Economic Perspective of the Issue of Poverty - Term Paper Example

? Article Analysis April 29, Article Analysis Economics includes demands for food. The research centers on the people’s demand for food. The research includes the United States government’s aid to the poor and needy of American society. Food stamps help increase the demand for products and services offered by stores and other entities. The New York Times Article Food Stamps Helped Reduce Poverty Rate, Study Shows” is a good economic issue (ref: http://www.nytimes.com/2012/04/10/us/food-stamp-program-helping-reduce-poverty.html?_r=1) 1. In terms of providing a brief overview / synopsis of the economic issue, the article shows that the Agriculture Department mentioned food stamps continue to reduce the poverty level of the United States. The food stamps are also known as Supplemental Nutrition Assistance Program or SNAP. The food stamps project benefitted more than 45,000,000 individuals in the nation. Specifically, the food stamps program raised the average below poverty line individual’s income six percent nearer to the poverty line. 2. In terms of discussing the model or economic theory that relates to the issue presented in the news article, the economic theory that relates to the issue in the news article is demand principle. The economic theory dictates that “as the prices of goods and services increase, the demand for products and services decrease.” The theory also states that the demand for the products and services increases as the price of goods and services decline. The people who have enough money to pay for the goods and services will be the ones willing to buy the goods and services. As the prices of the goods or services increase, some of the people can no longer afford to buy the previously lower priced goods or services. Thus, the people who can no longer afford to buy the higher priced goods and services are forced to shift to the competitors’ lower priced goods and services. With the scarce money resources, the poor has to budget their low money supply to buy only the most necessary needs in life. In layman’s terms, Roger Arnold (2008) describes demand as the willingness or eagerness of the buyers to buy the different quantities of goods and services at a certain price range within a particular time period. Ronald King (King, 2000) theorizes “The Food Stamp Act of 1964 authorized the secretary of agriculture “to formulate and administer ‘a program under which “eligible households within the State shall be provided with an opportunity more nearly to obtain a nutritionally adequate diet through the issuance to them of a coupon allotment which shall have a greater monetary value than their normal expenditures for food.’1 The food stamp program is intended to increase the food purchasing power of low-income households to the point where they can afford the “Thrifty Food Plan, ” the least expensive of the food purchasing plans developed by the U.S. Department of Agriculture.” The above quote states that the basic unit for the United States food stamps benefit program is the household. The family is described as the group of persons living under one roof who regularly buy food and prepare food in together. The food stamps program presumes that average household spends 30 percent of their entire purchasing power (computed in terms of cash on hand) on their unavoidable food needs. The food stamps program lightens the food need predicament of the family qualifying as belonging to the poverty line population of the United States. The United States government steps into the poverty level family home by giving them subsidy that is enough to close the gap between the household’s expected contribution to food purchases and the cost of the Thrifty Food Plan. The food stamps are given to the qualified families through booklets of coupons denominated in United States dollar amounts or by an Electronic Benefit Transfer card technology program. Some of the United States groceries are authorized to accept the food stamps as payment for the food bought from their stores. With the food stamps, the poor will have more money available to buy nonfood items. With the food stamps, the poor people do not need to worry about filling their hungry stomachs. With the food stamps, the people will have more money to buy more food and other necessities, or wants in life. 3. In terms of discussing what economic theory states and predicts about the issue presented in the news article, the economic theory states that the demand for products and services decreases as the prices of the goods and services increases. As the demand for the higher priced goods and services decrease, the stores or companies selling goods and services will have to contend with the reduced quantities of products and services offered their current and prospective clients. With the reduction in revenues generated from productions and services sold, the stores and entities must reduce the amounts paid for their daily expenses. To reduce its expenses, the entity or business may have to retrench some of its employees. The retrenchment will reduce the amount paid for salaries. The retrenchment will result to the retrenched employees’ joining the unemployment lanes of the United States government. Joining the unemployment land would push the retrenched employees into the poverty line statistics of the United States. The retrenched employees’ joining the unemployment line would increase the number of individuals or families having to get a set of food coupons. An increase in the number of food coupons given to the citizens of the United States would mean an increase in the amount of funds allocated to filling the basic food needs of the citizens. To remedy the economic issues, the nation is prioritizing alleviating the poverty condition of the United States’ citizens. With the food stamps, the nation helps the poor people of the United States have more money to buy the higher priced goods and services. With the food stamps, the poor people will have more purchasing power, compared to when the worst case scenario when food stamps are withdrawn from the United States poverty alleviation program. The food stamps program is a vital government measure that puts its tax revenues into a very productive use. The government uses the taxes collected from the rich and famous to fund is many services. One of the government’s visible services is the food stamps program. The program goes directly to the heart of every United States citizen. 