Policies Aimed at Raising the Income of the PoorText extracted from:The World Food ProblemLeathers & Foster, 2004http://www.lastfirst.net/images/product/R004548.jpg

Poverty and InequityAre poverty and inequity inevitable?Must there be an elite?In U.S. we are an eliteTraditional values:Dominate or be dominatedWork hard to be among the eliteAlternative is terribleIs inequity a moral good?Or morally unacceptable?How can inequity be diminished?To achieve a better life for everyone?

PoorElite

The Hungry are PoorPolicies to alleviate poverty:Redistribute income or wealth from the rich to the poorProgressive taxationLand ReformPromote general economic growthBangladesh Garment Factoryhttp://news.bbc.co.uk/2/hi/south_asia/3535018.stm

TaxationProgressive TaxationWealthy pay greater percentage of income than poorIncome taxSales tax in developing worldPoor often barter for goodsSales taxes come from wealthyTo redistribute wealthGovernments have to spend tax money on the poorBartering in Zaire outside of the taxable economyhttp://jetcityjimbo.com/awful_wonderful/photos/emmasmarket.html

Inflation due to income elasticity of DemandIf one rupee taken from top 5% in IndiaReduces food demand by .003 rupeesIf government gives the rupee to the poor in bottom 20%Increases food demand by .58 rupeesTherefore inflationaryMarket economy removes some of the benefit

http://www.tribalbazaar.com/merchadise/Pictures/w.8.jpgIndia market stall

Tax land use valueTax on some large land owners smallNo incentive to farm efficientlyIf tax land use, inefficient farmers will be forced to sell Land redistributed without displacing good farmershttp://www.meridianholidays.com/Can_bali_sing_super_holiday.html

Minimum wage lawsMay help the poorCan be enforced in urban areasResults in mass migration to cities in developing countriesMay not help the poorWait for a good job can take a long timeFamily undernourished while waiting for employmentEmployers motivated to substitute captial for laborInvest in machinesReduce number of jobshttp://www.globaleye.org.uk/secondary_summer/oncamera/india-factory.htmlClothing Factory, India

Hope for Land ReformCredited with helping reconstruction of Japan, TaiwanInequity in land can be extremeColumbia: 10% of owners controlled 80% of land (1988)Tenant farmers pay 50% to landlordIf small farmers own land, motivated toWork long hoursInvest in fences, irrigationIncrease productivityTenant farmers, Indiahttp://news.bbc.co.uk/2/hi/south_asia/2322387.stm

Problems with land reformSocialist elimination of property ownership causes problemsChinaRussiaLand to the tiller reforms did not benefit poorest people PuruMay reduce investment in agriculture by wealthyAfraid of losing landPolicy may be anti-agricultural form of urban bias

Land Reform in South Africahttp://www.thebigquestion.co.za/Default.aspx?tabid=743

Economic GrowthPrivate sector must grow to provide jobsGovernment projects dont create jobs efficientlyPer capita income in Taiwan:1960: $1,2001998: $12,000Per capita income in Democratic Republic of Congo:1960: $4891998: $197http://www.globaleye.org.uk/secondary_summer/oncamera/taiwan-factory.html

How to promote growthRecommendations of World Bank and IMF:High savings leading to increased capital stockGood macroeconomic policyHigh labor productivityEducationHealthAnti-povertyAdoption of new technologyMarket orientation

http://www.thenoelfoundation.org/pinternational.html

Good Macroeconomic PolicyObjectives:Low inflationEncourages savingsKeep central Bank out of political processMore confidence in savingsLow budget deficitsPrevents printing more money and inflationReduces borrowing by governmentsStable exchange ratesAttract foreign investorshttp://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/1874755.stmMcDonalds in China

Market OrientationPromote open and free trade reduce government distortion of supply and demandAssign and enforce property rightsTo increase ownershipMotivates productivityEliminate corruptionhttp://bara.arizona.edu/research/pro-ranching-mexico.htm

Agricultural DevelopmentPromote growth of the agricultural sectorIncreased productivityStimulates economic growthLow food prices allow low wages to be paid in factoriesbut workers live wellCan buy more non-food itemsStimulates employment

http://www.provost.uncc.edu/LatinoInitiative/Photos.htmMarket stall, Mexico

GlobalizationDefinition: increasing integration of countries in the world economyOpening bordersAdopting macroeconomic policies in order to get IMF loans Adopting market-oriented agricultural and industrial policiesIn order to get IMF loansReducing restriction on foreign investmentAdopting labor and environmental policies that will attract foreign investmenthttp://www.uwm.edu/Dept/CIE/Resources/globalization/images/globefull169.gif

http://www.foreignpolicy.com/wwwboard/g-index.php

Criticisms of GlobalizationPolicies encourage Low wagesPoor working conditionsPoor environmental qualityFiscal policies imposed by IMFReduce health programsReduce educationReduce poverty alleviation programsIMF policies are antidemocraticIMF can countermand decisions by democratic governmentsMultinational corporations benefitAt expense of ordinary peoplehttp://www.zazona.com/ShameH1B/JobDestructionHumor.htm

http://www.foreignpolicy.com/wwwboard/g-index.php

http://www.foreignpolicy.com/wwwboard/g-index.php

Joseph StiglitzNobel Prize in economics 2002Policies imposed by IMF dont take into account special circumstances of each countryPrivate sector solutions require infrastructure that may not be thereGlobalization policies need to be reformed to help poor countries growhttp://www.cigionline.ca/about/ibg.php?member=41