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Why Do People Stay Poor? [pdf]

sticerd.lse.ac.uk

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Re: Why Do People Stay Poor? [pdf]

#51

Post by jcun4128 »

nicbou wrote: post #39
asdff wrote: post #28

Earlier quoted context omitted.

This sort of perspective is very important, especially here on HN where I see plenty of ignorance on this topic. When you work these jobs, often the local cost of living is pinned to these minimum wages, where you stagnate and are unable to save. How can you possible afford to move when your rent increases? You have no savings to rent a vehicle to move your things, nothing to put down up front for a new apartment, an…

People vastly underestimate how hard it is to do anything without capital/savings. If you are one missed paycheque from going hungry, you can't afford any risks. No going back to school, no going freelance, no interviewing, no investing in anything. You can't afford the means to make money, whether it's a car, a computer or nice clothes. You can't afford them breaking down, but you also can't afford maintaining them.…

Yeah I was definitely fortunate to have a friend/ability to buy time to learn by becoming "homeless"/living on a couch and as mentioned no kids.

Re: Why Do People Stay Poor? [pdf]

#53

Post by carlob »

collyw wrote: post #21
carlob wrote: post #12

Earlier quoted context omitted.

I don't want to defend capitalism, but I'd say that capitalism needing the exploitation of the weak is not even entirely true. There is strong evidence that overall economic growth peaked at times (or places) where income taxes were higher and the distribution of wealth and income was more equitable. Of course there is the whole matter of causation/correlation, but this at least shows that a capitalist society can an…

What's the evidence you are referring to? I was listening to Thomas Sowell recently and he made some comments that sounded quite the opposite of what you say - that lowering taxes resulted in increased revenue. It's clearly different times and places that you / he are referring to, I am interested in learning a bit more.

For example look at Plots 11.12 to 11.15 here[0], which show an inverse correlation between growth and inequality and a direct correlation between tax rates and inequality.

There are some pretty simple arguments that would justify this: one individual with 20 times the average income is going to spend less than 20 individuals with the average income.

Note that I'm not arguing for some Soviet-level of extreme equality, I'm just saying that the US in the 60s or Sweden from WW2 onward are much healthier economies than Europe during the Belle Epoque or the US nowadays.

[0] http://piketty.pse.ens.fr/files/Piketty2019GraphiquesTableau...

Re: Why Do People Stay Poor? [pdf]

#54

Post by luckylion »

stoilt wrote: post #36
Findeton wrote: post #14

Earlier quoted context omitted.

In the times of cavemen everyone was poor, was capitalism the root cause?

I haven't read the linked paper so I don't know how they'd define poor in it, but in my opinion in times of cavemen everyone was free to catch any prey to feed their families, everyone was free to pick any fruits from any trees and bushes, everyone was free to move in to any caves on any land. I'd say they had everything they needed. Nowadays I wouldn't call that poor as masses of people working several shifts to be…

Good luck moving into your neighbors' cave in the stone age, or picking the apples from the tree they consider their own.

You don't think that today's poor are better off than stone age humans?

Re: Why Do People Stay Poor? [pdf]

#55

Post by carlob »

atq2119 wrote: post #29
carlob wrote: post #12

Earlier quoted context omitted.

I don't want to defend capitalism, but I'd say that capitalism needing the exploitation of the weak is not even entirely true. There is strong evidence that overall economic growth peaked at times (or places) where income taxes were higher and the distribution of wealth and income was more equitable. Of course there is the whole matter of causation/correlation, but this at least shows that a capitalist society can an…

I agree with your general assessment, but I'd disagree with your conclusion about capitalism. The defining characteristic of capitalism is the private ownership of the means of production. As long as that ownership isn't equally distributed, that's exploitative by definition, because profits go to owners "for free" -- the owners don't have to work for those profits. This isn't really the case if ownership is equally…

Exactly, my conclusion would be that totally unfettered capitalism tends to collapse either because of catastrophic economic crises, or war or revolution. As such even capitalism itself doesn't benefit from the extreme exploitation of the weak.

Re: Why Do People Stay Poor? [pdf]

#56

Post by scarygliders »

atq2119 wrote: post #29
carlob wrote: post #12

Earlier quoted context omitted.

I don't want to defend capitalism, but I'd say that capitalism needing the exploitation of the weak is not even entirely true. There is strong evidence that overall economic growth peaked at times (or places) where income taxes were higher and the distribution of wealth and income was more equitable. Of course there is the whole matter of causation/correlation, but this at least shows that a capitalist society can an…

I agree with your general assessment, but I'd disagree with your conclusion about capitalism. The defining characteristic of capitalism is the private ownership of the means of production. As long as that ownership isn't equally distributed, that's exploitative by definition, because profits go to owners "for free" -- the owners don't have to work for those profits. This isn't really the case if ownership is equally…

I disagree with your reasoning.

It appears to assume that the company or factory concerned has always existed.

There must have been some point at which said company did not exist at first, then came into being.

