Monthly Archives: March 2014

Poverty is back in the news, for several reasons. The first is the 50th anniversary of President Lyndon Johnsons 1964 War on Poverty speech. In addition, Republican congressman and 2012 vice-presidential candidate Paul Ryan has released a much-criticized report about federal poverty programs. In 2012 the Romney-Ryan ticket suffered from Mitt Romneys dismissive comments about the 47 percent and conservative caricatures of the poor as welfare-dependent moochers and takers. Ryans attempt at a version of what George W. Bush called compassionate conservatism appears to be an effort at rebranding the right as something other than an alliance of Have-Lots and Have-Somes against Have-Nots.

Public debate about poverty typically focuses on the causes of poverty, rather than the cures. The causes of poverty are many and various. You may be poor because you are the child of poor parents; or because you grew up in an economically distressed urban or rural region; or because you were bankrupted by unexpected medical bills; or because you lost all your money gambling on imaginary real estate in Second Life (this actually occurred, in a case of which I know). Because poverty has multiple causes, policies must be equally numerous, if the goal is to avert or prevent poverty in the future.

But its not necessary to avert or prevent poverty in the future in order to cure the poverty that already exists in the present, for whatever reason. Let me illustrate this point with an example. The treatment of victims of gunshot wounds in the emergency room may be identical even though one gunshot wound was caused by a shooting in the course of a robbery, another by a failed suicide attempt and a third by reckless play with a firearm. Doctors and nurses can treat the victims of the gunshot wounds now, while leaving others to propose better policing, better suicide-prevention counseling and better firearm safety training in the future.

Fortunately, drastically reducing existing poverty in the U.S. is not a difficult intellectual problem, even though it is a difficult political problem. With sufficient political will, we could slash existing poverty in the U.S. very quickly, while simultaneously trying to prevent as much poverty as possible in the future. Some public policy problems, like averting global warming or regulating shadow banking, are incredibly complex. By comparison, antipoverty policy is simple.

We know exactly what we need to do to radically reduce poverty in America. We know that it could be done, and we know how to do it, because many other First World democracies have slashed poverty already.

Among developed nations, the U.S. is an outlier in having a high proportion of its population living in poverty. Among the 34 member nations of the Organization for Economic Cooperation and Development (OECD), in 2010 on average 11.1 percent of the population suffer from relative income poverty. In the U.S. , however, the number is 17.4 percent. Among developed countries, only Chile (18%), Turkey (19.3%), Mexico (20.4%) and Israel (20.9%) have more of their people living in poverty, according to the OECD.

The low-poverty nations tend to be Scandinavian countries like Sweden (9.1%), Norway (7.5%), Finland (7.3%) and Denmark (6.0%). Some on the right argue that it is wrong to compare small, relatively homogeneous countries with a giant, pluralistic, continental society like the U.S. Others argue that the English-speaking countries as a whole are willing to tolerate more poverty and inequality than the Nordic social democracies.

The numbers dont support these arguments. Among the most populous Western states are France (7.9%) and Germany (8.8%), both of which have around half as many people in poverty as the U.S., notwithstanding their own growing immigrant populations. And while all English-speaking countries tend to be less statist than continental European societies, all of the other anglophone nations have considerably less poverty than the U.S., including Australia (14.4%) and Canada (11.9 %). Indeed, three English-speaking countries Ireland (9.0%), the UK (10.0 %) and New Zealand (10.3%) have fewer citizens in poverty than the OECD average in 2010 of 11.1%.

How do other countries do it? They dont necessarily have fewer poor people to begin with. According to an OECD study, with respect to pre-tax, pre-transfer poverty, the U.S., at 13, ranked in the middle of 26 high-income nations. When it comes to post-tax, post-transfer poverty, however, the U.S. was nearly the worst, second only to Israel.

The difference is entirely the result of government social spending on the poor mostly in the form of transfer payments, like public pensions, unemployment insurance, child subsidies and/or wage subsidies. Many other developed democracies start out with lots of poor people, just like the U.S. But the countries with big welfare states remove most of them from poverty. The American welfare state does lower the poverty rate but not enough. The American welfare state is way too small to be effective in doing its job of lowering poverty.

Excerpt from:
Paul Ryans worst nightmare: Heres the real way to cut poverty in America