Poverty & Inequality Policies
Economics: Edexcel A A Level, topic 9.1.2
Examples of Measures to Reduce Poverty and Inequality
Countries tackle poverty and inequality with different policies. Their aim is to have the income more equally distributed.
India and a minimum price on food
- The Indian government has a policy of controlling food prices, whilst providing a minimum support price for farmers.
- Keeping food prices low is a way to ensure that everyone can afford to eat and stay out of absolute poverty.
- However, many farmers are poor, so depressing food prices could push poorer farmers into poverty.
- This combination can help to avoid this issue.
UK aid budget
- There is inequality within a nation, but there is also inequality between nations.
- A progressive income tax system sees the highest earners in the UK pay 45% tax.
- The UK also contributes roughly 0.7% of GDP to international aid to help to reduce poverty and inequality nationally.
Housing Markets
Housing is a key cause of inequality in wealth. Rising house prices can stop local residents from buying houses. This creates a disconnect between 'renters' and homeowners'.
Foreign buyers
- In many parts of London (including St John's Wood, Knightsbridge and South Kensington), foreign buyers own a high percentage of the residential property.
- French & Greek residents are particularly concentrated in South Kensington.
- Similarly, many English retirees own property in the South of Spain.
- This can impact the national identity and also create resentment towards migrants if this demand increases house prices and makes them unaffordable for locals.
- For example, in 2013 the Financial Times reported that 82% of property deals in Central London involve foreign buyers.
Bans on property purchases
- In 2018, New Zealand introduced a ban on the purchase of residential property by foreigners. This excluded foreigners from Australia and Singapore because of trade pacts that already existed.
- Silicon Valley billionaires like Peter Thiel had purchases 400+ acre farms in New Zealand. Many think it is a doomsday backup plan to escape to New Zealand if there is a breakdown of society in the USA.
Test yourself on Poverty & Inequality Policies
What type of price control for food did the Indian government introduce?
How much income tax do the highest earners pay in the UK?
In 2013, what percentage of Central London property deals involved foreign buyers?