Liberalism

Liberalism is the view that income should be redistributed in such a way so that the poorest in society always receive an adequate level of income as a form of social insurance. This view was originally developed by the philosopher John Rawls. Public policy should be based on the maximin criterion, which seeks to maximize the utility or well-being of the worst-off person in society. That is, rather than maximizing the sum of everyone’s utility, one should maximize the minimum utility.

Libertarianism is the view that government should enforce individual rights to ensure that everyone has the same opportunity to use his or her talents to achieve success, but should not redistribute income. Libertarians argue that equality of opportunity is more important than equality of income. The libertarian alternative to evaluating economic outcomes is to evaluate the process by which these outcomes arise. When the distribution of income is achievedunfairly—for instance, when one person steals from another—the government hasthe right and duty to remedy the problem. But, as long as the process determiningthe distribution of income is just, the resulting distribution is fair, no matter howunequal.

18. Briefly explain Policies to Reduce Poverty. Minimum-wage laws, Welfare Negative Income Tax and In-kind transfers.

Poverty is one of the most difficult problems that policymakers face. Members of poor families are more likely to experience homelessness, drug dependency, domestic violence, health problems. And most people believe that, at the very least, government should try to help those most in need. Here are some of the policy options, which does help some people escape poverty, but none of them is perfect, and deciding which is best is not easy.

The magnitude of the effects of the minimum wage depends on the elasticity of the demand for labor. Advocates argue that the demand for unskilled labor is relatively inelastic, so that a high minimum wage depresses employment only slightly.

Critics argue that labor demand is more elastic, especially in the long run when firms can adjust employment more fully

The government attempts to raise the living standards of the poor through the welfare system.

Welfare is a broad term that encompasses various government programs that supplement the incomes of the needy.

Temporary Assistance for Needy Families

Supplemental Security Income (SSI)

A negative income tax collects tax revenue from high-income households and gives transfers to low-income households.

High-income families would pay a tax based on their incomes.

Low-income families would receive a subsidy – a “negative tax.”

Poor families would receive financial assistance without having to demonstrate need.

In-kind transfers are transfers to the poor given in the form of goods and services rather than cash.

Food stamps and Medicaid are examples. Advocates of in-kind transfers argue that such transfers ensure that the poor get what they most need.

Advocates of cash payments argue that in-kind-transfers are inefficient and disrespectful.

19. Evaluate whether the following statement would be false or true: "The women's movement has done more to alleviate inequality in the income distribution than any government policy over the last century." Expand your evaluation based on the Case Study “The women’s movement and the income distribution” and express your understanding about it, please.

This statement is false. Because from the case study ‘The Women’s Movement and the Income Distribution’ we know: Increase in percentage of women who have joined the work force Has led to less equality in family incomes More high-class women are joining the work force, but lower class women have always been working Making rich households even richer, but also increasing benefits for women
Therefore, it just made inequality even more. Because those women’s of lower class have always been working and their family income didn’t change. But women’s in rich families started to work, which made those family even more richer and increased inequality.

20. Explain why for some parents “scrimping is legal but saving is not always good” in the USA. Express your understanding of the News about “Saving and Welfare”.

For some people who have low living standards there are some help from the Government. Such programs as Welfare, Food Stamp, Medicaid, etc. The thing I that there is a condition which prohibits savings. Because this help is only for people’s basic needs and does not intend for ‘people to take the money and put it in a saving account’. But they can just spend it it for their real needs. Let’s consider an example of mother from the news “Saving and Welfare”. She is a good example how people sometimes are scrimping. She follows principle ‘ a penny aved – a penny earned’ and has a true talent for pariemony. She decides not to spend money which government gives a help and save it for some rainy day or daughter’s future. But the law caught her up. Government officials raised the question whether she really needed a welfare help if she was able to save money. And as a result she was sentensed one-year probation and paid $1000 to government.

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