Poverty is a problem that has been with mankind since our early days, and arguably since the beginning of civilization. Prior to the agricultural revolution, when humans lived in small hunter-gatherer groups, poverty was a non-issue. Groups shared limited resources; there was no advantage to hoarding resources, since by sharing, the group was able to have more food, better shelter, and more efficient means of hunting, gathering, and preparing and storing food.
Poverty is due to a difference in resources, which translates to a difference in status, within a community. Prior to the advent of money or currency, when trading was common, poverty existed but not to the extremes it does in modern society. While resource hoarding has always been possible, and kings have been able to have large estates, the abstraction of money makes wide income disparities more likely and more prevalent.
The approach to solving poverty has to come from reducing income disparity, and in order for this happen, a given society must adopt governmental policies that are enforceable to equalize incomes. The best way to do this is through taxation that redistributes wealth. Examples of such societies include Scandinavian countries of the twenty-first century, which have succeeded in reducing (not eliminating) income disparities through taxation and government distribution of wealth into social programs. By distributing resources such as healthcare, housing, and education, a reduction in poverty can be achieved. Differences still exist, but the less wealthy are still able to contribute to society, and their health and physical security aren't threatened by their poverty. They are able to get quality education for their children and have hope of rising out of poverty in the next generation.
Although the American Declaration of Independence purports that "all men are created equal," we know from experience that some have greater advantages and privileges. Even the phrase Jefferson wrote is ironic, since it leaves out women and, as slavery was the law of the land, African American slaves.
Poverty grows out of inequality, and the only solution to inequality is to limit individual freedom in earning, amassing, and using wealth.
According to the paper produced by the Overseas Development Institute (ODI; see the source below), poverty, inequality, and growth interact with each other through different paths. For example, income inequality can slow economic growth, which worsens poverty. The converse is also true: income inequality worsens poverty, which can affect growth. There are multiple pathways that explain the interaction between income inequality and poverty (see the link below). According to the ODI paper, even a small change in the redistribution of income, allowing the poor to claim a greater percentage of the overall income, can decrease poverty.
This data suggests that one way to decrease poverty in the United States is to decrease income inequality. To do so, states and the federal government can increase the minimum wage and create a progressive tax structure that taxes the rich to a greater extent than the poor. Federal and state laws about the minimum wage and about the tax structure have to change to address the ways in which income inequality contributes to poverty.
https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/3876.pdf
Background
Income inequality is defined as the “disposable income” in a household in a given year and includes revenue received regularly from work activities or investments. Income inequality explains the unequal distribution of income across the population.
According to an article by Inequality.org, the distribution of average income figures in the United States, for the year 2015, shows large variations. The country’s top 0.1% averages an income of about $6747439, almost 198 times the average income of the bottom 90%.
Further information from the US Census Bureau gives the year 2015 an income Gini Index of 0.479, not different from the previous year, 2014, and showing a quite high level of income inequality. For the same year 2015, the US Census Bureau states a poverty rate of 13.5%, compared to 14.8% in 2014.
Results
Impact of Income Inequality on Poverty
Elise Gould in her article “Inequality is the Main Cause of Persistent Poverty” states “educational upgrading” and “overall income growth” as some of the things that have helped reduce poverty levels in the country. However, she notes the lack of equality in income growth that has instead increased poverty levels; high income inequality is spurred by “inequality of pre-tax, pre-transfer and market incomes.” To offset poverty rates, it would be important to reduce the growth of income inequality by pushing up the income of those people in the lower earning brackets of the society.
Solutions to Reduce Poverty
According to the Center for American Progress, some of the steps that can be taken to reduce growing poverty levels in the United States include the following:
Job creation
Increase of minimum wage levels
Increase of “earned income tax credit” for those workers without children
Support for equitable wages across genders
Support for paid leave
I hope that this helps in answering your questions.
No comments:
Post a Comment