ADM 614 Topic 8 DQ 2

Income transfers were developed as a part of Lyndon B. Johnson’s war on poverty. Define income transfers. How should traditional income transfers eliminate incidence of poverty? Does it work? Explain.

Answer:

The war on poverty was a proposal started by the United States president in 1964, Lyndon B. Johnson. President Lyndon B. Johnson’s primary goal was to reduce and possibly eradicate poverty within the United States. In trying to achieve that purpose, he introduced income transfers. Income transfers, also called transfer payments or government transfer are the benefits that are redistributed to the economy. These payments, therefore, are non-exhaustive since there is no exchange of goods and services. Examples of income transfers include welfare, social security, and subsidies given to particular firms in the market (Bentley, 1987). Lyndon believed that the extension of these benefits to struggling America would help in the eradication of poverty. Fortunately, the transfers have assisted in reducing the poverty rates in countries that employ the system. Food stamps are the most significant forms of income transfers since the working poor are replenished enough to continue providing for their dependents.

Government transfers are meant to offer protection and a level of security to individuals and their dependents that have lost their earnings through death, retirement, temporary unemployment or disability (Bentley, 1987). To evaluate whether income transfers work it is important to study the poverty rates before the government transfers and after. In most cases, government transfers help in reducing the incidence of poverty. According to Susan Bentley, author of ‘Income Transfers, Taxes, and the Poor’ the system works because of the largest income transfer, social security alleviates poverty (Bentley, 1987). It is important to note that social security is directed to the general public and not specifically the poor people. Moreover, similar claims are filed by Wilner and John in their discussion paper ‘Poverty rate and government income transfers’. Counties that are more generous in transfers are found to be doing better in the eradication of poverty and reducing its incidence than those that allow minimum transfers (Wilner & John, 2011). In conclusion, income transfers have helped many Americans in overcoming hardships and helping them get back on their feet to the point of contributing to the growing economy.

References

Bentley, S. (1987). Income Transfers, Taxes, and the Poor (1st ed., pp. 1-4). Rural Development Perspectives. Retrieved from https://naldc.nal.usda.gov/download/IND89018050/PDF

Wilner, J. & John, U. (2011). The poverty rate and government income transfers: A spatial simultaneous equations approach. Ifpri.org. Retrieved 22 January 2017, from http://www.ifpri.org/publication/poverty-rate-and-government-income-transfers