What’s in This Chapter?
Is there more or less poverty in countries that have higher income inequality? Consider the following hypothetical example.
Country A: The poorest income group earns an average of $4,000 per year. The richest income group earns an average of $7,000 per year. Incomes are relatively equal.
Country B: The poorest income group earns an average of $12,000 per year. The richest income group earns an average of $100,000 per year. There is a high degree of income inequality.
Assuming prices of goods and services are the same in both countries, which country do you prefer to live in?
If comparisons bother you and you mostly want people to have relatively equal incomes, you will answer country A.
If you care about absolute living conditions and purchasing power, you will answer country B. The standard of living is higher in country B, and the opportunities for advancement are greater.
People in countries with high degrees of income inequality typically do not stay poor. Nearly 60% of people who are poor in the United States, are no longer poor ten years later and 85% are no longer poor by the end of their career.
Not all, but a substantial percentage of the people in the group that remains poor (the ones remaining poor after 10 years) are in welfare programs. Do welfare programs encourage households to remain dependent on government help? How much incentive is there for people to transition from welfare to work? The welfare reforms of 1996, which introduced stricter eligibility requirements, encouraged a larger percentage of people to find work. Should we go further, and perhaps take welfare programs out of the hands of large bureaucratic governments and leave caring for the needy up to smaller governments (counties, cities) or local organizations, churches, private charities, neighbors, and friends? Should donations to help the poor be an individual choice, as Ayn Rand recommended? Or should donations be mandatory (taxes) and be in the hands of government administrators? This unit discusses these and other questions related to income inequality and poverty.
How did this horribly biased textbook even get approved I’m in shock reading this and why is HCC making us read this trash? We deserve legit textbooks not whatever this persuasive essay is supposed to be. And then the website isn’t even a secure site this is ridiculous
Saraf, thank you for your feedback. I am sorry you feel this way. Please tell me specifically where the information in this text is inaccurate and I will be happy to have a discussion with you about this. Of course, each text has its own biases in terms of what it chooses to include. In fact, most if not all standard economic text books are biased in a more liberal direction (in favor of more government involvement and more supportive of Keynesian policies). This is also reflected in what is mostly taught in most schools around our country and definitely Western Europe. So this text gives a different angle and hopefully food for thought. If you only read what you want to read, you will not grow and learn much. In fact, while growing up in the Netherlands, I used to be quite liberal (like yourself), and when years later in the United States, I was exposed to Austrian economic philosophies, I disagreed with and protested almost everything. However, I chose to open myself up and I continued to read and understand more. It allowed me to compare the various philosophies and eventually choose what I believe is the best one for a country’s overall economic standard of living.
I think the author (singular, one single guy wrote this and it shows) worked for HCC at some point and it seems like their entire rubric for microeconomics is based off of it. So maybe he had some sway in faculty and no one has bothered to double check or think critically since then because doing nothing is easier. It’s insulting tbh. I am certain there are better zero cost texts out there that were subject to some editing and review, but instead they chose to make us slog through this clearly biased poorly organized unedited personal project.
Oh yep here it is from the About section:
“He is currently a full professor of economics at Howard Community College in Columbia, Maryland. […] Mr. Bouman, a three time Faculty Forum (Senate) President”
explains a lot
Hi Darryl, thank you for your feedback. I am sorry to read that you are not happy with this text. I started writing these two texts (macro and microeconomics) 25 years ago per a request from the college to help save text book costs for our students. Before the first edition I read and analyzed twelve then popular standard economics text books, in addition to studying several texts to which I was heavily exposed during my graduate studies (Reisman, Hazlitt, Friedman, Ayn Rand). Each year since then, I have revised these online texts. Along the way, I have received peer comments from a variety of economics professors and colleagues in general, as well as many students. I have made many changes based on their feedback. These two texts are also full of source citations. I understand that you may not agree with some or a lot of things in these texts because everyone has their own beliefs. You stated somewhere that the text is very biased. It is true that I a am a believer in the free market, but that doesn’t right away mean that the content is not true. What I mean by that is that there are advantages and disadvantages of any system and I happen to believe that there are more advantages to the free market than disadvantages. I respect that you disagree with this belief because eventually it comes down to subjective preferences. I can actually relate to what you are saying because before entering grad school I thought like you and was radically opposed to the free market and supported a socialist economy. This is because I was heavily influenced by my economics courses in the Netherlands, which had a strong socialist bias. When I was exposed to another point of view in grad school, I had a chance to see different viewpoints and I tried to be open-minded about accepting these different ideas. Eventually, I put the two schools of thought next to each other and (after also reading a lot more about classical and Austrian economics) concluded that the latter made a lot more sense. The reason why I am not afraid to insert my support for the free market in these texts is because the vast majority of standard economics texts are biased the other way (pro socialist ideas, pro Keynesian). My guess is that you like these texts better because you happen to support these ideas and therefore they do not appear to be biased to you. However, I ask you to be open minded and consider other points of view (which is the definition of critical thinking). Now, if there is something factually untrue in my texts, please let me know and I will gladly accept your feedback. But when it comes to subjective viewpoints, I do believe that it is very beneficial to read many different ones and then draw your conclusions accordingly. I am proud of the texts, the knowledge it has instilled to students around the world (inflateyourmind.com has nearly 3 million page views as of this writing) and the combined total of millions of dollars it has saved our students. In unit 7 of the macro part, I express my dissatisfaction with our government’s (Federal Reserve) creation of inflation. Inflatyourmind.com comes at price of zero dollars. What a way to fight inflation!
Oh my goodness. I am so sorry for this person’s rude comment. This website is fantastic, and you can’t ask for better information about micro and macro economic from a free website. You can learn and use it for any economics class with great ease, and I’m sure it took a lot of time and effort to compile each individual unit for both economics classes. I don’t doubt many people are greatly benefiting from this near-textbook website.
Thank you for appreciating these texts, Eric!