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Trade balances affects upon their nations’ GDPs.

I'm Supposn

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Trade balances affects upon their nations’ GDPs.

Exports directly contribute to their nations’ balance of trade. Due to the trade balance being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production, (GDP).
Trade surpluses directly increase their nation's GDP. Imports are considered as negative exports and they directly reduce their nations’ balance of trade; trade deficits reduce their nation's GDP.
[Refer to https://en.wikipedia.org/wiki/Gross_Domestic_Product_(GDP)#Expenditure_approach
or to Expenditure Method Definition | Investopedia ].

Trade deficits make no net contribution to their nations’ GDPs but annual trade surpluses’ are immediate and direct net addition to their nation's GDP.
Nations with annual trade deficits have to some extent indirectly denied themselves of net benefits due to national production; among those benefits are having “on hand” the tools, facilities, and people with experienced familiarity of utilizing these all for increasing aggregate GDPs within their jurisdictions.

It’s axiomatic that the entire net economic differences between similar domestic and imported goods occur prior to the goods being under the importing nation’s jurisdiction or after domestic goods have reached their producers shipping dock.
[There’s no justification to refute this axiom if no applicable and otherwise unexplainable contrary example has ever been encountered].

Drag upon GDP due to trade deficits consequentially are also drags upon their nation's numbers of jobs and their pay rates. This is particularly detrimental to employees, their dependents and any other entities that are significantly affected by lesser employment or pay rates; that describe our entire lower income, and almost our entire middle-income earners and all others to the extent that they're dependent upon enterprises that are themselves greatly affected by reduced circumstances of employees and their dependents.

Respectfully, Supposn
 

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Trade balances affects upon their nations’ GDPs.

Exports directly contribute to their nations’ balance of trade. Due to the trade balance being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production, (GDP).
Trade surpluses directly increase their nation's GDP. Imports are considered as negative exports and they directly reduce their nations’ balance of trade; trade deficits reduce their nation's GDP.
[Refer to https://en.wikipedia.org/wiki/Gross_Domestic_Product_(GDP)#Expenditure_approach
or to Expenditure Method Definition | Investopedia ].

Trade deficits make no net contribution to their nations’ GDPs but annual trade surpluses’ are immediate and direct net addition to their nation's GDP.
Nations with annual trade deficits have to some extent indirectly denied themselves of net benefits due to national production; among those benefits are having “on hand” the tools, facilities, and people with experienced familiarity of utilizing these all for increasing aggregate GDPs within their jurisdictions.

It’s axiomatic that the entire net economic differences between similar domestic and imported goods occur prior to the goods being under the importing nation’s jurisdiction or after domestic goods have reached their producers shipping dock.
[There’s no justification to refute this axiom if no applicable and otherwise unexplainable contrary example has ever been encountered].

Drag upon GDP due to trade deficits consequentially are also drags upon their nation's numbers of jobs and their pay rates. This is particularly detrimental to employees, their dependents and any other entities that are significantly affected by lesser employment or pay rates; that describe our entire lower income, and almost our entire middle-income earners and all others to the extent that they're dependent upon enterprises that are themselves greatly affected by reduced circumstances of employees and their dependents.

Respectfully, Supposn

Please send a note to the democratic party !
 

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Trade deficits make no net contribution to their nations’ GDPs but annual trade surpluses’ are immediate and direct net addition to their nation's GDP

You are looking at the Trade Equation from only one side, that if the importer. So, you are not being objective.

Trade also smaller nations (that do not have the length and breadth of America's ability to produce virtually soup-to-nuts) must do as they can. So, they trade at prices that are much lower than the US.

Which is what China did with a vengeance. And, I did not hear one complaint from Americans regarding China's Trade Surplus. Even though their product-quality leaves much to be desired.

The National Debt, I sense, is worrisome and if we would not want to throw around our weight in a pocket-war every 10/20-years, then we might not have had such a sad deficit today. A significant part of our national budget is spent by the DoD. Do we need to be policemen to the world? I say, No.

We must be strong. We must be vigilant. We must be able to protect the nation. At home.

We can spend the money saved elsewhere and more productively. Like secondary-schooling is free, so should tertiary education be the same ...
 

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Trade balances affects upon their nations’ GDPs.
Yes, we know.

