take a lifetime to pay off. The free market people seem to think this is okay. They don't see that this company store mentality is creating massive poverty. It adds to the problem of concentrated wealth.
I see wage control laws as a lesser problem. The practice of enslaving working class people thru massive debt is more troublesome.

Answer 4

Many companies are doing well because they are price gouging and reaping excessive profits which they invest in foreign countries and/or horrendously inflate the salary and options of the current super mega CEO. This is what happened in the eighties under Reagan as well.

If these companies expect people to live on less money, then eventually, they will have to drop their prices because regardless of how high their productivity gets, the more product they have, the less it should cost. Otherwise, we are no longer following the laws of supply and demand. If nobody can afford the product, why manufacture it?

In order to be in the global market, our quality of life will have to be spiraled down to make the playing field more even under the current free trade agreements. That appears to be what is taking place. A global economy should result in the poorer countries getting richer, but we're the ones who are getting poorer while they are being taken advantage of.

Answer 5

This is an excellent question, yet sadly difficult for some people to grasp. And yes, I agree that it is incomprehensible why some people treat economic laws as if they are set in stone or something. I like this, so I copied it, to paste here.

but wages and job growth have lagged. At the same time, the share of national income going to corporate profits has dwarfed the amount going to wages and salaries

This is something that some people just can't seem to understand. Why? Is it just selfishness and greed, or is it stupidity? *sm*

Answer 6

So you give all your income that gets you above the poverty line to those that are below the poverty line right? That is because you believe we all should help the "poor" and you lead by example. You do not have a $400 + car payment, or an $80 + cable / Internet bill right? and cry poor at the same time, right?

On the minimum wage. If we raise it to $7.50 then all those currently making $7.50 will want a raise to $9.00 and all those making $9.00 will want $11.00 and so on. We all get raises! And how will the businesses pay for the additional labor costs? Either less workers or higher prices on good and services. Some will choose one way some will choose the other. In the end did we help anyone?

Oh thats right you will have the governement pass additional laws to prevent the loss of jobs or the increases in prices for goods and services. so much for the free market. Hello socialism.

ADD: I see the typical liberal "feelings" have been trotted out that corps are greedy and by some f'in magic they will stop being so because it will make them feel good. Go ahead open a business to feel good and not make money. See how long it lasts. If labor costs rise, businesses are NOT going to absorb the increased cost PERIOD. FACT. this is not the liberal "FEEL GOOD" business class in school discussing the benfits of moving towards socialism. I have gone from minimum wage to $45 per hour without a 4 year degree from hard work and not wanting anyone to give me someone else's money. If you like wealth redistribution go somewhere where they have it.

Answer 7

I agree with you, with the exception that raising the minimum wage isnt the fix.
If i was greedy business owner and was paying people minimum wage and you raised the minimum wage and I didnt want to pay that much then it would be easy to circumvent.
I would just cut some full time people that have benefits to part time and take away their benefits.
Im just showing the opposite side of this.
Thats only one way and there are a host of others.

Answer 8

The point of free markets (as tooted by Adam Smith's 'Wealth of Nations') was that the result would equal harmony and equilibrium for all. But now we see people saying 'why should we care about the poor'?

In the ways that Socialism has perverted itself, so has Capitalism. Centralization of capital does not work - there are entire continents to prove this. Look at Mexico, Argentina, Brazil, Indonesia, or the entire continent of Africa.

Answer 9

America needs to decide if they want to be a capitalist country or not. Perhaps there should be a referendum. Because it seems that the hatred of the rich is growing...which can only mean that people are not satisfied with true capitalism. But just suggest programs to help those less fortunate, and everyone screams "Socialism"! Can't have it both ways....

Answer 10

I see the usual Republican lie about how raising wages would raise the cost of living has already been trotted out.

When a CEO makes in five days what it takes the average worker a year to make,something is wrong.

When a CEO gets fired and receives a severance package worth more than the entire lifetime earnings of 20 average workers combined,something is wrong.

The cost of living has vastly outpaced real wages for one reason-greed.Corporations have engaged in obscene profit-taking,indulged in almost pornographic corporate welfare in collusion with the government,and taken millions of good paying jobs from American workers and given them to underpaid foreign workers.