Is Poverty Necessary In Society?

Is Poverty Necessary In Society?

Maybe it is possible to eliminate poverty in society.

Poverty is a term used to refer to a lack of capacity to participate effectively in society, and it entails having insufficient meals and clothes, lack of access to schools and primary healthcare services, lack of a job or land to cultivate crops, and exclusion from opportunities for development. The United Nations provides a quantifiable definition of poverty in its millennium development agenda. UN considers people living on less than a daily income of $1.95 to be living under poverty (“Ending Poverty,” par. 1). This definition utilizes income as the primary determinant factor in explaining poverty in the world. Income is a crucial index because it enables individuals to access productive resources to ensure that they lead sustainable lives. Other manifestations of poverty involve insecurity, susceptibility to violence, living in environments without access to clean drinking water, and basic sanitation.

The UN introduced the definition above in 2000, when the world established sustainable development goals. At the time, more than 30% of the global population lived under the poverty threshold. Countries made commitments to initiate programs and measures meant to eradicate poverty in society by 2030. The UN has conducted numerous surveys to determine the level of poverty over time and reported 16% (2010), 10% (2013), and 8% (2018) (“Ending Poverty,” par. 5). However, the trend has experienced a sharp decline, which has raised concerns about a complete reduction in poverty. Besides, there are various manifestations of poverty around the world as some regions continue to experience extreme hunger and malnutrition, including the horn of Africa, the Central African Republic, and North Korea (“Ending Poverty,” 2020). The initiatives demonstrate that “maybe,” it is possible to combat extreme poverty in society.

Discussion 2: Externalities and How to Fix Them

An externality is an economic term that describes the cost incurred or the benefit gained by a third party as a result of separate transactions or agreements. The third-party has no control over decisions that leads to the cost or gains. Externalities can either be positive or negative. I recently experienced a positive externality when purchasing my new iPhone 11 Pro. Since the election of Donald Trump to the presidency, the United States and China have engaged in a series of trade wars through protectionist fiscal policies. These measures have produced adverse effects on American manufacturers with primary processing factories in China. In September 2019, Apple was hit by a 25% tariff on components related to the production of Mac Pro computers, raising concerns about the price of the new iPhone 11 Pro (Statt par. 4). Experts expected that Apple would increase the price of the phone by $150, which I had paid as part of pre-orders with an American agent. However, the tentative trade deal ended the speculations, and Apple did not raise the price of the new iPhone 11 Pro. As a result, I saved $150 following the annunciation of the trade deal in December 2019 (Statt par. 1).

The Chinese manufacturers are the producers, while the American people the consumers of the product.  In this case, geopolitical agreements have significant implications on the price of commodities. Due to the global supply chain structure of the modern world, multinational companies have established factories in different countries for commercial and strategic purposes. However, the government introduces policies to protect local production capacity and achieve other socio-economic goals leading to the introduction of protectionist policies like the ones in the case of US-China trade wars.

Discussion 3: Types of Profit

The innovation profit theory produces positive benefits in society. Under this approach, profit is considered a reward reaped by firms that innovate. Innovation refers to an act of introducing a new concept, idea, and means of production or method. It includes applications of advanced solutions that meet new requirements and emerging needs in the market. The innovation profit theory has beneficial consequences in society because it identifies problems on existing technologies, processes, or products and designing new ones with improved solutions (Teece 1354). Therefore, the reward gained as a result of selling these innovative products has good implications in society. Amazon is one of the innovative firms that has produced extraordinary benefits to American consumers. It started as an online bookstore in Seattle to sell and distribute books. The company introduced and popularized online retailing, which enhances convince, safety, and user experiences. The invention of the internet in 1990 played a critical role in the success of Amazon because it provided a medium of communication between retailers and shoppers.

Innovative firms provide incentives in two major ways. Firstly, these firms introduce cost-reduction methodologies like machines and cheaper processing methodologies. Resources are scares and cannot meet all human needs.  Besides, identifying a new source of raw material represent the other way that innovation reduces the cost of products in society. Secondly, innovations create new products that help to improve existing methods. For instance, the introduction of computers and word processing software replaced typewriters that were difficult to edit and make changes. Firms that introduce innovative products are granted patents in some cases to avoid intellectual property theft. Therefore, customers pay to use these products to gain improved services and solutions from those innovations.