« What Do We Look Like? | Main | Can Clinton Atone? Does He Need To? »
August 29, 2006
Our Wondrous Economy
Now this is comforting:
Since 2000, Americans have been getting poorer, and national rates of severe poverty have climbed sharply, according to a study published in the October issue of the American Journal of Preventive Medicine. The researchers reported that the growth in the poverty rate is due largely to a rise in severe poverty and that “moderate” poverty has grown little.
[...]
The percentage of Americans living in severe poverty—earning less than half of the poverty threshold—grew by 20% between 2000 and 2004, and the proportion in higher income tiers fell. The researchers reported that the number of Americans living in severe poverty increased by 3.6 million between 2000 and 2004.
And let's make this very clear: 2001-2005 was an expansionary period. The economy was getting better, growth roaring forward, conditions easing. And yet, during that time, millions of Americans fell into ever-more severe impoverishment.
This has never happened before. A few years ago, economists marveled at the first time a three-year expansion had seen three straight increases in poverty. A year later, they wondered how it had happened for a fourth time. We'd never seen three -- much less four! -- years of expansion coincide with straight increases in the poverty rate. In the past, rising economic tides had lifted all boats. Now, the poor are capsizing.
August 29, 2006 | Permalink
Comments
Ask good 'ole Mickey Kaus about this growth in poverty.
Posted by: mickslam | Aug 29, 2006 11:23:23 AM
Well, what's your solution, Mr. Klein? Full government ownership of every business in America? Because as we all know, the only possible alternative to entirely unfettered Gilded Age capitalism is total socialism.
Posted by: mds | Aug 29, 2006 11:50:04 AM
"Full government ownership of every business in America?"
No, no, not the Gov't! It is the workers that must own and control the means of production. Then the gov't will simply fade away.
...
There is an argument that inflation has been understated leading to an overestimation of the expansion. For instance, housing being represented by rents missed the bubble, as rents have not followed housing prices in the usual manner. Of course, if they stick to that, the housing deflation won't show up in core on the downside.
Posted by: bob mcmanus | Aug 29, 2006 12:00:00 PM
The first step towards sanity is to stop thinking of capitalism as a fundamentalist thinks of religion. the question is -- how do you change belief that is so entrenched that peo would rather drive over the cliff than admit where they are headed? all our language, rhectoric, way of thinking and how we feel is vested in the idea that we are the world superpower with an advanced economy that is supposedly the best in the world. What is the tipping point for our society at which point there is no return from these issues?
Posted by: akaison | Aug 29, 2006 12:29:25 PM
>>2000-2004 was an expansionary period
uh.. wait a second. We had an official recession (as measured by the NBER) from March 2001 to November 2001 - it's kind of broadbrush inaccurate to state that the entire 2000-2004 period was "expansionary". Bush certainly doesn't deserve that kind of economic credit.
Posted by: Andy | Aug 29, 2006 12:31:42 PM
This problem has been around a long time. St. Basil in the 4th Century said:
"While we try to amass wealth, make piles of money, get hold of the land as our real property, overtop one another in riches, we have palpably cast off justice, and lost the common good. I should like to know how any man can be just, who is deliberately aiming to get out of someone else what he wants for himself."
Sounds a lot like 2006 America, doesn't it?
Posted by: Monk-In-Training | Aug 29, 2006 1:11:49 PM
Interesting that no one here wishes to acknowledge the direct correlation between the relative wealth of groups and education.
http://www.manhattan-institute.org/html/cr_31.htm
Posted by: Fred Jones | Aug 29, 2006 1:27:10 PM
This problem has been around a long time. St. Basil in the 4th Century said:
"While we try to amass wealth, make piles of money, get hold of the land as our real property, overtop one another in riches, we have palpably cast off justice, and lost the common good. I should like to know how any man can be just, who is deliberately aiming to get out of someone else what he wants for himself."
Sounds a lot like 2006 America, doesn't it?
Posted by: Monk-In-Training | Aug 29, 2006 1:28:15 PM
The first step towards sanity is to stop thinking of capitalism as a fundamentalist thinks of religion. the question is -- how do you change belief that is so entrenched that peo would rather drive over the cliff than admit where they are headed? all our language, rhectoric, way of thinking and how we feel is vested in the idea that we are the world superpower with an advanced economy that is supposedly the best in the world. What is the tipping point for our society at which point there is no return from these issues?
Halleluia - were that more people understood this.
Interesting that no one here wishes to acknowledge the direct correlation between the relative wealth of groups and education.
