“Extreme poverty in America: read the UN special monitor’s report” (Guardian):
The proposed tax reform package stakes out America’s bid to become the most unequal society in the world, and will greatly increase the already high levels of wealth and income inequality between the richest 1% and the poorest 50% of Americans. The dramatic cuts in welfare, foreshadowed by Donald Trump and speaker Ryan, and already beginning to be implemented by the administration, will essentially shred crucial dimensions of a safety net that is already full of holes. It is against this background that my report is presented.
The United States is one of the world’s richest and most powerful and technologically innovative countries; but neither its wealth nor its power nor its technology is being harnessed to address the situation in which 40 million people continue to live in poverty.
The Federal War on Poverty began 54 years ago (Wikipedia). As a percentage of GDP, the U.S. spends more on its welfare state than any other country on Planet Earth other than France (Forbes). Thus, due to our larger population, we actually run the world’s largest welfare state. Is it thus fair for the Guardian to say that our wealth isn’t being harnessed for poverty relief? What about the fact that the evil Donald Trump might assist Congress in changing the way some of this money is spent? If tens of millions of Americans are desperately poor despite the river of poverty relief cash that has been flowing for 54 years, what is bad about change? Is it too early to declare that the old methods have failed? It is plain that we were just about the turn the corner on poverty?
Unless these folks were suggesting that currently poor Americans were actually doing great prior to Donald Trump’s election, I think the only logical inference that one can draw from the above is that War on Poverty hasn’t been given a fair chance. That seems also to be the general feeling among New York Times readers. See, for example, “The U.S. Can No Longer Hide From Its Deep Poverty Problem” (nytimes), by a Nobel-ish economist:
it is precisely the cost and difficulty of housing that makes for so much misery for so many Americans, and it is precisely these costs that are missed in the World Bank’s global counts.
(So if we already have too much demand for too few houses and apartments, how is population growth via immigration supposed to make low-income Americans better off?)
The readers respond to this with comments demanding that we double-down on the Big Welfare State:
(the very top-rated-by-readers comment) Nancy Parker, Englewood, FL: … we should tax the rich until they yell out loud, because they are privileged, not entitled to the chunk of wealth they lay claim to. Not until every poor person has the basics can they live the lives of excess and extreme that they do.
(the next one, which 951 people recommended) Susan Sheeley, Salem, MO: … Poverty isn’t the result of immigration. It is the result of the very wealthy leaving the rest of America behind.
flyoverprogressive, Michigan: The 1.5 trillion that will mainly stuff the coffers of the wealthy should have been used to provide universal healthcare, affordable college, daycare for working moms and immediately infrastructure repair. Where I live, the roads, bridges, water and sewer systems are little better than the ‘shithole’ countries of Africa.
alan haigh, carmel, NY: … Americans are sold a mythological identity of a self reliant, individualistic people always capable of pulling themselves up by the bootstraps when sufficiently motivated. If this was true, poverty would not so stubbornly pass from generation to generation here. Poverty breeds poverty, not a lack of motivation- any lack of motivation is a symptom. [i.e., he is denying the science of heritability of success!]
T.A.S. Milwaukee, WI: … If the minimum wage were a living wage, so many fewer would be on welfare. If we had reasonable public transportation, people could get to work. Etc.
Among the highly-rated comments there is only one that shows some evidence of thoughtcrime:
Don P, New Hampshire: … During the past 50 years there has been tremendous action at the federal, state and local level to address poverty and many programs yet the number of Americans in poverty still grow.
The one glaring area that no one has attempted to address and certainly no politician will even speak about is the high birth rate. In 2015 the birth rate for women with income less than $10k was 64.7 as compared to 52 for women earning $50-76k, 46 for women earning $100-140k, and 43.1 for women earning $200 k.
The clear fact is that those with the least financial means are having the most children who are being born into poverty and are opportunistically disadvantaged from they day they are born. And far too often being born into poverty results in a lifetime of poverty.
(But of course he is not enough of a thought criminal to ask “Why would people who get paid by taxpayers to have kids have a lot of kids?” or “Is it possible that when a child is born to two parents who have never worked the child will be less likely than average to seek a job?” (See The Son Also Rises: Policy Implications and The Son Also Rises: economics history with everyday applications))
Readers: Why do Americans, after having spent so many trillions of dollars over so many decades, and observing the continued presence of tens of millions of their fellow citizens still “in poverty,” still have faith that the stuff that hasn’t worked for 54 years will suddenly start working?
