8/12/2019 Spring 2014 Optimal Bundle: Issue X

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C HARITY : N O S UBSTITUTE FOR THE S OCIAL S AFETY N ET America’s social safety net consists of programs like food stamps and unemployment insurancethat help economically-disadvantaged Americans. It provides billions of dollars of aid to the leastwell-off Americans, especially during challenging economic times. Many argue whether this socialsafety net is necessary, and public policy professor Marvin Olasky argues that it isn’t. His argu-ment rests on claims that private charity adequately supported the poor during the 19th century,and he wishes to return to a pre-New Deal society. Olasky’s view is mistaken; he misreads history,ignores insufficient charity to the poor, and fails to note the disastrous declines in private charityduring recessions. Private charity alone does not adequately support the poor, and a strong socialsafety net is necessary to ensure better economic outcomes.

The 19th century proves not that charity was sufficient, but that even more public insurance wasneeded. Expanding social insurance at that time helped millions of Americans who sufferedthrough fires, floods, and other disasters. Economist Mike Konzcal examines historical data andconcludes that social insurance provided assistance when no other help was available. Private char-ity alone also insufficiently helps the poor, and only 1/3rd of over $252 billion of charity in Amer-ica went to the poorest Americans, according to the most recent data from 2005. Economist Dyl-an Matthews affirms that this charity didn’t bring many people out of poverty, and additional re-search shows charity declining during recessions. Sociologist Chris Wimer affirmed this by citingfalls in charitable giving, especially 2008’s 7% fall due to the Great Recession. This was a declineof billions of dollars when an increase was needed, but the social safety net expanded from 0.1%of GDP in 2008 to over 2.0% from 2009-2014 to help the poorest Americans.

While private charity is an ideal source of help for the poor, it is inadequate if millions of Ameri-cans still need public assistance today. The role of social insurance in American history and insuffi-cient charity to the poor, especially during recessions, show the importance of helping economi-cally-disadvantaged people through the social safety net. Instead of relying on just private charity,civil societies everywhere should bolster their social safety nets to improve the lives of peoplewhen they need it. — CL

T HE P ENNSYLVANIA S TATE U NIVERSITY E CONOMICS A SSOCIATION P RESENTS :

EDITOR : COLE LENNON P RINT EDUCATION COORDINATOR

CONTRIBUTORS : LEAH GALAMBA, JOE KEARNS, COLE LENNON,RYAN SOSNADER , ELEANOR TSAI

SPRING 2014: WEEK OF M ARCH 27TH

“T HE O PTIMAL B UNDLE ”

Upcoming Events: Psuea.org — EA HomepagePsuea.org/blog — Education Blog

General Body Meeting: 3/27

GDP Revision Report: 3/27

CHECK OUT THE ARTICLES: SLATE .ME /1 DCOI A U ; BI T . LY /1 IR W0 B G ; STANFORD . IO /1 PP C Q L 8 ;BI T .LY /1 EM G WX K ; WAPO .ST /1 M 0V EF H ; BI T .LY /1 I S7 X K B ; 1.US A .GO V /1 LF 6A28

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L ITTLE R EBELLES Thanks to the success of entertainment featuring strong heroines likethose of “The Hunger Games” and “Divergent”, the toy industry is pro-ducing play-weapons for girls. The industry has always capitalized on gen-der stereotypes, but today’s young girls would rather be Katniss from

“The Hunger Games” than Barbie. Toy manufacturer Zing’s Air Huntress bows and sling shots now account for over 25% of the company’s sales.The popular app, Angry Birds, will also release a new game focusing sole-ly on Stella, the violent female angry bird. As gender stereotypes contin-ue to be challenged, companies will need to change their product lines toaccommodate this huge shift in consumer preference. — LG

F RAUDULENT IRS CALLS GONE RAMPANT Americans generally dread tax season, but they will be more outragedas an IRS fraud is emerging. This recent fraud is the largest of its kind,and The Treasury Inspector General for Tax Administration said thou-sands of victims lost over $1 million to IRS agent impersonators. Theseimpostors contacted victims by phone, demanding money transfers andcredit card information. Americans should be aware that IRS employeescontact by mail first, rather than by phone. They also usually do not askfor payments on Green Dot or prepaid cards. Awareness about thesescams will prevent Americans from losing additional income and guar-antee a fairer tax-collection process. — JK

A T ON OF BRICS

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Pink on the outside, violent onthe inside.

Tax season just got busier.

Current President Dilma Rousseff,also running for re-election.

Brazil, once renowned as one of the world’s largest emerging economies,will face difficult economic choices after its World Cup and presidentialelection this year. According to Reuters, Brazil’s next leader must enact budget cuts and raise taxes to address the country’s budget deficit. Thenext leader will also battle inflation and a forecasted growth rate of only1.68%, compared to over 4% growth in the 2000’s. Economists traceBrazil’s anticipated economic problems back to spending too much onconsumption and not enough on infrastructure during more robusttimes. Expect Brazil to pursue harsher austerity measures after October’selection as a means of restoring its financial credibility. — ET

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