Your far from the only one here who understands the efects of education on ones ability to generate wealth - what the fuck makes you think no one here acknowleges that?
Posted by: DuWayne | Aug 29, 2006 2:19:46 PM
Well, what's your solution, Mr. Klein? Full government ownership of every business in America? Because as we all know, the only possible alternative to entirely unfettered Gilded Age capitalism is total socialism.
That's just stupid. Come back when you have something valuable to contribute.
Interesting that no one here wishes to acknowledge the direct correlation between the relative wealth of groups and education.
Fred, I think the problem you have is that no one here is willing to draw the same conclusions from this as you. I'm not sure, but this blog probably doesn't draw a lot of readers from the vouchers and/or homeschooling crowd.
If education level and wealth are so closely connected, why do Republicans so often seek to reduce funding for public schools? Why has the Bush administration reduced the amount of federal aid available to college students?
A public school system that provides people the tools to get ahead - and nothing more, really - coupled with an economic system that rewards initiative, hard work and critical thinking skills seems to be the most conservative of all systems. But conservatives are rather less interested in "hard work" than a general "I gots mine, you can go to hell" attitude.
Posted by: Stephen | Aug 29, 2006 2:22:24 PM
It really should be noted that the what is being pointed to as surprising here is the rise in severe poverty during a recovery. Since this is the weakest post-WWII recovery for job growth, that should be no surprise ... the best way to reduce severe poverty is for some of the very poor to find jobs, and they only work their way into the job queue when there are tight labor markets for unskilled labor.
A rise in poverty overall, on the other hand, is not that unusual for "New Right" administrations heading into recessions ... see, for example, one of the diagrams on rates and numbers that bonddad (at the DailyKos and other sites) uses:
http://i17.photobucket.com/albums/b84/bonddad/Poverty.jpg
In terms of poverty, this recovery looks very much like the one year gap between the "one-handed" Carter recession engineered by the Fed and the Reagan recession ... just stretched out over whatever time is required for a recession to pop up and finish this plodding recovery.
Posted by: BruceMcF | Aug 29, 2006 2:28:37 PM
If education level and wealth are so closely connected, why do Republicans so often seek to reduce funding for public schools?
Only a small fraction of school funding comes from the fed. The bigger question is do we really want state schools? We are supposed to have independent school disctricts to prevent government indoctrination. What do the Republicans understand that you fail to comprehend?
Posted by: Fred Jones | Aug 29, 2006 2:29:50 PM
That's just stupid. Come back when you have something valuable to contribute.
Dude, he was being sarcastic.
Posted by: chdb | Aug 29, 2006 3:18:49 PM
What do the Republicans understand that you fail to comprehend?
That pinning school funding to property taxes is a great way to keep 'those people' in their place?
(Which prompts the question: what effect does a decline in house prices and property value assessments have on that kind of funding?)
Posted by: ahem | Aug 29, 2006 4:21:06 PM
More Confusion About the Return to Labor ...a post by David Altig, who is not my favorite economist, but is someone I read, on the distribution of returns from the expansion. He mentions that stagnant wages are pretty much limited to non-farm business;other sectors like finance have done ok. His main, possibly tiresome point, is that compensation should include benefits packages. And so, I sez, it is possible that the decline at the bottom is directly related to Republican stinginess in "benefits packages" transfer payments and the like. Gov't influence in income distribution may not be a large general factor, but might be significant at the very top and very bottom.
But I thought this might be a point:
"Just about a month ago the raging debate was about why it might be that changes in income inequality have been concentrated among the top 1% of income earners -- excellent examples of that debate being found here and here. Once you have identified the real issue as being about the top 1% of the income distribution, I'd think you have pretty much ruled out unionization (or the lack of it) as a dominant driver of the major trends in who gets what. In any event, on the question of unionization and wage inequality, I'm with Greg Mankiw." ...DA
The fun part, which I will leave to the readers who link thru, is the comment by Ezra's favorite econodude, Dean Baker.
I slowly, forlornly, attempt to regain the good graces of the Ezra, brownie pt by brownie pt.
Posted by: bob mcmanus | Aug 29, 2006 4:25:46 PM
Only a small fraction of school funding comes from the fed. The bigger question is do we really want state schools? We are supposed to have independent school disctricts to prevent government indoctrination. What do the Republicans understand that you fail to comprehend?
I wasn't talking about federal funding except in relation to the decrease of federal aid for college students.
