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Category Archive: Income and Poverty

  1. From Rags to Riches: The Cayman Islands Revolution

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    Enroll in the program here!

    The rule of law, Hayek wrote, is “a rule concerning what the law ought to be”: It ought to be general and abstract; equally applied, with legal privileges for none; certain, not subject to arbitrary changes; and just. In this Learn Liberty Academy, Andrew Morriss sets sail to show how the law of the Cayman Islands conforms with Hayek’s ideals, how it got that way through astute political entrepreneurship, and how the world at large benefits from its legal wisdom. The benefits of Caymanian rule of law are so diffuse and far-reaching that we can even attribute the American poor’s high consumption of healthcare to it.  Embark on Morriss’s expedition — read, watch lectures, and discuss!

    Song credit: “Coconut Water” – Dan O’Connor

    Archival images courtesy of the Cayman Islands National Archive

  2. Debate – What Would Happen if America Opened its Borders?

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    The United States has laws in place to limit the number of immigrants granted entry. How many immigrants should be allowed to call America home? Bryan Caplan, professor of economics at George Mason University, argues that the United States should have open borders. Jan Ting, professor of law at Temple University, argues that there need to be limits on the number of immigrants.

    In this clip, Prof. Ting argues that open borders would result in an enormous increase in the number of immigrants to the United States. He points out that there are so many opportunities here that people would come in huge numbers from less developed countries. The strain on the United States infrastructure and environment could be enormous.

    In his response, Prof. Caplan argues that the fact people would want to come in such great numbers is, in his mind, an argument favoring open borders. People should be living in places where they can achieve their potential. For many people around the world, this means they need to move. Would this have effects on the U.S. economy? Absolutely. Prof. Caplan argues that in the short run, housing prices would probably increase, for example. In addition, we may see a move to having personal servants, as many of the low-skilled workers in the world have skill sets that fall below the lowest-skilled workers in the United States. To offset pressures on the environment, Prof. Caplan recommends increasing costs for pollution and other environmental hazards.
    What do you think? Do you think the fact that many people would want to immigrate to the United States is an argument in favor or against opening the borders?

  3. Is Fixing Inequality A Matter of Justice?

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    The question of how to address poverty in the United States is complicated. Steven Horwitz, chair of the department of economics at St. Lawrence University, and Jeffrey Reiman, professor of philosophy and religion at American University, debate the level of government assistance that should be given to help the poor.

    In this clip, Prof. Horwitz suggest that the least amount of government necessary should be involved in alleviating U.S. inequality. He discusses the use, for example, of charitable donations from private entities as a way to help the poor without government involvement.

    Prof. Reiman, in contrast, suggests that poverty and inequality is a matter of justice. That is, everyone is entitled to a certain standard of living, a certain level of equality in outcome. He argues that charity hurts the dignity of the recipient. When it is a gift, the recipient is made to feel that he does not deserve the charity, that he is made lower than the giver. Instead, he argues, assistance given to the poor should be something they receive because they have a right to it. They should not have to feel that it is undeserved. This is an interesting philosophical question tucked inside a larger debate about the role of government in helping the poor. What do you think?

  4. A Marxian Case for Capitalism

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    The question of how to address poverty in the United States is complicated. Steven Horwitz, chair of the department of economics at St. Lawrence University, and Jeffrey Reiman, professor of philosophy and religion at American University, debate the level of government assistance that should be given to help the poor.

    In this clip from the full debate, Prof. Reiman answers Prof. Horwitz’s question about the role he sees for markets in addressing the poor. Prof. Reiman says he is a believer in capitalism and a believer in free markets. He finds that capitalism has worked well to raise the general standard of living for the poor in the United States and elsewhere in the world. He has even written a book titled, A Marxian Case for Capitalism. But he suggests that these gains are general and that more should be done for the individuals who are struggling in our country. Prof. Reiman also argues that the current system has degraded the dignity of many of the poor and that there are many problems that stem from bad government programs. But, he says, he does not favor abolishing the role of government dogmatically.

    Prof. Horwitz responds that the question of reducing government is not so much a dogmatic question as it is an empirical one. Has government worked at these things? Can it solve these problems? Prof. Reiman argues that perhaps the results are mixed. What do you think? Watch the full debate for more.

