Poverty and Politics

The problem of "Poverty" is central to a Democrat's identity and is balanced by his obsession with the rich. The word "poverty" has deep connotations for Democrats, upon which they validate their superior caring and concern for the poor. It is part of a Democrat's sense of moral superiority to Republicans. When a Republican speaks about poverty, one can be certain that a Democrat hears either Gordon Gecko from the movie Wall Street, "Greed is good," or Scrooge, "Are there no work houses, are there no prisons?".

If one examines their policies, however, it seems that Democrats care more about their concern for the poor than the poor themselves. This leads them to ask the wrong questions and come to the wrong answers. Poverty and wealth are a critical battleground in current politics and one for which the facts favor the Republicans. It is a rewarding topic to debate, because most liberals have ill-defined terms complemented by poor data.

Throughout this discussion, it is important to keep in mind the transient nature of American poverty. Consider this: most of us are two or three generations removed from our immigrant forbearers and in that brief time have achieved middle-class or higher status. That is the typical American story, rising out of poverty in one to two generations. Virtually every income group has been lifted by the tide of growth in the past decades.

The Quiz: 7 Claims About Poverty
Let us start with a quick quiz. Pick the correct claim in each set:

Number 1: A. The rich are getting richer, the poor are getting poorer, and most of us are getting nowhere. B. The rich are getting richer, the poor are getting richer, and most of us are getting ahead.

Number 2: A. American living standards have been falling since the 1970's B. American living standards have been rising since the 1970's, just like the previous 200 years.

Number 3: A. Life is getting harder: we're working more and there's less time to enjoy life. B. Life has never been easier, both on the job and at home. We're working less than ever, both on the job and at home, and there's more time to enjoy life.

'''Number 4: A. both adults have to work these days to maintain a family's standard of living. B. both adults have always worked to maintain their standard of living. Now, more families hire others to perform household chores. This gives the opportunity to work outside the home.

Number 5: A. Employment opportunities are bleak because good paying jobs are being destroyed as companies lay off workers to boost profits and splurge on executive pay. B. Good jobs are routinely destroyed in response to new products, higher productivity, and shifts in consumer demand - but more and better jobs are being created to replace them.

Number 6: A. As companies ship high paying manufacturing jobs overseas, the US is left with inferior service jobs. We are becoming a nation of Wal-Mart clerks. B. The growth in the service sector is not new and most of the new service jobs require high skill levels and are high paying.

Number 7: A. The US is no longer the world's best economy and is rapidly losing its economic supremacy. B. The US is still pre-eminent and as dominant as ever. US workers are more productive than ever. The US is still the land of opportunity.

Yes, the correct answer is (B) for every question. You would be hard pressed to know it listening to the Democrats' political speeches.

Defining Poverty: Absolute vs. Relative Wealth
The concept of absolute vs. relative wealth is one you must understand to discuss poverty in America. If 20% of the world lives on $1 per day and the next 20% lives on $2 per day, is anyone in America poor? Or think about the generational improvement in all of our standards of living compared to even 50 years ago. As P. J. O'Rourke quips, "for anyone who longs to go back to the good-old-days, I have one word: dentistry."

How do we define the word poor? It is not as simple as you might think. Is poverty defined by individual income or household income? Is it defined by relative income, for example the poor are the bottom 20% of income earners? What do we mean by income? If the elderly live in houses without mortgages, should we impute income equivalent to the rent not paid by the homeowner? Should poverty be based on a person's consumption? If someone has a house, a car, cable television and a cell phone, can they be considered poor? Should poverty be based on socioeconomic status and one's ability to earn the income status desired? Should a new teacher at PEA, earning $25,000 per year, with a stay-at-home spouse and four children, be considered poor? Keep this example in mind as we look at the methodologies of poverty.

Absolute income, by household
This is the definition used by the USFG.

Developed in the 1960's, it is three times the amount of money the Agriculture Department calculates it would cost to feed a family per year. For a two-parent, two-child family it is $20,650 (2007). Calculation of income does not include non-cash government benefits such as Medicaid (health insurance), food stamps, school lunches, housing subsidies or the Earned Income Tax Credit (EITC). By this measure, 12.1% (2006) of Americans are poor. If you include noncash benefits, the poverty rate in 2006 drops to 5.1%, not including EITC which averages $2000 per person.

