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Thread: Why Does Poverty Persist?

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    Why Does Poverty Persist?

    Beginning with Bill and Melinda Gates and Warren Buffet, everyone wants to do something to end poverty in the world. That's supposedly why the World Bank and myriad other expensive international institutions, plus the foreign-aid programs of developed nations, were created. But they've been at this effort for more than 50 years, and judging by the state of the underdeveloped world, there is little evidence of success. Even some of their own experts admit this. Why the poor results? A consideration of the reason for this colossal failure is necessary if we want to help the poor create prosperity.

    There is no reason why poverty should exist in the world today amid all the modern wonders in technology, agriculture, medicine, and more. Poverty persists because governments in poor countries do stupid things, many of them advised by their well-intentioned charitable donors. Lets point out a few of these obvious but persistent tragic mistakes.

    The resource that is most scarce in poor countries is the capital necessary to employ and increase the productivity of their abundant people. Capital demands labor; indeed, it competes in the labor market, thereby pushing all wages up. Everybody also knows that capital is invested for one reason and one reason only: to provide a competitive return. So isn’t it absurd to put a high tax on the return to capital? Customarily, high taxes are put on activities that governments want to discourage Just think: if to attract capital to a poor, usually unstable country the yield needs to be especially attractive, say, 20 percent, and profits are taxed at 33 percent (not unusual), the pretax yield would have to be 30 percent. Opportunities that offer this return are rare indeed. So why tax the return on capital? Unfortunately the aid dispensers invariably recommend "taxing the rich" -- that is, investors -- in order to reduce inequality. They prefer equality in poverty over prosperity with inequality.

    Next, take the labor law inspired by the UN's International Labor Organization: contingent severance pay to encourage job security. When a worker is dismissed for a cause not attributable to him (any market condition that makes his employment redundant), the employer must pay him a month's wage for each year he was employed. But if he quits to take a better-paying job, he gets nothing. Thus workers lose bargaining power because employers know they are reluctant to forgo the severance. As a result, workers are discouraged from moving to better-paying jobs where their contribution would be of higher value but their severance would fall back to zero, and they don’t get raises they might otherwise deserve because their employers know this. Everybody is worse off by this misplaced quest for job security.

    Trade restrictions are another way that governments perpetuate poverty. Most poor countries have import duties to cripple competition and keep inefficient malinvestments profitable for cronies of the powerful. Governments are oblivious to the waste of capital and effort that uneconomic investments produce (known as "dead weight loss"). Opening markets would remove barriers to productive investment and hence prosperity.

    These are just a few examples of harmful practices common to poor countries. Donor countries and institutions have not been much help; indeed many of these practices have been promoted by them at one time or another.

    The reasons for the donors' failure is that they allow ideology to prevail over common sense. They invest time, effort, and money trying to alleviate the effects of poverty rather than the obvious causes and thus perpetuate it. If we want to help the poor, let us use our heads more than our hearts
    http://www.fee.org/in_brief/default.asp?id=1021
    “Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way for himself if society is sweeping towards destruction. . . . What is needed to stop the trend towards socialism and despotism is common sense and moral courage.” Ludwig von Mises

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    Re: Why Does Poverty Persist?

    If all the "world's problems" were really eradicated then what would all militaries, NGOs, Amnesty Int, Greenpeace, governments, the U.N., psychologists, and philanthropists do for a living?

    Suffering is kept a steady pace, otherwise thousands of people would lose their jobs.
    banging the gong...

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    poverty exists, despite all the riches of the world, because capitalism is a class devided society with those who never worked in their lives having more than they need and those working all their lives barely meeting ends

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    Re: Why Does Poverty Persist?

    19th century lassie faire capitalism has been tried, failed, and was evil. To suggest a return to pre-liberal won working conditions improvements will eradicate poverty is insane.
    "Ka warea te ware. Ka area te Rangatira."

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    Re: Why Does Poverty Persist?



    And a tip 'o the hat to Mr. Friedman.

    Who said Reaganomics was dead ?

    So why tax the return on capital? Unfortunately the aid dispensers invariably recommend "taxing the rich" -- that is, investors -- in order to reduce inequality. They prefer equality in poverty over prosperity with inequality.
    Wow, Too early in the morning. Too damn early.
    I predict that this quote will not survive the test of time.
    Got any snake oil for sale this time around, Papa ?

    But hey, what the hell. Tis the season!

    Happy New Year
    When being run out of town, get in front of the crowd and make it appear like a parade.

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    Senior Member Array Covertjay's Avatar
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    Re: Why Does Poverty Persist?

    He gets hard over this discredited Von Hayek crap don't he?