  5. Debate: What To Do About Poverty

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    This LearnLiberty debate presents arguments for and against more government assistance to help the poor in the United States. Prof. Steven Horwitz argues that the government has created too many problems and that lifting government-imposed barriers to the poor will go a long way toward solving the problems of inequality in the United States. Prof. Jeffrey Reiman takes the view that government, while not perfect, will have a key role to play in creating better programs to help the poor. What do you think?

     

  6. When Capitalism Fails (Why Won’t Anyone Think Of The Children?)

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    The question of how to address poverty in the United States is complicated. Steven Horwitz, chair of the department of economics at St. Lawrence University, and Jeffrey Reiman, professor of philosophy and religion at American University, debate the level of government assistance that should be given to help the poor.

    In this clip, professors Horwitz and Reiman discuss how children who are poor can best be helped. While adult poverty may, in many cases, be due to some fault of the adult, should children have to suffer their parents’ mistakes? Both argue in favor of improvements in the education system, especially in creating more choice. While Prof. Horwitz suggests this can be done outside of government, Prof. Reiman argues that government will still have to be involved, even if only to create the vouchers.

    Prof. Reiman also turns the question on its head, suggesting that perhaps the children of successful parents should not benefit from the parents’ success any more than children of poor parents should not be punished for their parents’ failings. Should all children start out on an equal footing, financially as well as educationally? What should be done to improve education opportunities for the poor? Is the government the best provider of education? What are your thoughts?

  7. How to Fight Global Poverty

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    Have you heard the news? The number of people living in abject poverty—defined as living on less than $1.25 per day—has been halved since 1990. How did that happen? Prof. Stephen Davies explains that extreme poverty has been on the decline in part because two of the world’s most populous countries, China and India, have embarked on a path of economic liberalization and development over the past two to three decades. As more countries have embraced free trade and market-friendly policies, we have seen encouraging news of poverty reductions and greater access to clean drinking water. If such policies continue, Prof. Davies says, it’s not out of the question for extreme poverty to be eradicated in the foreseeable future. These gains are likely to be lost, however, if we make poor economic decisions that take us back toward protectionism and economic controls. With good economic policies and free markets, we can help many of the poorest people in the world.

  8. Combating Global Poverty with a Cup of Coffee

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    Millions of people in the developing world struggle to survive on just a couple of dollars a day. Fair trade claims that buying fair-trade labeled coffee is a way to help the poor. But is it the best way? Professor Colleen Haight has been researching fair-trade for the past 10 years; she’s also spent time on coffee plantations in Central America talking with the coffee farmers there about their experiences. She says that while fair trade has done a lot to increase consumer awareness, it may not be the best way to actually help the poor.

    Fair-trade coffees cost a little bit more than necessary and the extra profit is returned to the farmer. Fair trade farmers are small landowners, but migrant workers—who are much poorer than any landowner—do not benefit from fair trade. Fair-trade farmers are required to pay migrant workers the minimum wage in their country, but that’s already the law.

    Prof. Haight says there is a better way to help these poor migrant workers. You can help them by buying premium coffees instead of fair trade coffee. Premium coffee beans are harvested with greater care and fetch higher prices at the market. As a result, migrant workers receive higher pay working for farms that produce premium coffees. Premium coffees and fair-trade coffees cost about the same amount, but buying premium coffees does more to help the poor than buying fair-trade labeled coffees. You have a limited amount of money; you should be able to use it in a way that maximizes the benefits to the poor.

  9. What’s So Great about Economic Freedom?

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    Economic freedom is about the freedom to buy and sell things, says Professor Antony Davies, but it’s also about the freedom to interact with people, to converse with others, to travel, and to say what we want to say. Evidence shows that economic freedom is associated with many positive things in society. This holds true among states in the United States and across the countries of the world.
    Countries that have more economic freedom also tend to have higher GDP per capita. They tend to take better care of the environment. They also tend to have less child labor and more gender equality. Prof. Davies examines the data on these factors and several of the arguments people have raised about the data to show the many benefits of economic freedom. Economic freedom is about being free to make your own choices. It allows us to:
    - Do what we love
    - Create wealth
    - Protect the environment
    - Improve equality
    - End child poverty

  10. Is There Income Mobility in America?

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    We often hear that the rich are getting richer and the poor are getting poorer. While a surface-level examination of U.S. households by quintile from 1967 to 2009 would seem to support this claim, Professor Sean Mulholland uses other data to show that this measure overlooks two vital pieces of information that should concern those who care about the welfare of the poor.