GDP = C + I + G + (X - M)


Trade deficits make no net contribution to their nations’ GDPs but annual trade surpluses’ are immediate and direct net addition to their nation's GDP.
Yes, we know.


Drag upon GDP due to trade deficits consequentially are also drags upon their nation's numbers of jobs and their pay rates.
No, it doesn't.

GDP is merely one measure of economic output. It doesn't tell you anything about wages, or employment figures, or productivity.

Let's say that in 2017, both exports and imports increase significantly. That will almost certainly mean more jobs in the US (as someone has to produce more goods than in 2016), but we'd still have a deficit. We could even import more goods that year, while jobs and wages go up.

What else ya got?
 

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Let's say that in 2017, both exports and imports increase significantly. That will almost certainly mean more jobs in the US (as someone has to produce more goods than in 2016), but we'd still have a deficit. We could even import more goods that year, while jobs and wages go up.

But - without something making up for the demand lost to the trade deficit, national income will decrease, which affects GDP in the future. Assuming a balanced federal budget (no added demand), you would need investment borrowing and growth sufficient to make up for the loss of dollars overseas. That, I believe, was Supposn's point.
 

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From Investopedia: In Praise Of Trade Deficits

According to the U.S. Census Bureau, from the early 1990s to 2007, the U.S. continues on a general trend of increasing GDP year over year; the trade deficit is also increasing. If Theory 1 was true, there would be an inverse relationship between GDP and a trade deficit, but this does not seem to be the case. There are short periods of time in U.S. history where we see reduced GDP in conjunction with an increasing trade deficit, but most of those time periods can be excused as anomalies and the short-term weakness can be attributed as a symptom of other ailments and the trade deficit is just the nature of the host. As for the situation of dumping dollars in the world currency markets, this can happen in any environment but the probability of coordinating such an effort is low.

Theory 2 may hold much more weight as evidenced by the positive correlation between the U.S. GDP and the trade deficit. This can be easily explained by the fact that the U.S. is a demand-based consumer society with a negative savings rate. In addition, as the U.S. evolves into more of a service society, the products that individuals demand will no longer be made in the country. As more manufacturing and labor intensive products are created outside of the U.S., a trade imbalance may be inevitable.

In fact, the economic growth from 1980-2000 tended to grow in years in where the trade deficit grew compared to those years in which it declined. This provides even more evidence that an imbalance of trade in the form of a deficit did not drag the economy.

'Nuff said ... ?
___________
 

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But - without something making up for the demand lost to the trade deficit, national income will decrease, which affects GDP in the future.
So what?

Again, GDP is only one measure, and imperfect measure, of national productivity. Wages don't go up or down based on GDP; consumers don't have more or less money to spend based on GDP; taxes are not indexed to GDP; we don't lose tax dollars because of imports.


Assuming a balanced federal budget (no added demand), you would need investment borrowing and growth sufficient to make up for the loss of dollars overseas. That, I believe, was Supposn's point.
I think his point is "trade deficit BAD!!!" without actually understanding the issue(s).

For example, foreign investment is not counted by GDP. All those Chinese and Russians buying multi-million dollar apartments in NYC, and stock in American companies? Not included. Many economists believe that the US trade deficit is offset by foreign investment.
 

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So what?

Again, GDP is only one measure, and imperfect measure, of national productivity. Wages don't go up or down based on GDP; consumers don't have more or less money to spend based on GDP; taxes are not indexed to GDP; we don't lose tax dollars because of imports.



I think his point is "trade deficit BAD!!!" without actually understanding the issue(s).

For example, foreign investment is not counted by GDP. All those Chinese and Russians buying multi-million dollar apartments in NYC, and stock in American companies? Not included. Many economists believe that the US trade deficit is offset by foreign investment.

This is why trade deficits are only one factor in determining economic health, because as you demonstrated it doesn't give the whole picture. there are a lot of things that are misleading with GDP. its worth consideration but its not really a great measure of economic health either. Still trade deficits are certainly not desirable.
 

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So what?

Again, GDP is only one measure, and imperfect measure, of national productivity. Wages don't go up or down based on GDP; consumers don't have more or less money to spend based on GDP; taxes are not indexed to GDP; we don't lose tax dollars because of imports.

