INCOME AND WEALTH DISPARITY – PART III – THE FACTS AND MISCONCEPTIONS ABOUT POVERTY

The redistributionists, including Joseph Stiglitz, President Obama, Robert Reich, former Secretary of Labor, Paul Krugman, NY Times columnist, Bill de Blasio, the new Mayor of NYC, and others seem to have only a passing flirtation with the free market.  They appear much more inclined, on purpose or not, to want to promote class warfare.

One of their main thrusts is in the area of poverty, where they spout things like, “In America, nearly one in four children live in poverty.”

So let’s look at some facts:

According to the Census Bureau, the poverty line for a family of four in 2012 was $23,000 of annual income.  That did not include the value of housing subsidies, food stamps, welfare, health and medical aid, and educational assistance and meals, which would probably double that income figure.  Still not much money for a family of four.

Understanding poverty in America requires looking behind these numbers at the actual living conditions of the individuals the government deems to be poor.  For most Americans, the word “poverty” suggests near destitution: an inability to provide nutritious food, clothing, and reasonable shelter for one’s family.  However, only a small number of the approximately 50 million classified as “poor” by the Census Bureau fit that description.  While real material hardship certainly does exist, it is limited in scope and severity.

The following facts about people defined as “poor” by the Census Bureau are taken from various government reports:

  • 80 percent of poor households have air conditioning
  • 92 percent of poor households have a microwave
  • Nearly three-fourths have a car or truck, and 31 percent have two or more cars or trucks
  • Nearly two-thirds have cable or satellite TV
  • Two-thirds have at least one DVD player, and 70 percent have a VCR
  • Half have a personal computer, and one in seven have two or more computers
  • More than half of poor families with children have a video game system, such as an Xbox or PlayStation
  • 43 percent have Internet access
  • One-third have a wide-screen plasma or LCD TV
  • One-fourth have a digital video recorder system, such as a TiVo

Is this the poor or the middle class?

Most of the poor do not experience hunger or food shortages.  The U.S. Department of Agriculture collects data on these topics in its household food security survey.  For 2009, the survey showed:

  • Ninety-six percent of poor parents stated that their children were never hungry at any time during the year because they could not afford food.
  • Eighty-two percent of poor adults reported never being hungry at any time in the prior year due to lack of money for food.

Other government surveys show that the average consumption of protein, vitamins, and minerals is virtually the same for poor and middle-class children and is well above recommended norms in most cases.

  • Only 9.5 percent of the poor live in mobile homes or trailers, 49.5 percent live in separate single-family houses or townhouses, and 40 percent live in apartments
  • 42 percent of poor households actually own their own home

The alarming statistics and inferences of the Stiglitz-disparity advocates attempt to portray Americans as being much worse off than the rest of the Western World, and this appears to be simply way off base.

Susan Bacon, neighbor and friend who has worked extensively in the skidrow community, says her hands-on experience isn’t always in sinc with all the national statistics we’ve quoted, but is bothered when some low-income families have a flat screen TV but cannot care for their children.

Since the word “poverty” carries such a negative connotation, we find ourselves surprised that poor people live as comfortably as they do.  This doesn’t mean that they don’t want a better life or that society shouldn’t help them to achieve more.  It also doesn’t mean there shouldn’t be safety nets so that we don’t find people starving in the streets.  The only question is whether public and private policies are appropriate as safety nets as well as to support upward mobility.

Many in the Stiglitz arena seem to focus everything on the government’s social engineering as the solution.   These have been tried and funded, to the tune of $21 trillion since President Johnson declared a “War on Poverty.”  The outcome over 50 years, however, with regard to the number of poor families, remains about the same.  Perhaps more of the same isn’t the solution.

A lot of poverty is being driven by personal behavior, not an unfair economic system.  In 1963, just six percent of American babies were born out of wedlock.  Now 41 percent are, and that includes 72 percent of African-American babies.  Single-parent homes are four times more likely to be living in poverty; and children raised by single parents are three times more likely to end up in prison and 50 percent more likely to be poor as adults.

To sum it up, it’s not desirable to be poor, but the majority of the poor in the United States do not live in squalor as one might have imagined and actually live a better life than the middle class of a hundred years ago.  This doesn’t mean they shouldn’t get some help.  It does mean we should at least understand the problem as it truly exists.

Next month in Parts IV and V we’ll address what happened to the middle class and what, if any, are the consequences of all this disparity.

ArtSchwartzSig

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