If you recognize the value of education yet do not wish to have publicly funded schools, then the educational level of a child's ancestors becomes the salient factor in determining that child's chances for success, since it will be only the already-educated, therefore already-wealthy who will have access to it.
I remember the good ol' days, when we had "pull yourself up by your bootstraps" conservatives, people who valued hard work over inborn privilege.
Dude, he was being sarcastic.
Oh, well, sorry then.
Posted by: Stephen | Aug 29, 2006 4:25:51 PM
Interesting that no one here wishes to acknowledge the direct correlation between the relative wealth of groups and education.
Interesting that no Red ever acknowledges the direct correlation between a state's wealth creation and its casting of its electoral votes for Kerry. Particularly interesting in the face of so much federalist blather about states being experimental labs in government.
Posted by: SomeCallMeTim | Aug 29, 2006 4:44:50 PM
Only a small fraction of school funding comes from the fed. The bigger question is do we really want state schools? We are supposed to have independent school disctricts to prevent government indoctrination. What do the Republicans understand that you fail to comprehend?
Yes, you are supposed. And yet there's more government indoctrination in American schools than in French schools even though France has a far more centralized school system.
And it's actually a problem that there's so little federal funding. The number one problem in American education is district-based funding, which keeps money in districts and in effect dooms poor people to crappy schools. Fund all schools the way well-off suburban schools are funded and you'll get results.
Posted by: Alon Levy | Aug 29, 2006 4:56:22 PM
If you recognize the value of education yet do not wish to have publicly funded schools, then the educational level of a child's ancestors becomes the salient factor in determining that child's chances for success, since it will be only the already-educated, therefore already-wealthy who will have access to it.
Precisely correct and dare I say beautifully articulated.
Full privitization of certain social needs (healthcare, education) only leads to a widening gap between the rich and poor. It must be nice to believe in an unproven theory on faith alone.
Posted by: Adrock | Aug 29, 2006 5:07:43 PM
Interesting that no Red ever acknowledges the direct correlation between a state's wealth creation and its casting of its electoral votes for Kerry. Particularly interesting in the face of so much federalist blather about states being experimental labs in government.
That's because those red staters are too busy sucking on a federal teat that's kept flowing by the wealth-creating states you mention. For instance, military bases are a wonderful public trough (granted, their disproportionately Southern distribution traces back to some non-political factors, too, e.g., weather and cheap land).
Posted by: sglover | Aug 29, 2006 5:10:02 PM
Fund all schools the way well-off suburban schools are funded and you'll get results.
There is a caveat here. Many "troubled" districts often do spend more per pupil and yet get worse results. Its a matter of concentration of students that need more help than others. Some classrooms are only as strong as their weakest links. Sadly the first items in the budget to get cut are the teachers themselves. Money itself doesn't results, lowest student-to-teacher ratios does.
Posted by: Adrock | Aug 29, 2006 5:14:22 PM
low teacher to student ratios and I would add getting to the students earlier (if you have at risk home situations) rather than later- at least according to a teacher friend of mine- are the two big factors
Posted by: akaison | Aug 29, 2006 6:26:14 PM
There is a caveat here. Many "troubled" districts often do spend more per pupil and yet get worse results. Its a matter of concentration of students that need more help than others. Some classrooms are only as strong as their weakest links. Sadly the first items in the budget to get cut are the teachers themselves. Money itself doesn't results, lowest student-to-teacher ratios does.
Yeah, I know about the exceptions. But in general, spending is an excellent predictor of performance in any given district, and there is some evidence, namely Prop 13, that this is indeed due to causation.
Low student-to-teacher ratios and getting to problematic students early obviously require money that most lower-class districts can't raise.
Posted by: Alon Levy | Aug 29, 2006 9:25:27 PM
Sigh…
How does the AJPM define the poverty level?
What they usually do is take some arbitrary fraction of the median income. This says nothing about standards of living, and only perpetuates the incessant "keeping up with the Jonses" mentality.
If everyone in America had zero change in wages, except for the single "median wage-earner" whose salary goes up by one dollar… whoops! Poverty goes up!
If the median wage earner's wage goes down one dollar… whee! Poverty goes down!
Asinine.
Posted by: Mastiff | Aug 30, 2006 3:33:08 AM
Well, yeah. Except for the little detail that the poverty level is defined by the total cost of what you need to live like a normal first-worlder - housing, food, transportation, etc. - you're completely right.
Posted by: Alon Levy | Aug 30, 2006 12:02:22 PM
The comments to this entry are closed.
