Category: Poverty

girl bitting appleThe opening paragraphs of latest issue of Stanford University’s Pathways magazine contains an eye-opening claim: in any given month of 2011, 1.65 million U.S. households with children were living on less than $2 per person, per day.

That sounds horrific, and it is: horrifically misleading.

Once you dig deeper you find that what they mean is “households living on $2 or less in cash income per person per day.” The reason it is misleading is because, as a savvy economist might say, you don’t eat income.

What we mean (or should mean) when we say “living on” is consumption. In economics, consumption is the use of goods and services by households.

For at least the first few years of our lives (i.e., when we’re children), most of us have no incomes at all. So how do we keep from starving? Because what we “live on” (our share of consumption) is paid for by someone else’s income, usually our parents. Americans in extreme poverty are also able to consume using someone else’s income: their fellow taxpayers. This is why the poor can have near zero income and still have access to many of the goods and services, such as housing and food, required for survival.

As Jordan Weissmann notes, the Stanford article “ignored all non-cash safety net benefits.”

Earlier this month, I wrote a two part article for the Library of Law & Liberty, critiquing the uncritical condemnation of income inequality by world religious leaders.

In part 1, I pointed out that “while the Pope, the Patriarch, the Dalai Lama, and others are right about the increase in [global income] inequality, they are wrong to conclude that this causes global poverty—the latter is demonstrably on the decline. And that, I would add, is a good thing.”

F. A. Hayek

In part 2, drawing on the work of F. A. Hayek, I noted, “As societies learn to use their resources ‘more effectively and for new purposes,’ the cost of manufacturing luxury goods decreases, making them affordable to new markets of the middle class and, eventually, even for the poor.” I continue, “Such inequality not only accompanies the very economic progress that lifts the poor out of poverty, it is one essential factor that makes that progress possible.”

We may add to this two more ways in which focusing solely on income inequality can be misleading from article in the Wall Street Journal yesterday by Nicholas Eberstadt: increased equality in lifespan and education. He writes,

Given the close correspondence between life expectancy and the Gini index for age at death, we can be confident that the world-wide explosion in life expectancy over the past century has been accompanied by a monumental narrowing of world-wide differences in length of life. When a population’s life expectancy rises from 30 to 70, the Gini index drops by almost two-thirds—from well over 0.5 to well under 0.2.

This survival revolution—and the narrowing of inequalities in humanity’s life chances—is an epochal advance in the human condition. Since healthy life expectancy seems to track closely with overall life expectancy, a revolutionary reduction in health inequality may also have occurred over the past century. Improvements in global mortality for the poor have contributed to the very “economic inequality” so many now decry. This is another reason such measures can be deceiving.

The spread and distribution of education has had a similar impact. In 1950 roughly half of the world’s adults—and the overwhelming majority of the men and women from low-income regions—had never been exposed to schooling. By 2010 unschooled men and women 15 and older account for a mere one-seventh of the world’s adults, and about one-in-six from developing areas. (more…)

union-jack-flag-great-britain-x-nature-with-uk-for-2685143At the height of power, circa 1922, the British Empire was the largest empire in history, covering one-fifth of the world’s population and almost a quarter of the earth’s total land area. Yet almost one hundred years later, Great Britain is not so great, having lost much of its previous economic and political dominance. In fact, if Great Britain were to join the United States, it’d be poorer than any of the other 50 states — including our poorest state, Mississippi.

Fraser Nelson discovered that fact by using a “fairly straightforward calculation” (see the end of this article for an explanation, and what Nelson missed). The result, as Nelson explains, is that all but one income group in America is better off than the same group in Britain:

Bruton_Church,_WilliamsburgThis summer I made a visit to Colonial Williamsburg in Virginia, and on a tour of churches, I heard a fascinating explanation of how society functioned when the church was the place where the poor had their material needs met, not the government. The Bruton Parish Church in Williamsburg is one example.

According to church records, Burton Parish formed in 1674 following the merger of several colonial parishes originating as far back as 1633. As a Church of England congregation, this Anglican parish church was the center of life and culture. For example, during the era of the American Revolution men like George Washington, Thomas Jefferson, and Patrick Henry attended the church. Not only did prominent people in politics attend the parish church, the church also served the central location for providing social services for the poor.

