An economic way to fight, world hunger

Discussion in 'Economics & Trade' started by Bored Dead, Sep 9, 2012.

  1. Bored Dead

    Bored Dead New Member

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    A proposal for a 5% luxury tax for world hunger charities

    Around the world, there are many people facing starvation. A 2010 statistic places the number or people facing hunger at 925 million, which is a terrible situation that the 1st world nations must face. World hunger charities around the world see this problem, and do their best to fight it, but it’s not enough. Millions of people are still starving and millions need help. This problem, like any problem, can be solved with enough effort, and here is what I believe is a realistic solution to this problem through a good economic plan.

    This plan is to create a 5% luxury tax, for example, in the United States, and give the proceeds to world hunger charities, with one important restriction: they may only be allowed to fight world hunger with resources bought in the nation adopting this policy.

    Two problems exist with this plan. One is that many 1st world nations don't produce enough food to feed the world’s hungry, and another is creating new taxes hurts our economy and costs jobs. How the first problem is going to be solved is that this restriction is going to cause charities to invest the money they can’t spend on food or supplies, on investing in the agricultural industry, which will expand to produce more food.

    How the second problem will be solved is by each charity buying mass amounts of food in the economy causing the production of food to expand, which means more jobs. The creation of these food production jobs (as well as distribution jobs), will equal the jobs lost due to raising taxes on luxury goods (like expensive cars, video games, diamonds, TVs basically anything for entertainment or anything luxurious)

    So the net result, I theorize, which I believe is a worthy trade, will be less production of some luxuries nations don't need, for feeding of the hungry, mostly in third world countries.

    Additional problems people have brought up:

    Bandits seizing the food and attacking the distributors

    Well this can be solved by charities hiring security in dangerous territories

    The population becoming lazy due to no longer needing to search for food


    This has been brought up and is ridiculous to me, as people won't be happy with just having enough food to survive. They will always want money and will search for ways to get it.
     
  2. Reiver

    Reiver Well-Known Member

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    The issue is straight forward: what is the best way of reducing absolute poverty problems, thereby minimising the risk of starvation issues. Charity has its place, particularly in helping those suffering from natural disaster. However, ultimately it has to come down to economic development. A blanket policy of trade liberalisation, for example, has enabled exploitative relationships where the locals actually suffer from trade (reflecting resource exploitation and pollution costs). The likes of the WTO has to be radically reformed to ensure that development is its core objective
     
  3. Bored Dead

    Bored Dead New Member

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    I really doubt third world governments or the UN will implement the correct policies to spur economic development, and it will certainly take some time to develop.

    So why not support a solution like this?

    Also, are the economics solid?
     
  4. Reiver

    Reiver Well-Known Member

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    Its not an economics solution. Its just a redistribution policy. The consequences could be more coplex that you envisage. We already have foreign aid targets, expressed as a percentage of GDP. Imposing a tax solution could restrict flexibility and actually harm overall provision. Its better to try 'carrot'' solutions, ensuring thereby chariable monies aren't harmed
     
  5. Bored Dead

    Bored Dead New Member

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    I really don't mind what class of policy it is, redistribution sounds fine.
    no policy can avoid the possibility of the unknown, give me a specific negative consequence and I'll see if anything can be changed to fix it.
    The charities have full control over the spending of the money, they can do whatever they want with the money, hire more workers, hire security, purchase and distribute food, buy ships, anything! (although if corruption ensues then they will need regulations). That is flexibility!

    Will the jobs lost due to higher taxes be negated by the jobs created by the investment in agriculture and distribution?
     
  6. Reiver

    Reiver Well-Known Member

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    Redistribution works, in terms of the individual, because it reduces the negative effects from inequality of opportunity. We don't have that here. We just have a rigid means to achieve some desired redistribution (which isn't much different to the foreign aid targets) whilst ignoring the real problem: North-South trade inequalities.

    A luxury tax, whilst creating market distortions, won't necessarily cost jobs. Your policy, however, won't create jobs as its not geared towards economic development
     
  7. Bored Dead

    Bored Dead New Member

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    It does redistribute without any unintended effects, right?

    Are foreign aid targets like taxing to solve world problems?

    Why can't this be used as a temporary solution while economic problems get worked out?

    So taking money out of the economy doesn't do any damage at all? And charities buying mass amounts of food won't cause the production of food to expand causing the creation of jobs?
     
  8. Anders Hoveland

    Anders Hoveland Banned

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    What about a fat tax?

    Perhaps those in the world who eat more than their fair share should be the ones who have to help feed the hungry.
     
  9. Bored Dead

    Bored Dead New Member

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    The problem isn't that too much food is being eaten by obese people, it's that people in these countries are too poor to buy food. If fat people didn't eat as much food as they did, the food just wouldn't be produced.

    How do you like the policy?
     
