Capitalism and Poverty

By Neal Walters

What is capitalism?

An economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.

Capitalism has been the basis of our American economy for the past 250 years and was even an important economic policy since the founding fathers wrote the constitution. There are indeed flaws to the system that cause people to be skeptical of the system as of late including the failure of the private sector of banks and other mortgage companies which unethically sold mortgages to people who could not afford them. The result of this recent recession has brought an awareness of poverty in the U.S.

Homelessness in the US is still a burining problem in US politicstaken from blog revolutuion

Homelessness in the US is still a burining problem in US politics
taken from blog revolutuion

On Friday we had a guest speaker Tavis Smiley of the Tavis Smiley Show and Tavis Smiley on PBS. Dr. Smiley touched on civil rights issues that the country was still facing and in being critical of President Obama, stated that he had not done enough to solve the civil rights issues still occurring throughout the country. One of Smiley’s strongest criticisms was the poverty rate in the U.S. and the millions of people without opportunity and education that remain in our cities. Smiley offered everybody a chance to go to his website afuturewithoutpoverty.com and sign a petition to President Obama asking to sit down and have a meeting about poverty and in doing so find a way to “cut poverty in half in ten years and eradicate it in 25 years”.

Is cutting poverty in half in 10 years really possible? Has there ever been a society in the history of mankind without poverty?

Data has shown that throughout the 20th century the poverty rate has ranged between about 23 and 11% and currently the poverty rate is about 14%. Smiley’s desire to cut the poverty rate in half means we would have to have close to 7% even though in the last 100 years our lowest rate has never been below 10% poverty let alone 5% (we will assume a perfect poverty rate is above 0%).

How do we get to this point and what happens when we get there?

Smiley, although strong in believing justice and fairness for all classes, has little or nothing in offering a policy to help

Wall StreetTaken from NYtimes

Wall Street’s NYSE
Taken from NYtimes

people increase their own household incomes. Even Obama’s $787 Billion dollar stimulus package has had little effect on changing the lives of the impoverished. Government programs have tried to help those who cannot help themselves and the impact has yet to be seen in a major way.

But what happens if the government somehow enacts so many social programs that there will be close to little poverty in the country? What will become of Capitalism? The class system will be relatively full of the working class and nobody below them. How can people be competitive if they know that there is no place to fall with bad performance? Capitalism thrives on the the competitive nature of the private businesses and the choice of individuals to hire and fire workers based on performance and ability. In poverty there is also an unseen human factor that I believe Smiley overlooks and needs to be addressed before the issue of poverty can be eradicated. The desire to work hard and be compensated. The idea that hard work and a good education will help you create a life for yourself. Many of the impoverished in today’s country are helpless and doomed because of their current situations in all types of communities but other people find themselves falling into this “poverty” category because of bad decisions and poor life choices.

According to the position of Political activist Tavis Smiley, we should eradicate poverty no matter what but who do we save? The hard working Individual with the mindset to succeed shall continue into greatness and the bad decision maker should be left to the outcome he gives himself.

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