Improve the editing of essay, make it with clarity.
ECON1116 Principles of Microeconomic SEC 04
Poverty as a Micro-Economic Issue
Microeconomic is an economic branch that deals with firms and individuals behavior in making informed decisions with respect to allocation of scarce resources. The distribution of income within a state stands out as a micro-economic issue that is defined by the rate of poverty in that specific state. States or countries come up with poverty limits in which the people whose living standards are below that line are considered to be poor. Since this evaluation is considered as one way to help people below the line, it also raises concerns on where the line should be set. In this respect, this paper will analyze poverty as a micro-economic issue highlighting its economic principles and social importance.
Even though poverty is a global micro-economic issue, its impacts are more realized in developing countries commonly caused by natural disasters and war. It is also caused by centralization of power and greedy of few elites, environmental degradations and colonial rules that stagnate the economy. For instance, around forty million people in 2008 were considered to be poor in U.S. the rate of poverty differs among regions, age and racial groups. There is no easy way of eradicating poverty especially the advanced rate in developing countries by promoting education for all citizens and economic growth can be some of the ways of reducing the rate in United States. Nations that are industrialized consider poverty as an important issue to be addressed in an economy. While absolute poverty may not be the definition of poor people in most of the wealthy countries, in developing countries as the rate of poverty increases, inequality increases to a rate of concern. This is clearly evident by the rich-poor gap that has over the years widened in over half of the richest countries in the globe since the nineteen eighties according to poverty and inequality research conducted by OECD in 2008. The study also found out that in the recent decades, economic growth has been for the benefit of the rich widening the gap especially in countries like Norway, Canada, Germany and the United States. This rate of poverty is also perceived to increase in the coming five years(Ferreira, Francisco 20-36).
The best pathways out of poverty are promoting education for all. The more people get educated the more viable they become to secure well-paying jobs. The federal government should deal with unemployment through creating more jobs in investing is sectors like infrastructure and other investments that create employment for its citizens and earn them a decent income. It should also raise the minimum wage to increase wages and as a result increase the consumers disposable income which will reduce the rate if poverty. The federal government should also ensure there is wage equality for men and women through closing the wage gender-gap which can reduce the rate of poverty by half for women who are working and their families. In order to achieve this, the government should therefore pass the paycheck Fairness Act which would reduce salary discriminatory practices and increase the states Gross Domestic Product (Piazzaand James, p. 235).
Passing of policies that deal with employee’s work-family conflict could be achieved through establishing work schedules could really work. This would increase the performance of individuals in their working areas which will directly improve the performance of the company at large causing individuals receive high bonuses and salaries and reduce poverty. Expanding Medicaid through implementing the Affordable Care Act would ensure that millions of Americans have access to affordable health coverage that would free up the small household income to be used in other areas such as paying for food and household rental bills. Reforming of the United States criminal justice system and enacting laws and policies that support successful-re-entry could actually reduce poverty. Therefore, poverty can actually be eradicated through enacting policies that can grow the middle class, increase economic security and expand opportunities through increasing employment rate.
Poverty is an issue of social importance within societies. For instance, thirsty, illness and hunger can be described as causes and effects brought about by poverty. The aspect of being poor simply means that one is not able to afford basic needs like food and water. The society becomes affected by poverty in one way or the other because the problems are interrelated. For example, lack of food or water makes people to be vulnerable to the spread of diseases which can be caused by poor sanitation(Piazza, James p. 353). The concentration of crime varies with space and time hence high in some areas and low on others depending on the extent by which the society is wealthy. Most of the criminals happen to be the uneducated people within the society and the high number of idle people due to unemployment leading to long-lasting poverty rate that increases as time passes by. Unemployment is considered to be the biggest factor that contributes to poverty that fosters crime as compared to inequality in income. This is because low income makes people commit non-violence crimes whereas idle people scheme on ways of committing violent crimes(Piazza, James p. 353).
The vicious cycle of poverty means that issues like crime, violence and diseases moves from generation to generation affecting the economy. Some of the hereditary plagues that include child labor, lack of education due to lack of schools, transmission of diseases, poor hygiene, low incomes and high rate of unemployment causes people to stagnate and have poor living standards which promote poverty. As a result of high rates of poverty, people end up becoming stressed hence associate themselves with substance abuse behaviors like consuming alcohol and drugs like cocaine and heroin. From adults to children in despair in the United Statesadopt these self-destructing habits as a way of dealing with stress. Lack of proper equipment’s in working areas because crippling accidents that leave people helpless due to poor access to proper healthcare. Poor living and housing conditions cause the spread of diseases that are related to water and food simply because the poor lack access to hygienic basic products.
