Quote of the Day

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What we currently call the poverty line is so high that only the top 6 percent or 7 percent of the people who were alive in 1900 would be above it.

Robert Fogel (Via Arnold Kling). RTWT.

13 thoughts on “Quote of the Day”

  1. I’ve kept this on hand to remind me the difference between poverty by bureaucratic fiat and traditional poverty. Please excuse any errors in the retyping.

    The Specter of Poverty in America
    Tuesday, September 21, 2004
    By Robert Rector

    Last month, the Census Bureau released annual poverty figures showing that the percentage of Americans who are poor rose from 12.1 percent in 2002 to 12.5 percent in 2003.
    It’s important to recognize that these figures are a year old. They cover 2003, not the current year. Given current economic conditions, it is extremely likely that poverty fell during 2004, although the official figures won’t be available until the fall of next year.
    Poverty is a lagging economic indicator. Formal recessions (when the whole economy is shrinking) usually last less than a year. But the poverty rate almost always continues to rise for several years after the recession ends. The last recession officially ended in November 2001, but the poverty rate continued to rise in 2002 and 2003. This is a normal economic pattern that has occurred in most prior recessions.
    Compared to prior recessions, the recent recession was mild and had a limited impact on poverty. Overall, the increase in poverty resulting from the recent downturn has been half the increase that occurred in the two last recessions that hit the economy in the early 1980s and early 1990s.
    Still, the Census Bureau reports that 35.9 million persons “lived in poverty” in 2003, a number that should cause concern to all. But to really understand poverty in America, it’s important to look behind these numbers ”” to the actual living conditions of the individuals the government deems poor.
    For most Americans, the word “poverty” suggests destitution: an inability to provide a family with nutritious food, clothing and reasonable shelter. But only a small number of the million persons classified as “poor” by the Census Bureau fit that description. Real material hardship certainly does occur, but it’s limited in scope and severity. Most of America’s “poor” live in material conditions that would be judged as comfortable or well-off just a few generations ago.
    The following are facts about persons defined as “poor” by the Census Bureau, taken from various government reports:
    ”” Forty-six percent of all poor households own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and porch or patio.
    ”” Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.
    ”” Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
    ”” The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens and other European cities. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)
    ”” Nearly three-quarters of poor households own a car; 30 percent own two or more cars.
    ”” Ninety-seven percent of poor households have a color television. Over half own two or more color televisions.
    ”” Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.
    ”” Seventy-three percent own a microwave oven, more than half have a stereo, and a third have an automatic dishwasher.
    Overall, the typical American defined as poor by the government has a car, air conditioning, a refrigerator, a stove, a clothes washer and dryer, and a microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family isn’t hungry, and he had sufficient funds in the past year to meet his family’s essential needs. While this individual’s life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, activists and politicians.
    Even better news is that remaining poverty can readily be reduced, especially among children. Child poverty in the U.S. is caused largely by low levels of parental work and by the absence of fathers from the home. While work and two-parent families are the surest ladders out of poverty, the welfare system continues to reward idleness while failing to provide support to keep families in tact.
    To further reduce poverty, welfare should be overhauled: All able-bodied welfare recipients should be required to work or prepare for work in exchange for the aid they receive. Also, new parents in low-income communities who express interest in marriage (and research tells us there are many) should be equipped with the skills they need to create a healthy marriage, rather than be penalized when they do get married.
    Robert Rector is a senior research fellow at The Heritage Foundation.

  2. In the UK poverty is calculated by a mathematical formula. Any household with an income less than 60 per cent of the median is officially adjudged to live in poverty. The trouble is that unless there is a huge change at one end or the other, this formula means that the proportion of households in poverty never really changes. Duh! There is no indication whether it is the same households time after time or whether people spend some time being “poor” and then make money. And, of course, the income of those households gets taxed as well, so they have to claim benefits because they cannot survive on what is left.

  3. -Many measures of poverty are flawed because they do not consider income that comes in the form of services or other non-cash means.

    -Many measures of poverty are flawed because they look only at income and not wealth. Many people in our society, particularly older, retired people have both low incomes and substantial assets.

    -There’s a lot of turnover in the population at each income level. Many of the people who were considered poor a few years ago would not be considered poor now. One of the common mistakes is to compare “the poor” in Year X with “the poor” in Year Y without recognizing that these are often not the same people.

  4. The constantly repeated “poverty statistics” are a meaningless, politically fashioned number whose sole purpose is to generate a rationale for the establishment, continuation, and enlargement of huge government programs allegedly designed to remedy the situation.

    In fact, the various welfare, social security, and other entitlement programs are a huge jobs program for the clients of the statist groups who trumpet these “crises”, and the programs themselves have had little or no effect on the numbers of alleged poverty victims. Indeed, during the heyday of the programs’ expansion, each increase was met with the claim that more was needed because there were now more impoverished than ever before.

