Welcome to Finance and Fury, the Furious Friday edition.

This week is a flow on from last week’s episode talking about the basics of supply-side economics. But, it’s going to be applied to a question we got from Nick.

What is a solution for society that would eliminate all the poverty that exists?

This will be broken up into 2 episodes in total. The second part being which political party that seems to be on the right track to achieving this.

Poverty:

  • It’s an extremely deep topic to discuss
  • We must look at the statistics and the root causes
  • Humanity was born into poverty, so how did humanity get out of it?
  • How long ago was everyone in extreme poverty?
  • What is the quality of life? What are the standards of living?
  • How is extreme poverty defined?
  • What does history tell us about how many people in extreme poverty changes over time?

 

The poverty line:

  • We don’t really have extreme poverty in Australia
  • What about people who receive a pension or government assistance?
  • What is the Australian relative poverty rate? This sits at about 26% of the Australia population before tax and transfers, or half the median income level.
  • It’s the median, then that cut in half. That is the relative poverty rate for any group of people.
  • It is about $22,500 a year in Australia for a single adult, after taxes and transfers.
  • After redistributions, it reduces to be closer to between 10% and 14% that are in relative poverty.
  • See how easy it is to misrepresent these statistics?
  • If you have a society where some people have more than others, then there will always be people in relative poverty
  • If you make everyone poor, then the relative poverty disappears
  • Let’s move on to the more absolute measure of poverty

 

Absolute poverty:

  • Currently, around 4% of people in Australia cannot afford basic goods, in the deep exclusion zone
  • This group gets smaller over time
  • People don’t stay in the deep exclusion zone, its mobile, not a lot of people stay in it
  • There are only some factors that limit people getting out of the deep exclusion zone
  • The trend of absolute poverty over time has started to decline
  • The world population grows, but the world’s absolute poverty population shrinks

 

What helps reduce absolute poverty?

  • Exposing people to free markets, increased purchasing power parity
  • Economic reform, giving people property rights
  • Employment opportunity and economic freedom
  • Stop planning the economy from a government and let people figure it out with free markets
  • Economic freedom helps as it reduces the costs of goods and services
  • The more economic freedom a population has, the more wealth the population has
  • Check out the mini-series on socialism where I address classical liberalism
  • Basics of supply-side economics
  • People on minimum wage in a high GDP per capita environment are better off than people in a low GDP per capita environment
  • It is important to focus on the standard of living and better products and services available to consume
  • This system is better than demand-side economics, which is less economic freedom.

 

The best working system:

  • One that supplies a great standard of living
  • Uses supply-side economics
  • Allows individuals to accumulate wealth
  • The countries with the richest individuals have the lowest levels of poverty
  • Inequality is not the enemy
  • Reflect on your standard of living, income distribution ends poverty but sacrifices everyone’s wealth
  • The Gini coefficient measures income equality
  • The Gini coefficient is increasing, but so is the overall wealth
  • Just because things aren’t equal, doesn’t mean they’re not fair

An important problem to tackle is increasing everyone’s ability to have the opportunity to earn and consume cheaply.

This is an extremely complicated issue. I believe that the solution lies in supply-side economics. We need the government to help though, so in the next episode, I will run through how government systems and cultures need to let people escape poverty.

Thanks for listening today, it was quite a long episode.

If you would like to get into contact with us you can here. And if you liked the episode, leave us a review.  

Have a good day

How to prepare for buying a home, paying off a mortgage, starting a family or funding your kid’s education costs?

Welcome to Finance and Fury, The Say What Wednesday Edition special series – running through the catalogue of questions and concerns The series is broken down into three stages – 50 years or so timeline – last week was basics and the first stage...

Starting an online business or franchise

Welcome to Finance and Fury, the Say What Wednesday edition John’s Question: I thought a useful topic could be about pros and cons off starting a business and starting your own business vs buying a franchise system etc. and using a business to achieve financial...

Say What Wednesday: Labor’s policy changes – Franking credits, negative gearing, super, and CGT

Welcome to Finance & Fury, the ‘Say What Wednesday’ edition where every week we answer questions from you guys.   Today’s question is from John;   “Thanks for the podcast and the content you provide. I thought a useful podcast topic could be the...

Beggar thy neighbour – How devaluation of currency can make or break economic growth domestically, or for trading partners

Welcome to Finance and Fury, the Say What Wednesday edition  Today's question comes from Jessica. Jessica – Hey Louis, You mentioned something about a Yuan devaluation in the Tech Share episode. I’m just wondering what this is and why a country would do this? Thanks...

Agenda 2030 – A global conspiracy theory, or something to actually worry about?

Welcome to Finance and Fury, The furious Friday edition Intro ep to a new FF series – probably going to be the biggest Today – episode to give the bird's eye view of the overall topic - massive topic - ranges from education, energy, transportation, medicine prices,...

Buying Property inside an SMSF: Tips and traps, what works and what doesn’t

Say What Wednesday Buying Property inside an SMSF: Tips and traps, what works and what doesn't Welcome to Finance and Fury, 'Say What Wednesdays' where each week we answer your questions. This week's question is from Sandeep: “Hi, Can you please talk about how to...

Furious Friday: Do you work full time? Are new tax cuts only going to the “top end of town”? Is this “selling Queenslanders out”

Furious Friday Do you work full time? Are new tax cuts only going to the “top end of town"? Is this "selling Queenslanders out"? Welcome to Furious Friday… The Tax Bill has Passed…Yay! Now, let’s clear up a little misconception floating around, we’re going to talk...

How to use your home for Investments

Welcome to Finance and Fury Today we have Jayden here, and we will be talking about using your home for as an investment and as a forced savings account. You can start turning the bad debt into good debt. Through paying down the loan quicker, and then redrawing on the...

Building a strategy to fit your goals

Welcome to Finance and Fury Today we are continuing from last week, and going through strategies to fit your goals. Some bad news… The workbook will be released next week because there are a few pieces missing, as it doesn’t achieve what I wanted it to. So as a DIY...

We are entering new economic and investment territory – An introduction to QE, what does it look like and what does it mean for investments?

Welcome to Finance and Fury We live through transformational times – new environment for finance and investing   We are fast reaching the limits of monetary printing - markets are still trying to work out how to price that in Past model – print money Get GDP growth...

Pin It on Pinterest

Share This