How Does the Free Market Help the Poor?

[AMack]

Just trying to become better versed in the free market and how it helps the poor. I remember how RP talked about the inflation tax, and how it hurts the poor. I understand that pretty well. But, I'm kinda rough on some of the other stuff. Please educate me, specifically on how less government intervention helps the poor. The democrats seem to have a monopoly on the poor because they essentially promise to give the poor money that others earned, but I know better. Please educate me.

[ShaneC]

I think, and I'm not well versed in this enough to be sure, that the basic gist is this:

1. The lowest paid are whom drive the prices of basic goods and services.
2. The more money the lowest incomes make, the more everything else costs.

So, essentially, if everyone is making a minimum of $1200 per month, you can factor the average cost of living will be at least $1200 per month in the lowest cost areas.

Therefore, the low incomes can never get ahead.

The middle class - as long as we make more than the lower classes, we're considered to be "doing ok". So whilst minimum wage may go up from $4.75 to $5.75, those of us making $9.75 still make $9.75.

Though that $5.75 still buys the same things that $4.75 did yesterday (or last week, last month, etc).

Eh...I hope the helps. Thats the best I can explain it anyway.

[Shink]

Hey, I'm going to copy/paste answers I asked on facebook for you.:)

Justin Lee Hicks (Rapid City, SD) replied to your post 2 minutes ago
I'm not registered on that board(and am to lazy to do so) so I'll reply here.

In simplest terms the free market does nothing to help the poor. What it does do is give the poor the chance and incentive to help themselves more then any other system. Socialism can promise no one being poor but it results in everyone being poor.

The free market indirectly helps poor people by lowering the price of goods when companies compete.
It helps poor people by allowing them to have a job at any point when they can prove that their output is worth anything, controls like minimum wage mean that you aren't going to get a job unless you can prove to your employer you can output $6 an hour worth of manpower which locks out some people.
It helps poor people by taxing them little so that what they make comes home to them for them to spend as they wish instead of going to corporate welfare.
The free market also promotes private charity which keeps charity personal and effective. I believe private charity allows someone to work with human beings to develop job talents and be answerable to the donors of the money instead of the impersonal check from the government that goes away when you actually get a job.

I might think of more later, feel free to copy paste this over there.
************************************************** ************
Jimmy Armstrong (Rutgers) replied to your post 2 minutes ago
The better question is how does the welfare state help the poor? It does not. The only way to have a welfare state is to inflate the currency, which is really what hurts the poor most horribly. The free market allows truly compassionate people to come to the aid of the poor with no regulations, and most of all, no compulsion.

[d'anconia]

In a free market it is assumed that we'd have more money due to less taxes and thus people would have more money available to give to private (non-profit) organizations who could better deal with the issue of poverty.

The current system we have has a few fatal flaws:
a.) It does not require the consent of the person who has their taxes taken away
b.) The government branches that are designated to fight poverty really do not want to do anything but increase the size of their branch. Eradication of poverty would mean unemployment for most within the branch and thus they have 0 incentive to get rid of poverty.
c.) History has shown that welfare and other social programs have really been unsuccessful in eradicating poverty. There is no incentive to be effective and we're basically poured in hundreds of billions for just about no real results.
d.) Private organizations would have to compete in order to get voluntary charity donations and thus they would have to show effectiveness if they were to get a large share of the market and/or gain on their competitors. Competition breeds efficiency.
e.) The current system really just gives the poor incentive to stay poor. It subsidizes it whereas private competing organizations would have to focus on getting the poor back up on their feet in order to show decent results.

Enjoy.

[Kregener]

Less government benefits EVERYBODY, including those with less income. Here are a couple of ways:

A free market, free from government rules, regulations, impediments, taxation and overall interference, immediately lowers the cost of doing business, which in turn, lowers the cost of goods and services. This benefits everybody, including those with the least amount of income. As one example, among thousands, is that currently the Fud.gov adds about $5,000 to the cost of a new car and .78 cents to the price of a gallon of gas.

Since the market determines the playing field, the vendor with the lowest cost and the highest quality obtains the market share of their particular product. This in turn impels competitors to lower their cost and raise their quality. This benefits everybody, including those with the least amount of income.

Of course, as long as the government continues the Great Ponzi Scheme of fiat money, print and spend, print and spend, print and spend, the free market can only do so much. We are NEVER going to "free market" our way out of the MOUNTAIN of unfunded and unfundable future liabilities Uncle Sugar has piled upon us.

