Filed under: Politics | Tags: American Income Mobility, Dishonest Language, Redistribution of Income
We lose track of reality by misuse of words, deliberate efforts to change the meaning of words, ignoring common sense, and simply not stopping to think things through.
Poverty is much in the news. But do we ever stop to think that as long as we define the poor as the bottom twenty percent of the national income, there will always be the poor.
There is no material poverty in the United States. 80 percent of poor households have air conditioning; three-quarters have a car or truck, 31 percent have two or more. Two-thirds have cable or satellite TV. Half have one or more computers. Forty-two percent own their homes. Poor Americans have more living space than the typical non-poor person in Sweden, France or the U.K.
The Treasury Department divides the American people up into quintiles — the poor, the lower middle, the middle, the upper middle, and the rich. They are not the same people over time, and income mobility is the norm. 80 percent of people born in households below the poverty line escape poverty when they grow up, some become rich.
Economics Professor Walter E. Williams writes:
The Census Bureau pegs the poverty rate among blacks at 35 percent and among whites at 13 percent. The illegitimacy rate among blacks is 72 percent, and among whites it’s 30 percent. A statistic that one doesn’t hear much about is that the poverty rate among black married families has been in the single digits for more than two decades, currently at 8 percent. For married white families, it’s 5 percent. Now the politically incorrect questions: Whose fault is it to have children without the benefit of marriage and risk a life of dependency? Do people have free will, or are they governed by instincts?
The black illegitimacy rate was only 14 percent in 1940. A slightly higher percentage of black adults were married than white adults according to census data going back to one generation out of slavery, a fact in every census from 1890 to 1940. Avoiding long term poverty is not complicated: 1. graduate from high school. 2. get married before you have children and stay married. 3. work at any kind of job, even one that starts at the minimum wage. A married couple, each earning the minimum wage would earn an annual combined income of $30,000. The poverty line for a family of two is $15,500, and for a family of four, it’s $23,000.
Since LBJ’s War on Poverty the nation has spent about $18 trillion at the federal state and local levels of government on programs justified by the “need” to deal with some aspect of poverty. Poverty is a political game. Promising to help the poor is a good thing. Making the poor dependent on government is not. A poor person who is offered a job at the minimum wage that promises a brighter future, would lose money by going off welfare. But you don’t climb the economic ladder on government handouts. The government is not dependable. Once welfare is granted the amounts may be cut at any time depending on budgeting. There is little political interest in addressing the basic causes of poverty. Which is why the failure to talk about it honestly is so unfortunate.
So you have increasing the minimum wage. Government will make the poor less poor by ordering their employer to pay them more. A full time minimum wage worker at $7.25 is earning more than the poverty line. The minimum wage here is $9.25, and goes mostly to teenagers whose family incomes are around $50,000. You will notice that the politician who is proposing to raise the minimum wage has no skin in the game. He just gets to preen and get votes from people who think he’s doing something nice.
Filed under: Capitalism, Economy, Freedom, Taxes | Tags: American Income Mobility, Hooray for Capitalism!, How Are We Doing?
How well-off are we? Using economic data, economics professor Steve Horwitz addresses questions about inequality, consumption, happiness, and well-being.
Are the rich getting richer and the poor getting poorer? Is there income mobility in the United States? Are Americans happy? Are we “objectively” better off than we used to be?
This lecture was taped in 2010 at the IHS summer seminar, “Morality, Capitalism, & Freedom” at Wake Forest University.
(h/t: American Digest)