Week 9: Combatting Poverty by Working Together

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Sachs suggests that “…the richest of the rich, not the average taxpayers, but taxpayers with incomes at the very top of the charts,” (289) should be taxed higher or “a burst of large-scale philanthropy commensurate,” (289). I agree with this. Sure, they may have worked hard for that money, but the small increase that Sachs is talking about isn’t anything that will cause a huge dent in their wallet, or really any sort of dent at all.

According to Sustainable Governance Indicators, “higher taxes tend to coincide with lower deficits and low debt.” The article used public data of Western Europe, North America, Oceania and Japan to study the connection between tax levels and public debt-to-GDP. It even goes so far to say that there is a strong correlation between countries with higher income inequality and their likeliness to have unstable budgetary policies. Willy says that there are many reasons that there are correlations between high taxes/income equality and fiscal sustainability. One is that high-tax countries may be less prone to dramatic boom-and-bust cycles because there is added friction to monetary activities. He says that if political leaders want budgetary sustainability for the long-term, they should promote income equality and higher taxes for the rich.

From SGI Article

From SGI Article (listed in references)

Sachs discusses how specific needs of individual countries require specific costs. For example, Tanzania looks for about 45% of funding to go toward health and population. Their other major needs include “other social sectors”, economic infrastructure and services, production and multisector. The U.S. is the biggest source of international aid to Tanzania, but I don’t think it’s fair to answer how long the U.S. can sustain Tanzania for when we can’t even sustain ourselves completely. In 2004 when Sachs wrote his book, predicted for 2015 that “…most of the world will have been freed from the poverty trap onto a path of self-sustaining growth,” (303). He says that the poverty level in SSA will drop from 40 percent to 20 percent by 2015.

Looking at Nigeria, their poverty level was 48.4 percent in 2004 and when it was last measured in 2010, according to the World Bank, it was still at 46 percent. I doubt in four years that that level is around the area of 20 percent.

In Chapter 16, Sachs discussed the “myth” that extreme poverty will eventually take care of itself because the growth of the global economy. He proves this wrong by saying how if one thinks globally, they will see that poverty is a global issue, not just something that should be faced by individual countries. I wouldn’t necessarily say that it’s a global issue, but it is something that wealthier nations should help poorer countries with, while simultaneously helping out their own poor populations. Thinking globally is pushing nationalism aside and trying to have a symbiotic relationship with the world around us.

References:

Willy, C.J., 2013, ‘Tax The Rich, Give To The Poor,” Sustainable Governance Indicators, http://news.sgi-network.org/news/details/1304/tax-the-rich-give-to-the-poor/

World Bank, http://data.worldbank.org/country/nigeria

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