Well, no. GDP = national income, so when GDP goes down, so does our income. Plus, when GDP goes down a few quarters in a row, that's a recession, investment suffers, and the whole thing spirals down. Whatever is happening within the economy with income disparities and other stuff, GDP does tell you how much you produce, and how much you have earned.

I think his point is "trade deficit BAD!!!" without actually understanding the issue(s).

For example, foreign investment is not counted by GDP. All those Chinese and Russians buying multi-million dollar apartments in NYC, and stock in American companies? Not included. Many economists believe that the US trade deficit is offset by foreign investment.

The trade deficit makes up the vast majority of our current account; the other stuff is negligible. Our trade deficit is offset by federal deficit spending, mostly.

A small trade deficit isn't a big deal. Like you said above, the increased economic activity from international trade is a good thing. But a large trade deficit causes problems, as I explained above. You can buy more stuff, IF you have a job. That's the tradeoff.
 

I'm Supposn

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You are looking at the Trade Equation from only one side, that if the importer. So, you are not being objective.

Trade also smaller nations (that do not have the length and breadth of America's ability to produce virtually soup-to-nuts) must do as they can. So, they trade at prices that are much lower than the US.

Which is what China did with a vengeance. And, I did not hear one complaint from Americans regarding China's Trade Surplus. Even though their product-quality leaves much to be desired.

The National Debt, I sense, is worrisome and if we would not want to throw around our weight in a pocket-war every 10/20-years, then we might not have had such a sad deficit today. A significant part of our national budget is spent by the DoD. Do we need to be policemen to the world? I say, No.

We must be strong. We must be vigilant. We must be able to protect the nation. At home.

We can spend the money saved elsewhere and more productively. Like secondary-schooling is free, so should tertiary education be the same ...

Lafayette, I’m not opposed to our nation or any nation participating in global trade
Annual trade surpluses directly increase and trade deficits indirectly decrease their nation’s GDP. Trade deficits’ drag upon their nation’s GDP economy effects and is effected by their drag upon their nation’s numbers of jobs and wage scales. Those detrimental effects upon employees additionally affect employees’ dependents and all others who are dependent upon enterprises that are sensitive to employees lesser conditions.
We benefit from cheaper imports but they do not fully compensate for trade deficits detriments to their nation’s GDP.

That’s why I’m a proponent of the unilateral, substantially market driven trade policy described within Wikipedia’s “Import Certificates” article.
Refer to the article or to
http://www.debatepolitics.com/economics/253134-import-certificates-4.html .

To the proportional extent of a nations’ balances of trade relative to their GDP’s I would suppose that small nations with trade deficits suffer no less (and possibly proportionally more) than do greater nations with chronic annual trade deficits.

Respectfully, Supposn
 

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Visbek, annual trade surpluses directly increase their nation’s GDP; annual trade deficits indirectly reduce their nation’s GDP. That’s why creditable economists do agree that trade deficits drag upon their nation’s numbers of jobs and consequentially anything that drags on job numbers must to some extent drag upon wage rates.

Respectfully, Supposn
 

I'm Supposn

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... GDP is merely one measure of economic output. It doesn't tell you anything about wages, or employment figures, or productivity.

Let's say that in 2017, both exports and imports increase significantly. That will almost certainly mean more jobs in the US (as someone has to produce more goods than in 2016), but we'd still have a deficit. We could even import more goods that year, while jobs and wages go up.

What else ya got?

VisBek, GDP indicates how large of an economic pie is being divided. (I would prefer that it would be published in terms of GDP per capita, but we don’t generally get everything we desire).

Median wage is the best indicator that may or may not be available to gauge our living standards.
There have been and continue to be attempts to better indicate living standards but until other statistics are more widely published, available and evolve to be more generally used, median wage is the best indicator when we can get those statistics.

Median wage is also problematic because it’s too often not readily available and when it’s published its too often only published as a parsed segment of our population rather than a national statistic for our entire working population.


Statistics between different years are much less useful if they’re not all pegged to the U.S. dollar’s purchasing power.

No one claim that the trade balance determines the nation’s number of jobs but annual trade surpluses will promote job increases and trade deficits will dampen or be a drag upon their nation’s numbers of jobs.

No one claims that numbers of jobs determine wage rates or rates of unemployment but more jobs promote higher wage rates and lesser unemployment; lesser jobs drag upon wage rates and promoter greater unemployment.