[ghemminger]

free markets create economic miracles and plenty o jobs for the poor.....site history....hong kong....singapore....economic free zones create wealth....

[Meistro1]

Less barriers to entry = more companies competing for workers. Lower taxes = more money in everyone's pockets = companies can higher more workers. No inflation = no incentive to waste instead of save = people have more money saved up and aren't hurt so much by losing their jobs.

But most importantly :

With less government beaurocrats living off the hard work of the rest of us, there will be ALOT more to go around.

[JPFromTally]

Well let me ask you this: Who is the most EFFICIENT at helping the working poor, the government or Wal-Mart?

I would say Wal-Mart. As a poor person, I can go into Wal-Mart and purchase quality items at low prices 24 hours a day! Now did the government pass laws to make Wal-Mart do this? Absolutely not. Quite the opposite, government increases bureaucratic burdens on Wal-Mart that force it to raise prices. Wal-Mart does this because of competition (i.e. free market) for a broad segement of the population (the working poor).

Now let's say some government do-gooders think that the basic neccesities are STILL to expensive at Wal-Mart for poor people and they say that those things should be free.

They open up a store called the Bleeding Heart Government Free Food Store.

Do you think:

This store will be open 24 hours a day?
That there will be 20 different kinds of bread and peanut butter brands to choose from?
That the taxpayer who is forced to pay for these items are going to be charged $1.25 for a loaf bread or $25 to cover the cost of all the bureaucracy?
That there will be no application process and minimum salary amounts to qualify to shop in this store?

Now after 1 year of being open the government do-gooders realize that the poor aren't shopping at their store and they can't understand why. They realize that it's the greedy corporation that's taking advantage of these poor people by making them pay for stuff that should be free. What do you think will happen next?

[Shink]

Kevin Frost (Lehigh) replied to your post 12 minutes ago
quickly...for many reasons.

in a free market, every transaction is mutually beneficial, i.e. free of coercion. people trade the fruits of their labor for the fruits of other's labor. because people have differing skills, and differing tastes and preferences, they divide their labor, concentrating on what they do best, and trade the excess of their labor (beyond what they consume themselves) for the results of other's labor. lets say there's a doctor and a secretary, and the doctor can type 100 words a minute, and the secretary only 50. without trade, the doctor would type on his own, and type more efficiently. however, his skills as a doctor are more valuable than his typing skills, so he uses a small part of his gains as a doctor to hire the secretary, even though the secretary, in absolute terms is less skilled. this is, simplified, the law of comparative advantage. in this example, it provides the less skilled person (for this poster, probably a poor person), with employment. He or she trades their skill as a typist to the doctor, and in return gets money. the secretary then uses this money to buy goods and services that fit his.her tastes and preferences. I know this seems really simple, but here's the key... this exercise in comparative advantage, in a free market system, is happening on such a grand scale, that it creates many more goods and services for people to consume. production in a free market happens on a scale and in a scope many times greater than it would in isolation. because there is not coercion in a free market transaction, the consumption of these goods improves their lives.

its really that simple... in a free market, the quality of a person's life is simply better than it would be in isolation, or in a coercive system.

However, i bet this person is actually concerned about how "free market" solutions to "problems" in today's society would affect the poor. That, I'm sorry to say, is a much more complicated sell. I would first have to explain, completely, the neoclassical model, and then contrast that with the US economy, as well as the government's role in said economy. yadda yadda...
************************************************** *****
Post #7
Kevin Frost (Lehigh) replied to Kevin's post 4 minutes ago
I have a friend who thinks we need to live in sustainable communities...farm our own food, build our own houses, and on...

Without a market mechanism, what would a "sustainable community" in the middle of arizona do without any trees for wood? how would they generate heat,or build houses? What if there was no iron ore, or titanium, or any other metal under their earth, how would they make steel products? Clearly, one would rather live in a house made out of wood, and use products made out of steel. How would they get around? The items necessary for building a car or a plane are not likely to be found in the same 15 mile radius. What about simple, everyday items, like a pencil? Milton Friedman starts out "Free to Choose" by going through an intellectual exercise that suggests that no one, in the world, knows how to make a pencil. The sustainable community would have to grow its own trees, farm its own rubber, make its own steel for the eraser casing, and use its own graphite, and then they would have to know how to put that all together to make a pencil! These things come about because of trade, and trade is governed by the law of comparative advantage.

