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"Systemic Poverty As A Cause Of Recessions", Robert Ashford

College of Law - Faculty Scholarship

This article argues that the failure to address and ameliorate systemic poverty is a major cause of recessions. Recessions occur (and sub-optimal employment and growth persist) when a critical mass of market participants come to believe that the distribution of future earning capacity is not sufficient to purchase what can be produced despite the physical and technological capacity to employ available labor and capital to produce more over the same period even at lower unit cost. The essence of systemic poverty is widespread inadequate earning capacity. In recessionary periods, with rising unemployment, the problem of inadequate earning capacity (which perennially …