Many people still believe there is hope for complete poverty eradication, but there is still reason to why it exists. According to Alesina and Perotti (1996), when the hierarchical structure of the financial world is viewed, an executive officer makes a lot compared to ordinary workers. This theory does not need genius understanding as it tries to show the difficulty in ending poverty. Some people will be in support of equal pay, but a majority will resist this move, as it will threaten the existence of economic hierarchy. The rich would do whatever it takes to get richer as the poor languish in poverty. Therefore, poverty in the form in which it currently exists in is a result of predicament economic structure. Many institutions around the globe will try to maximize their profit by minimizing labor, a move that will see many people offloaded their duties (Alesina & Peroti, 1996). This move makes people subject to their master hence increasing their chances of ending up poor. The reasons as to why there always will be poverty are as follows:
Firstly, when an economy grows, a national income increase (Fields 1980). This does not necessarily mean that reduce relative poverty and increase income inequality. There are two types of poverty in the world today; relative poverty and absolute poverty. Relative poverty is when one income is a certain percentage of a specific income. Therefore, a change in economic growth, will to some extent influence the pattern of relative poverty. It may, however, fail to reduce relative poverty since it (relative poverty) depends on the income distribution of the growth. Absolute poverty, on the other hand, is an income maintained below a certain level necessary for the accomplishment of maintenance of standard living (Fields 1980). In this, economic growth can reduce poverty as long as the lowest earners could sustain the living standards of a certain country.
Delegate your assignment to our experts and they will do the rest.
Secondly, governments’ benefits such as pensions and allowances are increased according to a person’s average wage as well (Medcalffe, 2017). There is no point at which the lowest earner in an organization will get more allowances or even equal allowances to the highest earning individual, or a person as a senior rank. As much as there will be unsteady economic growth, poverty will never end. Economic growth creates job opportunities that reduce levels of unemployment. Lack of employment is the biggest cause of relative poverty. Still, through employment, minimum wages ought to be increased at a steady pace with average earning so as to end relative poverty.
Finally, taxes imposed on workers are not progressive in many states (Medcalffe, 2017). Progressive taxes that encompasses higher rates of income tax would encourage higher deductions from high income earning people and be used for social spending. The health care and education benefits that would arise from this will promote equality. Many countries do not do this, therefore, very hard to end poverty.
In conclusion, economic growth may also fail to reduce poverty if it still provides the best opportunities for highly qualified and experienced persons compared to non-experienced, if it still creates an increased number of part-time jobs whose income keeps lagging behind, index link government benefits to make incomes fall behind average earnings. Support of interest-bearing wealth by many states is also a reason why it is very difficult to end poverty. This appears as a wealth-creating scheme that benefits the rich and makes the poor poorer.
References
Alesina, A., & Perotti, R. (1996). Income distribution, political instability, and investment. European economic review , 40 (6), 1203-1228.
Fields, G. S. (1980). Poverty, inequality, and development . CUP Archive.
Medcalfe, S. (2017). Economic Well-Being in US Metropolitan Statistical Areas. Social Indicators Research , 1-21.
