Lecture 7: Poverty Theories- Structural

Question 1

Underlying Assumptions

Answer 1

Structural forces drive poverty and inequality; rather than individual factors

• Not about personal/group characteristics
• It’s about structural factors

Market incomes are unequal; this inequality should be tempered by government provision of core goods

• Market income: what your labor yields in a labor market. We don’t all make the same
• Tamed by gov’t provision; because people have basic needs

Poverty and inequality are problematic
- Negative societal outcomes- if they didn’t, why would we care?

Question 2

Market income

Answer 2

The market delivers unequal income within and across countries

The difference between market income poverty rate and disposable poverty rate is what a country decides to do in terms of
- State provided benefits (pension, healthcare, childcare, etc.) that defray or cover these costs for citizens; Government action via programs and tax transfers

Question 3

Readings

Answer 3

Russell

• Look at the very rationale of capitalism; unpack Marx and Durkheim
• Laissez-faire capitalism
• Limits of capitalism (quote): (what do these mean?) “What counts is that the primary goal of capitalism production is to produce commodities that are exchangeable at a profit, that is, have exchange value. Therein lies the rub and flaw in the system, according to Marx; the primary goal of capitalists is to produce commodities for which they can reap profits rather than to produce goods that are useful in society..Marx chose not to exploit the conflict between use and exchange value…but it’s precisely this contradiction that highlights the limitations of the system and has the potential for indicating where reforms, if not revolutionary changes, need to be made. Reforms, at the least, are needed to the extent that the system either does not produce needed goods and services or produces harmful goods and services”…“If there is a contradiction between production for usefulness and production for profit, there is by implication also a contradiction between distribution of goods according to need and unregulated market distribution of commodified goods according to the purchasing abilities of consumers… where this analysis becomes directly relevant to contemporary social policy is that distribution according to purchasing power- or, in more technical economic terms, effective demand rather than need- results in excluding poorer parts of populations from needed goods and services, including basic essentials such as food, housing and medical care”
• Capitalism as “Frankenstein”

Question 4

Stanford Center for Poverty and Inequality (link)

Answer 4

Context: How we deliver basic core goods.

• Used to deliver through (to) the workplace
• Americans at risk (“market risk”), families are less secure
• People have differential risk to basic goods
• Dynamic changes and family incomes over time

Argument

• The nature of what firms provide has changed -> more economic insecurity throughout the day-to-day
• Affordable Care Act (expands coverage in the context of what we already have. This is not universal healthcare); aka Obamacare; built on what we had; did not fundamentally alter how we do things

Question 5

Defined benefit

Answer 5

Retirees receive guaranteed benefits, usually based on number of years employed, income level
- Our social security benefits are a defined benefit

Pay-as-you-go- current workers pay for current retirees in a cross-generational compact
- Demographic events (our baby boom) necessitate system adjustments; Adjustment (depends on each cohort): Less workers to support each retiree

Societal impacts: Encourages a collective consciousness- we workers pay for you now and future workers will pay for us
- Cross-generational

Single purpose financing
- Simple to administer

Purpose is a collective retirement system, not an individual account though transfers to spouses/children are possible in our system
- If all beneficiaries die- $$ are returned to the system

Purpose is a collective retirement system, not an individual account though transfers to spouses/children are possible in our system

Since benefits are guaranteed, in our case, backed by the full-faith of the US government, beneficiaries do not take on market risk.

Social insurance model so risk is spread across each generation – some will have long lives and some will have short lives and the less healthy, therefore, will subsidize the well. This is part of how the system works to spread risk across a generation.

Question 6

Structural economic analysis (link)

Answer 6

Americans are assuming more risk -> general sense of panic

Income equality