  10. Reiver

    Reiver Well-Known Member

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    You've gone for the stick, a mere restrictive form of the attempt to meet foreign aid targets. Why haven't you gone for the carrot? Why haven't you gone for tax credits, using those credits to attract corporations and rich individuals into making investments characterised by sustainability in terms of economic development?
     
  11. Bored Dead

    Bored Dead New Member

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    So your saying give tax credits to individuals investing in third world economies? That would mean you would be basically Raising taxes, which is taking money out of the economy, and using to invest in foreign countries. By taking more money out of the economy you increase unemployment. Maybe businesses could cause safe deflation if they reduce their workers wages to compensate for the lower amount of money in circulation, but that doesn't happen. This is proven by statistics from the US recession.

    July_inflation_rate_2010.jpg

    Reported Unemployment.jpg

    The amount of money in the economy decreases in 2009 (proven by higher unemployment with no significant change in inflation or income) and as money in the economy decreases, unemployment increases. Unemployment increases without causing deflation. Thus when money in the economy is reduced, unemployment ensues.

    Now I get to criticize your idea! Sweet (though friendly) revenge! (although I will still admit I'm wrong if I believe I am)
     
  12. Reiver

    Reiver Well-Known Member

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    What on earth do you think your redistribution tax is? It takes money out, by definition. The difference here is that we're ensuring policy is directly liked to economic development criteria, whilst avoiding the problems inherent in country to country redistribution (e.g. foreign aid is often inefficiently linked to trade protectionism)

    You are wrong. The difference here is that my comment was based on an economic solution. Yours is not. Its just a restrictive form of redistribution.
     
  13. Bored Dead

    Bored Dead New Member

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    No it doesn't, all money taken out will end up back into the economy through the agricultural industry. Unneeded production is being lost, not money or jobs.
     
  14. Reiver

    Reiver Well-Known Member

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    This is nonsense. Its certainly a leakage to the economy. To achieve something that isn't there has to be increases in economic opportunis (something a tax credit would achieve)
     
  15. Iolo

    Iolo Well-Known Member Past Donor

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    The American Capitalist Plan for the world is to ensure that the poor breed like rabbits and die or use birth control and die because refused aid. It is their plan for you too, mugs.
     
  16. Bored Dead

    Bored Dead New Member

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    Well, I'm listening to you, how does money leak out of the economy with this plan?
     
  17. Bored Dead

    Bored Dead New Member

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    Conspiracy theories are off topic, please stick to criticizing or supporting my plan please.
     
  18. Reiver

    Reiver Well-Known Member

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    What do you think taxes are? A leakage. The stuff about 'only buying from the country' I've ignored as its just a variation of economic nationalism. We've already had foreign aid linked heavily with protectionism. The skewed trade patterns ensure deadweight loss. They also lead to all sorts of problems such as dumping, whereby we get protectionism of developed world agriculture at the expense of third world (weakening economic development opportunity).
     
  19. Bored Dead

    Bored Dead New Member

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    True, taxes may be a leakage, but government spending of those taxes negates the leakage from taxes. The money leaves the economy through taxes but returns back again when charities spend it on food.
    It's not nationalism, it's making sure a country isn't shooting themselves in the foot by taxing money out of their economy to fund jobs in another nation while sacrificing jobs in their nation.
     
  20. Reiver

    Reiver Well-Known Member

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    And then you create a form of protectionism. Its no different to the current problems generated by agricultural subsidies

    You may have good intentions, but its certainly the same as economic nationality (i.e. a distortion of production based on country-specific demands). It is therefore on a par with the losses generated by protectionism
     
  21. Bored Dead

    Bored Dead New Member

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    Are you conceding the the point that there is leakage in this plan?
    So what if this is a form of protectionism? The only negative effect I can think of is that the price for the food will be higher, but that is a fair trade for not giving away jobs.
     
  22. Reiver

    Reiver Well-Known Member

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    No. A tax is a leakage. You've just added a negative with another negative: effectively destroying the notion of economic aid, replacing it with a form of protectionism

    You're effectively demanding that foreign aid becomes a subsidy to domestic agriculture etc.
     
  23. Bored Dead

    Bored Dead New Member

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    Whats wrong with agriculture subsidies?
     
  24. Reiver

    Reiver Well-Known Member

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    They are a form of protectionism that harm trade relations and destroy economic opportunities (including development). It interferes with the whole notion of comparative advantage and stops the historical economic cycles that we expect (industrialisation, followed by- due to productivity and income gains- deindustrialisation with workers shifting to the tertiary sector)
     
  25. Iolo

    Iolo Well-Known Member Past Donor

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    Your plan is fine, but since decent people have no power over government, irrelevant: you are ruled by the very, very rich, who own your media and tell you what to think and do, and they won't wan't to lose any of their swag, will they?
     

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