Phil, if you were emperor, how would you prefer to stop/cut back on using taxpayer money to pay people to have kids? Which welfare programs would you cut? Would you replace them with something else ?
“But of course he is not enough of a thought criminal to ask “Why would people who get paid by taxpayers to have kids have a lot of kids?” or “Is it possible that when a child is born to two parents who have never worked the child will be less likely than average to seek a job?”
Clearly the solution is to pay additional money to welfare recipients to not have kids in excess of what they would receive for the kid. With bonus prizes for abortions.
Dingus,
It is unfortunate, but that kind of realistic approach will likely be necessary. Maybe billboards that deride people below certain household incomes for having kids? “Having a hard time making rent? Don’t have kids.”
Maybe we can have parental licenses with lots of stipulations?
Also, completely gutting the current alimony/child support system would also be necessary.
You’re missing the main point, which invalidates the entire discussion: the definition of “poverty” is constantly tweaked, so that the number of people in poverty stays large enough to justify the existence of the bureaucrats who depend on it, regardless of how much better off the “poor” actually are.
I wonder where Phil gets his numbers. US (#25) spends slightly more per capita than Mexico (#27). Denmark is #1. To get to #1 or #2, you have to include various tax breaks and tax advantages, most of them going to the middle and upper classes via things such as pre-tax health insurance, 401(k).
I’m going to assume you never lived anywhere else in the world as a lower class working parent. I assure you if most American parents earning less than 40K per year lived in France or Denmark for a year or two and then were forced to move back to US, there would be riots in the street.
Yz: Great question! This is the kind of stuff we used to think about back in the college dorm in the Just Say No Reagan years.
If I could take over from Donald Trump as the Supreme Dictator of the U.S., what would I do with the child-related welfare stuff?
I guess I would start from the position that the U.S. population of my childhood (205 million in 1970) was a reasonable level of crowding and led to a sufficient number of traffic jams, etc. So I wouldn’t want the government to encourage or discourage residents of the U.S. to have children.
On the other hand, Americans (including me!) can’t bear to see a child suffering from the effects of poverty. Kids didn’t ask to be brought into this world and we’ve made it illegal for them to do most things, including work. So we need to make sure that kids have what they need. Right now we often do that by giving an adult cash (or cash-equivalents such as housing) and then the adult owner of the kid can divide the cash between him/herself and the kid. So we never know if the adult wanted the kid or wanted the cash.
I guess I would start with a system in which there is no way for an adult to profit from owning a child. So the child can get a free education. The child can go to Target and get clothing on the taxpayer’s dime. The child can get food at school or at a restaurant if he/she is hungry. The child can get housing in a comfortable dormitory (maybe have to think about this one; don’t want every teenager abandoning the parental home in favor of the government-funded form!). But no cash or free stuff for adults because the adult has managed to produce or get hold of a child.
At that point we wouldn’t have any children in poverty and we would see how many children Americans actually want to have for the sake of having children!
Andy: You wonder where the numbers on welfare state spending come from? There is a link in the original posting to Forbes magazine. That we spend more than other countries and deliver less value to citizens is not inconceivable. It costs us 5-6X what other rich countries spend to build a public transit system. See https://www.newyorker.com/magazine/2017/01/23/where-the-second-avenue-subway-went-wrong ; Nothings stops us from being The Dumb Country (TM)! Just imagine a Muscovite showing up in a U.S. city and seeing that the U.S.-run subway system hardly goes anywhere, is always late, and runs so infrequently as to be barely useful. The Muscovite would be disappointed, but you can’t infer from this that the U.S. spends less on public transit. I’m sure that we spend way more!
Phil could we ‘donate’ our kids to this program? I’m asking for a friend.
wally: http://www.omaha.com/news/life-of-the-nebraska-safe-haven-kids/article_4c205641-2226-5543-a3e4-b28f63fea297.html covers an episode in the history of American do-gooding. It was brief, though: “By the time state lawmakers met in special session and put an age limit in the law, 27 parents and guardians had left off 36 youngsters.”
Your statement “As a percentage of GDP, the U.S. spends more on its welfare state than any other country on Planet Earth other than France” is very deceptive. Your readers, here, who are probably nearly all middle class or rich, probably think that you’re referring to taxes that they pay that are handed out to other people.
This is the from the Forbes article:
But that sort of calculation misses a lot. It misses “tax breaks with a social purpose” such as the Earned Income Tax Credit and the tax exclusion for employer-provided healthcare.
