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Wealth

The Wealth Beneath Your Feet

The Wealth Beneath Your Feet.
SOIL LAB: The Wealth Beneath Your Feet Purpose: To determine potential growth based on tests of physical characteristics such as pH, fertility and consistency. Pre-Lab: TO start off our investigation, we had to gather soil. Our group decided to get it from below a tree, right next to the trunk. In terms on fertility, we rated our soil to be a 4 (1 being the least fertile, 10 being the most). We rated it rather high because it was in a place where it had not been tampered with making it better than others.
Also, it was quite dark and matched up very well with diagrams online of fertile soil. (http://www. enchantedlearning. com/geology/soil/) TEST ONE: Collection of Soil and Observation of Soil Profile The first layer (O) we observed is the top layer, a layer of organic soil. It is made up of humus and leaf sediment. Below that (A) comes the topsoil. This is where seeds sprout and other plants roots grow. This layer is also made up of humus, but here are other mineral particles as well. Next is the eluviation layer (E).
This layer contains mostly sand and silt. It is the eluviation layer because of the process that takes place here where minerals are lost as well as clay because of water dripping through the soil. The subsoil layer is next (B). This layer is made up of clay and mineral substances, it receives from the eater being dripped during the form the eluviation process eluviation process. ,Regoliath (C) lies beneath and is mostly just broken up bedrock. Lastly is the actual bedrock layer (R), essentially just unweathered rock.

The Wealth Beneath Your Feet

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Understanding Societal Wealth and Inequality

Understanding Societal Wealth and Inequality.
On a general basis, wealth is an accumulation of physical entities which hold great importance to us. These entities are objects such as money, land, jewelries, gold, precious stones and so much more. It is also a means were by people grade themselves or attain superiority over others. Wealth comes with power, prestige, honor, and integrity. Wealth is a very important tool in a society and that is the very means of survival in today’s world. In Charles Darwin’s evolutionary theory, he speaks of “survival of the fittest”.
In today’s modern world when fittest is mentioned it actually means wisest, more intelligent or brilliant or clever. Even the strongest in a society cannot attain power without wealth. What an irony but that is the situation of the world and now people are misusing this privilege. The unreasonable use of this opportunity is what is causing inequality in a society. According to the founder or father of economics, Adam smith, he explains that the wealth of a nation is not based on land or other forms of property but on the labor gotten from the nation.
What he tries to explain from this is that the amount of working power in a society gives rise to the power in terms of wealth of the nation. Even if a society has abundance in land, both fertile and unfertile, the society is useless without the working force of the society (Smith). Every human being in a society is entitled to the wealth provided by the society because when people are created they didn’t place a part of the society to them naturally. The moment people start claiming the wealth of the nation; many people will be left out. This is called private wealth which causes inequality amongst people in a community.

