Question

Respond to each question below in 4-6 sentences or more to receive a thumbs up.

• Some actions by the poor may appear to be counterproductive (e.g., smoking, gambling, crime). In what ways do you think institutions force these choices. What other factors should we consider in addressing these issues?
• Why do you think the poor are primarily engaged in self-employment? Would it help for them to shift into wage employment, and what policies might encourage them to do so?

Answer 1

Introduction: -

Income disparity or the difference in income between the rich and the poor is a big consideration for any government be it in the developing nations or the developed ones alike.

Over the years, countries have done enough progress to eliminate extreme poverty, and to increase access of people to modern facilities such as nutrition, healthcare, education etc. through the use of the taxation system and through active government investment for which funds may be collected from internal sources or through foreign aid.

We have key examples of countries such as India and China which have done tremendous work on the same and have been able to uplift a lot of people.

Further specific details to the case study are as follows.

Part A) Counterproductive Nature of the Poor: -

It is widely accepted that a lot of crime in countries which have a larger population of poor people is primarily because of the fact, that they do not have access to modern education, employment facilities and lack even basic access to facilities such as sanitation, nutrition etc. Therefore, they tend to move towards the path of crime, smoking, gambling etc.

For example, in countries such as Somalia, where the rate of international crime is the highest, the root cause of such activity is the failure of the administration to provide for its citizens to lead a respectable life for themselves.

Therefore, when we look at the poorest sections of the society and conclude that their acts are counterproductive in nature, we need to analyse the failure from the part of government institutions as well.

Government Bodies that are tasked with provided minimum wages such as employment exchanges, those that provide education to the vulnerable sections of the society such as government schools and colleges, healthcare sector and others all collectively need to take responsibility for elevating these sections of the society.

In countries where crime rates are high, or where people move towards areas such as gambling, smoking etc, the performance of these very institutions which are tasked with providing for the vulnerable sections of the society is often questionable.

Another economic consideration to give is the political status of the society and its trading partners. Countries such as North Korea have shut their economic boundaries and are not indulged in trade with any major country across the globe wherein volumes of trade remain extremely low.

Such hostility by the government also is a contributing factor aside from institutions which indeed have failed in North Korea and in many other countries where poor seem to be non-contributing towards the society at large.

Thus, we can conclude by saying that performance of critical institutions which provide healthcare, nutrition, employment etc to the poor is to be considered while evaluating the counterproductive nature of poor people. At the same time, the general health of the economy and its trade partners is also an equally important consideration as low demand in a country and low trade volumes often lead to conditions wherein people remain poor as they do not add value to an economy.

Part B)

When, we talk off the poor sections in any economy, we see that a majority of them are engaged in primary task such as agriculture and tend to remain self-employed. One of the major reasons for this is their lack of access to the financial sector which does not provide loans to people without a collateral. Further, with limited educational background, their access to the formal employment sector, also remains limited the resultant of this is that they do not get employed in the formal sector and their role in the economy is limited to primary tasks and self-employment only.

Indeed, if these people were part of the formal employment scheme which has minimum wages and maximum hours under strict laws in most countries, these people would be much better off and would be earning a stable income for themselves.

Major policies which would allow for people of the poorest sections to move over to a formal employment is to get them educated from a very young age which would allow them to acquire the required skills to seek formal employment.

Even those that wish to get employed in the formal sector can be provided minimum training through various programs which would then make them fit for employment schemes.

For example, strengthening the employment exchanges and allowing them to train people for work is an excellent way of managing the current pool of talent among the poorest sections of the society.

Further, the government can increase its participation in areas such as infrastructural and healthcare development, creation of roads, railways etc, all of which would help the most vulnerable sections of the society in seeking employment in these areas. Reservation of jobs in certain categories is also a means for upliftment of this very vulnerable section of the society.

Please feel free to ask your doubts in the comments section.