Are the Business Cycles of Capitalistic Economics Reponsible for the Inadequate Income Distribuation and Poverty in United States

Do the Business cycles of capitalistic economies are directly responsible for the inadequate income distribution and poverty in the American economy?

To examine this question, we need to know the meaning of capitalistic economy system.

According to Wikipedia “Capitalism is an economic system based on private ownership of the means of production and capital goods, and the production of goods and services for profit in a market economy. Central characteristics of capitalism include the process of capital accumulation, competitive markets, and wage labor. In a capitalist economy, the parties to a transaction typically determine the prices at which assets, goods, and services are exchanged.”

Every economy systems have some advantages and disadvantages and no one can claim that there is an economy system without any disadvantages. After surfing on the internet, I found some of the most important advantages and disadvantages of capitalistic economy system:

Advantages: 1-Equality 2-Freedom 3- Growth 4-Highly competition between producers

Disadvantages: 1-Inequality 2-War 3-Wast 4-Pollution

I think equality and inequality both exist because everyone has opportunities to make the best, but on the other hand, inequality still exists. Imagine a firm with 99 workers and 1 entrepreneur that produce whiteboard. They all have high school diploma, including entrepreneur. The entrepreneur was born in a rich family and now he has invested his money on this firm. The workers gain more benefit if they work harder but the great benefit comes to entrepreneur who had invested money. So the entrepreneur will be richer faster than other workers and the gap between workers and entrepreneurs is getting greater, so one part of population that has muc...

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... be more than someone else that has master degree. This inequality in income sometimes exists and policy makers always try to solve it.

Is government intervention inevitable and beneficial?

All countries try to protect their domestic firm and as I mentioned in previous pages, it is undeniable the benefit of government intervention.

For example, the unemployment insurance causes the unemployment period to be longer but it also causes the recession period to be smaller. Or quota and tariff imposed more cost on consumers but if we look on the other aspect, these policies save job in our country and sometimes cause to make new job opportunities and unemployment rate will decrease and the firms produce more products and goods.

So we can conclude that the government intervention is beneficial.

Works Cited

http://listverse.com

http://en.wikipedia.org