How Prosperity Generates Poverty
There is a predictable annual ritual which begins when the Census Bureau releases its estimates that roughly one eighth of Americans live in poverty, and that this proportion has been relatively invariant in recent years despite the steady rise of per capita real incomes. This is followed by predictable rant by the anti-free-market crowd who lament the presence of an alarming number of children in poverty (a legitimate concern) and declaim that "the system" must be seriously flawed and who advocate more heroic interventions to alleviate this condition. FULL ARTICLE
Comments (9)
banker
Someone needs to post why minimum wage is so good for poor people. Logical arguments need not apply.
Published: May 9, 2006 8:45 AM
David Oenbring
Minimum Wage is bad for poor people. If they have no takers for their skills at $5.15 per hour why does anyone think there will be a market at $8 per hour? Poverty in America is basic cable.
Published: May 9, 2006 9:37 AM
Nat
Once again the government gets it wrong. There is VERY LITTLE poverty in America. Certainly less than 1/8 of the population. I'd be suprised if it were one percent.
This article makes it safe to assume that no one from the Census Bureau has ever been to rural Jangxi in China. The richest person there makes someone in Cabrini Green look like Bill Gates.
Published: May 9, 2006 12:19 PM
Ken Zahringer
That's the magic of government statistics. Real material living conditions are irrelevant. The Census Bureau defines "poverty" as making less than 50% of the median income, no matter how much that is in actual dollars. Voila! We can have all the poverty we want, for political purposes, as long as we define it correctly.
Published: May 9, 2006 12:37 PM
Stefan Karlsson
Actually, Ken, it's not true that the Census bureau defines poverty as less than 50% of the median income or any other form of relative poverty definition. They use a absolute poverty definition which has stayed the same for decades apart from being [quite properly]updated annually to adjust for consumer price inflation.
That is not to say that there aren't problems with this poverty definition. It for example excludes capital gains income and non-cash benefits from the government. Moreover, it do not take into account differences in cost of living between different parts of America, which means that poverty is exaggerated in rural areas while being underestimated in places like New York City and San Francisco.
Published: May 9, 2006 3:11 PM
Som
If the welfare state dissapeared, perhaps more people would move back to rural areas because of the lower cost of living like thailand 40 years ago. However, for those who appreciate cosmopolitan urban life, the minimum wage puts them at a severe disadvantage. This is simply because there will be less jobs available and the inability to make any money what so ever, so it's much more difficult for lower income individuals to live together in one apartment paid with by their combined lower income and still enjoy the urban life. Not to mention housing would be proabably cheaper since more lower class people would be moving back to rural communities.
Published: May 9, 2006 4:12 PM
billwald
I theorize that at least in Washingtos State there is a tacit agreement that the largest city in every county will be ceded to the Dems and given welfare funds in order to keep the poor people out of the Rep suburbs.
I boggles my mind that welfare housing is built on the most expensive real estate in the country e.g. San Francisco & Seattle when for the cost of a building lot in Seattle several entire houses could be purchased elsewhere and given to our poor and oppressed. All I can think of is that the rich business owners are pleased to have the middle class build low cost public housing so that they can under pay their employees and sell cheap greaseburgers.
Published: May 10, 2006 8:19 PM
Julien Peter Benney
Som,
it is hard for me to believe that if the welfare state disappeared then people would move back to rural areas. If farm subsidies are abolished as I imagine you would wish, then only those nations with very large supplies of continuously flat land would be able to economically support local food production. Such nations are found mainly in Australia and sub-Saharan Africa. Elsewhere the free market encourages rapid technological growth because of scarcity of land and minerals.
Published: June 29, 2009 5:29 AM
Julien Peter Benney
Som,
it is hard for me to believe that if the welfare state disappeared then people would move back to rural areas. If farm subsidies are abolished as I imagine you would wish, then only those nations with very large supplies of continuously flat land would be able to economically support local food production. Such nations are found mainly in Australia and sub-Saharan Africa. Elsewhere the free market encourages rapid technological growth because of scarcity of land and minerals and makes (even with farm subsidies) agriculture completely unviable as a means of making money. Even with a lower cost of living rural areas would have to depend on something other than farming to survive in a free market.
A more likely outcome in land-short countries is that without welfare and farm subsidies they become even more tourism-dependent, which increases competition for housing and force prices up further. Or they would become nations where almost all land is urbanised: housing costs in Italy and Japan are so high that it would probably be economic in a totally free market to develop all land that could potentially be developed for housing.
Published: June 29, 2009 5:38 AM