[ShaneC]

Well let me ask you this: Who is the most EFFICIENT at helping the working poor, the government or Wal-Mart?

I would say Wal-Mart. As a poor person, I can go into Wal-Mart and purchase quality items at low prices 24 hours a day! Now did the government pass laws to make Wal-Mart do this? Absolutely not. Quite the opposite, government increases bureaucratic burdens on Wal-Mart that force it to raise prices. Wal-Mart does this because of competition (i.e. free market) for a broad segement of the population (the working poor).

Now let's say some government do-gooders think that the basic neccesities are STILL to expensive at Wal-Mart for poor people and they say that those things should be free.

They open up a store called the Bleeding Heart Government Free Food Store.

Do you think:

This store will be open 24 hours a day?
That there will be 20 different kinds of bread and peanut butter brands to choose from?
That the taxpayer who is forced to pay for these items are going to be charged $1.25 for a loaf bread or $25 to cover the cost of all the bureaucracy?
That there will be no application process and minimum salary amounts to qualify to shop in this store?

Now after 1 year of being open the government do-gooders realize that the poor aren't shopping at their store and they can't understand why. They realize that it's the greedy corporation that's taking advantage of these poor people by making them pay for stuff that should be free. What do you think will happen next?

PERFECT example.

[thread drift]

Personally, I hate Wal-Mart with nearly every fiber of my being (my wife will vouch for this) and refuse to shop there. I'll hit up Sears, Target, K-Mart, etc just to avoid Wal-Mart, but alas, I have the *CHOICE*.

Anyway.........

Given a financially sound choice, I'd love to have more "Mom & Pop" type stores around, but that doesn't seem to be an option anymore.

[/end thread drift]

[rpf2008]

The poor help themselves AND markets are in the business of making money, which includes making goods and services for low income consumers.

[ZackM]

You've already got some great answers, but i'll throw another out there for you.

I would watch this John Stossel video regarding our public education system.

http://www.youtube.com/watch?v=pfRUMmTs0ZA

Specifically, how it compares our system to Belgium's. It will give you some great examples to cite comparing two completely different approaches to a common problem.

Belgium doesn't appear to have a "true" free market, but it's alot closer than our current system and produces much better results. If you can convince someone that competition improves even public education, you can easily apply the logical conclusions to most other things government screws up.

In short, Belgium attaches a $ figure to each student (so it is still publically funded). However, the parents and student have total choice about where they go to school. The schools are only funded for the students they have enrolled. Instead of being accountable to a state standardized test or a federal department, the accountability is direct to the parents and student.

An incompetant administrator simply will not last under these conditions. Unhappy parents means no students which means no public money.

The schools adapt to the market, meeting the demands and needs of their customers. If they don't, they go out of business. If a good restaurant opens up right next to a crummy one, it might put the crummy one out of business. The same logic applies to the school system.

And this is all accomplished spending less per child than we do here in the states, yet we are constantly told that we need to spend more money on education. After watching this video, you'll understand that money isn't the problem.

It's a great example of how moving towards a free market benefits everyone. In this case, even the poorest students get the same quality of education that "private" schools offer here in the states.

-

[nexalacer]

The example of Wal-Mart does show the low-cost benefits to poor people, but it brings up another question in my mind.

If you watch the movie "Wal-Mart: The High Cost of Low Price", you can see some of the business practices that they use that has made me vow to never shop there. But the main thing that we should consider when using Wal-Mart as great example of free market is that they have no qualms about using force against their suppliers to guarantee those low prices.

If you are a believer in true liberty, then you must logically be opposed to the use of force in business. Not to say I want the government regulating wal-mart, because I understand that the hurdles required to keep the other mega-stores in operation or to open competing mega-stores are actually created by government, however, I don't think we should use Wal-Mart as an example of the beauty of the free-market, as it can tend to push away people who feel Wal-mart's practices are detrimental to the quality of life of all people involved with that company.

Again, I'm not saying I'm against the free market in the slightest, because if we had a free-market Wal-Mart would never have come into existence as it is today. I AM saying that we should not praise a non-free-market based business as an example of the beauty of the free-market because you're left with a pretty ugly picture if you look beneath the surface.