Your not inferring we should not be concerned regarding lesser jobs or lesser purchasing powers of wages? So what is the point you’re trying to make?

Respectfully, Supposn
 

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To the proportional extent of a nations’ balances of trade relative to their GDP’s I would suppose that small nations with trade deficits suffer no less (and possibly proportionally more) than do greater nations with chronic annual trade deficits.

Respectfully, Supposn

of course in a free market you have no trade deficits since the money we send to China, for example, is only valuable to them if they can buy stuff here thus eliminating the trade deficit.
 

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LIFE GOES ON

Trade deficits’ drag upon their nation’s GDP economy effects and is effected by their drag upon their nation’s numbers of jobs and wage scales.

You have yet to prove this point. It is only a supposition on your part.

Which is why I posted the Investopedia Article In Praise Of Trade Deficits. And this excerpt:

In fact, the economic growth from 1980-2000 tended to grow in years in which the trade deficit grew compared to those years in which it declined. This provides even more evidence that an imbalance of trade in the form of a deficit did not drag the economy.

Life goes on, regardless of the fact that the world's enormous Trade Deficit with China has lifted the lives of billions of Chinese - at the comparative cost of millions of low-end jobs in both Europe and the US*.

Let's try to look beyond the 3-mile limit for the consequences of International Trade. The most glaring of which is this: Neither the US nor Europe can any longer provide cost-effective labor bashing out frying pans or making sun-glasses or a whole host of products requiring nimble-fingers.

MY POINT

French television ran a program recently regarding the manufacturing of elaborate "dentelle" (lace) products. This employment once had thousands of women working in France, some at home, most in factories. Now there is only one small town lost in the center of France that makes French lace-products employing totally about 200 women.

We must go "up-market" to employ our youth looking for their first-jobs; and the sooner they get free or nearly-free Tertiary Education (vocational 2- or 4-year) the better chance they will have at longer-term employment at decent pay-scales.

And the fewer societal marginals we will have trying to make living peddling drugs because that is the ONLY marketing that they know how to perform ...

*In the US, had we not the HofR Replicants shutting off the Stimulus Spending pump in 2011 and had we available sufficient retraining in upper-skilled jobs, we would never have had an economy in the doldrums for the four long years afterwards.
______________________
 
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joG

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You have yet to prove this point. It is only a supposition on your part.

Which is why I posted the Investopedia Article In Praise Of Trade Deficits. And this excerpt:



Life goes on, regardless of the fact that the world's enormous Trade Deficit with China has lifted the lives of billions of Chinese - at the comparative cost of millions of low-end jobs in Europe and the US*.

Let's try to look beyond the 3-mile limit for the consequences of International Trade. The most glaring of which is this: Neither the US nor Europe can any longer provide cost-effective labor bashing out frying pans or making sun-glasses or a whole host of products requiring nimble-fingers**.

MY POINT

French television ran a program recently regarding the manufacturing of elaborate "dentelle" (lace) products. This employment once had thousands of women working in France, some at home, most in factories. Now there is only this one small town lost in the center of France that makes French lace-products.

We have to go upmarket to employ our youth coming onto the Labor Force - and the sooner they get free or nearly-free Tertiary Education (vocational 2- or 4-year) the better chance they will have at longer-term employment at decent pay-scales.

And the fewer societal marginals we will have trying to make living peddling drugs because that is the ONLY marketing that they know how to perform ...

*In the US, had we not Replicants shutting off the Stimulus Spending pump in 2011 and had we sufficient retraining in up-skilled jobs, we would never have at an economy in the doldrums for four long years afterwards.
______________________

There is an interesting question hidden in there. Why would it be so bad to allow the poor to be poor here? Why do we feel we must segregate them to the factory floors over seas and that it is better to subsidize those born per chance, where we don't want the poor to live?
 

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THE DICHOTOMY

There is an interesting question hidden in there. Why would it be so bad to allow the poor to be poor here? Why do we feel we must segregate them to the factory floors over seas and that it is better to subsidize those born per chance, where we don't want the poor to live?

We are doing that already. It's called the Poverty Threshold, and about 50 million American men, women and children eke out living there.