The person or people who started that company were likely to have begun it by;

- performing any and all research required into starting the company

- acquiring the premises (or starting from home/garage)

- doing the work themselves

- at the same time, managing the company; running the finances, sales, gaining new customers/contacts etc.

If the company thrived, they then considered additional workforce. Perhaps they replaced themselves with these new employees to take on a more managerial position. So now you have a person or people who are concentrating on the managerial/sales/contacting/financing side. And now the company has additional employees.

The company has provided employment to more than just the person or people who initially started that company.

I do not agree that is "exploitative". Nor do I agree that the profits are going to the company owners "for free" - the owners are still performing work in the company. It's only the nature of that work (i.e. the tasks which need to be performed in order to keep that company going) that are different.

Re: Why Do People Stay Poor? [pdf]

#57

Post by djrobstep »

Kiro wrote: post #48
TrackerFF wrote: post #46

This is something I enjoy about our jobs up in Scandinavia - the salaries are very compressed around the mean. Engineers, Lawyers, and other similar professions tend to earn 2x-3x of what the absolute minimum wage jobs earn. That's quite the difference compared to other countries, where Engineers can earn 5x-20x. People here are still motivated to seek higher education and better paid jobs, even though they could liv…

I agree but considering the minimum wage is 0 I don't understand how you came up with the 2x-3x number.

Nordic countries have minimum wages defined by collective bargaining agreements rather than the law - because unionization is so strong and the agreed minimums are relatively good, they don't really need national legal ones.

Re: Why Do People Stay Poor? [pdf]

#58

Post by La1n »

oblio wrote: post #23
La1n wrote: post #19

Earlier quoted context omitted.

>And since the natural state of humanity is poverty (after all we all started as hunter-gatherers), breaking out of it on your own is extraordinary. The natural state was sharing resources and taking care of a small group of people. Not working for a boss.

What does that have to do with anything I'm saying?

I don't agree humanities natural state was poverty. Yes, they were poor compared to now, but resources were shared and no one was "breaking out on their own". If you had a good hunt this was shared with the community, unlike the world we live in now were wealth is hoarded by a small few, so your comparison makes little sense.

Re: Why Do People Stay Poor? [pdf]

#59

Post by luckylion »

claudiawerner wrote: post #49
luckylion wrote: post #43

Earlier quoted context omitted.

> I can easily imagine a situation (I.e. a functioning society) in which poverty is not the default. You're imagining a society that has overcome the default state and maintains their progress. They haven't changed the default. A machine's default state isn't being powered, but if you power up a machine and keep feeding it power and maintain it well, you can rely on it being powered. Once you stop maintaining it, or…

>You're imagining a society that has overcome the default state and maintains their progress. They haven't changed the default. They have changed the default from the perspective of an individual in that society, or if the society is large enough to encompass the majority of people, they have changed the default even more. The default state in the abstract sense is not only poverty, but the struggle against a state o…

The default mode is what happens when you stop interfering. What happens when a society stops doing anything, does it remain in it's current state? Then that is the default state and they have truly altered it. But it doesn't, of course.

Any individual may perceive it to be the default because they've never experienced anything else, but it would be foolish to believe it to be the actual default. History has taught us over and over again that it's not, that civilization may crumble and advances can be lost. Like somebody relying on their car always working because "it never died on me before" and not maintaining it well, they will eventually find that suddenly it does.

> What is "poverty is the default" supposed to be telling us?

I believe it's an important fact, because it changes the perspective. If wealth was the default, we'd just need to take care not to do some certain things that would change it, and had it happened, we'd just need to stop doing those things for it to automatically return to the default state. If poverty is the default, it's the opposite: you need to do something to end it, and you need to keep doing it.

Re: Why Do People Stay Poor? [pdf]

#60

Post by TrackerFF »

Kiro wrote: post #48
TrackerFF wrote: post #46

This is something I enjoy about our jobs up in Scandinavia - the salaries are very compressed around the mean. Engineers, Lawyers, and other similar professions tend to earn 2x-3x of what the absolute minimum wage jobs earn. That's quite the difference compared to other countries, where Engineers can earn 5x-20x. People here are still motivated to seek higher education and better paid jobs, even though they could liv…

I agree but considering the minimum wage is 0 I don't understand how you came up with the 2x-3x number.

Yes, we - at least in Norway - don't have any official minimum wage, but a good rule of thumb is that the majority of unskilles non-industrial jobs start around 150 NOK / hr. +/- 15 NOK. Or annually around 275k-345k NOK

In USD, that around $16.5 +/- $1.5. $30k - $39k year.

The vast majority of professional jobs which require a BS or MS start between 450k-600k / $50k-$67k, and will by end of career be around 600k - 1MM / $50k - $110k.

But keep in mind, there are several factors at play:

- private pays more that public jobs - industry salaries differs wildly - location plays a big role - lots of outlier jobs pay much more than the above - The numbers above are based on current USD/NOK rates, which is very weak for us Norwegians. It's right now around 9, but has been down around 5 during the good years. So one needs to look at salaries as a relative thing.

Edit: But we DO have union wages, which effectively work as minimum wages for many professions. But alas, there are lots of jobs with no unions.

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