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Thread: Getting serious about poverty means understanding wealth

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    Getting serious about poverty means understanding wealth

    The following is true and explains the relationship between time preference and wealth.

    Getting serious about poverty means understanding wealth

    If Christians are serious about improving the lives of the poor,” says William R. Luckey in this week’s Acton Commentary, “we must be serious about understanding the sources of wealth creation.”

    If a person merely gathers food to survive, there is no way that his standard of living will increase. All his goods are used for current consumption. But if he possesses some goods that will be used to produce consumer goods for future consumption, he possesses capital. For example, if the food gatherer invents a type of plow, he will plant some of the grain he would have consumed to begin to grow his own grain, rather than stripping the land bare and moving on. The plow is a capital good. But how did he acquire this good? He had to spend time actually thinking about his invention and how it could be made and used. To do this, he had to refrain from consuming some of his current supply of grain and save it so as to feed himself during the invention-making period, where his time would be spent making and testing the plow. We call this savings. All increasing of production requires savings.
    Edmund Burke: "In vain you tell me that Artificial Government is good, but that I fall out only with the Abuse. The Thing! the Thing itself is the Abuse!"

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    Trumpster's Avatar Senior Member
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    It might be more effective if Mr. Luckey would give a more recent example, like what should people do today to stop the cycle of poverty? If he could send a letter to every poor person telling them the plow-story about saving to increase production, what impact would he expect that to have on poverty?

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    Quote Originally Posted by Trumpster View Post
    It might be more effective if Mr. Luckey would give a more recent example, like what should people do today to stop the cycle of poverty? If he could send a letter to every poor person telling them the plow-story about saving to increase production, what impact would he expect that to have on poverty?

    Examples are easy, I think, for a small amount of money, saved, buy a car and insurance and start a taxi service. Or open a barbershop, or beauty salon, or a tattoo shop, a small garage to fix cars, whatever. The problem is most of theose are restricted by government red tape from entring into such business.

    Savings might not be such a problem under a UBI plan, as suggested by Charles Murray and others, and being expeimented with in Africa, where you're guanteed a fixed income, enough security to save some, and not penalized for making more.
    Edmund Burke: "In vain you tell me that Artificial Government is good, but that I fall out only with the Abuse. The Thing! the Thing itself is the Abuse!"

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    Quote Originally Posted by Trumpster View Post
    It might be more effective if Mr. Luckey would give a more recent example, like what should people do today to stop the cycle of poverty? If he could send a letter to every poor person telling them the plow-story about saving to increase production, what impact would he expect that to have on poverty?
    Capping interest on credit at 10-12% would be a place to start. If people wouldn't lend if they couldn't get better interest than that, then that would help too.

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    Quote Originally Posted by Kacper View Post
    Capping interest on credit at 10-12% would be a place to start. If people wouldn't lend if they couldn't get better interest than that, then that would help too.
    I don't disagree but price fixing always tends to screw things up.
    Edmund Burke: "In vain you tell me that Artificial Government is good, but that I fall out only with the Abuse. The Thing! the Thing itself is the Abuse!"

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    Quote Originally Posted by Chris View Post
    I don't disagree but price fixing always tends to screw things up.
    You know, it isn't really price-fixing. In my state, 12% is the maximum interest private individuals can charge but a bank, financial institution, etc can charge you as much as you are willing to agree to pay. If it is illegal for me to loan you money at 15%, it sure as heck should be illegal for a check cashing place to loan you the same money at 50%

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    Quote Originally Posted by Kacper View Post
    You know, it isn't really price-fixing. In my state, 12% is the maximum interest private individuals can charge but a bank, financial institution, etc can charge you as much as you are willing to agree to pay. If it is illegal for me to loan you money at 15%, it sure as heck should be illegal for a check cashing place to loan you the same money at 50%
    I didn't say anything about legalities. I said price fixing screws things up. It can create shortages and it can create surpluses. It's what causes the normal business cycle to fluctuate so wildly. Keep the government out of it. If you want to charge low interest rates, that's fine, the banks, that's fine.
    Edmund Burke: "In vain you tell me that Artificial Government is good, but that I fall out only with the Abuse. The Thing! the Thing itself is the Abuse!"

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