Poverty in the Context of Supply and Demand Theories - Term Paper Example

? Business Topic: Article Analysis Inserts His/Her Inserts Grade Inserts May 2, Brief Overview/Synopsis of the Issue The article focuses on the economic issue of poverty and its relation to the demand and supply theory of economics. Poverty forces the poor to demand a reduction of constantly increasing prices. Companies are willing to supply goods and services if the prices are increasing. Poverty forces the New York City government to step in to alleviate the resident’s poverty predicament. Indeed, the article vividly shows that the government of New York City must aid the residents in their desire to climb out of their current poverty debacle. Subject: Business Topic: Article Analysis Introduction In terms of discussing the model or economic theory that relates to the issue presented in the news article, the economic theory in focus is a supply and demand theory. As prices of goods and services increase, the demand for the products and services decrease. Likewise, as the prices of goods and services increase, the supply of the goods and services increase (Arnold, 2008). In terms of discussing what economic theory states and predicts about the issue presented in the news article, as the prices of goods and services increase, the poverty level people will reduce their demand for the higher priced products. On the other hand, as the prices of goods and services increase, the business entities are eager to supply more services and goods in order to generate more profits (Boyes, 2010). Analysis of the Economic Impact of the Major Social Problem of Poverty The April 12, 2012 issue of the New York Times article is reflection on poverty. The title of the article is New York City’s Poverty Rate Rises, Study Finds (Roberts, 2012). The paper shows strong evidence there has been an increasing number of New York residents joining the ranks of the poor over the last years. The number of New York City residents has literally increased by 100,000 individuals. With the increase, the poverty ratio soared by as much as 1.3 percent. The new poverty rate is 21 percent. The percent indicates that one out of every five New York residents qualifies as poor. The article further states that New York has one of the highest poverty levels in the U.S. Once New York has implemented a more detailed description which defines who can be classified as a poor individual, current New York City’s statistics of the poor has the largest annual rise in poverty ratio. As Jan Windebank emphasized, “Throughout the advanced economies, the widespread consensus is that employment is the best route out of poverty. Not only are the approaches of both the Old Left and New Right grounded in such a belief, but so too is the employment-focused third way approach of New Labor. In this book, however, our intention is to begin to explain why an alternative third way discourse has started to emerge that rejects an employment-centered approach to poverty alleviation” (Windebank, 2003). The current recession, which started in 2008, is blamed as the major culprit for the ballooning of the poor individuals in New York City. The recession brought a lot of the United States companies into the unfavorable quagmire of bankruptcy. With bankruptcy enveloping some of the companies in the United States skies, those that cannot innovate are forced to close shops. With the closing of the shops, many employees are retrenched. With the loss of their jobs, the retrenched employees could not afford to retain their previous lifestyle. The retrenched employees had to join the long line of New Yorkers waiting for their turn to grab a set of food coupons. With the slowing of the United States economic wheel into a snail’s pace, statistics showed that one out of every four New York residents, under the age of 18 years, joined the poor of New York, the city that never sleeps. New York City’s Center for Economic Opportunity reported the latest poverty report. Likewise, the 2008 U.S. Economic crisis is connected to the European Union’s current economic meltdown (Navarro, 2011). Going deeper, the New York City families (having children to feed) were the hardest hit. Their mean poverty climbed to 23 percent. In addition, many homes were forced to seek other financial means to make their economic ends meet. Some families (having two or more members working) were also engulfed by poverty’s long clutches. During 2010, the ranks of families having two working members increased by 1.3 percent. The increase is five percent of the same group of families having two members holding on to their jobs. The same New York City research group, Center for Economic Opportunity, blamed the current recession for the worsening poverty picture of the city (Roberts, 2012). The same New York research group also blamed the increased unemployment rate for being the cause for New York City worsening poverty situation. As the unemployment rate increases, more people reduce their demand to buy goods and services in the city. Consequently, as the number of customers visiting the New York City stores decrease, the New York City store’s revenues decline. As the store revenues decline, more stores retrench their employees. As the number of unemployed citizens soars up, some of the stores have no other recourse but to