    After forty years of the “War on Poverty”, a few points are crystal clear.

    The trillions of dollars spent on these programs, if simply handed to actual poor people without the creation of an enormous, resource eating beaurocracy which consumed the lions share of the funding, leaving only a pittance to be distributed, would have been more than enough to propel them into the economic middle class, with many of the stabilities and other beneficial effects of that status.

    The disastrous destruction of the black family, which can be directly correlated to the imposition of rules requiring that there be no man in the family capable of generating income, in order for the woman and children to be elegible for funding, could have been avoided. Instead, the war on poverty became a war on young black married couples, and in a few generations collapsed a major social stabilizer in lower income and minority populations.

    Not inconsequentially, the status of being a ward of the state has done to the minority subcultures just as much damage as it had done to the cultures of the various Native American peoples who were placed in that status during the 18th and 19th centuries. And, just as the NA tribal members were classified by blood into an inescapable status of eternal dependency until some managed to break out in recent years, so too the emphasis on race in various entitlement programs has led minority peoples into the quicksand of claiming race as the quintissential badge of distinction.

    Poverty, as has been very clearly demonstrated by the last few decades of economic expansion, is defeated by education, productive work, and the avoidence of several well documented mistakes that short-circuit the achievement of the first two factors. But, as is also clear to any but the deluded, it is not in the interests of members of the statist elite, and those employed and supported by these myriad programs’ jobs and benefits structures, to ever actually eliminate poverty as a social condition.

    Instead, poverty is a political gold mine whose veins are regularly reinfused with new supplies of tax dollars, few of which, oddly enough, ever end up in the pockets and purses of the truly impoverished.

    If something that is supposed to do X continuously and relentlessly produces Y instead, it is legitimate to question whether X was, in fact, ever the actual goal of the process. And a very good argument can be made that poor people are the victims, not the beneficiaries, of the endless supply of anti-poverty initiatives that their compassionate statist benefactors propose.

    Several decades of poverty programs have been an abysmal failure, and should be openly examined and recognized as the dangerous mistakes they have been, and are to this day.

  5. I read somewhere that alot of the poverty numbers were elderly on fixed income (but with savings and no debt) or students (who aren’t working. I’m not sure how true that is and/or how well those demographics are filtered out of the final #’s.

  7. “relative wealth may be more important than absolute wealth”

    I am familiar with these arguments.

    Politically, maybe, or in terms of perceptions.

    Absolute wealth determines things like how long you live, or whether your kids die in infancy, or weather you are damaged for life by disease or injury or being poisoned. All of these things are a function of wealth.

    Absolute wealth is more important, absolutely.

  9. Which might mean something if they were talking about salaries, but hey, dont let little things like facts get in the way of your politics.

  10. Shawn thinks we here at CB are too stoopid to understand the difference between real and nominal incomes. That I can forgive. But does he really and truly think Professor Robert W. Fogel, The Charles R. Walgreen Distinguished Service Professor of American Institutions and Director of the Center for Population Economics, in the Economics Department at the University of Chicago, and a Nobel laureate, is also too stooopid to get this distinction?

    Sure am glad we have someone as smart as Shawn to help clear things up!

  11. The American economy should be compared against those of its wealthiest contemporaries. Surely the point of comparing poverty rates today with those of a century ago is purely rhetorical.

    Nor should we dismiss “statism” before carefully restricting its meaning. Statism in the economy includes the Federal Reserve, immigration law and trade regimes.

    Statist economic arrangements are as complex as the are integral and anyone who asserts they can be dismissed as category is engaging in rhetoric, not analysis.

    Many attempts to end poverty through statist means have come to disaster. But some, such as social security, have been largely successful. It’s demanding intellectual work to cut through the rhetoric and look at the specifics for poverty programs, but it is essential to understanding them. When we look, for example, at single-payer health insurance as an option, we need to look outside the U.S. to see how the program functions elsewhere in the world. The same goes for farm and industrial subsidies, corporate welfare and public education.

    If ending poverty were as simple as eliminating the state’s role in economic affairs, the poor would have long ago been banished from the earth.

  12. Lex, I agree, absolute wealth is more important than relative wealth. Even if everyone’s wealth were made equal people would still find ways to rank each other based on intelligence, ability, looks, etc, and those of lower status would still be dissatisfied.

  13. Clive, this: “Statist economic arrangements are as complex as the are integral and anyone who asserts they can be dismissed as category is engaging in rhetoric, not analysis.” Who are you talking to? What? Seriously, read the article. It has some good stuff in it.

    Wade, relative wealth has a huge impact on politics, psychology, all kinds of stuff. It is not irrelevant. It just depends on what you are focusing on. Fogel is talking about things which are much more basic, life-and-death level basic.

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