In consideration of the above discussed cause and effects of poverty, it is paramount to note that poverty is a major cause of social tension and used inequality to divide people in a nation especially inequality in wages or income. This is as a result of poor distribution of scarce resources within a country resulting to minority people having all the resources and the majority left with little or no resources at all (Piazzaand James, p. 235). The presence of middle class serves as an indicator of a wealthy or developing country bur recently, even well developed countries ate collapsing due to losing the middle class to increased rate of clashes and number of riots. An entire country in addition to the society can be destabilized by the dangerous factor of poverty. For instance, the high rates of unemployment and poverty caused revolts to rise in Arab springs. As a result of poverty, many governments have been overthrown and many wars have risen as a result worsening the situation.
All the efforts of a nation should be focused on uniting people in the society rather than nationalism and should work towards a common set of policies and values that promote equality in distribution of scarce resources. Precisely, the economy should be nurturing all its societies in creating an environment that fosters education and enables citizens to use their skills in participating in growth and development as well as maximizing their potential in the society(Ferreira, et al, p. 20). This creates an enabling and empowering society that transforms the social way of doing things, values and order that can stabilize and settle people. In order to fight the social consequences of poverty, it is important to empower and stabilize political institutions that can fight against the resistance to change and ensure all laws and policies are implemented timely.
The nature of poverty and economics makes it complicated to directly address inefficiencies successfully. For instance, it is evident that the poor can actually be hurt by enforcing lids on prices and raising minimum wages. Nonetheless, their other issues that the federal government can maximize in order to eradicate poverty through expounding on the relationship between poverty and the economy. Focusing on economic growth is one of the best factors a government should consider. According to Okun’s Law, there is a relationship between unemployment and the Gross Domestic Product of a country (Ferreira, et al, p. 27). This states that a decrease in the level of unemployment will inevitably result to an increase in the level of output in a country and vice versa. Therefore, the government can pursue growth policies which in return will create more jobs for the society.
The poor happen to be disproportionately affected by the GDP shocks. A good example would be an African or Latin American child who would be forced to drop school during economic crisis and help at home. In counteracting this effect, the federal government should implement policies that promote stability and reduce the rate of inflation. It is also appropriate for the government to create opportunities for the poor families to build up their investment capital through grants, loans and work trainings. These probabilities at structuring mastery in traits and employable skills give poor people the chance to compete fairly in the job markets and eventuallybalance income across the population. The availability of accessible information considered by economists as a public good could create a general awareness of information in the market and open job opportunities for poor people. Lack of awareness causes the society to become poorly informed hence poverty targeted policies become ineffective(Bhagwat et al, p. 233).
Some of the remedies to poverty include; community centers in low income areas, job agencies and well-advertised websites to create awareness of the availability of opportunities in the society. Unluckily, foreign power in some countries is required to help accomplish this remedy. Some other effective ways of eradicating poverty is through locally based small scale programs that are focused on empowering the poor to becoming self-reliant. The economic principle seeks to promote the virtuous person and society hence the poor should be given the opportunities to showcase their virtues such as diligence, temperance, hard work and prudence through purchase and ownership of their own businesses (Bhagwati et al, p. 233).
In conclusion, the removal of poverty is an ongoing process rather than an emergency action. The economic principles approach to poverty focuses first on the nature of the poor as people created by God with unlimited potential, value and creativity.This would increase the performance of individuals in their working areas which will directly improve the performance of the company at large causing individuals receive high bonuses and salaries and reduce poverty. Expanding Medicaid through implementing the Affordable Care Act would ensure that millions of Americans have access to affordable health coverage that would free up the small household income to be used in other areas such as paying for food and household rental bills. Reforming of the United States criminal justice system and enacting laws and policies that support successful-re-entry could actually reduce poverty. Therefore, poverty can actually be eradicated through enacting policies that can grow the middle class, increase economic security and expand opportunities through increasing employment rate.
Bhagwati, Jagdish, Jagdish N. Bhagwati, and Arvind Panagariya. Why growth matters: How economic growth in India reduced poverty and the lessons for other developing countries. PublicAffairs, 2013.
Chandy, Laurence, and Geoffrey Gertz. Poverty in numbers: The changing state of global poverty from 2005 to 2015. Washington DC: Brookings Institution, 2011.
Ferreira, Francisco HG, Phillippe G. Leite, and Martin Ravallion. “Poverty reduction without economic growth?: Explaining Brazil’s poverty dynamics, 1985–2004.” Journal of Development Economics 93.1 (2010): 20-36.
Ferreira, Francisco HG. “Distributions in motion: economic growth, inequality, and poverty dynamics.” World Bank Policy Research Working Paper Series, Vol (2010).
Piazza, James A. “Poverty, minority economic discrimination, and domestic terrorism.” Journal of Peace Research 48.3 (2011): 339-353.
Reich, Adam D. “The costs of being poor: two new books explore how difficult the housing market and criminal justice system make it to climb out of poverty.” The American Prospect 27.4 (2016): 108+. Opposing Viewpoints in Context. Web. 25 Nov. 2016.