Trickle-Down Economics: Trickle-Up Poverty

Claire Roberts – Honorbound

Our world’s top 1% holds more wealth than the rest of the world combined: the leading 62 individual incomes pool to at least $7.6 trillion[1], while over 3 billion people, half of the global population, live on less than $2.50 a day[2].

To be blunt, our culture idolizes luxury. Updates on the world’s richest, prettiest, and most talented individuals are plastered on social media, magazines, and news platforms. Any teenager in America, and maybe even a majority around the world, could tell you who is married to Kanye West or who America’s republican candidate is for the 2016 election. But these teenagers may not be able to tell you much about humanity’s economic well-being, like the fact that 22,000 children die every day as a result of poverty[3], or that 121 children today are denied an education[4]. Why aren’t these statistics broadcasted- and why does our society place an emphasis on the wealth of some when billions of others are suffering?

Economic stability depends on the circumstance of a person. Are they working? Are they fairly compensated for the work they are doing? Are they striving to maximize their economic utility through their work? When discussing global poverty we are faced with the issue of low-wage labor jobs. Naked Economics, a book that examines economics on a global scale, analyzes the role of Asian sweatshops internationally. Nike’s co-founder Phil Knight, has a net worth of 24.1 billion dollars and is often scrutinized because of the way his company treats sweatshop workers. Nike pays its Vietnamese workers $600 a year, and while this salary is undeniably low for the working conditions, it is twice the salary of the average Vietnamese worker. Yes, we all wish these workers could work a job with better conditions and higher pay, but unfortunately that is not currently an option. These workers do not work in sweatshops because they want to, they work in sweatshops because they have to. Protesters demand that we cut-off international trade to close down sweatshops, but doing so would not benefit these workers because of the perverse incentive: unemployment. Working conditions in sweatshops may be harsh, but they are nowhere as harsh as the conditions these workers would experience when faced with unemployment[5].

If we want to help Vietnamese sweatshop workers by closing sweatshops we must also provide a better and more sustainable alternative, which is difficult when dealing with a private company’s foreign affairs. Instead of shutting down sweatshops, why don’t we demand that Phil Knight (or the new CEO as of June 2016, Mark Parker) coughs up some of his money to pay his workers more[6]?  The problem with the top 1% is not that they are rich, it’s that they are unnecessarily rich when compared to the rest of the world.

When provided with the right tools (education, health, opportunity, etc.) a person is able to achieve a higher utility. But your average person does not have the time or money to push resources towards helping millions of workers find better opportunities. The top 1% does, but too much energy is spent admiring their lifestyles, and not enough energy is spent publicizing the horrendous effects of extreme poverty on humanity.

[1] “An Economy For the 1%.” Oxfam International. Accessed October 19, 2016.

[2] Office, Human Development Report. “2015 Human Development Report.” 2015 Human Development Report. 2015. Accessed October 19, 2016.

[3] “Child Mortality Rate Drops by a Third since 1990.” UNICEF. Accessed October 19, 2016.

[4] Shah, Anup. “Poverty Facts and Stats.” Global Issues. Accessed October 19, 2016.

[5] Wheelan, Charles J. Naked Economics: Undressing the Dismal Science. New York: Norton, 2002.

[6] Vinton, Kate. “Nike Cofounder And Chairman Phil Knight Officially Retires From The Board.” Forbes. June 30, 2016. Accessed October 19, 2016.

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