The Ideal System of Economy in the United States - Report Example

The United States Economy The United States Economy The United States Economy – An Introduction The United States is the largest economy in the world. Though its economy was initially capitalistic one, over the many decades of its economic development, it has turned into a mixed economy. Today, its economy is a mixture of both substantial public and private sector investments. Private corporations are the ones which are involved in taking a vast majority of microeconomic decisions. The United States government however, prefers to take a minimal role in making decisions on the issues related to the domestic economy. The United Sates has become such a powerful economy in the world because of certain positive inherent characteristics of the land and its people. It is these characteristics which have contributed to the positive aspects of the United States economy and which have helped it people to grow and by which its people judge their society to be a good society. Following is a list of such features or characteristics which have help this economy to evolve into what is represented to be in the world today: Abundant natural resources - The United States has abundant mineral resources and high-crop yielding farm soil. Its has coastlines on both the Atlantic and Pacific Ocean and this combined with the inland waterways in the form of the Great Lakes and rivers, has enabled commerce to be carried out by the sea and the rivers. These natural resources have aided the country in its rising economic growth over the years and have helped bind the fifty States of which constitute America together in a single economic unit. Quality labor force - The strength of the United States labor force has seen an increase over the years, and this has helped fuel almost constant economic expansion. Its not just the internal labor force, which has expanded, it is also the immigrant labor force which has seen a rise over the years. Labor is one of the most important aspects required for a healthy economy because, the quality and adequate quantity of labor force, coupled with their productivity is what enables the economy to grow. Labor force productivity is reinforced by the aspects of emphasis on education (giving importance to both technical and vocational training in education) and the willingness of the America public to experiment and to change. Managerial skills – The economy is run by organizations which employ highly efficient and effective managers, who respond to signals from market. The traditional managerial structure in business organizations operating in the United States follows a hierarchical approach in the flow of authority. The flow of authority begins with the chief executive, who makes sure that the entire business runs smoothly and efficiently. The authority passes from the top command to various lower levels of management, who are responsible for coordinating different parts of the enterprise, up to the foreman on the shop floor. Such specialization of work tasks reflect the adoption of a scientific approach to management, which makes for a very efficient managerial resources. Establishment of corporations – Corporations have been established to carry out business activities and are regulated by government laws. The corporation is a voluntary association of owners, who are known as stockholders. The stockholders come together to form a business enterprise. Corporations run according to their business objective and are governed by a complex set of rules and customs. Financial resources from banks – Business corporations in the United States get their financial resources from banks in order to perform the function of producing goods or services. Corporations procure finance for their activities by selling stock (such as ownership shares in their assets) or bonds (such as long-term loans of money) to banks, insurance companies, individuals, and other investors. Laws have been put in place, to ensure that the corporation functions according to a proper financial system and to also enable the free flow of information to investors, so help them to make well-informed decisions. Nature of their economy – The nature of their economy is one that allow for business to determine the trends of the economy. These ingredients, which constitute the United States economy, have enabled it to develop into a successful one and have contributed to help people living in America, to achieve ‘The American Dream’. This term implies having a successful and satisfying life and indicate the financial security and material comforts, a person can attain here, and also the dream of achieving fame, that crosses the boundaries of social, ethnic, or class boundaries. These are those aspects of the U.S economy which are appreciated by everyone. Recent trends in economic decisions and statistics reflect on how well economic resources have been utilized this year. As of November 2006, 92,000 jobs were created. The rate of unemployment has come down to 4.4 percent, which is the lowest unemployment rate since May 2001. Employee salaries and wages have also seen a rise. These figures and data show that the American Economy is very strong and is continuing to grow. Following list of points reflect on the growth and prosperity in the United States economy: Real wages has grown 2.4 more than that of the previous year. This means an extra $755 for the average full-time production worker or about $1,327 for the typical family of four members, in which there are two wage earners. The real after-tax income per person has seen a rise by 9.8 percent. The United States economy has grown a solid 2.9 Percent over the past four quarters – a rate which indicates that its growth is much faster than any other major industrialized country. Productivity has grown at an annual rate of 3 percent, since the first quarter of 2001 and has increased by 2.4 percent during 2001-2006. Employment rates have risen. A look at the issue of poverty in the United States (The negative aspects of the economy) One would think that the world’s most successful economy and one which is still growing would never be have to tackle the problem of poverty. Sadly, to say, poverty does exist in the United States. In the United States, the poverty line is determined by multiplying three times, the annual cost of a diet, which is considered to be nutritionally adequate. This index changes depending on the size of the family. It is updated ever year, to reflect the changes that occur to the consumer price index. In America, poverty is a persistent as well as a very serious problem. In the United States per capita income is more than what that seen in any other industrialized economies of the world. The actions of government and private institutions put together, have seen a contribution of more than $500 billion per year. This means that roughly 2 percent of the American economy’s gross national product is contributed to areas such as public assistance, food stamps, and social insurance programs like social security, aid to families with dependent children (AFDC), Medicare and Medicaid. Despite such huge efforts in reducing inequality, poverty still exists now, more so, than in earlier decades. Despite having abundant natural resources, job opportunities and even after taking efforts to reduce income inequality, poverty is more prevalent in the United States than in the rest of the industrialized world. It is also more