Even if private wealth was a good thing, greed which is part of human nature makes it very bad in a society. One man wants to accumulate everything for himself and his family members and this wealth is passed down from one generation to the next. Others in the society have no way of accessing that wealth which belongs to all of them. In Jean Jacque Rousseau’s book Discourse on the origin of inequality published by Marc Michael Rey in1755, Holland, he talks about types of inequality. The types of inequality are natural or physical inequality and moral or political or ethical inequality.
The natural inequality he explains that yes every one wasn’t born with the same physical structure. Some might be born strong or weak, tall or short and so on and so forth but that doesn’t mean that inequality should exist. Everyone is born with one skill or the other which enables one to survive in the society and it’s those skills that enable the society to develop very fast and well. The type of inequality that he focuses on is the moral inequality which is caused by people’s ideas which are brought forward and authorized because it favors them.
This inequality is a detriment to the development of a society. People come up with the idea of private wealth and the moment everyone starts seeing things in their eyes they begin to accept it as a way of life which is not so (Rousseau). From this idea of private wealth, people who have, start taking advantage of it. They keep on accumulating more wealth from there they gain power, prestige, importance in the society and they begin to oppress others with it. Issue of superiority and inferiority start surfacing and stratification occurs.
The less privileged ones become slaves to the rich people and that is how slavery starts which is a form of stratification in a society. People fall into this category because of survival. The thought of slavery is inhuman, why should somebody be a slave to another person because of material possessions? It’s not right. Slavery was initially based on debt or the violation of a more or defeat in war. Slavery based on debt is the subject matter. The rich knew that if they accumulated everything the poor or peasants would be forced to borrow from them.
They went into contracts with them and the contract entailed that if they didn’t pay at the designated time with interest, they would be forced to pay up their debt with labor which meant they would become slaves to them. This was called bonded service or indentured service. This was a common psychology the rich used to oppress the poor and this continued from one generation to the next. In some circumstances if the father and the mother cannot pay up even after death, the child (ren) take the debt and work for the rich person till the ebt is paid. This occurred in the United States of America until Slavery was based on color. In some areas in Ghana when debt was not paid in time, the rich person will collect the girl child of that family and she becomes his own until he is satisfied with her probably when she is in her fifties. Nothing was done about this, girls suffered because of private wealth. People used it to their advantage and people suffered. This form of slavery continued in Ghana until a militant president broke the bond or contract.
Now those girls who were taken from their house at an early age live in shame, they walk nude on the streets of Ghana because they have been stripped of their purity at an early age. Stratification of a society is the after effect of private wealth. Stratification of societies has evolved through the ages from slavery to caste to estate and to class system which is the modern day form of stratification. Slavery as a type of stratification system is what I have previously explained. The next stratification system is the caste system.
The Indian caste system is a typical example of the intense effect of stratification. The system is ascribed meaning one cannot choose his or her class because it is given to you and it is based on religious reasons. It is a rigid system and its characteristics or features entail endogamy, it’s practically a taboo to marry outside your caste. The Brahmans being the apex of the society are the only ones that can teach other Brahman children. It doesn’t matter if you have a good education standing, your ideas or teachings are regarded as useless.
Functionalist sociologists, Kingsley Davis and Wilbert Moore suggested that society must offer rewards to ensure that important social positions are filled by the most competent people (Rowell). This doesn’t look like what the functionalist theorist said about being rewarded because of your ability. The Brahmans are the richest in the society, they do no work and they get all the privileges the society has to offer. The other castes present in the system are the Kshatriya (warriors), Vaishay (merchants), Shudra (laborers/farmers), and Dalit (untouchables).
This system is so rigid and it is almost impossible to change ones caste. Another caste system which existed in South Africa because of colonialism was the Apartheid caste system. We should note that colonialism was a form of amassing wealth. In this case a country is taking the wealth of another nation to add to its own wealth and they never stop accumulating wealth. It is a macro-view of man and greed when looked at properly. When I talk of macro-view I mean when a developed or civilized country oppress the underdeveloped or uncivilized people and use their scarce resources to make them wallow in poverty.
At that time in South Africa, the nation was divided in four, white, colored, black and Bantu. Privileges were giving according to caste level. The people at the bottom of the caste suffered because they received less. So we now see that the problem of private wealth is an issue even amongst countries. The estate system which is another form of stratification was evident in the middle ages. In this period the political system was feudalism. There were three classes in this system namely, clergy, nobles and the commoners.
The clergy and the nobles are about 1% of the society’s population and the remaining 99% belonged to the commoners which most of them were dirt poor or peasants. This system existed because the nobles owned vast amount of land and because of that they practiced feudalism which is a system of government by land ownership. This land ownership is still a form of private wealth because the nobles own the land which is the means of production and the peasants work their heads off to survive. Slavery, caste, and estate system were all means of stratification in the old era.
The people were controlled by the divine rights which meant that the people were subjected to the nobles or kings because it was an authority from God to obey them and anyone that questions that authority would be put to death. The modern era of stratification has changed because people are now enlightened but how enlightened are they? The effects of private wealth cannot be left behind because as I said before, human greed is inevitable. The modern era of stratification is an open class or social class which is divided in three, upper class, middle class and the lower class.
It is called the open class because it is flexible and it is achieved not ascribed, now that is ideal but not real because the elites in the society want to maintain that form of stratification they create institutions that help maintain that private wealth because even in the grave they still want to dominate. Yes it is undeniable that you should be rewarded for one’s hard work, which is where private wealth becomes positive in a society. That chance of working and being rewarded is limited to a few in the society and that few are known as the elites of the society.
They pass this chance from one generation to the next in other to ensure that the system or order is not disrupted. They maintain this stratification by controlling ideas, information and use of force. All this is possible by the introduction of institutions such as, legal, educational, police and military institutions. They control the ideas through the educational system, they tell what children should believe and not question it. They also make it possible that only the rich can attend schools because if one is not literate, the chances of the person rising to a higher status in the society would be limited.
The elites control the price of educational institutions in the society allowing only a limited amount of children to gain access and as the world is, the children that are given this privilege are the children of the elites. When education fails to impact what they desire, they move on to using the legal institutions. As we all know not everyone has the money to acquire a lawyer in a court case and that is why a public defendant is setup. The elites own the legal institutions especially the public ones and the moment a lower class citizen comes with a court case, he or she knows that the case has already being won by the rich or elite.
They fill up these institutions with their own kind and in the course of that they protected from the law. The law was not implemented to create orderliness in a society, that’s what we all think but the real issue is that the law was placed to suppress the poor. Legal institutions are placed to justify the rich and their actions so that no one can question it. When the rich realize that a poor individual is about to gain access to private wealth, false evidence is planted to strip the poor of their right to the private wealth. Is that just? I doubt.
The police institution was created by the elites to protect what they have and their lives from the poor. Mostly in nations it is noticed that the elites move around with convoys while the poor have no protection because they have nothing to lose. The police are also there to ensure that the poor doesn’t revolt on the inequality or stratification order. The moment the police isn’t effective enough they call in the military institutions. They mostly do this in times of riot and strike. In these cases they use force to maintain the stratification of the society.
We see that the educational institution is used to control ideas and information while the legal institution is used to influence the behavior of the lower class and the military and the police institution is used to exert force on the people when they cannot influence or change their reasoning. In Karl Marx’s book, the communist manifesto, he suggests that the society is stratified according to those who won the means of production (bourgeoisie) and the laborers (proletariats). The bourgeois give the proletariats false consciousness and exploit them with these.
He suggests that when the proletariats develop class conscious, there would be an overthrown, but it will happen violently (karl Marx). A violent revolution would take place and the society would go form capitalism to socialism and then communism. This communism entails a classless society but is achieving a classless society possible? When the former Soviet Union practiced communism it was ruthless and harsh. They misunderstood the true ideology of communism. They used violent means to achieve it and in the process tried to have ultimate power. The people of the Former Soviet Union had to give to the state a large amount of their products.
During the communist the early communist period over 20 million people were killed whether by hunger or in war. There was no freedom of speech; people who revolted against it were killed immediately by a political police that was set up. The regulations were imposed by deporting people to Siberia, shooting them or provoking starvation to death. The economy failed because creativity was not enhanced. In a society, no individual will be willing to bring new ideas if they are not going to be rewarded for it. The government dictated what kind of products to produce and it was monotonous.
Trade of goods became limited even the goods they had, countries were no longer interested in them because they had nothing new to offer. A classless society could not be achieved in the Former Soviet Union because the government which was 0. 5% of the society ruled and had ultimate power and the moment someone can influence your behavior without objections from the individual, it is said to be superiority and inequality comes to play. Communism led to revolutionary acts which caused a lot of victims especially in areas such as western Germany, Bulgaria, Czechoslovakia in 1953, USSR in 1962, and Poland in 1956 and 1970.
Resources were wasted since the government was in charge. This happened in poorly developed countries owned by the Soviet Union. The Soviet Union used up their resources to build strong armies to be able to compete with nations such as the USA. Communism would have survived but because people have greed for power, a dictatorship rule would be developed and all dictators hate competition and revolt. Massive killings would erupt because of insecurity from the dictator’s side. Another problem with communism is the income. Like in China the income was very poor.
Peasants in china received $71 and 32 cents annually and the average workers and workers in state industries earned $459 yearly. Productivity reduced drastically because some accelerators for adequate production were unavailable to the people, which included fertilizers, machineries, basic farm tools, preservative equipment etc. Management activities were very poor because the amount of people handling it was very little and division of labor was not encouraged. They also suffered from inflation pressure because prices of goods rose due to expenses made on the production of the goods (Prybyla).
Capitalism is what most countries practice and yes it has helped their economic standards when USA is used to compare but we should not forget that this same capitalism is what is causing the effects of the private wealth such as social class which is a type of stratification. People use capitalism to exploit others since they dictate the wages of the workers. They ensure that the wages of their workers are very low so that the profit can be very large. They enjoy but the workers suffer immensely because they can’t take care of their family and this is the reason nations are stratified. All past efforts towards a free market economy, world trade, globalization, industrialization, the pursuit of high living standards, unlimited economic growth and every other form of capitalist endeavor have benefited only a small minority; the big players” (Kumar). He explains that capitalism is has proved to be a detriment to the society by benefitting only the rich and we should note that capitalism doesn’t increase the economy of the nation rather the wealth of the capitalist in the society who are the elites.
If capitalism increases the wealth of the society then why almost 70% of the society suffering from poverty, starvation are etc.? …capitalism is incapable of solving the problems of humanity, but in fact hunger, pollution, the breakdown of social fabric, human unhappiness and many other problems are caused by capitalism” (Kumar). As I have mentioned before, it is only ideal for capitalist to think they are improving the economy but the real thing is that people are exploited for their labor just as Karl Marx indicated. Now that I have established the fact that capitalism and communism cannot solve the problems of inequality in the society, it is time to establish my own solution.
I believe that the two can work hand in hand and success can be achieved out of to some extent. Of cause nothing comes with a disadvantage but if it can solve 80% of the problem then I think it is a wonderful solution. A hybrid of communism and capitalism would be utmost importance. A communist government and a capitalist economy is the hybrid I am talking about. This hybrid actually means a form of communal living. No one is superior to the other but that doesn’t mean one cannot have more money than the other if he works for it.
Communal living entails that everyone is entitled to the scarce resources in the land and the government has a say in the business of the citizens. A breakdown of the services and the wages are given to the government and the total money gotten from the business is calculated and estimated if the salary of the workers is not fair enough then the person doesn’t get the contract to execute the business. An agreed of the percent of the total investment or profit is dedicated to the payment of the workers. By that everyone is comfortable and living well and the poverty issue and starvation is reduced.
If the opportunity is used to exploit the labor of the people then the privilege is taken from one and given from one and this is where reward is functional. This hybrid brings good reforms such as free education (primary and secondary level) to enable one to have a little experience to support ones self, subsidized health care, availability of employment for the masses and social amenities made available. All business activities executed in the nation is open to the government and they pay taxes according to what they earn since they are using the resources of the nation.
The tax is used to build the society by contributing to education, health care, social amenities, and protection (police and military services). The agricultural sector is supported by the government by subsidizing cost of machineries and educating people in the agriculture to enable quality and quantifiable products. With this the issue of starvation is reduced. A good example of this idea is the Chinese political and economic system. The communist party realized that communism wasn’t working so they sent the people out to make money.
China had a drastic change in economy and it happened in a short time. They experienced double digit GDP growth from 2003 to 2007 –hitting a high of 13%. In 2008, the government launched a $586 billion stimulus plan and they lifted millions out of poverty. China was established as the world’s second largest economic power (Rizzi). Once the problems associated with private wealth have been dissolved, the only problem left to worry about is man’s greed. Man in recent times has learned to control his greed and the only reason it was a major reason was because the law authorized it indirectly.
Works Cited
Karl Marx, Frederick Engels. The Communist Manifesto, in The Two Narratives of Political Economy. Hoboken, NJ, USA: John Wiley & Sons Inc., 2010. Kumar, Satish. Critique of Capitalism. November/December 2005. <http://www.resurgence.org>. Oracle Education Foundation. “Oracle Think Quest.” 2008. Communism- The Failure of an Utopian System. <http://thinkquest.org>. Prybyla, Jan S. “Economic Problems of Communism: A Case Study of China.” Asian Survey, Vol. 22, No. 12 (1982, Dec): 1206-1237. Rizzi, Warren. China’s Economy Dances Between Communism and Capitalism. 23 April 2012. 28 April 2012 ;http://www.policymic.com/articles/7356/china-s-economy-dances-between-communism-and-capitalism/headline_story;. Rousseau, Jean Jacque. Discourse on the originn of inequality . Holland: Marc Michael REy, 1755. Rowell, Katherine R. Essentials of Sociology, A Down-to-Earth Approach. Boston: Pearson Education Inc., 2006. Smith, Adam. An inquiry into the nature and causes of the wealth of a nations. Pennsylvania: Penn State Electronic Classic Series Publication, 1776.