In 17th and 18th century Williamsburg, Virginia helping the poor was assumed, as a social norm, to be the responsibility of the church, not the state. In the Bruton Parish, the vestrymen, in addition to managing the affairs of he parish, were responsible for all poverty related social services. In the Anglican church, the vestry was established as a committee elected in local congregations to work with the wardens of the church to meet various needs. During the colonial era, if a person did not have adequate housing, adequate food or clothing, if women were widowed and children were orphaned, and so on, it was simply an assumption that the church would meet the needs of those on the margins locally and personally.

police-povertyI’m about to make a prediction that is incontrovertible — a claim that cannot be controverted because (a) I am absolutely right in my prediction, and (b) because I will be long dead before my rightness can be proven.

Here’s what I predict: By the year 2114 social scientists will have established with 90 percent confidence that the “root cause” of the majority of the social maladies we experienced in the early twenty-first century (i.e., right now) were attributable to family structure, family dynamics, or family culture.

A trend in that direction appears to already be underway. Consider, for example, research recently published in the British Journal of Psychiatry that studied more than half a million children born in Sweden between 1989 and 1993. The results of the study showed that children of parents in the lowest income quintile experienced an increased risk of being convicted of violent criminality and substance abuse compared with peers in the highest quintile. No real surprise there. What was unexpected was the conclusion: “There were no associations between childhood family income and subsequent violent criminality and substance misuse once we had adjusted for unobserved familial risk factors.”

Blog author: jcarter
Thursday, August 21, 2014

7figuresFeeding America is a nationwide network of 200 member food banks, the largest domestic hunger-relief charity in the United States. The Feeding America network of food banks provides food assistance to an estimated 46.5 million Americans in need each year, including 12 million children and 7 million seniors.

The report “Hunger in America” is Feeding America’s series of quadrennial studies that provide comprehensive demographic profiles of people seeking food assistance through the charitable sector.

Here are seven figures you should know from the latest report:

news4.wideaIf you live or work in a city you likely pass them on the streets and sidewalks every day. Holding a sign reading “Homeless, please help” or an old coffee cup to collect spare change, the itinerant panhandlers and chronic homeless look you in the eye and ask for your money.

What do you do in such situations? What should you do?

Jim Antle recounts some of the experiences he’s had with panhandlers and explains why he gives them money:

Fish-safety-netWhen Americans are asked what percentage of the federal budget is spent on foreign aid, the average answer is 28 percent. The real answer is around 1 percent.

Before we start mocking the estimation skills of our fellow citizens, I have a similar question for my fellow conservatives: What percent of federal budget goes to programs that provide aid (other than health insurance or Social Security benefits) to individuals and families facing hardship?

Would you say 40 percent? 30 percent? 20 percent?

The actual answer is 12 percent, or $398 billion.

Could the amount of money donated to private charities cover the substitution cost for the social safety net? The short answer is: it’s not even close. As AEI president Arthur Brooks explains,


basic-income-guaranteed-and-minimum-wage_thumb1For decades conservatives and libertarians have pondered ways to replace the defective American welfare state. One of the boldest and most controversial ideas is to simply give everyone a basic guaranteed income. Instead a variety of ad hoc welfare programs, people would simply be given cash.

Matt Zwolinski outlines an example proposal that includes an unconditional cash grant — no strings attached. Just give people cash and leave them “free to spend it, or save it, in whatever way they choose.” Zwolinski outlines a number of benefits we could gain by replacing welfare programs with a guaranteed income.

81396fYesterday, Acton research associate Dylan Pahman made the connection between inequality and poverty alleviation. Today, he continues that argument and explains how the connection affirms the moral merits of economic liberty:

Hayek argued for a stronger connection between inequality and economic progress in his 1960 work The Constitution of Liberty. “New knowledge and its benefits,” writes Hayek, “can spread only gradually, and the ambitions of the many will always be determined by what is as yet accessible only to the few . . . This means that there will always be people who already benefit from new achievements that have not yet reached others.”

Hayek’s basic point is simple: Before many social advancements become common, they first exists as luxuries. “The new things,” writes Hayek, “will often become available to the greater part of the people only because for some time they have been the luxuries of the few.” This applies to much of what the average person in a developed society today takes for granted: automobiles, air-conditioning, refrigeration, tablet computers, smart phones, and so on. Go back far enough, and we might even add clean water and basic sanitation to the list.

Read more . . .