So the people who receive health insurance from their employers as part of their compensation are thus considered to be welfare recipients.
Then there’s this:
On the basis that state health care, state healthcare insurance and private health care insurance are all “poolings of risk”. They are thus communal social welfare spending and we can indeed group them this way if we wish.
Someone seems to think that health insurance sold by corporations for the purpose of making profit is somehow a form of welfare.
also this:
And when you add in private spending, including some mandated by law, you see the US has a pretty massive social safety net.
If you look at the graph, which is not easy to read, private spending makes up a big portion of American “welfare” spending. The “private social expenditure” makes up around 10% of US GDP on that graph, much larger than any other country. If you track down the origin of that graph, you’ll find that it comes from an OECD report (http://www.oecd.org/els/soc/OECD2016-Social-Expenditure-Update.pdf) which includes this statement:
Private social exenditure concerns social benefits delivered through the private sector (not transfers between individuals) which involve an element of compulsion and/or inter-personal redistribution.
So things like pension funds would have to included in addition to employer-provided health insurance. These are things American generally don’t consider to be welfare of part of the war on poverty.
Vince: https://en.wikipedia.org/wiki/Welfare_state provides what is, I think, a good explanation what “welfare state” means in the English language. For example, “The welfare state involves a transfer of funds from the state to the services provided (i.e. healthcare, education, etc.) as well as directly to individuals (“benefits”), and is funded through taxation. It is often referred to as a type of mixed economy.[6] Such taxation usually includes a larger income tax for people with higher incomes, called a progressive tax.”
I think the Forbes article is using the term in the conventional way.
[Separately, I think that there is no way to estimate the true size of the U.S. welfare state, other than to establish a lower bound. Local governments are requiring private property developers to hand over a percentage of their apartments so that they can be distributed by a local housing ministry to selected people. This is a form of spending that isn’t on any government’s budget and the taxation is indirect (by raising the cost of housing for those who must rent or buy at market rates). The numbers from other countries, on the other hand, would typically include the cost of housing those who don’t work and/or those whose earnings are low. In Germany, for example, the government will pay cash to landlords. See https://en.wikipedia.org/wiki/Hartz_concept#Hartz_IV So the cost is visible on their budget.]
Phil, you say you don’t want to encourage or discourage Americans from having children. But if you want the population to go back to 200 million, why wouldn’t you want to discourage people from having kids?
Yz: I want to be a benevolent dictator! Also, in general I think that markets and society work best when the government is neutral. If people really want kids for their happiness, why discourage? But don’t encourage people to have more kids than they do want for the pure sake of the kids.
Absent today’s cash incentives, I don’t think that Americans would want to have a crazy high number of kids. American adults now are all about personal fulfillment rather than responding to the needs of someone else, be it a spouse, a kid, or a friend. But if having a kid enables an American to skip out on 10, 20, 40, or 60 hours per week of wage/slave labor, then the kid becomes an enabler of personal fulfillment (more leisure time, more personal spending power).
If the population hits 350 million despite the lack of subsidies to parents (my dictatorship would also eliminate tax deductions and credits related to kids!), then it would be time to re-think!
Perhaps the answer to your question is that some Americans think these programs work. I found this paper:
https://courseworks.columbia.edu/access/content/group/c5a1ef92-c03c-4d88-0018-ea43dd3cc5db/Working%20Papers%20for%20website/Anchored%20SPM.December7.pdf
In the conclusion:
The OPM shows the overall poverty rates to be nearly the same in 1967 and 2011 – at
14% and 15% respectively. But our counterfactual estimates using the anchored SPM show that without taxes and other government programs, poverty would have been roughly flat at 27-29%, while with government benefits poverty has fallen from 26% to 16% — a 40% reduction. Government programs today are cutting poverty nearly in half (from 29% to 16%) while in 1967 they only cut poverty by about a one percentage point
A 40% reduction as a result of these programs is pretty good! If you can design a program (or lack of program) to get us the other 60% of the way there I’ll say I knew you when!
The problem with the headline is it conflates “social safety net” and “anti-poverty”. It is reasonable to think of health care as a part of the safety net, but the health care system’s purpose is not really “anti-poverty”. If the U.S. spent the percentage of GDP on healthcare as France, it would move us to the middle of the pack just behind Finland on that chart. So yes, we have a problem with “social safety net” spending which is driven primarily by our inefficient health care system.