Understanding Societal Wealth and Inequality

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Racial Wealth Inequality

Racial Wealth Inequality.
Caitlin Maltbie 009606309 Take Home Essay Question 2: Racial Wealth Gap Between Blacks and Whites After racial discrimination was made illegal in the 1960s, blatant and bigot racism has seemed to disappear, yet remaining racist attitudes have continued to put blacks at an overall disadvantage due to the progression of these attitudes into institutionalized settings and policies.
The result of historical and contemporary discrimination and segregation is a widening gap of racial wealth between blacks and whites. Now, America could be argued to be a dichotomized society of black and white, proving that the Kerner Commission was correct to predict that “our nation is moving toward two societies, one black, one white, separate and unequal (Bobo & Smith 1998: 178). ” Although whites didn’t necessarily intend on such a separate and unequal society, they don’t plan to change it either.
The reasons behind this perpetuating, widening gap that I will discuss follow a history of disadvantage versus advantage dating back to the time of slavery, as well as segregation and discrimination in practices such as hiring processes, loans, residential structuring, wages, and government aid which have resulted in increases of unemployment among inner-city blacks as well as concentrated poverty. Blacks are at a disadvantage to whites because they lack human capital tracing back to equal education and job opportunity that would regularly aid to accumulate wealth as it does for whites.

