Poverty can be defined in an absolute or relative way. Absolute poverty is characterised by an insufficient intake of food, clothing and shelter to enable individuals to continue to live at a minimum standard. By contrast, relative poverty is defined by identifying the poorest group in a particular community. Thus, in a developed economy, poverty could be defined as being in the bottom 10 per cent of income earners. When poverty is defined in this way it can be the case that a rich nation’s poor have a much higher standard of living than the average standard of living of the residents of a poor nation. Clearly absolute poverty can be eliminated by raising the income of people currently below the minimum standard so that they have sufficient food, clothing and shelter to meet this standard. By contrast, relative poverty can only be improved by making the distribution of income more equitable such that the poorest group in society has a standard of living sufficiently close to that of the remainder of the population that to describe them as being in poverty does not make sense. While the formula for eliminating relative poverty in rich nations is relatively obvious, the world continues to struggle with solutions to the problem of absolute poverty in those nations where the vast majority of the population have experienced chronic poverty over many decades.

Professor & Head of QUT's School of Economics and Finance, Tim Robinson

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The degree to which an economy prospers depends on the quantity and quality of economic resources available to be used within that economy. This will be a function of the nation’s endowment of natural resources, the educational achievement of the population, and the rate at which capital can be accumulated (which is largely dependent on the rate of saving in the economy). In addition, good governance in the political, government and business domains is required. A nation’'s capacity for creativity and its inventiveness will also be important factors. As it is with nations, so it is with families. Thus well organized families comprising well educated individuals with a strong savings ethic and a creative streak will, on average, prosper to a greater degree than unimaginative, disorganized families with low educational levels and a spendthrift nature.

Professor & Head of QUT's School of Economics and Finance, Tim Robinson

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The standard economic treatment of this issue has it that minimum wages cause unemployment of low-skill workers. The argument is that if employers can’t get more from a worker than the minimum wage they’re required by the state to pay, then they won’t employ them. Strange then that virtually all developed nations have a minimum wage. An alternative to the standard economic view is that if there is a tendency for minimum wages to cause unemployment amongst the unskilled, then this provides a powerful incentive for them to seek to raise their skills through education (which is often facilitated by the state). Looked at from this perspective, minimum wages do not cause a rise in the unemployment rate. What is more, they have the advantage that they raise the skill levels and the earning capacity of previously unskilled workers. It has also been argued that minimum wages call forth more individuals to join the workforce and thus result in higher levels of national output.

Professor & Head of QUT's School of Economics and Finance, Tim Robinson

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This is a highly contested issue. Following the lead of the father of modern economics, Adam Smith, contemporary libertarian economists, exemplified by Milton Friedman and his followers, believe that social well-being is maximized by minimizing government involvement in the economy. They say that government involvement should, in effect, be limited to ensuring good government, maintaining law and order, and the defence of free societies. At the other extreme, socialists believe in a strong role for government and government ownership of the means of production and distribution. Under a socialist regime private ownership is restricted to personal belongings and effects. The reality is that the last century has seen the mixed economy prosper with government involvement through legislation and regulation pervading the economy. In recent times, the extent of government ownership of the means of production and distribution in mixed economies has typically diminished although funding of health and welfare services has grown strongly.

Professor & Head of QUT's School of Economics and Finance, Tim Robinson

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In spite of his support for free markets, John Stuart Mill, the father of modern liberalism, argued that the excessive bargaining power of employers in relation to individual employees meant that the formation of unions to redress the imbalance should be facilitated by the state; and so it has come to pass. If the balance of power between employer and unionized employee is just right then clearly unions play an indispensible role. If, however, the balance favours one side or the other – and this may differ from industry to industry and from employer to employer – then the imbalance should be redressed. Beyond bargaining around wages, unions have been responsible for enormous changes in hours of work, work practices and worker entitlements over the years. If the recent trend of declining union membership on the part of workers is anything to go by, it appears that unions have been so successful in pursuing their aims that, at least for now, their major work has been done.

Professor & Head of QUT's School of Economics and Finance, Tim Robinson

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Economists look foremost for efficiency in the tax regime. Efficient taxes are those which have the least effect in diminishing output as a result of their disincentive effects. Unfortunately, the most efficient taxes are often the most inequitable so governments must seek a compromise. They must also consider the ease of avoidance of taxes and the costs of collecting them. With the rise in importance of adverse environmental effects of human activity there are increasing opportunities for taxes which unequivocally increase well-being because they both raise revenue for government and, at the same time, discourage environmental damage. A good example would be a tax on carbon emissions.

Professor & Head of QUT's School of Economics and Finance, Tim Robinson

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The wonderful thing about modern science is that the theories it develops are tested every day. Insofar as the natural sciences are concerned these tests are carried out by test-pilots in the latest jet planes, by pharmaceutical companies developing new drugs, or by the designers of new computers. In the realm of social science, psychological theories are tested every day in laboratories and consulting rooms, political science is tested in the electorate and in the parliament, and economic theories are tested through development and assessment of economic policy. Unfortunately, application of the scientific method in the social sciences often results in inexact theories which have uncertain effects when they are applied in the real world. The presence of this uncertainty enables practitioners in the social sciences to overlay their findings and policy prescriptions with their own philosophical, religious and political leanings. The result is that arguments about scientific truth are much more widespread in the social sciences than in the natural sciences. Seldom do we hear arguments about whether the law of gravity is valid; yet we are continually exposed to competing theories about psychological motivation or the way in which the economy works. Disagreements about truth are motivated by individuals’ needs for self-realisation and are made possible by the inexactness of science – particularly social science.

Professor & Head of QUT's School of Economics and Finance, Tim Robinson

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