Jul 15, 2020 in Informative

Is Poverty Inevitable?

Nearly 25% of the states in the USA have low per-capita incomes characterized by high unemployment, low labor force participation rates, and high dependency on the government. Most of these people living below the poverty line are from rural and inner city parts as compared to suburban areas. In 2009, about 39.8 million of the population lived in poverty. Poverty rates in America have constantly increased since the 1930’s. California is the leading state with about 23.8% of the poor. Persistent poverty is very complex with many people unable to make their ends meet in the expensive world. Those at risk are women, children, single parents and the elderly. Despite the improvement in transport and other infrastructure sectors, the country’s development pattern is still uneven with income inequality being on the rise. Similarly, the number of people with the income below the economic average is increasing. Nevertheless, I do not think poverty is inevitable since its presence is rather a result of misplaced priorities and wrong policies. The paper shows how the government can apply good policy choices to improve the lives of the poor and reduce their poverty level significantly. 

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Economic Theories of Poverty in Relation to the USA

Classical and Neoclassical Tradition

Classical traditions argue that people are responsible for their poverty, and the state should not interfere with capabilities and attitudes of its citizens. People in the U.S. have one common thought that an individual is poor because he or she is responsible for it. On the other hand, neoclassical economics contends that poverty exists because of reasons that are beyond individuals’ control, for example, market structures that exclude the poor from credit markets, educational barriers, poor health, and single parenthood among others. In 1999, it was found out that about 9.4% and 14.9% of full-time and part-time employees respectively did not earn enough annually to be above the poverty line.

Keynesian Tradition

The Keynesian tradition focuses on macroeconomic forces and the way the government can stabilize the economy and provide public goods. It argues that poverty is not voluntary and is caused by unemployment. For example, one study indicated that 29% of families in the U.S. could go for several months without any income. 

Marxian Tradition

It contends that poverty is caused by discrimination among classes. In an attempt to end poverty, economists propose that the government should intervene to regulate markets through minimum wages and anti-discrimination laws.

Policies to Reduce Poverty

The reduction of hunger and food insecurity is the main purpose of the Food Supplemental Nutrition Assistance Program (SNAP), better known as food stamps. It can help to reduce the poverty level in the USA. The program is one of the major antipoverty efforts and social safety strategies, in the country that serves a large portion of people. Though it is unappreciated, its application to the entire population can improve the availability of food in the country, reducing the impacts of the famine. The program helped to reduce the poverty rate significantly during the economic recession, whereby it decreased to 8 percent in 2009. Similarly, it improved the income of the poor by 6% making poverty less severe. Furthermore, in 2011, the SNAP program reduced the number of persons living in poverty from 1.46 million to about 800,000. However, its critics have argued that it does not decrease poverty, but instead has encouraged unhealthy eating habits and led to obesity. 

Another policy of fighting poverty in the USA is providing the poor with money and incentives. Although many social programs are aimed at ensuring that people have jobs rather than giving money, the provision of assistance in the form of finances, housing subsidies, pensions, and child benefits can reduce the poverty rate. For instance, with the aim of addressing poverty among the elderly, the government has come up with the means of sending them money through the social security program. This anti-poverty initiative has helped many elderly in the country by scaling down the poverty rate. Similarly, children in poor families should be given assistance through supporting their parents and ensuring that the money is not misused. Families of the Native Americans in North Carolina had their lives improved significantly after they had received assistance from the government. Moreover, the latter has expanded anti-poverty measures, such as an income tax credit, that have helped people find work. Nevertheless, many have argued that these welfare programs have provided small benefits to the poor. Furthermore, they have said that the incentives and money given to low-income families make them worse off and increase the culture of dependency.

Ending homelessness and housing instability can also reduce the poverty level of the country. More than 560,000 Americans were reported to be homeless in 2015. This situation was aggravated by the shortage of affordable housing. Despite that, the number of people without homes is decreasing due to an increase in the federal funding. In addition, assistance has focused more on dealing with homelessness by means of permanent supportive housing. However, this policy cannot entirely solve the housing crisis, and even though the government provides assistance, most eligible families do not benefit from the housing voucher due to the limited funding.  

A minimum wage rise and an earned income trade credit (EITC) can help to reduce increasing inequality and persistent poverty in the United States. However, the former depends on how it benefits the poor and the response from employers. The proponents of the wage rise contend that it can establish fairness and equality in the labor market of the country. The earned income trade credit is more effective and can be better initiative than the one above since it provides subsidies to families with a low income and having greater needs, especially those with children. Furthermore, apart from reducing poverty by providing an extra income, the EITC involves incentives that increase the possibility of families to come out of poverty even before they have received their EITC payment.

Another way out of poverty is increasing job opportunities in the country. The full employment policy coupled with investments can help in overcoming the present economic situation. The development of low-cost housing creates jobs by increasing the disposable income and lowering housing costs. In addition, free schooling can help to train many people and prepare them for job placement. Education also provides high and valuable skills to people that make them become more productive in jobs. It in turn boosts the economy and provides more money to people reducing the poverty level. Moreover, the government should be the main employer ensuring a person willing to work is provided with the job.

Expanding Medicaid can reduce the use of the limited household income through medical bills enabling people to acquire other basic needs, such as paying a house rent, as well as buying food and clothes. Apart from improving health care and ensuring access to health care services, the Medicaid coverage can also reduce the poverty rate and financial constraints that come as a result of an illness or an injury. Although it has helped millions of Americans to get out of poverty since its introduction, some of the states in the USA do not provide the Medicaid program to cover many adults below the federal poverty level making the lives of many families deteriorate. 

Conclusion

Poverty in the USA is a result of people responsibilities, lack of social and private assets, as well as class discrimination. Despite an improvement in transport and other economic sectors, the country’s development pattern remains uneven with income inequality on the rise. However, based on the above theories, poverty is not inevitable. Although it may not end completely, it is the role of people and the government to reduce it and make the future better. Such policies as the reduction of hunger, food security, homelessness and housing instability, as well as the provision of money and incentives among others can help to decrease the poverty level significantly. However, if one of the policies does not perform well, then it should be changed and substituted with a new one.

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