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Ending Poverty

Poverty cannot be eliminated or even significantly reduced by conventional means. Charity indicates a good heart in the giver but it also betrays a lack of technical know how regarding the elimination of poverty. People cannot be cured by giving them medicine if they remain in the environment that causes the sickness. So to it is with poverty. The cure for poverty requires moving the poor from out of the conditions that create poverty.

The present solutions are so ineffective that poverty gets worse as the enrichment of the top echelons shrinks the middle class. The process by which people are impoverished must be dealt with to solve the problem of poverty.

An economy is no more and should be no more than people exchanging work for work. Anything more than this is a complication and an expense that serves to inflate prices and solves nothing. A fully functional economy is best illustrated by barter despite the common belief that barter is an inefficient and time consuming way to exchange goods and services.

In a barter economy a farmer exchanges eggs for the village baker's bread. This is a rational exchange because both parties benefit equally and there are no hidden costs. But as we all know the extent that this can be done directly is limited. Only a very few number of items are close enough in value to be exchangable directly and fewer are usuable by both parties.

Money is meant to facilitate trades and to create an asset of universal value to eliminate both the need for parity and mutual need. Money in this senses as a medium of exchange and is a way to maintain the accounts of the economic participants. Money is a form of portable accounting. The farmer knows how much bread is owed her by the money she has. The village baker knows how many more eggs she has bought compared to the bread she has sold because she is by that amount short of cash or to that degree in debt.

But the use of money has created an added complication and expense. Money represents value and is in that sense a thing of value through in actual fact it neither represents real value nor is of real value. If we attach value to work it is not hard to see that money represents the value generated by work but does not necessarily represent work done.

Money can be stolen or obained by illegal means. It can be gained by misrepresentation and fraud. The possession of money means the possessor did something that someone thought was worthy of payment, however it may not actually have produced anything of worth to the rest of the world. A hit man may be paid well but so far as the rest of us are concerned it would be better were he not paid at all.

Lending money costs the borrower but produces nothing but debt and interest payments and more money for the lender. All of this money for nothing the rest of us has any use for creates inflation.

A community may be poor in money but rich in intelligence and energy. If given the opportunity many people can find ways of being productive. We know people who have good hearts and a willingness to help others but may not necessarily have a good job or even a job at all. The weakness of the informal economy, in which friend helps friend in a kind of informal barter, is that those who help others may be taken advantage of by those whom the help. People who help others do not always get rewarded for the work they do. Charity is a more formal type of helping but is done specifically with the expectation the help will go one way only - the person(s) helped not being in a position to return the favor. This is admirable from the perspective of the person doing the giving but is not necessarily the preferred solution for the person required to accept charity.

 It is easier to understand the dynamics of interest and debt if the world is veiwed as an island with 20 people on it. Such an economy would not tolerate a third of their number sitting idle because the rich did not see any reason to hire them and in fact used unemployment to keep wages low. Nor, would they borrow money from him at interest just so they could have a home to live in.

 

Ending Poverty 2

Note On Economics

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