How Government Hurts The Poor

laliberty:

Just a few quick examples, as to elaborate on this question:

1. Minimum wage laws ostensibly exist to offer poorer workers better pay, but tend to leave the lower-skilled workers unemployed instead. ¹
2. Tariffs and tough anti-immigration laws purportedly protect American citizens – poor, lower-skilled individuals in particular – from the “unfair” competition of cheap foreigners. Instead, it drives businesses to other countries or raises prices on products, burdens which weigh much more heavily on the poor. ^{2, 3}
3. Drug prohibition is intended to help rid the streets of dangers, particularly in lower-income neighborhoods; instead, outrageous numbers of poor people are incarcerated (or worse) for non-violent activity. ^{4, 5}
4. The Welfare State, which supposedly functions as a “safety net” for individuals in unfortunate circumstances by providing them assistance (mostly financial), is not only wasteful and corrupt when run through the bureaucratic, palm-greasing sausage-factory that is the state – it also has been shown to function as an impediment in allowing the downtrodden to escape from the cycle of poverty and dependence. ^{6, 7, 8, 9, 10, 11, 12}  
5. And then there is war itself, that definitionally destructive and deadly effort, which recruits heavily in poorer communities (the military billboards and recruiting offices in the neighborhoods near me are innumerable) as a way to give poor kids an alternative to gangs and a means to pay for higher education. Yet, in too many cases, it simply offers them death. There are conflicting reports as to whether the composition of military personnel is dominated by recruits from lower-income homes, but it seems at least anecdotally evident that there is a concerted effort to “help” the poor by offering them this “opportunity.” ^{13, 14}

Put frankly: government is no friend of the poor.

Lovely and concise!

lovebelikeawhirlwind:

loveandchunkybits:

dynamicafrica:

No one who attacks the humanitarian aid establishment is going to win any popularity contests, but, neither, it seems, is that establishment winning any contests with the people it is supposed to be helping. Easterly, an NYU economics professor and a former research economist at the World Bank, brazenly contends that the West has failed, and continues to fail, to enact its ill-formed, utopian aid plans because, like the colonialists of old, it assumes it knows what is best for everyone. Existing aid strategies, Easterly argues, provide neither accountability nor feedback. Without accountability for failures, he says, broken economic systems are never fixed. And without feedback from the poor who need the aid, no one in charge really understands exactly what trouble spots need fixing. True victories against poverty, he demonstrates, are most often achieved through indigenous, ground-level planning. Except in its early chapters, where Easterly builds his strategic platform atop a tower of statistical analyses, the book’s wry, cynical prose is highly accessible. Readers will come away with a clear sense of how orthodox methods of poverty reduction do not help, and can sometimes worsen, poor economies.

– Publisher’s Weekly via Amazon

I bought this book and read like a paragraph and from then on I viewed aid way different. If you are a good intentioned do-gooder that wants to help the poor and hungry…its a must for your bookshelf. Just read the first chapter is all you need to really “get” it Read the rest to be armed with facts and statistics when people who dont know any better try to have a misinformed opinion

this book is phenomenal.

gonna reread.

BUY. THIS. BOOK. And William Easterly’s work, in general, but I think I’ve already made my endorsement of his work more than obvious; he’s a fantastic economist (lovely data and econometrics), but he also has the unique skill of not writing like one.

I need to find time to actually read for once, because I bought some other books on the topic (aid/development in Africa) last semester, which I’ve only read excerpts from, but which are just phenomenal (they’re ‘Dead Aid’, by Dambisa Moyo and ‘The Bottom Billion’ by Paul Collier).