Starting back as far as the 16th century, slavery crippled chances for blacks to gain social and economic mobility. Now, we continue to see these crippling effects among generations of blacks. Not only do whites typically earn more annually, they have an easier time finding employment. The racialization of the state could be considered the starting point of the racial wealth gap between whites and gaps, and can be seen in policies and programs in the U. S.. Beginning during the times of slavery, if blacks were able to accumulate any amount of money they would spend it on the freedom of themselves and their family, whereas whites were ble to purchase assets with their money and eventually able to generate monetary inheritances for their upcoming generations. To add to the disadvantages, in the 19th century homestead laws didn’t allow African Americans to take advantage of federal land-grant programs. The core of the New Deal legislation, the Social Security Act of 1935 ultimately cut blacks out of receiving any benefits due to the fact that it exempted agricultural and domestic workers. The New Deal also exempted blacks because they fell beneath the threshold for coverage due to lower wages.
After World War II, the Fair Housing Act funneled loans away from cities into the suburbs, furthering the chances of blacks to own homes. Contemporary policies such as the AFDC practically forces wanting recipients to rid themselves of any assets to pass a test in order to receive benefits. The Internal Revenue Code and the Internal Revenue System gives tax breaks on assets such as homes, so due to the fact that blacks have less assets than whites, they again are at a disadvantage.
The result has been that blacks have continuously put more into the system and have received less in return. Homeownership in America is the primary means for generating wealth, and it also serves as a pathway to community and schooling, and parental assistance in buying a first home is key to setting opportunities for their adult children and their families (Shapiro 2003: 87). However, although monetary support among whites is most likely to go from parents to adult children, elderly blacks are more likely to need help themselves from their adult children (Shapiro 2003: 87).
This leaves new generations of blacks living up to a duty to provide for their elders rather than accumulating wealth for themselves and their children. Due to racialization of the state in homeownership practices, it has been very difficult for blacks to come upon owning a home. Because government policy follows racialized attitudes, the FHA was able to follow “restrictive covenants” in which they prohibited blacks to move into white neighborhoods, claiming to “protect” these white communities.
Also, the government began to help families buy homes by supporting loans, however these loans would only apply for nicer neighborhoods, where redlining, a process in which bank employees literally “redlined” bad parts of town, was absent. The result of this was that blacks couldn’t buy homes because the homes they could actually afford were in the redlined areas. The redlined areas often became their homes, where public housing was built after many blacks were condemned to live in their houses after the Urban Renewal Program intended to decrease inner-city slums by pushing them out.
Also, construction of new freeways and highways through cities during the 1950s forced blacks out of their homes (Wilson 1996: 194). Whites now were concentrated in the suburbs, and blacks were left trapped in public housing areas where these structures acted to form concentrations of urban ghettos, where unemployment rates were two-and-one half times as high as whites and annual wages 11 percent lower due to deindustrialization and the migration of jobs to the suburbs (Bobo & Smith 1998: 180).
On top of this, the Reagan and Bush administration decreased spending to subsidize cities, proving the shift in the federal government’s support for basic urban programs which had exaggerated the rates of unemployment and social organization in the inner-city neighborhoods (Wilson 1996: 194). Even after racial discrimination became illegal in the 1960s, suburbs diversified among race rather than class, as zoning laws and discriminatory land-use kept blacks out of suburbs because they didn’t allow the construction of apartment buildings or low-income housing (Wilson 1996: 193).
Economic detour can be traced back to the fact that blacks have never been in control of the means of production. For blacks wanting to start their own businesses, which would in turn make them able to generate more assets, it has been hard. Even while other people of color have been able to successfully own and run their own businesses, people fail to patronize black businesses. On top of not being able to own their own businesses, blacks have also had to face to the employers who still maintain negative racial attitudes towards blacks during hiring processes, especially involving inner-city residents (Oliver & Shapiro 1995: 198).
More than nine-tenths of white parents (91 percent) surveyed hold assets compared to fewer than two-thirds of black parents (94 percent (Shapiro 2003: 81). Among families with positive assets, the financial capacities of the parents of white families are four times greater than those of the parents of black families (Shapiro 2003: 83). Half of all whites come from families with the ability to deliver head-start assistance versus only a fifth of blacks (Shapiro 2003: 84).
Cultural capital is yet another form of inheritance that allows families with ample assets to pass along nonmonetary benefits to their children that give them a competitive edge in school, the job market, and other areas. Cultural capital is typically found where wealth is high (Shapiro 2003: 85). Over the lifetime, whites’ inheritances are on average seven times larger than blacks’ inheritances. Black boomers will inherit 13 cents for every dollar inherited by white boomers.
The legacy of grandparents of black baby boomers, who lived and toiled under harsh discrimination and glaringly different conditions, did not include financial resources. We see a glimpse of the racial reality of two generations ago continuing to impose and structure differences onto the present generation of young adults and a generation of children still coming up. Post World War II economic prosperity benefited whites substantially, whereas blacks still faced discrimination in the work place, therefore they were unable to really save any money.
Deindustrialization in the post-World War II period had a profound effect on people living these cities. Many who had worked in manufacturing plants lost their jobs as plants closed and moved their operations in the South, overseas, or elsewhere. These people were forced to find other types of employments, and some became poor (Iceland 2003: 109). Building of low-income projects in already poor inner-city neighborhoods in the post-World War II period, contributed to poverty concentration. Residential segregation interacting with economic change and social alienation, played a key role in the perpetuation of concentrated poverty.
National black unemployment is officially above 15 percent and rising while white unemployment is 7. 6 percent (Wright 2012: 142). Because the tactics for maintaining systemic white privilege changed in the 1960s, the rationalizations for explaining racial inequality changed, too. Whereas Jim Crow racism explained blacks’ social standing as the product of their imputed biological and moral inferiority, color-blind racism explains it as the product of market dynamics, naturally occurring phenomena, and presumed cultural deficiencies (Bonilla-Silva 170).