file for bankruptcy. To avoid filing for bankruptcy, some of the stores or establishments must reduce avoidable expenses and costs. In terms of figures, the article indicates that New York City had an estimated 1.7 million employees in 2010. In response to the possible higher poverty rate, the local city government instituted economic recovery measures. The measures included issuing food stamps to families qualifying as residents being at poverty level. In addition, the local New York City government distributed tax credits to companies and individuals in order to increase their purchasing power. With the increased purchasing power, the city’s economic wheel runs faster. In addition, the government instituted other programs to alleviate the resident’s economic plight. The city’s economic recovery measures were set into motion in 2007. The economic depression started in 2007. The city’s measures to improve the situation continue to unfold up till the present time. More than one million residents took advantage of the city’s social initiatives, such as Food Stamps 2010 program. The 2010 food stamps’ statistics is higher than the city’s 2008 statistical figure where only 773,000 residents qualified for the same food stamps program (Roberts, 2012). The New York City incorporates many factors in arriving at the city’s poverty statistics. The city includes the medical care data in its poverty analysis. Likewise, the city includes the child care issues in generating the city’s poverty statistics. Further, New York City also included the travelling expenses of the residents in the poverty equation. The city incorporated the housing figures in arriving at the final poverty line balance. With these factors, the city’s poverty line was higher than the average federal poverty line. In terms of the city’s 2010 expenses to alleviate poverty, the city’s expenses allocated to aid the average four –member family household was $30,000. The city’s expense figure is significantly higher than the average expense figure of the United States government (Roberts, 2012). As expected, the article indicates both the children and the African American Hispanics were the hardest hit by the economic depression. The Bush administration’s economic agenda, tax rebate program, was instrumental in reducing New York City’s economic crisis. In addition, the new government of Obama gave its own poverty – alleviation program to help New York City recover from the economic crisis. The Obama government’s program included a stimulus package that included both unemployment benefits as well as tax credits. The stimulus package helped the bankruptcy- destined companies recover from the current economic difficulties. The Obama administration instituted subsidized employment projects to reduce the unemployment rate in the United States. The Obama administration also set into motion the expanded child tax credits program to lessen the damaging impact of the economic crisis (Roberts, 2012). In terms of specifics, Sam Roberts indicates different groups generated different poverty levels. The Hispanics generated a high 26 percent poverty ratio. The Asians spawned a 25 percent poverty ratio. The African Africans produced a 22 percent poverty ratio. The Non-Hispanics turned out a 15 percent poverty output. The Noncitizens generated a higher 28 percent poverty percentage (2012). The city’s poverty predicament is seen in David Jone’s statement, who notes the following: “What’s happening is we’re building an enormous group of people who are not working at all… We may continue to see high levels of poverty even as the recession recedes.” Explanation of How the Economic Behavior of Individuals, Businesses, and Governments Can Affect Economic Growth, Social Well-being and the Quality of Life The economic behavior of individuals can affect economic growth, social well-being, and the quality of life as economics includes the money factor. A person with money has the purchasing power to buy goods and services. The economic wheel runs faster when an individual buys goods and services. As the number of individuals having money increase, the purchasing power of the community increases. As the purchasing power increases, more stores and entities generate higher revenues. As the revenues of the stores and other business establishments increase, the stores and establishments can hire more employees. As more people are hired by New York City’s stores and other business establishments, the economic wheel favorably runs at a very fast speed (Hamilton, 2009). On the other hand, the lazy residents do not contribute to New York City’s economic recovery program. A lot of the residents who are not willing to work do not have the challenging spirit to even start searching for job to all. Some of the lazy residents do not have the drive to set up their own businesses. Some of such residents do not want to give up their privilege of having food stamps (free meals). Others prefer to just take drugs, abuse alcohol and join gangs. Many of such citizens engage in criminal activities, like robbery etc., to survive in New York City’s fast-paced business world. The economic wheel’s speed is reduced when the lazy residents are added to the poverty equation. The economic behavior of businesses can affect economic growth, social well-being, and the quality of