Tag Archives: Wealth Redistribution

“No one really trusts the data.”

When the Census Bureau said in September that the number of poor Americans had soared by 10 million to rates rarely seen in four decades, commentators called the report “shocking” and “bleak.” Most poverty experts would add another description: “flawed.”
Concocted on the fly a half-century ago, the official poverty measure ignores ever more of what is happening to the poor person’s wallet — good and bad. It overlooks hundreds of billions of dollars the needy receive in food stamps and other benefits and the similarly formidable amounts they lose to taxes and medical care. It even fails to note that rents are higher in places like Manhattan than they are in Mississippi.
On Monday, that may start to change when the Census Bureau releases a long-promised alternate measure meant to do a better job of counting the resources the needy have and the bills they have to pay. Similar measures, quietly published in the past, suggest among other things that safety-net programs have played a large and mostly overlooked role in restraining hardship: as much as half of the reported rise in poverty since 2006 disappears.
The fuller measures have also shown less poverty among children but more among older Americans, who are plagued by high medical costs. They have shown less poverty among blacks but more among Asians; less poverty in rural areas and more in cities and suburbs, where the cost of living is high. And they have found fewer people in abject destitution, but a great many more crowding the hard-luck ranks of the near poor, who do not qualify for many benefit programs and lose income to taxes, child care and medical costs.
“The official measure no longer corresponds to reality,” said Jane Waldfogel, a professor of social work at Columbia University. “It doesn’t get either side of the equation right — how much the poor have or how much they need. No one really trusts the data.”
The most balanced read on poverty I’ve found in a while. I look forward to the forthcoming census report, regardless of what its conclusions are.
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Filed under Domestic Politics

Bill Niskanen on Inequality

The late Bill Niskanen on inequality:

Rawls recognizes that individual well-being is dependent on more than income and wealth, but he does not acknowledge the implications of the fact that the other dimensions of well-being are not fungible. Consider the following example.

One young man is healthy and handsome, spends his days on the beach, has his pick of young women companions, and makes $10,000 a year by busing tables in the evening. Another young man is confined to a wheelchair, has congenital body odor, has never had an intimate relationship, and, with no other life, makes $100,000 a year as an expert computer programmer. In this case, who is worse off? Who should redistribute what to whom and how?

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Filed under Economics, Philosophy

“Less excess and more access”

Jagdish Bhagwati is one of the great professors of Columbia University and truly one of the great scholars of international trade and development. I don’t think the Left will be happy with his recent comments on the benefits of growth-oriented policies over alternative “redistributive” developmental models.

Many on the left are suspicious of the idea that economic growth helps to reduce poverty in developing countries. They argue that growth-oriented policies seek to increase gross national product, not to ameliorate poverty, and that redistribution is the key to poverty reduction. These assertions, however, are not borne out by the evidence.

Growth, Bagwati argues, is what is best for the poor.

In almost willful ignorance of the fact that the growth-centered model has proved itself time and again, skeptics advocate an alternative “redistributive” developmental model, which they believe will have a greater impact on reducing poverty. Critics of the growth model argue that it is imperative to redistribute income and wealth as soon as possible.

Growth produces wealth. Wealth allows the poor to purchase education and health care, and thus improve their lot in life. (What else is poverty than the absence of wealth?) This combined with access to education will erase poverty faster than redistributive schemes. But how will this sell politically?

But the political sustainability of the growth-first model requires both symbolic and material efforts. While growth does benefit the poor, the rich often benefit disproportionately. So, to keep the poor committed to the system as their economic aspirations are aroused, the wealthy would be well advised to indulge less in conspicuous consumption.

At the same time – and more importantly – the poor need greater access to education in order to increase their economic opportunities and social mobility. “Less excess and more access”must become the principle that guides development policy.

Emotions and dogma trump evidence. The poor stay poor.

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Filed under Economics