Racial Wealth Inequality

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The Wealth of Nations

The Wealth of Nations.
The Wealth of Nations was published 9 March 1776, during the Scottish Enlightenment and the Scottish Agricultural Revolution. It influenced a number of authors and economists, as well as governments and organizations. Synopsis I: Of the Causes of Improvement in the productive Powers of Labour Of the Division of Labour: Division of labour has caused a greater increase in production than any other factor. This diversification is greatest for nations with more industry and improvement, and is responsible for “universal opulence” in those countries.
Agriculture is less amenable than industry to division of labour; hence, rich nations are not so far ahead of poor nations in agriculture as in industry. Of the Principle which gives Occasion to the Division of Labour: Division of labour arises not from innate wisdom, but from humans’ propensity to barter. The apparent difference in natural talents between people is a result of specialization, rather than any innate cause. That the Division of Labour is Limited by the Extent of the Market: Limited opportunity for exchange discourages division of labour.
Because “water-carriage” extends the market, division of labour, with its improvements, comes earliest to cities near waterways. Civilization began around the highly navigable Mediterranean Sea… Of the Origin and Use of Money: With division of labour, the producer of one’s own labour can fill only a small part of one’s needs. Different commodities have served as a common medium of exchange, but all nations have finally settled on metals, which are durable and divisible, for this purpose. Before coinage, people had to weigh and assay with each exchange, or risk “the grossest frauds and impositions. Thus nations began stamping metal, on one side only, to ascertain purity, or on all sides, to stipulate purity and amount. The quantity of real metal in coins has diminished, due to the “avarice and injustice of princes and sovereign states,” enabling them to pay their debts in appearance only, and to the defraudment of creditors. Of the Real and Nominal Price of Commodities, or of their Price in Labour, and their Price in Money: Smith gives two conflicting definitions of the relative value of a commodity.