The African version of poverty: Nigeria's slum-children roaming over public junk-piles looking for bits 'n pieces of fabric that they can sell in order to earn enough money to buy a sandwich that will sustain them for an entire day. (Whilst Nigeria pumps oil!)

The American version of poverty: Some 20-year old junkie selling pot (or herself) to make enough money to buy a car (or feed her child) so he can seem "like all the other guys".

Isn't the objective for all of us to live "decently"? For that to happen, we must make it happen. Laissez-faire politics will NOT accomplish the objective of reducing Income Disparity. That is, a decent job for a decent family, all the way up and down the line.

Not the present Mediatized Madness of a select few (hundred) making hallucinatory levels of income in Hollywood, whilst Income Disparity is the contextual-existence of those watching the Hollywood-stars on the BoobTube.

And why do we have thousands upon thousands of people rushing to be "just like them"? Because they can, with a bit of luck. Any revenue above $100K is 70% "in the pocket" Income net-of-taxation.

LIFE BECOMES A GAMBLE

The lucky win, the poor subsist. Is that the choice you want to give to your child?

"Luck" is no way to run a nation's economic-policy for 320 million people. A country with abject massive poverty on one end and aberrant riches on the other - with a huge chasm in between populated by the middle-class. (Of course, I exaggerate the dichotomy.)

But the preponderance of Wealth being the unique characteristic of "success" has had exactly that societal effect.

Tell me how it isn't so ...
______________________
 
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Lafayette

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Many economists believe that the US trade deficit is offset by foreign investment.

I happen to be one who agrees.

BUT, we cannot live forever catering to the world's riches. Look, given the nature of mankind, any economy is going to have a large spread of comparative wealth - from poor to rich.

We should strive to make sure that the spectrum is fair and efficient. That is, not too many at the top (making grossly exaggerated fortunes) and not 50 million Americans incarcerated below the Poverty Threshold.

(Btw, Poverty is a dynamic. That is, the stats show that the US always has 50M people below the Poverty Threshold, but they are not always the same families.)

Poverty is an non-exhaustive realm of statistics. If stats are "your thing", and you are interested particularly by the subject of poverty, you should start here: Census Bureau, "Income and Poverty in the United States: 2014"
__________________________
 

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Today's Info-graphic:

Female to Male Earnings.jpg

Observations:
*The US male/female earnings have stagnated for the past quarter century; and
*No, women are making neither the same nor more money than men,
*They are making generally 20% less ...

Next question: Why?
_________________
 

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THE DICHOTOMY



We are doing that already. It's called the Poverty Threshold, and about 50 million American men, women and children eke out living there.

The African version of poverty: Nigeria's slum-children roaming over public junk-piles looking for bits 'n pieces of fabric that they can sell in order to earn enough money to buy a sandwich that will sustain them for an entire day. (Whilst Nigeria pumps oil!)

The American version of poverty: Some 20-year old junkie selling pot (or herself) to make enough money to buy a car (or feed her child) so he can seem "like all the other guys".

Isn't the objective for all of us to live "decently"? For that to happen, we must make it happen. Laissez-faire politics will NOT accomplish the objective of reducing Income Disparity. That is, a decent job for a decent family, all the way up and down the line.

Not the present Mediatized Madness of a select few (hundred) making hallucinatory levels of income in Hollywood, whilst Income Disparity is the contextual-existence of those watching the Hollywood-stars on the BoobTube.

And why do we have thousands upon thousands of people rushing to be "just like them"? Because they can, with a bit of luck. Any revenue above $100K is 70% "in the pocket" Income net-of-taxation.

LIFE BECOMES A GAMBLE

The lucky win, the poor subsist. Is that the choice you want to give to your child?

"Luck" is no way to run a nation's economic-policy for 320 million people. A country with abject massive poverty on one end and aberrant riches on the other - with a huge chasm in between populated by the middle-class. (Of course, I exaggerate the dichotomy.)

But the preponderance of Wealth being the unique characteristic of "success" has had exactly that societal effect.

Tell me how it isn't so ...
______________________

The best to give your child is a good socialization with three or four languages, a degree from St Gallen or Kings College, a MBA from Harvard and an MBS from MIT or CalTec.
 

Lafayette

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WHY POVERTY HAPPENS

There is an interesting question hidden in there. Why would it be so bad to allow the poor to be poor here? Why do we feel we must segregate them to the factory floors over seas and that it is better to subsidize those born per chance, where we don't want the poor to live?

