Furious Friday: How can a System reduce Poverty?

Welcome to Finance and Fury, the Furious Friday edition.

This is part 3 in the poverty miniseries, which is alongside the supply side economics flow on.

The first episode was supply and poverty.

The second episode was the big 5 factors of poverty.

Today we will put it all together to derive a system that can reduce overall poverty.

This system: will it be perfect?

• Just look at Utopia
• “misplaced faith in political utopias has led to ruin”
• All systems have flaws
• Having less freedom leads to more poverty
• Could technically lead to more poverty, if it’s by choice

The system has to be 2 parts:

1. What system works best to reduce the big 5 factors: reduce diseases, increase knowledge, reduce apathy, reduce authoritarianism and build resilience rather than dependence.
2. What provides individuals freedoms?

Disease:

1. Death from chronic disorders in the first world
2. Death by horrible diseases in the third world like respiratory infections, diarrheal diseases etc
3. The necessities: clean water, electricity, food, and education
4. Where do these factors come from? Why aren’t these a problem in Western countries?

The System:

• Corruption comes with any system
• Greater power can show more corruption
• But power is needed to provide a structure for secondary factors
• Money in politics can represent a form of corruption
• There is no sense of service working in institutions
• Any powerful system will punish you for speaking truth about their evils
• Lack of transparency within institutions, to remove this, politicians should forgo financial incentives
• The formal education of politicians and the real world experience of politicians are very slim
• Reducing the element of these factors helps to reduce poverty, by using a meritocracy

What does any system have the ability to create?

• The remaining 3 factors – dependency, apathy and authority
• The more power the government has, the worse off the population are
• The focus should be not to make the population reliant
• The battle between freedom and free stuff
• Welfare helps to a point, but after that point it keeps people in poverty
• The safety nets can either be voluntary or compulsory
• Most people don’t want to support people who want to remain in the safety nets
• These are not long term solutions
• The lack of knowledge is a responsibility of ours
• 12 years of school is not enough, Focus on practical and applicable skills. A libertarian view on education. Learn the basics
• The best and brightest from these suffering populations leave, leaving no one to help fix local issues
• Community systems that can help build self-reliance, dialectic systems help communities

Recap of the System:

• Allows for the provision of infrastructure, concentrated responsibility to provide this
• Corruption needs to be low to reduce poverty
• Lack of decision-making ability
• Provide jobs and the ability to get jobs
• Greater the economic freedom, the lower unemployment is and the lower tax is
• More freedom means less inflation and the greater price purchasing parity
• Countries at the bottom have high government expenditure to GDP %

The last 3 factors are solved by individual and Economic freedoms

• Small percentage of people think that poverty has gotten better, the majority think poverty has gotten worse
• Stop using a relative poverty measure, only 4% of Australians are in absolute poverty. It’s not extreme poverty.

Which political party seems to be on the right track?

• Listen to the podcast to find out!
• Government spending is about $16,000 per person in this country
• Public earnings are about $1,775 pw whereas private earnings at about $1,590 pw.
• The 74 senators have interesting life experience before politics

To summarise the episode:

• More economic and individual freedom, the lower the poverty rates

Next week:

Back on track next week with the pitfalls of supply-side economics. There are 2 major faults.

If you liked the episode let us know by leaving a review, or get in touch with us at the contact page here.