Adam Smith, “What everything really costs to the man, who wants to acquire it, is the toil and trouble of acquiring it. What everything is really worth to the man who has acquired it, and who wants to dispose of it, or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. That this is really the foundation of the exchangeable value of all things, excepting those which cannot be increased by human industry, is a doctrine of the utmost importance in political economy. “The value of any commodity … is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities. ”
Of the Component Parts of the Price of Commodities: Smith argues that the price of any product reflects wages, rent of land and “… profit of stock,” which compensates the capitalist for risking his resources. Of the Natural and Market Price of Commodities: “When the quantity of any commodity which is brought to market falls short of the effectual demand, all those who are willing to pay… annot be supplied with the quantity which they want… Some of them will be willing to give more. A competition will begin among them, and the market price will rise… When the quantity brought to market exceeds the effectual demand, it cannot be all sold to those who are willing to pay the whole value of the rent, wages and profit, which must be paid in order to bring it thither… The market price will sink… ” When demand exceeds supply, the price goes up. When the supply exceeds demand, the price goes down.
Of the Wages of Labour: Smith describes how the wages of labour are dictated primarily by the competition among laborers and masters. When laborers bid against one another for limited opportunities for employment, the wages of labour collectively fall, whereas when employers compete against one another for limited supplies of labour, the wages of labour collectively rise. However, this process of competition is often circumvented by combinations among laborers and among masters.
When laborers combine and no longer bid against one another, their wages rise, whereas when masters combine, wages fall. Of the Profits of Stock: Smith uses interest rates as an indicator of the profits of stock. This is because interest can only be paid with the profits of stock, and so creditors will be able to raise rates in proportion to the increase or decrease of the profits of their debtors. Smith argues that the profits of stock are inversely proportional to the wages of labour, because as more money is spent compensating labour, there is less remaining for personal profit.
It follows that, in societies where competition among laborers is greatest relative to competition among employers, profits will be much higher. Smith illustrates this by comparing interest rates in England and Scotland. In England, government laws against usury had kept maximum interest rates very low, but even the maximum rate was believed to be higher than the rate at which money was usually loaned. In Scotland, however, interest rates are much higher. This is the result of a greater proportion of capitalists in England, which offsets some competition among laborers and raises wages.
Of Wages and Profit in the Different Employments of Labour and Stock: Smith repeatedly attacks groups of politically aligned individuals who attempt to use their collective influence to manipulate the government into doing their bidding. At the time, these were referred to as “factions,” but are now more commonly called “special interests,” a term that can comprise international bankers, corporate conglomerations, outright oligopolies, trade unions and other groups.
Indeed, Smith had a particular distrust of the tradesman class. He felt that the members of this class, especially acting together within the guilds they want to form, could constitute a power block and manipulate the state into regulating for special interests against the general interest: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary. ” Smith also argues against government subsidies of certain trades, because this will draw many more people to the trade than what would otherwise be normal, collectively lowering their wages.
Motivates an understanding of the idea of feudalism. Of the Rent of the Land: Rent, considered as the price paid for the use of land, is naturally the highest the tenant can afford in the actual circumstances of the land. In adjusting lease terms, the landlord endeavors to leave him no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighborhood.
This is evidently the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him anymore. Whatever part of the produce, or, what is the same thing, whatever part of its price, is over and above this share, he naturally endeavors to reserve to himself as the rent of his land, which is evidently the highest the tenant can afford to pay in the actual circumstances of the land.
II: Of the Nature, Accumulation, and Employment of Stock Of the Division of Stock: “When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavors by his labour to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only.
This is the state of the greater part of the laboring poor in all countries. ” “But when he possesses stock sufficient to maintain him for months or years, he naturally endeavors to derive revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital. Of Money Considered as a particular Branch of the General Stock of the Society:
“That the price of the greater part of commodities resolves itself into three parts, of which one pays the wages of the labour, another the profits of the stock, and a third the rent of the land which had been employed in producing and bringing them to market: that there are, indeed, some commodities of which the price is made up of two of those parts only, the wages of labour, and the profits of stock: and a very few in which it consists altogether in one, the wages of labour: but that the price of every commodity necessarily resolves itself into some one, or other, or all of these three parts; every part of it which goes neither to rent nor to wages, being necessarily profit to somebody. ” Of the Accumulation of Capital, or of Productive and Unproductive Labour: “One sort of labour ads to the value of the subject upon which it is bestowed: there is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour.
Thus the labour of a manufacturer adds, generally, to the value of the materials which he works upon, that of his own maintenance and of his master’s profit. The labour of a menial servant, on the contrary, adds to the value of nothing. ” Of Stock Lent at Interest: “The stock which is lent at interest is always considered as a capital by the lender. He expects that in due time it is to be restored to him, and that in the meantime the borrower is to pay him a certain annual rent for the use of it. The borrower may use it either as a capital, or as a stock reserved for immediate consumption. If he uses it as a capital, he employs it in the maintenance of productive labourers, who reproduce the value with a profit.
He can, in this case, both restore the capital and pay the interest without alienating or encroaching upon any other source of revenue. If he uses it as a stock reserved for immediate consumption, he acts the part of a prodigal, and dissipates in the maintenance of the idle what was destined for the support of the industrious. He can, in this case, neither restore the capital nor pay the interest without either alienating or encroaching upon some other source of revenue, such as the property or the rent of land. ” The stock which is lent at interest is, no doubt, occasionally employed in both these ways, but in the former much more frequently than in the latter. III: Of the different Progress of Opulence in different Nations Of the Natural Progress of Opulence:
“The great commerce of every civilized society is that carried on between the inhabitants of the town and those of the country. It consists in the exchange of crude for manufactured produce, either immediately, or by the intervention of money, or of some sort of paper which represents money. The country supplies the town with the means of subsistence and the materials of manufacture. The town repays this supply by sending back a part of the manufactured produce to the inhabitants of the country. The town, in which there neither is nor can be any reproduction of substances, may very roperly be said to gain its whole wealth and subsistence from the country. We must not, however, upon this account, imagine that the gain of the town is the loss of the country. The gains of both are mutual and reciprocal, and the division of labour is in this, as in all other cases, advantageous to all the different persons employed in the various occupations into which it is subdivided. ” Of the Discouragement of Agriculture: “Of the Discouragement of Agriculture in the Ancient State of Europe after the fall of the Roman Empire”. “When the German and Scythian nations overran the western provinces of the Roman Empire, the confusions which followed so great a revolution lasted for several centuries.
The rapine and violence which the barbarians exercised against the ancient inhabitants interrupted the commerce between the towns and the country. The towns were deserted, and the country was left uncultivated, and the western provinces of Europe, which had enjoyed a considerable degree of opulence under the Roman Empire, sunk into the lowest state of poverty and barbarism. During the continuance of those confusions, the chiefs and principal leaders of those nations acquired or usurped to themselves the greater part of the lands of those countries. A great part of them was uncultivated; but no part of them, whether cultivated or uncultivated, was left without a proprietor. All of them were engrossed, and the greater part by a few great proprietors.
This original engrossing of uncultivated lands, though a great, might have been but a transitory evil. They might soon have been divided again, and broke into small parcels either by succession or by alienation. The law of primogeniture hindered them from being divided by succession: the introduction of entails prevented their being broke into small parcels by alienation. ” Of the Rise and Progress of Cities and Towns, after the fall of the Roman Empire: “The inhabitants of cities and towns were, after the fall of the Roman empire, not more favored than those of the country. They consisted, indeed, of a very different order of people from the first inhabitants of the ancient republics of Greece and Italy.
These last were composed chiefly of the proprietors of lands, among whom the public territory was originally divided, and who found it convenient to build their houses in the neighborhood of one another, and to surround them with a wall, for the sake of common defense. After the fall of the Roman Empire, on the contrary, the proprietors of land seem generally to have lived in fortified castles on their own estates, and in the midst of their own tenants and dependants. The towns were chiefly inhabited by tradesmen and mechanics, which seem in those days to have been of servile, or very nearly of servile condition. The privileges which we find granted by ancient charters to the inhabitants of some of the principal towns in Europe sufficiently show what they were before those grants.
The people to whom it is granted as a privilege that they might give away their own daughters in marriage without the consent of their lord, that upon their death their own children, and not their lord, should succeed to their goods, and that they might dispose of their own effects by will, must, before those grants, have been either altogether or very nearly in the same state of villanage with the occupiers of land in the country. ” How the Commerce of the Towns Contributed to the Improvement of the Country: Smith often harshly criticized those who act purely out of self-interest and greed, and warns that, “… for us, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. ” IV: Of Systems of political Economy
Of the Principle of the Commercial or Mercantile System: Specifically, The Wealth of Nations attacks, inter alia, two major tenets of mercantilism: 1. The idea that protectionist tariffs serve the economic interests of a nation (or indeed any purpose whatsoever) and 2. The idea that large reserve of gold bullion or other precious metals are necessary for a country’s economic success. Of the extraordinary Restraints: “Of the extraordinary Restraints upon the Importation of Goods of almost all Kinds, from those Countries with which the Balance is supposed to be Disadvantageous”. Of Drawbacks: Merchants and manufacturers are not contented with the monopoly of the home market, but desire likewise the most extensive foreign sale for their goods.
Of Treaties of Commerce: When a nation binds itself by treaty either to permit the entry of certain goods from one foreign country which it prohibits from all others, or to exempt the goods of one country from duties to which it subjects those of all others, the country, or at least the merchants and manufacturers of the country, whose commerce is so favored, must necessarily derive great advantage from the treaty. Those merchants and manufacturers enjoy a sort of monopoly in the country which is so indulgent to them. That country becomes a market both more extensive and more advantageous for their goods: more extensive, because the goods of other nations being either excluded or subjected to heavier duties, it takes off a greater quantity of theirs: more advantageous, because the merchants of the favored country, enjoying a sort of monopoly there, will often sell their goods for a better price than if exposed to the free competition of all other nations. ”
Of Colonies: Of the Motives for establishing new Colonies: The interest which occasioned the first settlement of the different European colonies in America and the West Indies was not altogether as plain and distinct as that which directed the establishment of those of ancient Greece and Rome. Causes of Prosperity of new Colonies: The colonists carry out with them knowledge of agriculture and of other useful arts superior to what can grow up of its own accord in the course of many centuries among savage and barbarous nations.
They carry out with them, too, the habit of subordination, some notion of the regular government which takes place in their own country, of the system of laws which supports it, and of a regular administration of justice; and they naturally establish something of the same kind in the new settlement. Of the Agricultural Systems: “Of the Agricultural Systems, or of those Systems of Political Economy, which Represent the Produce of Land, as either the Sole or the Principal, Source of the Revenue and Wealth of Every Country”. V: Of the Revenue of the Sovereign or Commonwealth Smith postulated four “maxims” of taxation: proportionality, transparency, convenience, and efficiency. Of the Expenses of the Sovereign or Commonwealth: On taxation Smith wrote, “The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.
The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation. ” Of the Sources of the General or Public Revenue of the Society: In his discussion of taxes “The necessaries of life occasion the great expense of the poor. ” They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess.
A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion. ” Of War and Public Debts: “… when war comes politicians are both unwilling and unable to increase their tax revenue in proportion to the increase of their expense. They are unwilling for fear of offending the people, who, by so great and so sudden an increase of taxes, would soon be disgusted with the war … The facility of borrowing delivers them from the embarrassment …
By means of borrowing they are enabled, with a very moderate increase of taxes, to raise, from year to year, money sufficient for carrying on the war, and by the practice of perpetually funding they are enabled, with the smallest possible increase of taxes [to pay the interest on the debt], to raise annually the largest possible sum of money [to fund the war … The return of peace, indeed, seldom relieves them from the greater part of the taxes imposed during the war. These are mortgaged for the interest of the debt contracted in order to carry it on. ” Smith then goes on to say that even if money was set aside from future revenues to pay for the debts of war, it seldom actually gets used to pay down the debt. Politicians are inclined to spend the money on some other scheme that will win the favor of their constituents. Hence, interest payments rise and war debts continue to grow larger, well beyond the end of the war. Impact– United States
James Madison, in a speech given in Congress on 2 February 1791, cited The Wealth of Nations in opposing a national bank: “The principal disadvantages consisted in, 1st. banishing the precious metals, by substituting another medium to perform their office: This effect was inevitable. It was admitted by the most enlightened patrons of banks, particularly by Smith on the Wealth of Nations”. Thomas Jefferson, writing to John Novell on 14 June 1807, claimed that on “the subjects of money & commerce, Smith’s Wealth of Nations is the best book to be read, unless Say’s Political Economy can be had, which treats the same subject on the same principles, but in a shorter compass & more lucid manner”.
Two views of the “Wealth of Nations” The “Wealth of Nations” is therefore inhomogeneous and consists of the earlier elements of an individualistic strain in the tradition of Aristotle, Puffendorf and Hutcheson, Smith’s teacher, – elements compatible with a neoclassical theory – and the classical theory Smith learned in France. Smith’s classical message is what he states at the very beginning: the two ways to create the “Wealth of Nations”. First, make productive labour even more productive by enhancing markets to deepen the division of labour (moving the neoclassical production curve to the right); and second, use more labour productively instead of unproductively, i. e. produce more goods and services that are inputs to the next economic reproduction circle, as opposed to goods used up in final consumption. In the words of Adam Smith: “The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes … This produce … bears a greater or smaller proportion to the number of those who are to consume it … But this proportion must in every nation be regulated by two different circumstances; First, by the skill, dexterity, and judgment with which its labour is generally applied; and, Secondly, by the proportion between the numbers of those who are employed in useful labour, and that of those who are not so employed.