One reason is that poorness is bad is because it shortens life-span. The higher their standard of living, generally the longer a people live.

It is not a question of "not wanting the poor to live". It is one of, "Why are we doing so little to help them exit poverty?"

The first and foremost influence on the situation of the poor is intelligence. Because with intelligence generally comes a better standard-of-living. By intelligence, I don't mean necessarily IQ. I mean the ability to assimilate skills/competencies.

This factor, I suggest, is at the heart of the matter. Largely because, for the most part, smarter people have better incomes from better jobs. Which does not mean that if a child (male or female) wants to do construction work that they cannot. It simply means that they should not start off at the bottom - On the Job Training. No further instruction (all along a career) will simply mean more job-changing in that particular occupation since one does not acquire new skills.

THE MANY CAUSES OF POVERTY

Poverty has many originating factors: The causes of poverty include changing trends in a country’s economy, lack of education, high divorce rate which causes feminization of poverty, having a culture of poverty, overpopulation, epidemic diseases such as AIDS and malaria, and environmental problems such as lack of rainfall.

I suggest that the first three causes of poverty are the most relevant to our society:
*Trends that bring new products/services to market, and trends that make them either obsolete or no longer desired. Both determine the skill-sets necessary in any market-economy.
*Lack of education, particularly in the skills necessary to perform certain types of work.
*High divorce rates that sets a man free to conceive other children, but restricts the woman to caring for and bringing up the child.

AND THE SOLUTION

In one form or another, the above three reasons need attention and remedy - some by means of legislation, others by instruction and/or simply custom ...
__________________
 
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WHY POVERTY HAPPENS



One reason is that poorness is bad is because it shortens life-span. The higher their standard of living, generally the longer a people live.

It is not a question of "not wanting the poor to live". It is one of, "Why are we doing so little to help them exit poverty?"

The first and foremost influence on the situation of the poor is intelligence. Because with intelligence generally comes a better standard-of-living. By intelligence, I don't mean necessarily IQ. I mean the ability to assimilate skills/competencies.

This factor, I suggest, is at the heart of the matter. Largely because, for the most part, smarter people have better incomes from better jobs. Which does not mean that if a child (male or female) wants to do construction work that they cannot. It simply means that they should not start off at the bottom - On the Job Training. No further instruction (all along a career) will simply mean more job-changing in that particular occupation since one does not acquire new skills.

Poverty has many originating factors: The causes of poverty include changing trends in a country’s economy, lack of education, high divorce rate which causes feminization of poverty, having a culture of poverty, overpopulation, epidemic diseases such as AIDS and malaria, and environmental problems such as lack of rainfall.

MAIN CAUSES OF POVERTY

I suggest that the first three causes of poverty are the most relevant to our society:
*Trends that bring new products/services to market, and trends that make them either obsolete or no longer desired.
*Lack of education, particularly in the skills necessary to perform certain types of work.
*High divorce rates that sets a man free to conceive other children, but restricts the woman to caring for and bringing up the child.

In one form or another, the above three reasons need attention and remedy - some by means of legislation, others by instruction and/or simply custom ...

As you pointed out elsewhere, we have done an enormous amout to bring people out of poverty. We have allowed out people to buy the goods produced by the poor and bought successive hundreds of millions out of poverty while paying for the bill for keeping the trade route safe. All told that sum must around 3 billions now, don't you think? And that is not including the maybe 3 billion we kept alive at a lower level than global middle class.
 

Lafayette

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SURVIVAL OF THE FITTEST?

As you pointed out elsewhere, we have done an enormous amout to bring people out of poverty.

We've done what we've done, but it is hardly enough:

Number in Poverty and Poverty Ratio.jpg

Moreover, if it has been a constant 13-to-15% of the population since 1965 (half a century!), let's also recognize that it is not always the same people. Entire families drop in and crawl out, depending upon their work situation. The charted line nonetheless remains constant.

As I never tire of repeating, their work-situation depends upon their skill-sets. No developed nation can be proud of the fact that 15% of its population is forever living below the minimum sustainable level of existence.

Of course the land of Uncle Sam adheres to the Darwinite Dictum "Survival of the fittest" as a constant rule ...
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