4. In terms of discussing how the situation / issue presented in the news article align with economic theory; the program makes sense from an economic perspective. The outcome presented in the article shows that the economic theory of demand would predict that there will be an increase in the demand for goods and services. The food stamps program, as discussed in the news article, makes real sense. The people will be more than happy to receive the food stamps. The poor people do not have to worry about filling a hungry stomach. Mark Blaug (1997) reiterated that the demand for labor affects the demand for goods and services. With a low demand for labor, the unemployment lines increase. With the increase in the unemployment lines, there is an increase n the demand for food stamps. Peter Rupert (2008) emphasized that “the standard measure of poverty is often criticized by many quarters for it excludes factors such as food stamps. In typical economic fashion, most analysts explicitly include in-kind benefits as well as taxes to offer a wider perspective of poverty, within the economic spectrum.” Some quarters presume that value of the food stamps is equivalent to its cash value. One good reason for this concept of food stamps is that the stamps are described as inframarginal. For example, the family recipients of food stamps use up more on food acquisition than what they receive, in terms of the value of the food stamps. Prior to the Food Stamp Act of 1977, the food stamps beneficiaries had to comply with certain ‘purchase conditions.’ After the implementation of the 1977 food stamp statute, it is more convincing to state that the food stamp amounts are equal to its cash amounts.” Putting the concept in layman’s terms, the food store can sell food worth $10 to a cash paying customer or exchange the food item for the food stamps amounting to $10. The above analysis of food stamps is correct. The value of the food stamps is that it replaces cash. The poverty line people of the United States are given a privilege not to go hungry. The people do not need cash to eat food. With the food, the people can use their cash to buy more important things. More important things include buying medicines. More important things can also mean using their cash to pay for the transportation looking for a job that will remove them out of the poverty population. The very essence of the food stamps law is to help each American to prioritize other matters as the nation takes care of one of their basic needs. Maslow states that one of man’s basic needs is food. Without food, all other needs are not important. For example, a person who is hungry would not focus on trying to be the best basketball player in the street corner. The hungry person would not prioritize looking for the most beautiful girl to be one’s wife. The hungry person would not prioritize wanting to live in a 1,000 square meter home. During the 1981 to 1984, Ronald King (2000) mentions Reagan Administration insists food stamps represented the quintessential uncontrollable entitlement program that automatically that was described as burdening the tax payers of the United States. The food stamps program also represented the insufficient incentives for top quality management. With the cost of the food stamps program increasing an estimated ten times during the past 10 years, the Reagan Administration interpreted the food stamps program as a program that has gone in uncontrollable state. With the food stamps amounts ballooning into unprecedented amounts, the budget limits of the United States food program is bearing towards an explosive destruction stage. With the destruction of the food stamps program, the funds generated from the taxpayers are focused on feeding the poor. With the program, the government has to remove funds allocated to the other government programs in order to fill the United States citizen’s increasingly uncontrollable demand for food stamps. Consequently, the people or entities benefiting from the other food programs will have to suffer. For example, the cash amounts needed to build more roads and bridges will have to be significantly reduced. With the reduction in amounts allocated to the medical services of the elderly, more deaths will occur among the elderly citizens of the United States. To resolve the food stamps crisis of his time, Ronald Reagan reported to the United States Congress that the food stamps program will be restored to its former glory as the bastion of those who REALLY need the food stamps to survive. Mr. Ronald Reagan was correct. The essence of the food stamps program is to help those who really needed help. However, one cannot avoid thinking of others who will take advantage of the good intentions of the government. The government’s good intention is to help the poor and needy get back to their feet. The government wanted to give the poor an added advantage as they strive to get out of their quagmire of poverty. The intended beneficiaries could have taken the cue from the government to do their share to reduce the amounts spent on the food stamps program. One of the best ways to help the United States food stamps program is to find a job. The poor can find a job that will help them avoid applying for the food stamps. There is always a probability that some quarters of the American poor will no longer fight for a new job. Instead, they prefer to take advantage of the food stamps program. Some quarters of the American poor prefer to be under the food stamps program. Consequently, some have grown closed to the issue of finding a job that will take them out of the food stamps program. When this economic situation occurs, the individual can be classified as a lazy citizen. The individual prefers not to find a job. The person prefers the free food given by the government. Some even sleep on streets in order to avail of the United States government’s free food program. Based on the above discussion, economics focuses on the demands for food. The people’s demand for food is an economic concept that has to be addressed. The United States government’s aid to the poor and needy of American society can both be successful and unsuccessful, depending on the recipients and the purpose of the food stamps program. Indeed, the article vividly shows that the food stamps help increases the demand for products and services sold by stores and other entities. REFERENCES Arnold, R. (2008). Economics. New York: Cengage Learning Press. Blaug, M. (1997). Economic Theory in Restrospect. New York: University Press. King, R. (2000). The Politics of Food Stamps. Washington D.C.: Georgetown University Press. Rupert, P. (2008). Frontiers of Family Economics . New York: Emerald Press. Read More