The Wealth of Nations

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Wealth

Does Economic Wealth Lead to Well-Being

Does Economic Wealth Lead to Well-Being.
Does Economic Wealth Lead To Well-being? In 1974, USC Professor Easterlin put forward that within a country the rich have higher average subjective well-being (SWB) than the poor. Nevertheless, the average SWB is uncorrelated with income between rich countries and poor countries. For example, the Gallup poll of 2012 well-being from Livescience website (2011) shows that Panama has 61% of people who said they are thriving, which had a greater score than the USA. The modern economy based on the opinion that the growth in the economy can lead to SWB increases.
Surprisingly, economic growth does not bring more happiness. Therefore, this is the Easterlin Paradox. One explanation is ignoring variables, in the first part of this essay, noneconomic factors such as health, environment or family will be discussed, and these factors will counteract the positives of wealth. Then the second part will account for why economic wealth cannot measure happiness. There is also a certain amount of opinion to support economic wealth give rise to happiness. It will be presented by discussing GDP issues in part three.
Well-being does not only depend on economic factors, but it also be influenced by work, environment, health or family relations etc. The Weighted Index of Social Progress sees Sweden, Denmark and Norway on top, while the Happy Planet Index sees Colombia and Costa Rica among the leaders (Measures of Well-being, 2006). And a few South American countries’ SWB is as high as developed countries such as Puerto Rico, or Guatemala. The above cases show that economy is one of the elements in estimating SWB. It is evidence that economic wealth results in the working burden raising dramatically.

