Minimum wage laws force an employer to pay its employees above a mandated level. On one hand, yes, this means that workers have more money in their pockets. It means they can now go out and spend money which will, in turn, stimulate the broader economy, right? Wrong! The higher wages paid by the employer have to be made up somewhere.
It allows individuals to earn money based on the importance of their role in society. If doctors didn't earn more than carpenters, no one would become a doctor and we'd have a shortage. There would no incentives to work harder because you could do an easy job and get paid the same amount for doing something that involves a lot of work. They are also exposed to competition and have to face different challenges and find solutions to them to stay in competition. It is in a capitalist economy that hard work is rewarded and pays off.
There is a failure to realise that long term better economic welfare also means general higher standards of living, as people have enough money to buy everything they need and some of what they want, competition is rife so drives quality up and prices down, and the government are able to take in more taxes from firms who are much healthier financially. This mass employment may lead to more jobs, but the workers themselves or the way they’re used is hugely inefficient. Another reason that labour production in the UK is so low is the lack of competition. There is a strong body of evidence that competition enhances productivity. So, with a lack of one there is a lack of the other.
The problem with power is that "power corrupts and absolute power corrupts absolutely". So whoever has the power to control will not be willing to give it up. Preservation of power becomes the game and human life counts for nothing. In a society where one unwilling beggar roams the streets, the biggest psychological fear of the rich and powerful is to become a beggar one day. So that person will do everything in their power to accumulate more wealth to ensure that poverty will never happen to them.
Capitalism mostly has a "free market" economy, which means people buy and sell things by their own judgment. Opposingly, socialism is an economic system characterised by a kind of society where people work together to get a fair standard of living (TheFreeDictionary, 2013). Socialists believe capitalism is bad for society and the government is responsible for reducing it via programs that benefit the poor such as free public education, free or subsidized healthcare, higher taxes on the rich. In contrast, capitalists believe that government does not use economic resources as efficiently as private enterprise and therefore society is better off with the free market determining economic winners and losers (Diffen, 2013). In capitalism, the market determines price, including the price of labour.
• Introduction: Good intention may have both consequences depending on how it guided whether by error or correct decision. The best example is the minimum wage regulation which means to raise the wages to improve living conditions but actually influence many to economy. Minimum wage is the lowest hourly, daily wage of an employee. Many economists have different ideas of an in crease in minimum wage, the matter in the views on disadvantages and advantages being disputed by many advocates. The advantages from higher minimum wage can have a positive effect on the whole economy flows, while the disadvantages have some negative effects on employment rates.
Lower income tax will act as a reward for unemployed workers to join the labor market, or for existing workers to work harder. Lower corporation tax furnish encourage and reward for entrepreneurs to start and so increase national output. Interventionist supply-side policies are adopting government intervention to overcome market failure. For example, increase spending on education and training to reduce occupational immobility. Better education and training to improve skills, agility, and mobility – also called human capital development.
Arundhati Roy’s text “Excerpts from War Talk” and “Why the Rich are Getting Richer and the Poor Poorer” by Robert Reich are two texts explaining the major reasons of why in todays society rich people get richer while poor become poorer. Unfortunately, the society is very unfair. There is a system in place that is controlled by a handful of extremely wealthy people, who often were luckily born into the right families and never worked their way to the top. These people in power positions have the game rigged to continue to benefit them and to protect their heritage. Your future wealth is no longer depending on how hard you work; there are hardworking intelligent people and hard working less intelligent people in all groups of society.
Many may argue that the falling economy and the wealthy not wanting to share their shares is to blame for the raising rates of poverty here in the states. Poverty of course, has a lot to do with money and income but underneath that it is has a deeper story. Stories of how different people are suffering from it and how they are managing to live day by day. It almost seems as if it’s a foreign nation of its own and you only understand the concepts if you are in it. There is no doubt that here in America we are dealing with one of the greatest economic downfalls.
The welfare state directly causes poverty as Murray points out that the generosity of the welfare state creates a dependency culture and a work shy underclass who are prepared just to live off benefits without ever working thus the welfare state undermines personal responsibility and self help. Also, the welfare state indirectly causes poverty. This is because the high amount of tax, which funds the welfare state, hinders entrepreneurs to create new jobs. However, the New Right view has been highly criticised because the welfare state and the minimum wage help to protect workers from employers exploiting them. Without the welfare state, there would be a large gap between the rich and poor.