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How so? I assume you mean that in relative terms (many would rather be "poor" here than "middle class" in many other places), but still... that's a new economic theory on me. Do you mean a global economy or a national economy?
I'm not trying to set a mousetrap. I've just never heard that expressed before. They do exist, but I don't see that they must exist.
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Yeah, I can see how what I said could have been a little ambiguous. I'm talking about national economies, not the global economy. In the third world poverty is definitely a problem, but I can assure you that people aren't starving in America.
The reason there have to be poor people for an economy to function is that some people simply do not have the skills to perform tasks that a worth a large amount of money, because these jobs are easy to do. Those individuals in an economy without the skills are capable only of performing these simpler jobs which pay less money, and therefore they are poor.
Lets say job X is worth $100,000 a year, and job Y is worth $25,000 a year. The reason that X is so much more valuable than Y is because there are four times as many people capable of performing job Y than job X, and chances are that job Y is four times more common a job than job X.
It's all a pyramid.
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First, maybe it would help if either (or both) of you would define poor in your own terms.
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One is poor when their income is significantly below the mean income, and/or they are unable to afford more than basic necessities with few luxuries.
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Correction;
For a CAPITALIST economy to function, there must be poor people
In a communist society, the wealth created by the proletariat will be shared out amongst the proletariat; "From each according to his ability, to each according to his need."
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Non-capitalist economies don't function, because they violate the very principles of supply and demand which govern all exchange of goods on the planet.
Sure, the wealth might be distributed amongst the proletariat, but there will be so little wealth the be distributed that everyone will be as poor as the poorest were in the previous capitalist society.
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What incentive would they have to work to their ability if they get the same reward no matter what?
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WORKING FOR THE GOOD OF THE PEOPLE!!