Working pressure disrupts the staff’s life balance and thousands of work makes staff feel anxious every day. As the economy grows rapidly, the environment is polluted heavily. It is evident that the quality of environment decreasing gives rise to individuals’ SWB fall. Another contributing factor is health which is regarded as the most important aspect by the majority of people. Better health conditions give people confidence as well as well-being. Sometimes, individuals are entangled with family issues, and the negative effects from family cancel out the positive effects from economic income.
If a government considers increasing SWB, it should make more in policies that promote good governance, liberties, democracy, trust and public safety (Why Money Doesn’t Buy Happiness, 2011). Personal satisfaction lies in diverse factors, and earning does not play a major role. Section 2 will be devoted to the two explanations why GDP cannot measure the real SWB, especially in developed countries. A United Nations reported that the UK is only the 18th happiest place to live (British people are more miserable than Costa Ricans and Israelis, UN finds, 2012). Firstly, take case of a rabbit eats carrot.
A rabbit finds a room filled with a large quantity of carrots while the rabbit is going to starve to dying. Apparently the rabbit will gobble down the carrots, but the carrots will be become less attractive when the rabbit is almost full. According to the story, in rich countries the SWB rises up to a particular point, but it will never go beyond point. That is the reason why advanced countries (for example, USA, UK, France and Germany) SWB was not ranked in the top position. In reality, money is the carrot. The meaning of 100 dollars is significantly dissimilar between beggars and billionaires.
When economy develops to a certain extent, economic factors cannot measure happiness because there are several variables to act on the SWB simultaneously. An amount of factors were introduced at the last paragraph. The second explanation is more psychological. The major determinant of SWB is the relative life condition (comparing with people in the same level) rather than the real life condition. Being more specific, if one individual has better living condition than the other people who live in the same area, the one is more satisfied. This psychological comparison is called keep up with the Joneses.
For this reason, the SWB will not change even if economic growth brings about rising incomes. For instance, on the one hand, country people live in the countryside and local residents lead the similar country life. On the other hand, people who live in urban areas lead completely diverse lives. Their social circles usually have a great number of affluent individuals, so the psychological pressure which is caused by the wealth comparison is greater than the happiness of high income. There are also positive views to support economic growth leads to SWB.
To be empirical, countries with a lower GDP typically have more problems. Taking an example of Africa, according to the graph of geography of happiness from the Economist website (2010), countries at the bottom (mostly African) had lower score (The rich, the poor and Bulgaria, 2010). Most areas of Africa are rural. Africans now distinctly desire a better life. Although rich countries are clearly happier, the correlation is not perfect (The rich, the poor and Bulgaria, 2010). In the research of assistant professor Stevenson, they take a 0 to 10 life satisfaction scale to survey the work.
People who live in the rich countries place themselves around 7 and 8. At the same time, people in the poor countries consider themselves at about 3. As the matter of fact, increasing GDP can raise average satisfaction. For instance, nations with booming GDP imply government can spend more capital on health care, education or environmental protection. It is not apparent that a lager GDP measures citizen’s health, education or intelligence directly, but it does continue to contribute to citizen’s life. This paragraph provides a summary and a discussion of some extensions of this paper.
Firstly, basic needs are meet differences in well-being are less frequently due to income, and more frequently due to factors such as social relationships and enjoyment at work (Why money doesn’t buy happiness, 2007), different variables influence SWB jointly. Secondly, two explanations were presented to interpret that GDP cannot measure the real SWB. The saturating point exists in the process of economic development promotes SWB, and then the economic factors will not be crucial. What is more, the psychological comparison is a vital determinant in SWB, though the income rising expressively brings plentiful happiness.
Thirdly, GDP can increase national SWB authentically. To individuals, large income raises SWB in the short term. There are a number of separable components of SWB (Diener, 2000). Thus, money does not buy happiness. SWB is difficult to be calculated and can be measured in different ways. Happiness, as the ultimate goal, requires the most encompassing measure (measuring of well-being, 2006). Bibliography 1. Deutsche Bank Research, 2006, Measures of Well-being. Available from http://www. dbresearch. com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000202587. PDF [Accessed 19 April 2012] 2.
Dinener, E. 2000. Subjective Well-being: The Science of Happiness and Proposal for a National Index. American Psychologist, vol. 55, No. 1, 34-43. 3. Livesciene, 2011, Top 19 Happiest Countries (and the 20 saddest). Available from http://www. livescience. com/13790-19-happiest-countries-20-saddest. html [Accessed 16 April 2012] 4. The Daily Beast, 2007, Why Money Doesn’t Buy Happiness. Available from http://www. thedailybeast. com/newsweek/2007/10/14/why-money-doesn-t-buy-happiness. html [Accessed 19 April 2012] 5. The Economist, 2010, Comparing Countries. The rich, the poor and Bulgaria.
Money really can buy you happiness. Available from http://www. economist. com/node/17722557. html [Accessed 26 April 2012] 6. The Telegraph, 2012, British people are more miserable than Costa Ricans and Israelis, UN finds. Available from http://www. thetelegraph. co. uk/lifestyle/9184916/British-people-are-more-miserable-than-Costa-Ricans-and-Isrealis-UN-finds. html [Accessed 4 May 2012] 7. Yale School of management, What Are the Economics of Happiness? Available from http://bpp. wharton. upenn. edu/betseys/press%20reaction/Easterlin%20Paradox/YaleSOMInterview. pdf [Accessed 26 April 2012]

Does Economic Wealth Lead to Well-Being

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