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
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!