We can point at several causes to the question asked of what causes poverty?  Loss of a job, social injustices, education and the list can go on and on.  But can one factor be named as the cause of poverty?

Back in the late 1800’s an economist named Henry George stated that involuntary poverty and unemployment is the direct result of land speculation.  Speculators hold land out of use waiting for higher prices.  This means that land would not be readily available to labor and capital.  Thus, unemployment is the result because the land is not being used for production.

This withholding of the land leads to depressions and recessions in the business cycle.  Land speculation leads to higher prices in boom times that makes it too expensive for business to use.  And in turn labor suffers, production suffers.  In deflated times land values drop to a point where it stimulates investment and business.  Labor and production improves.  Unfortunately, this “good” times does not last.  For with the lower prices in land speculation returns and the cycle begins again of boom and bust.

According to this example the speculation in land prices leads to and is a direct cause of poverty.

I will understand it if Wall Street economists do not agree with this model.  But they are hiding their heads; they are wrong or they are just stupid.  Many seem afraid of this simple answer, they want to turn the science of economics into something it is not.  Many noted economists have won a many ward by inventing graphs and stats….but in reality it is not that complex….it boils down to speculation.

I know can it be as simple as that…and the answer is yes.  Look at the current economic situation–it began in the housing sector then moved on to the others.  The housing sector is most effected by speculation and that is what lead to this point in our economic history.  The prices kept climbing and financial wizards kept finding ways to put people onto land and it reached a point that it broke.  Speculation lead to this point and now it is on the down turn and eventually production will return when the price of land reaches a point that stimulates the business cycle.

By reading this one should get the understanding of what is happening in the world of economics.  I hope it helps.