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A Historic Decrease in Poverty

Interesting article if you have a subscription: https://nybooks.com/articles/2021/11/18/historic-decrease-in-poverty/ But I will post this fascinating excerpt:
Poverty would be less concerning if it were a brief transition to a better life. But modern scholarship has called into question the cherished notion that the United States is a country of exceptional class mobility. The authors of Poorly Understood cite the economist Miles Corak, a professor at the Graduate Center of the City University of New York, who has examined the degree to which a father’s earnings predict those of his sons. (Studies of intergenerational mobility often focus on men since they include earlier generations when women were less uniformly engaged in paid labor.) In Denmark, “intergenerational elasticity” is 0.15—about 15 percent of a father’s economic status is passed along to his sons. In Germany, the figure is about a third. In the US, the share of advantage or disadvantage passed from fathers to sons rises to nearly half. Among the fifteen wealthy countries that Corak examined, only two (the United Kingdom and Italy) were more class-bound than the US, and only slightly so.

Other researchers have found the “stickiness” of class status especially pronounced at the top and the bottom—people born rich or poor tend to stay that way. Inequality is a consequence of blocked mobility. But it is also a cause: the more that wealth concentrates at the top, the more power the wealthy have to pull up the ladder. If you doubt the lengths to which rich parents go to protect their children’s advantages, think of the Varsity Blues scandal, in which parents bribed counselors, falsified test scores, and faked athletic résumés to get their children into selective schools, including Stanford, Yale, and USC. For all the salience of the rags-to-riches tale, the authors of Poorly Understood write, Americans’ economic status is determined “to a much greater extent” by family resources than it is in many comparably wealthy nations.

Poorly Understood also attacks the idea, advanced by many conservatives, that the needy are already protected by an extensive safety net. As a share of GDP, France, Austria, Denmark, and Finland all spend at least 50 percent more than the US to help people of modest means and their poverty rates are roughly half as high. A pre-Covid study by Jared Bernstein, now a member of the White House Council of Economic Advisers, looked at poverty in rich countries on four continents. Before accounting for taxes and government aid, the American poverty rate was in the middle. But the safety net cut poverty by 80 percent in Sweden and by more than two thirds in Britain and Germany, while it cut poverty by only about one third in the US. That left the US with the highest poverty levels of all twenty countries reviewed.

Why does the US tolerate more poverty than its peers? In part, the authors argue, it is because the US is more racially diverse. (Or, one might add, it was for most of the twentieth century, when the safety net took shape—European demography is changing.) Some whites have been reluctant to support antipoverty programs because they believe, correctly, that the aid disproportionately helps minorities (who after centuries of exclusion are more likely to be poor). Blacks are nearly twice as likely as whites to live in poverty, though in absolute terms poor whites are more numerous. America’s individualist ethos—the idea that anyone can get ahead—also inhibits safety-net spending. And the dynamics of American politics favor the rich: money dominates, unions are weak, voter turnout is low, the Senate is antidemocratic, and the Electoral College gives small, conservative states outsized clout.

Comments

  • Yes, I have no doubt that all (or certainly most) of that is accurate. But here's the thing: the result of all of that background is the US as it exists today. And, as it will exist tomorrow, because there is no political force in this country that is realistically strong enough to effect significant change.

    Worse, given the newly increased (thanks to Trump) social and political divisions in this country, the path to change is blocked for the foreseeable future.

    This is now the United States, like it or not.

    And the system doesn't really care what Miles Corak, Jared Bernstein, you or I think.
  • Non-voters, who by some measures favor Democrats over the GOP by a 2-1 ratio could effect significant change, along with the millions who vote against their own financial interests. But in this country unfortunately, white supremacy and unlimited guns are more important than quality health insurance, clean air and water , etc!
  • You've nailed it, unfortunately.
  • edited January 4
    I think you're both right and yet the article describes how during Covid there has been a historic decrease in poverty because of government assistance programs that managed to pass during the crisis. The author concludes that these positive changes will be temporary because largely of the reasons you stated, but it is interesting that a crisis of this magnitude managed to make some inroads into our poverty problem:
    Consider not only how large but how varied the safety-net expansion has been since the coronavirus struck. The federal government spent about $800 billion on stimulus checks alone and hundreds of billions on expansions of joblessness aid. In addition to expanding SNAP, the government sent money to replace the meals children lost when their schools closed. The huge spending on emergency housing ($46 billion) was exceeded by the spending on childcare ($50 billion). The child tax credit provides $250 a month for every child—$300 for those under six. In covering the expansion for the Times, I exhausted my store of adjectives: extraordinary, remarkable, unprecedented.

