The question is: what do we do now? We can adjust, and build a fair and secure middle-class society, free of poverty and of oligarchy alike, with tools that are broadly familiar.…The Guardian (UK)
The broken US economy breeds inequality and insecurity. Here’s how to fix it
James K. Galbraith | Lloyd M. Bentsen Jr. Chair in Government/Business Relations and Professor of Government at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin
6 comments:
Repeat after me: Wealth is not income and income is not consumption —Branko Milanovic
Everyone focuses on wealth and income inequality. Meanwhile, consumption inequality is falling.
"consumption inequality is falling"
Is that your opinion? Where do you see that?
There are 40 mln kids in the US that face food insecurity.
Hard to consume without money in the modern global economy.
“ Stabilize energy prices and supplies – with regulation, quotas, price controls (as in Germany right now), ”
:p
There are 40 mln kids in the US that face food insecurity.
The US measures poverty incorrectly.
In the United States, the official poverty measure is known as the poverty threshold—a level that the U.S. Census Bureau updates for inflation each year and uses to calculate how many Americans are living in poverty. The Department of Health and Human Services (HHS) bases its annual poverty guidelines on this threshold in order to determine eligibility for certain benefit programs, like Medicaid, the Supplemental Nutrition Assistance Program, and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Changes to either the guidelines or the threshold itself could affect how many people receive food assistance.
Poverty should be measured after government benefits, not before, e.g., after food stamps, not before.
The official way America calculates poverty is deeply flawed
It takes neither benefits nor cost of living into account
America’s antiquated poverty line presents several problems. The most significant is that income is calculated before taxes and transfers, meaning that the poverty-reducing effects of the earned-income tax credit ($63bn annually) or food stamps ($68bn) is ignored. Progress against poverty goes undercounted as a result. There are two commonly cited measures of American poverty more sophisticated than the official one—the supplemental poverty measure (SPM), which takes benefits and cost of living into account, and the consumption poverty measure, based on expenditure instead of income, developed by two economists, Bruce Meyer and James Sullivan. Both of them show sharp and sustained declines over the past half-century upon accounting for safety-net programmes (see chart).
The Official Poverty Measure (OPM) and Supplemental Poverty Measure (SPM) Use Different Assumptions About Family Needs and Resources
If you look at the chart in the article below, you can see how the child SPM declines over time.
How Poverty Is Measured in the United States
Each measure serves a different policy goal. Broadly, the SPM—with its more up-to-date assumptions about current living needs and expenses and inclusion of government benefits—is a better indicator of the overall economic well-being of U.S. children. However, the income-based OPM remains important for understanding what children’s economic well-being would look like without government programs like refundable tax credits and the nutrition, housing, and energy assistance mentioned above.
Here in Canada, the same thing about child poverty.
Where to draw the line on child poverty
Introducing his famous motion in Parliament committing the government of Canada to abolish child poverty by the year 2000, NDP leader Ed Broadbent conjured a Dickensian vision of Canada. “Being a poor kid means box lunches from food banks and soup from soup kitchens. Mr. Speaker, to be a poor kid means trying to read or write or think on an empty stomach . . . One quarter of our children are wasting away.” The motion passed, unanimously.
That was on Nov. 24, 1989. Twenty years later, writing in the Globe and Mail, Broadbent found little improvement. “Canada’s level of poverty is virtually unchanged . . . After two decades, the child-poverty rate has dropped a mere two percentage points, to 9.5 per cent. Why do more than 600,000 Canadian kids wake up hungry and go to school trying to read, write and think on an empty stomach?”
The answer is: they don’t. More than 600,000 Canadian kids are not waking up hungry today, any more than one quarter of Canadian children were “wasting away” 20 years ago. What Broadbent means by poverty is clear from his rhetoric: a state of absolute privation—hunger, an empty stomach, wasting away. But the numbers he cites are all based on relative measures: that is, how many children were less well-off than other children.
That eye-popping one-quarter figure from 1989 was the number of children living in families with less than one-half the median income before tax. The somewhat more subdued 9.5 per cent figure for 2007, down from 11.9 per cent in 1989, was based on yet another measure, Statistics Canada’s Low Income Cut-off (LICO). LICO doesn’t measure poverty, and it doesn’t pretend to: indeed, the agency takes every opportunity to state explicitly that LICO is not a poverty line, and shouldn’t be used as such.
In other words, LICO is a relative measure, disguised as an absolute measure. Or at any rate, it hopelessly muddles the two. Which is how people like Broadbent, or the activist group Campaign 2000, can claim that Canada has made virtually no progress against child poverty in the last 20 years. Indeed, how could it have? A relative measure means that even if everyone’s income rises, the poverty rate does not change—not unless the distribution of income changes. It’s a measure of inequality, not poverty.
Post a Comment