life. Businesses need revenues to stay open and active for many years to come. Revenues are generated if there is a demand for the products of a business establishment (Arnold, 2008). The business cannot force the residents to buy its products and services. If there are no customers, the business establishments are forced to close shops. With the closing of their shops, the stores’ retrenched employees will troop to the city’s unemployment line for financial help. The businesses can continue being active despite a significant drop in their annual revenues. Many business establishments can retrench their employees in order to deal with the reduced trickling of their annual revenues. Some business entities will accept reduced revenues as they wait for the economic depression cloud to evaporate into the far reaches of the universe. Some business organizations are forced to reduce avoidable expenses in order to keep the company’s economic status above the bankruptcy level. The economic behavior of the New York City government can affect economic growth, social well-being, and the quality of life (Boyes, 2010). The New York City government must intervene in the current economic crisis unfolding the United States, the local community. The government must increase its food stamps program amount in order to cater to the poor residents’ increasing demand for food stamps. The government of New York City should increase its tax incentives to local businesses establishments in order to give the economically drowning companies a longer leash on their economic life. The New York City government can also create an environment that is conducive to hiring more employees. For example, the government can give tax credits or benefits to businesses hiring local New York City residents. Meta Analysis of Poverty In terms of Meta analysis, the graph (Appendix, Graph A) shows the results of the survey answer given by 30 respondents pertaining the current poverty level n New York City. In terms of recovery (where 5 is the highest and 1 is the lowest), there are some persons believing their New York City life’s poverty situation is recoverable. Many of the respondents believe that all their efforts will come to naught since their current efforts are miniscule, when compared to the average economic efforts of all New York City residents. In addition, more people are average thinkers. They think that outside help is needed to climb out of their current poverty status. In addition, there are only a handful of individuals believing they cannot survive their current poverty predicament. There are more people who believe that their bright light of economic recovery is near at hand. These people believe that they can reach the end of the long economic tunnel to a more comfortable economic life (Barrett, 2005). In terms of current poverty level (where 5 is the highest and 1 is the lowest), most of the 30 respondents believe they are within the poverty level classification. Most of the respondents believe the current economic depression triggered the worsening current poverty levels. Many families believe the government’s food stamps program can alleviate their current poor state. Likewise, the poverty level respondents believe that the government’s tax incentives and other poverty alleviation programs significantly lessen the economic plight of the respondents. In terms of discussing how the situation/issue presented in the news article align with economic theory, the article vividly shows that economic theories are in place. The increase in the unemployment rate forces the unemployed and poverty level individuals to stop buying unnecessary goods and services (demand theory of economics). As the prices of goods increase, more companies will sell their products and services to the New York City residents (supply theory of economics). As the companies’ sales decline, the companies are forced to retrench some or all of its workers. The article shows that the government of New York City is correct in helping the poverty level families out of their current economic debacle. Conclusion Based on the above discussion, the article focuses on the poverty, supply theory, and demand theory of economics. The demand for the products and services decrease when the prices decrease. Poverty reduces the poor’s capacity to buy goods and services as their prices increase. The supply of the products and services increase when the prices increase. New York City companies are eager to increase their supply of goods and services if the prices are higher. Indeed, the article vividly shows that the government of New York City must aid the residents in their eager desire to climb out of their current poverty debacle. References Arnold, R. (2008). Economics. New York: Cengage Learning Press. Barrett, C. (2005). The Social economics of poverty. New York: Routledge Press. Boyes, W. (2010). Economics. New York: Cengage Learning Press. Hamilton, D. (2009). Cultural economics and theory. New York: Taylor & Francis Press. Navarro, A. (2011). Global capitalist crisis and the second Great Depression. New York: Lexington Press. Roberts, S. (2012). New York's poverty rate rises, study finds. The New York Times, p. 1. Windebank, J. (2003). Poverty and the Third Way. New York: Routledge Press. Appendix A: Graph Graph A Poverty and Recovery Analysis Read More