(Source: http://www.amazon.com/White-Mans-Burden-Efforts-Little/dp/1594200378)

kohenari: Over at the Bleeding Heart Libertarians blog, Matt Zwolinski makes the following argument about sweatshops: I support sweatshops because I believe that they are good for the poor, not because I believe that interfering with them violates the non-aggression principle, or a natural right to freedom of contract, or whatever. If you could convince me otherwise – if you could convince me that the policies I advocate set back the autonomy and welfare of the poor rather than advance them – then I would change my mind. My sense is that most people, especially on the Left, will recoil at this argument. The way that the anti-sweatshop movement took off about ten years ago suggests that a substantial number of people find conditions and wages in sweatshops to be problematic at best and monstrous at worst. Indeed, the idea that even so-called bleeding heart libertarians celebrate sweatshop labor as an example of the free market doing good for people seems to cast aspersion on libertarianism in general and on the specific idea that there can be bleeding heart libertarians at all. Of course, Zwolinski does have a point. In so many countries, a job — even a sweatshop job with conditions that I would find monstrous — is a great boon to those who would otherwise be without work and, consequently, without some (or all) of the goods necessary for life. In other words, this might be one more of those instances where the Left makes the perfect the enemy of the good: To help the people who are suffering in the sweatshops, those of us who live comfortable lives elsewhere insist on an end to sweatshop labor and thereby deprive people of the jobs they need to avoid either far worse labor options or crushing poverty and perhaps even death. But I can’t get away from the feeling that making this argument also lets us off the hook far too easily. It’s certainly true that someone who consumes very, very little is better off with a little bit more. But I don’t think that’s sufficient. Certainly, it’s better that the job exists and that someone is elevated by it from absolutely crushing poverty to simple poverty. But here’s where the rubber meets the road and I separate myself from someone who thinks that the market is the only necessary arbiter of whether or not something is allowable or legitimate. For me, there’s no reason that a corporation must (let alone ought to) take advantage of people in such a state. Corporations and their shareholders benefit from doing so and the market allows it … but this is precisely why I’m always going to find myself favoring some sort of regulation rather than simply accepting whatever happens as a result of a free market. I would take a smaller profit as a shareholder or pay more for a product as a consumer if it meant that those products weren’t being made on the backs of labor that couldn’t complain of their poor pay and poor conditions for fear of losing the only job that keeps them (and their families) from even worse conditions and/or death. And, even more obviously, if I was someone who lived in crushing poverty, I think it’s clearly right that I’d be happy for the opportunity to work and improve my lot in life … but I’d also hope that wealthy people wouldn’t take advantage of me just so that they could make a little bit more money than they already make. In the end, I keep coming back to the need for some regulation so that people don’t get stepped on because I know, from looking at things from any of these perspectives, that the people who want to run a sweatshop are motivated by profit and not by the idea that they’re helping out impoverished people around the world. What they ought to do is to provide jobs that pay a living wage for people in the foreign countries in which they want to operate; this would still cost markedly less than wages in, say, the U.S. But this either doesn’t occur to them or simply doesn’t make the best financial sense (so long as they can get away with paying less and thereby make more for themselves). So they opt not to offer jobs in countries that regulate labor conditions and instead find places that allow them to open sweatshops. It would be fantastic if we could convince people to steer their corporate ships by our moral lights, but since we don’t seem able to do that, I favor regulations that would make every country inhospitable to corporations that want to exploit impoverished people. At that time, faced with the choice of paying workers a living wage in, say, Indonesia or paying workers a living wage in the U.S., corporations could freely choose to open factories in Indonesia that would make life better for workers there while also avoiding terrible sweatshop conditions … and they could still make a tidy profit. Clearly, this is what makes me a bleeding heart and not a libertarian. And it’s arguments like the one that Zwolinski puts forward about sweatshops that make me scratch my head about the idea of combining the bleeding heart ideas with the libertarian ideas. As I see it, the bleeding heart libertarians seem to be mostly libertarians and not very bleeding heart on the issue of sweatshop labor. Multinational corporations (MNCs), which are the main employers of sweatshop labour, are often accused of being extortionate, low-paying, and generally evil entities. I disagree and I think there are extremely strong arguments for ‘sweatshops’ (the apparel industry is really the only one that I can understand a sizable amount of disagreement from the left) from all parts of the political spectrum—not just classical liberals. When surveyed, the overwhelming majority of people in abject poverty said that the best thing that could happen to their community would be a MNC. Why? Well, the most significant reason is because MNCs pay better than local businesses in poor countries—a lot better. They also employ more people, decrease prices for the products they produce when they open a plant nearby (the proximity of market to manufacturer drives costs and prices down, empirically), attract other investors, i.e. FDI or ‘foreign direct investment’ (the advantage that Latin America has had over Africa can at least partially be attributed to Latin America’s heavy FDI compared with the extremely sparse FDI of most of Africa, especially subsaharan Africa), and perhaps most importantly (from a human rights perspective, which I think should be the biggest concern of those on the left) provides opportunities for women—in poor areas with severe misogyny (see: ‘Endangered Daughters’ and just about any literature on women in Southeast Asia), these are likely to be very rare and, as a result of financial dependency, women are much more likely to be thrust into child marriages, stuck in abusive marriages, and socially stigmatized, disowned, and destitute upon the death of a husband. In some areas in Southeast Asia, women are able to be completely financially independent because of their MNC employment and are actually able to choose to postpone marriage. Some may still be disowned by their families for these choices, but the point is that they now have a choice in what they do with their lives. This gives women otherwise doomed to poverty and domestic abuse opportunities. Not-so-fun, but illustrative anecdote on the effect of workforce discrimination’s effects on culture: the discriminatory employment of Africans by colonists transformed matriarchal (as well as egalitarian, gender-progressive, and otherwise very ‘modern’) societies into societies which closely resembled traditional European ones, insofar as they took on many patriarchal, sexist, and generally discriminatory policies, because women no longer provided any ‘worth’, nor were they independently socially mobile, because they became reliant on those who the colonists would hire: men. What’s interesting (and extremely promising for the validity of a more free market model) is that the increasing transparency (information) of these companies has led to significant improvements in the working conditions of these factories, increased pay, improved benefits, and community works projects. In other words, if the demand changes (for example, increased ethical standards for companies from whom they buy), the supply will change to meet that demand (as long as the flow of information is of a high enough quality that the market can maintain a reasonable level of responsiveness). Ultimately, I would like to see better conditions in factories (and even moreso, more organic, domestic economic growth in the form of local entrepreneurship), but the reality is that no one can just will those things to happen. Those who want this to happen need to stop telling other people to fix these issues (i.e. governments) and take the initiative. If you invest in an area you’d like to see this growth, congratulations: you just contributed to the FDI which many of these areas are really lacking and if you invest wisely, the investment may contribute to significant overall economic improvement. Regulations? Those destroy competition because if you enforce regulations, especially a minimum wage, you will drive out all of the local vendors, leaving only the MNCs, who are a. already paying higher wages and b. can afford to dance with the regulations—local businesses which are already struggling to get by don’t stand a chance. This would decrease overall employment and increase the number of people living in abject poverty, which brings me to my issue with top-down economics: better outcomes, not good intentions, drive good policies. Economic manipulation, especially by the paternalistic West, subject the developing world to our preferences—not theirs—which are developed from a perspective largely ignorant of their struggles, needs, and goals. Playing with the economy at home probably won’t kill anyone, but playing with the economy of communities just struggling to survive just might. Choose your battles, not those of others.