    Yes, the aid was temporary and sometimes delayed. The chaos in unemployment offices—state-run and underfunded—was especially bad, with some workers waiting months for checks. Still, huge sums flowed to people in need. I’ve spent a good part of the last eighteen months listening to their stories.

    When the pandemic began, Dakota Kirby, a single mother in Indianapolis, lost her job caring for an elderly woman. Having started the position only recently, she wrongly assumed that she could not get unemployment aid. That left her feeding her two young children with SNAP benefits, which were too small to last the month. She skipped meals so that they could eat, supplemented their fare with butter beans and tuna from a food bank, and pawned her television set. But she still came up short at the grocery store checkout line, forcing her to remove frozen pizzas from her cart as strangers looked on. “It was humiliating—it makes you really sad and angry as a mom,” she said. Then three new sources of nutritional aid arrived, including higher SNAP benefits and money to replace the meals her daughter would have eaten for free if the school was open. The new assistance swelled her grocery budget by 40 percent, to ten dollars a person a day—“a big old jump!” she said—and provided the household with enough to eat.

    Chenetta Ray, who works at a Houston recycling company, lost a third of her hours at the start of the pandemic when trash collections fell. Her car insurance lapsed. Her lights were cut off. She skipped meals and wore dirty work clothes to save money at the laundromat. When her teenage daughter discovered that they were behind on the rent, she offered to quit school and work, which Ray would not allow. Then Ray found out she had cancer. “I really got down and depressed,” she said. Two rounds of stimulus checks brought the family $4,000 this year, enough to pay some of Ray’s bills and get the CT scan she needed to guide her treatment. She received thousands more in rental assistance a few months later, which saved her from eviction. In addition to food and shelter, the aid eased her depression: “Part of the benefit of the stimulus to me was God saying ‘I got you.’… It took a lot of stress off me.”

    Note that both women describe the same sequence of events—rising hardship, followed by rising aid. Early in the pandemic, press coverage and political debate focused so much on the former, for good reason, that the full extent of the latter has been obscured. In its official, statistical sense, poverty is measured on an annual basis, after tallying the income that arrives during the year. Though poverty seemed to be rising when the crisis began, so much aid eventually flowed that the opposite ended up being true. What explains such a large safety-net expansion in a country resistant to it? Obviously, the answer starts with the severity of the pandemic. The scale of the job-loss eliminated normal budgetary constraints and added the white middle class to the list of those in need. Family aid was also corporate aid, since businesses needed consumers with money to spend, which attracted conservative support. Most importantly, the pandemic removed the usual argument that people in need have themselves to blame. Promoting the $1.9 trillion rescue plan that the Democrats passed earlier this year, Biden hailed the “millions of Americans who, through no fault of their own, have lost the dignity and respect that comes with a job.” After the bill passed the Senate, he again cited Americans “out of work through no fault of their own,” and added, “I want to emphasize that: through no fault of their own.” Politicians as different as Maxine Waters on the left and Josh Hawley on the right used the same words.....

    ....Now, with the economy growing and jobs going unfilled, that brief pause in the politics of blame has probably ended. The reasons for job vacancies aren’t fully understood—they seem to include a lack of childcare, fear of the virus, and shifting expectations of work—but even with many aid expansions gone, including the higher unemployment benefits, conservatives are blaming the generosity of the current safety net for many people’s hesitation to take jobs.

    Beyond the shock of the pandemic, a fuller explanation of the recent politics of poverty awaits. There are at least two contrasting points of view. An insider-centric perspective suggests that Democrats simply seized on a rare constellation of events to advance longstanding priorities. Rosa DeLauro introduced her first child tax credit bill in 2003. When the pandemic, and unified Democratic government, finally offered a chance to push it through, she and others grabbed the opportunity. Few Americans demanded it or even knew about it at the time.

    A competing interpretation looks beyond Washington to forces unsettling the country—rising inequality, wage stagnation, and racial unrest, especially after the police killing of George Floyd in May 2020. Street protests put new pressure on Democrats to address racial and economic inequity. That pressure operates at both the ideological and interest-group level: Democrats owe their power—including the two Georgia Senate seats they won at the start of the year—to voter turnout by people of color. The Urban Institute’s projections suggest that those constituents are getting what they voted for, with poverty down 47 percent among Latinos and 52 percent among Blacks.
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