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    sinneslöshen Array Unwell's Avatar
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    Re: Why Does Poverty Persist?

    seems an inherent nature of all human structures doesn't it...


    why? mai loo. why's the sky blue. why am i so hot...

    questions, questions...

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    Re: Why Does Poverty Persist?

    WTF does poverty have to do with capitalism? Jesus was poor, so was just about everyone else. It persists because some people have no idea how to earn, swindle, steal, or remain with their money if they ever have it at all. I believe in that old axiom; take all the world's money and doll it evenly among the population, come back in ten years and it will be back in the hands of those who had it in the first place.

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    sinneslöshen Array Unwell's Avatar
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    Re: Why Does Poverty Persist?

    Quote Originally Posted by jonny danger
    Jesus was poor
    and the society jesus was born into wasn't capitalist? no merchants? no traders? no land-owners? no employers?

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    Re: Why Does Poverty Persist?

    jonny wrote:
    I believe in that old axiom; take all the world's money and doll it evenly among the population, come back in ten years and it will be back in the hands of those who had it in the first place.


    IA

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    Re: Why Does Poverty Persist?

    Quote Originally Posted by jonny danger
    WTF does poverty have to do with capitalism? Jesus was poor, so was just about everyone else. It persists because some people have no idea how to earn, swindle, steal, or remain with their money if they ever have it at all. I believe in that old axiom; take all the world's money and doll it evenly among the population, come back in ten years and it will be back in the hands of those who had it in the first place.
    But if they did Jonny, I'd be up there with them next time round!

    Kill, Kill, Kill!! Being poor has taught me well


    "Eat the Rich!!"...............Motorhead!



    ps: <dole> to give out in small numbers.

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    Re: Why Does Poverty Persist?

    Quote Originally Posted by Unwell
    and the society jesus was born into wasn't capitalist? no merchants? no traders? no land-owners? no employers?
    Depends on your definition. I see Adam Smith, you see pagan bartering. If employed labour is defined as performing a service without monetary payment then Neanders where probably Capitalists.

    If I analyze myself - the person I know best - I can say I'll never live in poverty because I won't let it happen. It's a vision thing. Some people have the vision and consequential acceptance of poverty; the self fulfilling prophesy.

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    sinneslöshen Array Unwell's Avatar
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    Re: Why Does Poverty Persist?

    Quote Originally Posted by jonny danger
    pagan bartering



    right.

    read much smith mate?

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    Re: Why Does Poverty Persist?

    The historical(non-religeous) evidences re. Jesus the man are that he was born into and protected by a wealthy extended family, including Joseph of Arimathea, his paternoster and advocate at his trial before the Sanhedrin. It was in J o' Arimathea's tomb that Jesus was laid with &0 lbs of aloes, a VERY costly drug or bark, casting, for the quantity indicated nearly $20,000 in today's values. (Google)

    Further, Jesus the man, aka a magician/itinerant carpenter, had sufficient status and capital to be taxed at Caesarea Philipi after returning to there (his registered base).

    He wasn't a poor man, ie. "poverty stricken", more like a rich/poerful guru. There were several of these guys around in those days..."God-men".
    -----
    Sp. above 8olbs not &0lbs
    -----
    More to the point JD, is that poverty has EVERYTHING to do with capitalism. Neither state can exist without the other. Ya gotta have "poor" to have "rich" in comparison. If ya don't have darkness, ya can't see the light, mate.
    -----
    It's a relative thing.
    -----
    F88K me in-laws!...sorry, joke.
    Last edited by Dauber; 5th January 2007 at 10:35. Reason: Automerged Doublepost

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    sinneslöshen Array Unwell's Avatar
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    Re: Why Does Poverty Persist?

    Quote Originally Posted by jonny danger
    I see Adam Smith, you see pagan bartering.
    this interested me, might interest you...


    "As for capitalism, Marx failed to note that all three points of his definition belonged to virtually every traditional economy of at least the last three millennia, and did not at all account for what is novel in that new economic system, which almost all scholars recognize came into existence only during the past three centuries–although, of course, there are presentiments of it much earlier.

    For example, even in biblical times, there was private property. Otherwise, the Commandment “Thou shalt not steal” would have made no sense. And there were very active markets. Jerusalem during the biblical period was, economically, nothing but a market–a marketplace on the crossroads between three continents. Third, there were plenty of private profits in the biblical period; the bible is full of stories about them, and it was from gifts taken out of these profits that the great and beautiful Temple of Solomon was built. Private property, markets, and profits are marks of traditional economies, not of the new and distinctive economy of capitalism."

    (http://www.michaelnovak.net/Module/A...ew.aspx?id=105)

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