Sweatshops for Progress

cheguevaraslovechild:

“In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.” – Source

I am a little disturbed by a. the fact that there is such blatant stereotyping (racist and sexist) b. that the stats and the cartoon differ (there are 9 people in the picture, unless we count the elephant symbolizing the GOP, which makes using the glutton representative of a little over 10%), c. that the main course and appetizers are excluded from consideration (I understand the pie metaphor, but seriously, this is why America’s fat), and d. that a racist murder (i.e. Che Guevara) is still endeared to people (this is not intended to be a personal attack on the person from whom I am reblogging this; I am just really perplexed by this, especially in this specific case, where this person holds many views fairly consistent with my own).

The 2010 Forbes list of the 400 richest Americans had assets totaling $1.37 trillion. Even if all of this wealth were expropriated, it wouldn’t be enough to cover Obama’s deficits for a single year — and the following year these people wouldn’t be paying any taxes since Obama would have spent it all.

Truth be told, Obama recognizes there aren’t enough rich people to pay for everything. That’s why he has expanded the number of “millionaires and billionaires” to include those who earn more than $200,000. As runaway government spending continues, soak-the-rich taxes will have to hit more people — the “millionaires and billionaires” earning $100,000, then $50,000 and perhaps even less.

Jim Powell, of the Cato Institute. (via citizens-concerned)