Relative Poverty
Mostly used in Europe.

"Relative" poverty is defined as less than 60% of the median disposable income. This would include 24% of Americans, compared to only 16% of Germans. This creates a paradox in that America's lower income families have more material possessions than Europe's middle class, because the American middle class is so comparatively wealthy.

Disposable Income
This would calculate household income based not only on cash, but also noncash benefits, and would deduct work-related expenses such as transportation to work and child care. This method shows lower rates of poverty.

Consumption
Studies show that the poor spend more money each year than they report. There are many other sources of income such as money from family, absent boy-friends, off-the-book jobs and church charities.

Opportunity
Let us return to our PEA family.
 * By US government measures, they are poor, as they fall below the $27,610 per year standard for a family of six.
 * They would be "relatively" poor by the EU standard (60% of median US household income of $48,201 in 2006).
 * They would not be poor by the disposable income standard which would include the value of the PEA subsidized housing and food as well as the value of free high school tuition.
 * Nor would they be poor by the "opportunity" standard- Masters level college graduates can earn a lot more than $25,000/year if they so choose. That they do not means that they value other things more than the money. Would most Americans think them "poor"?

So how do we, as Republicans, want to define poverty? First, one must recognize that any definition is going to be arbitrary to some extent. Second, the definition must be different for the developed world compared to the absolute poverty of the third world.

The average hourly wage in New Hampshire is over $10 per hour. That means that any couple can get basic jobs and have an immediate family income of $40,000 per year. With an unemployment rate of less than 5%, no family here need be poor by any definition.

This leads us back to the concept of poverty due to an individual's inability to avail herself of the extraordinary opportunities in America. By this definition, lack of money is the symptom of the problem, not the problem per se.

By this definition, who are the poor? Here we begin to see the great divide between conservatives and liberals. If the poor are primarily responsible for their own plight, then government ought to prod them to change their ways. If poverty is primarily the consequence of economic and social forces largely beyond their control, then government ought to give them money and change the rules of the economy. What does the data show?

Democrats
In 1964, the Democrat's had their turn when LBJ's Great Society launched its War on Poverty. Endless efforts by anti-poverty warriors, both in and out of government, and tens of billion of dollars were expended over the next two decades.

The level of poverty remained at its intractable 12-13%, leading Reagan to quip in 1986, "I guess you could say: Poverty won the War". This is not to say that there were no gains: The problem was dependency. Sadly:
 * In 1960, one in four elderly was below the poverty line, now it is less than one in ten.
 * The Jobs Corp, designed to put 16-24 year olds on the path to good jobs, is considered somewhat successful, if costly.
 * Welfare roles tripled between 1960 and 1974.
 * Two parent families dropped dramatically.
 * Marriage rates, the single best predictor of poverty, plummeted
 * In 1964, 8% of children were born to unmarried parents. Today, more than one-third of all children- and more than 70% of black children- are born to single mothers.

Republicans
In 1994, with the first Republican congress in 50 years, it was the Republicans' turn. Amid prophesies of disaster, policy shifted to making the poor responsible for themselves, with government aid for those who did. For example, able-bodied adults could only get welfare for two years, after which they had to work.

President Clinton, a moderate Democrat, promised to "end welfare as we know it". The greatest government expansion by the Republican congress was increasing the Earned Income Tax Credit. Only Democrats were surprised by the positive results:
 * Welfare rolls fell from 3.9 million in 1997 to 1.9 million by 2005
 * A growing fraction of unmarried women with children are working
 * The percentage of births to unmarried mothers has continued to rise, however, from 26% in 1944, to 32% in 2006.

This has led to the current emphasis in anti-poverty programs to the promotion of marriage. One can avoid poverty in America by following three rules:


 * 1) Finish high school.
 * 2) Do not have a child until you are married.
 * 3) Do not get married until you are at least 21 years old.

The trick is to get adolescents to follow these rules. Those most likely to follow them come from two parent familys, a Catch-22 that government programs have been unable to solve. If unmarried teenagers with children are denied welfare, it will be their children who suffer the most. This is an unbearable thought to the American electorate. If you want to start an intensely emotional political debate, try suggesting to a group of Liberal friends that poverty is a moral problem.