prevalent now than it was in the early seventies, when the incidence of poverty in America reached a post-war low. According to the Census Bureau, 33.6 million Americans were living in poverty in the year 990, which constitutes about 14 percent of the population. Causes of poverty in America Though the United States government had launched a ‘War on Poverty’ program in the mid sixties, figures collected in the late eighties show that the incidence of poverty was as high in the late eighties as it was in the late sixties, when this program was launched. There are many reasons, why the United State faces the situation of poverty and here’s a look at some such reasons: Over the past decades, there has been a change in the composition of domestic households. As there are more and more single parents, these families are able to make less money than people who are married. This has in turn contributed to a large share of the population being in poverty. There have been times of slow economic growth or recessions. During such times unemployment levels increase, work hours are cu down and there is a stagnation in the family incomes. These problems are seen to affect people who are poor and make their situation worse. They are poised to come out of their situation, but are stopped because of the recession. The government has failed to implement adequate training programs to increase the skills of the poor and this has resulted in poverty not reducing. The government had brought out training and compensatory education programs such as Job Corps and Head Start. These campaigns were part of their ‘War on Poverty’ program, and were implemented to increase the skills of the poor, but these did not give effect in many areas. The federal government had spent a lot of money on such programs as well. For example, in the year, 1986 about $282 billion dollars was spent on these programs, but most of these programs have not been carefully evaluated. Some employment and training programs have increased the earnings of adult women but were not of much help to adult men. There are two types of income transfer policies in America. One policy is the public assistance program which is seen in the form of program such as AFDC, food stamps, and Medicaid. These programs are designed to help people who are already poor. The other policy is the social insurance programs, such as social security, unemployment insurance, and Medicare, which were designed to prevent poverty, when certain events like retirement or layoff threaten a household's well-being. It’s been felt that these income transfer policies, which are designed to alleviate poverty, have actually contributed to perpetuate it. It has been observed that there is a gross disparity among impoverished people in the United States along racial lines. This has led many to believe that racism (This can be historic and/or ongoing institutional racism) is a cause for much of the poverty seen today in the United States. There is a problem in availing job opportunities appear for significant subgroups of some races and ethnic groups. This is shown by the low-income nature of people, when they are divided along g racial/ethnic lines. and 40 % of Latino children live in poverty Recommendations and Conclusions Now that we have looked into the causes of poverty in the United States, what should be done to eliminate poverty? There is a point of confusion here because of two different radical opinions on poverty. One opinion is that the United States has eliminated poverty over the last century and the other opinion is that it has a severe poverty crisis and that the government has to devote significantly more resources to the problem. Before getting into the detailed aspects of how to eliminate poverty, it is important to understand that poverty in the United States is different from the kind of poverty experienced elsewhere in the world. America's poor are not people who are chronically undernourished and the average consumption of protein, vitamins, and minerals is virtually the same for poor and middle-class children. It’s been found that children from this section of society consume protein, vitamins, and minerals well above recommended norms. Poor children actually consume more meat than do higher-income children and have average protein intake, which is 100 percent above recommended levels. Therefore, it is not on account of lack of food that people are considered poor in America. Neither is there a lack of certain basic necessities needed for everyday living. It the kind of income level generated by the families at large and their general state of living conditions that constitute poverty. Poverty has been aggravated by a growing urban underclass. This underclass is viscously locked into a cycle of, joblessness, crime, welfare dependency and out-of-wedlock pregnancy. It is these aspects of American society, which need to be curbed so that the problem of poverty can be completely eliminated. There have been both governmental as well as nongovernmental efforts taken to change the situation of poverty occurring and remove the effects of poverty. These include actions such as neighborhood efforts to campaign against poverty and have also been covered in campaigns with a national focus on removing poverty. Theses efforts target specific groups affected by poverty such as children, autistics, immigrants, or the homeless. Other methods used to alleviate poverty include education, legislation, social work, direct service or charity, and community organizing. Above all these factors, if the poverty line in America must be removed, those aspects which directly cause poverty need to be addressed. Following are some recommended and suggestions on how to alleviate the problem of poverty in United States, by addressing these basic issues: The income transfer policies have to be redefined so that they focus on helping the real poor and not in making people think they can live in poverty. The government needs to implement adequate training programs to increase the skills of people affected by poverty. They should also look into whether their existing program are helping the people who really need help. During economic recessions, which is an expected thing in the economic cycle, more measures need to be taken to eliminate poverty occurring at this point, because it will put more burden on the country’ economic system and propagate poverty. Finally above all what is also required is social introspection. In this regards, it is important to implement programs by which poor mothers get married to the fathers of their children rather than stay single because such measures will lift about three-quarters of the population out of poverty. Therefore welfare program should be tuned to work on this aspect to reduce poverty in the world’s most developed nation. When these problem are addressed and solved in the United States, it will set a pace for similar measure to be adopted in other developed nations of the world, which are modeling their economy on the line of the America economy which are already like the Americans economy. It is when poverty is eliminated by tackling it from a social angle that it sets the mark for the society to be judged as a good society. References: Understanding Poverty and Economic Inequality in the United States. Available: Economy and budget. Available: United States. Available: How the U.S economy works. Available: Isabel V. Sawhill, Poverty in the United States. Available: Read More