Week 12 Response -- One Question

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This is a response to the class question, "How do property rights and the rule of law work together and why are they important when it comes to eradicating extreme poverty?" posed by @trostparadox.

Property rights are important for people to have because of the legal protection it provides for growing entrepreneurs and the stability of the lives for workers. Without property rights, there is always concern over how to personally protect the things you have, which may result in violence or confiscations, aka theft. The only way property rights can be ensured to people is through the rule of law. To be clear, my understanding of the rule of law is that it is the fairness of how justice is applied to all people. The rule of law should be impartial to class, position, race, ethnicity, and religion. Together, property rights and the rule of law can lead to entrepreneurship and growth in economic power. Other competitors to upcoming entrepreneurs would have more difficulty preventing competition through physical means or "legal" apprehensions. Extreme poverty can be linked to suppressed entrepreneurship. Without entrepreneurs being protected, other larger or out-of-nation companies could prevent competition or control the market. In some cases, the poverty is caused by free donations, which completely undercut all the entrepreneurs in that market at in consistent times. With a rule of law protecting the strength of the property rights of people, entrepreneurship is easier to start from the ground up instead of requiring existing connections to the marketplace. The new entrepreneurs provide opportunities for employment. This, in turn, provides employees with money to spend on goods in other markets. The new stimulation then helps grow that economy.
A way for other countries to help in the effort against poverty is to reduce the free product donations and instead use the money from poverty relief efforts to make scholarships for small businesses and supplementary teaching. The scholarship award or awards could be exclusive to new entrepreneurs. There is always a risk involved with tampering with a separate economy. Most of the time, it is best to allow entrepreneurs to find their own way to success. Providing supplementary teaching could be beneficial by providing some of the public additional skills or knowledge that could be used to either progressing a business or starting a new market.