    First, the share of total income does not tell us anything about whether income increased or decreased when adjusted for inflation. From 1967 to 2009, the real mean household income of the top quintile increased by 71 percent, meaning the rich became much richer. Over the same period. The real mean household income in the bottom quintile increased by 25 percent. This means the poor became richer as well. This measure shows that Americans in the lowest quintile could afford more goods and services in 2009 than in 1967.

    Second, these measures do not tell us what happened to particular households. Household income can change from year to year, but these measure do not track that. If we look at the households in the bottom quintile in 1987 and follow those households until 1996, we find that about 45 percent of them have moved up to a higher quintile. If we look at the next 10-year period, we find that 40 percent of households move up. Professor Mulholland also discusses income mobility from the top quintile down and across generations. He argues that these facts suggest that more improvements have been made for the poor in the past 40 years than many people believe. “To continue these improvements,” he says, “we should seek ways to expand opportunities for income growth and, with it, greater absolute mobility for those across the income distribution.”

    Sources:

    1. Data on household income shares by quintile come from here: http://www.census.gov/hhes/www/income/data/historical/household/. U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements, Table H-2.  Share of Aggregate Income Received by Each Fifth and Top 5 Percent of Households, All Races: 1967 to 2009

    2. Data on mean household income levels by quintile come from U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements, Table H-3.  Mean Household Income Received by Each Fifth and Top 5 Percent, All Races:  1967 to 2009. These data can be found here: http://www.census.gov/hhes/www/income/data/historical/household/.

    3. Data on relative household income mobility by quintile comes from: U.S. Treasury Department, (2008). Income Mobility of the United States from 1996 to 2005, Washington, D.C. It can be found here:
    http://www.treasury.gov/resource-center/tax-policy/Documents/incomemobilitystudy03-08revise.pdf.

    4. Data on generational income mobility comes from: Isaacs, Julia B. (2007). Economic Mobility of Families Across Generations. The Brookings Institutions. It can be found here: http://www.brookings.edu/~/media/research/files/papers/2007/11/generations%20isaacs/11_generations_isaacs.pdf

  11. Who Exploits You More: Capitalists or Cronies?

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    Many think capitalism exploits the masses for the benefit of a small minority. Professor Matt Zwolinski says that even if this is true we should be asking what the alternative to capitalism might be. The common suggestion is to increase government regulation and control over businesses. But does that alternative really make sense?

    The history of government regulation shows that citizens are in an extremely vulnerable position in relation to the state. Lobbyists and government officials are often tempted to exploit that vulnerability, by lobbying for and rewarding bailouts and subsidies. Governments frequently pass laws that benefit the economically powerful and politically well-connected at the expense of citizens.

    When the government wants to use your money to bail out GM, you don’t have the right to say no. But in the marketplace, no one can force you to spend your money. Which is more exploitative? Zwolinski wonders: if we really want to reduce the amount of exploitation, is increasing the power of the state really the best way to do it?

  12. Top 3 Ways Sweatshops Help The Poor Escape Poverty

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    Should sweatshops around the world be shut down? What might we say if we looked at sweatshops from the perspective of the world’s poor? While it may be true that sweatshops treat workers unfairly, Professor Matt Zwolinski says there are three points to be made in defense of sweatshops.

    • The exchange between the worker and the employer is mutually beneficial. Sweatshop jobs often pay three to seven times more than wages paid elsewhere in an economy. Workers in the developing world tend to view sweatshop labor as a very attractive option.
    • Even if sweatshop labor is unfair, it’s a bad idea to prohibit it. Taking away sweatshops just takes away an option for the poorest workers of the world. While countries can make it illegal for sweatshops to pay low wages, they cannot prevent sweatshops from shutting down and paying no wages. And when that happens, the workers all lose their jobs.
    • It is better to do something to end the problem of global poverty than it is to do nothing. Sweatshops are doing something to help. They are providing jobs that pay better than other alternatives, and they are contributing to a process of economic development that has the potential to offer dramatic living increases.

    If we look at sweatshops from the perspective of the world’s poor, which looks better: the American company that outsources to a sweatshop and provides jobs in developing countries, or the American company that, because of its high-minded moral principles, hires only U.S. workers?