If there is no government program to end poverty by securing a biologic father for each child, then what is a good Republican to do? The answer, gratifyingly, is to grow the economy. The barrage of gloomy and misleading press about the "shrinking middle class" and "rising poverty in America" has obscured the truth about the rising income and wealth of all Americans, not just the rich.

There is an astonishing pace of upward income mobility for all classes of Americans. Reports from the Census Bureau and the Federal Reserve show that,
 * The middle quintile of Americans in 1967 made between $28,000 and $39,500 per year (2004 dollars).
 * By 2004, the middle quintile earned between $38,000 and $59,000 per year.

That's why the middle-class owns things like cable TV and second cars that were considered luxuries in the 1960's. The most impressive constant about the American economy is the upward mobility it offers for the bottom rungs. A Treasury Department study released in November of 2007 showed that,
 * By 1991, most workers in the bottom quintile were better of than those in the middle quintile in 1975.
 * Nearly 58% of filers who were in the poorest income group in 1996 had moved into a higher income category by 2005.
 * Nearly 25% jumped into the middle or upper-middle income groups, and
 * 5.3% made it all the way to the highest quintile.
 * Of those in the second lowest income quintile, nearly 50% moved into the middle quintile or higher, and only 17% moved down.
 * This means that more than half of all lower-income Americans in 1996 had moved up the income scale in only 10 years, results little changed from earlier studies of the 1960's and 70's

We can say with certainty that most working Americans are achieving levels of wealth and income that far surpass those of their parents.

If we best help the poor by growing the economy, how do we best grow the economy? Basically by following Republican economic principles: low taxation, low regulation and all those other ideas Democrats don't believe.

Real Poverty: The Homeless
Let us close the discussion on poverty with the one income category- $0 to $5000 year where there is little income mobility. This is a true underclass and it constitutes about 3% of families. The problems of this group can perhaps be best illustrated by using homelessness as an example.
 * About one-third of the homeless have mental illness and
 * Another one-third have drug or alcohol dependency.
 * The 1990's saw a rapid increase of homelessness amongst children with the breakdown of the family.
 * There is no full-time work participation, nor in many cases are they even employable.

While helping this group is a worthy priority, their poverty is not the result of a macro failure of the U.S. economy.

There is some part of human nature that relates to predictions of gloom and disaster. There is no generation in history that hasn't declared that the world is going straight to hell. So it is with the Democrat's view of declining living standards, job insecurity, and little opportunity for their children.

Most polls show that a majority of Americans believe them, despite the fact that they and their neighbors are all doing great, thank you very much.

It is important for us to keep explaining the objective data of the Great American Dream Machine. If there is job insecurity, this is reflection of the tumultuous upward churn of the digital age. If standards of living are declining, why do we all have 52" LCD televisions? We have experienced tremendous economic progress in the past 25 years and it is the result of free enterprise. As long as we protect that, the progress will continue, especially for the poor . The best is yet to come.

Food for Thought

 * 1) Who has a higher standard of living, the wealthiest American in 1890 or an average American in 2008?
 * 2) Would you want to be a millionaire in a country where everyone else was a billionaire?
 * 3) Would you rather live in a country where everyone was poor or a country where half were poor and half were rich?
 * 4) At the time of the Civil War, Southern whites made up one-third of the white population but composed an absolute majority of all the illiterate whites. Every social measure of the American South lags that of the North. Most of the differences are attributed to culture. The low levels of intellectual and economic achievements of the Scots-Irish culture, called "redneck" or "cracker", has held back Southerners for generations. If one-third of whites lived in redneck culture, 90% of the black population did until the 1950's. Today, the last remnants of the culture can be seen in the ghettos of the north settled by these Southern black "rednecks". This counter-productive and self-destructive culture, the "gangster" attitudes and Rap music of the inner city blacks, is now seen as the "authentic" black culture. How do we tell how much of Black under-achievement is due to residual racism and how much is due to this culture? What can or should be done about it?
 * 5) On December 31, 2007, Gallup released a poll showing that 84% of Americans are satisfied with their lives. Two weeks earlier, Gallup had released a poll showing that 70% of the respondents believe the nation is headed in the wrong direction. Discuss.