Also, if “no one has attempted to address and certainly no politician will even speak about is the high birth rate” why exactly did the Obama administration put such a priority on expanding access to low cost contraception and what exactly is the justification for rolling that back?
all I want is government back to a size ca. 1859.
I do not want to suck on any guv’mint teat, nor have my children learn to do so.
I guess I read too much Heinlein as a kid.
For your dictatorship to be economically solvent with a shrinking population, it seems like you would have to eliminate social security. And if you did that, people might be more incentivized to have kids as a form of retirement/disability insurance for themselves.
Yz: The Ponzi scheme nature of Social Security doesn’t lock us into infinite population growth. If there is a temporary period of workforce shrinkage, followed by equilibrium, we can borrow to deal with the temporary shortfall. Patching a temporary problem by importing low-skill workers isn’t going to work in the long run. The low-skill immigrant who shows up here at age 35 and brings his parents aged 70 and 75 isn’t likely to be a net contributor to the welfare state when you take the long-term perspective. Patching a temporary problem by encouraging Americans to have a lot of more babies probably won’t work either because we are not efficient at delivering K-12 education or at building infrastructure.
As I understand it, “poverty” itself has a nontrivial definition that makes a lot of putatively anti-poverty spending ineffective. This may be by design.
For example this article from 2012.
http://manhattancontrarian.com/blog/2012/11/18/the-poverty-deception-part-ii
And what does it mean to be in poverty?
https://nypost.com/2012/11/27/poverty-like-weve-never-seen-it/
“The welfare state involves a transfer of funds from the state to the services provided (i.e. healthcare, education, etc.) as well as directly to individuals (“benefits”), and is funded through taxation. It is often referred to as a type of mixed economy.[6] Such taxation usually includes a larger income tax for people with higher incomes, called a progressive tax.”
I think the Forbes article is using the term in the conventional way.
That’s just not true. As I stated, the Forbes article explicitly includes private (non-government) spending. It’s very clear.
Philg,
“As a percentage of GDP, the U.S. spends more on its welfare state than any other country on Planet Earth other than France (Forbes)”
But this appears to contradict
http://www.nationmaster.com/country-info/stats/Economy/Social-welfare-spending/%3E-%25-of-GDP/Excluding-education
Can you explain the discrepancy?
Phil, sounds like you would like the US to become Japan, at least in terms of immigration and fertility rates. Is that accurate?
John: The U.S. welfare state is run through hundreds of state and local programs as well as at least dozens of federal ones. So I don’t doubt that different estimates could be produced by different people. Forbes used the OECD numbers. I’m not sure that anyone has a complete number given that so little of our economy is still run on a market system (e.g., the prices that you pay for housing, health care, food, and phone service may all be “means-tested” and therefore different depending on who is buying).
Yz: I’m 54 so I don’t think I should get a vote! It is today’s young Americans who should decide politically. If today’s 18-year-olds decide that they want to live in a China-sized country with more than 1 billion people, who am I to tell them that they shouldn’t want this? When I was a kid the U.S. was so thinly populated that anyone who was bright and studied hard would get into an Ivy League college and anyone who worked hard could afford a beach house (maybe one street back from the actual shore!). Those things aren’t possible now that the population has roughly doubled, but maybe young people think that they’ve gained something that is more valuable? If they want to rub shoulders with 1+ billion fellow residents of the U.S., I don’t know that older Americans such as myself should try to thwart their desire. We can maybe try to secure second passports for our children so that if they don’t like the super-crowded version of the U.S. they can emigrate to a country that is implemented on a smaller scale. Also set them up with a trust fund so that their inheritance isn’t harvested by a child support, alimony, or sexual harassment plaintiff! (see https://www.americanbar.org/publications/probate_property_magazine_2012/2013/january_february_2013/article_oshins_domestic_asset_protection_trust.html )
Phil, thank you for answering my questions!
I think a lot of young-ish people are themselves immigrants and so they feel that what they gained is the right to be here at all. I’m in my early 30s and came to the US as a child. Do you think I should have a say in US immingration policy going forward? Should my kids?
Yz: I think in the U.S. we have a brightline rule that all citizens, regardless of how recent the citizenship, get an equal voice within age restrictions (e.g., people younger than 18 get no voice). On issues where the main effects will be felt 50 or 100 years from now I would like to exclude the oldsters (including myself!) from voting. But I wouldn’t want to go so far away from the brightline rule by saying that you or your kids should be excluded. Given that we have a lower age limit I don’t see why we can’t have an upper age limit!