Thursday, August 30, 2007

Poverty is Bad For Business

Someone who gets it. From a business writer no less and about the dozenth one I've seen by a business writer in the last month or two.

On Poverty, Maybe We're All Wrong

Most years, what passes for the national debate about poverty is confined to the 24 hours after the government releases its annual report on household incomes, as it did yesterday.

The left expresses moral outrage -- in the richest country the world has ever known, one in every eight residents still lives in poverty -- and calls for government to do something about it.

The right, to the degree that it pays any attention to the issue at all, notes that while the poverty rate goes up and down with the economic cycle, it has remained relatively stable over the past 35 years and, in any case, represents a failure of government meddling, not a mandate for more of it.

That there is a germ of truth to both views does not excuse the fact that the debate has become stale and unproductive, based on misleading data and outdated assumptions.

Much better, conservatives say, to do away with all those patronizing and inefficient social welfare schemes that create perverse incentives and "empower" the poor to act in their own best interest using the same traditional market mechanisms as everyone else.

The best refutation of this argument that I've seen in a long time is contained in a new book, "The Persistence of Poverty," by a friend of mine, Charles "Buddy" Karelis, a professor at George Washington University. Karelis isn't an economist or social welfare expert but a philosopher by profession with wide-ranging curiosity, a dry wit and a weakness for unconventional wisdom. And after doing lots of reading and giving it extensive thought, Karelis concluded that the reason some people are perpetually poor is that they don't have enough money.

Ya think? That would seem obvious if we were at all rational creatures but it's fairly well documented that we are not. Pearlstein goes on to explain why it isn't as obvious as it seems at first glance but not wanting to rip off his entire article, I leave you to go read it. It's a refreshing change from Cowboy Bush who apparently believes the poor all gambled their money away at a Reno casino.

16 comments:

TomCat said...

Mama, the that conclusion may be too esoteric for a guy that never made it through My Pet Goat.

On poverty, the problem with many of the programs we have is that they tend to institutionalize poverty, rather than alleviate it. No matter how leftist I am, the notion of 3rd, 4th and 5th generation welfare families reeks of a broken system. Rather than eliminate programs, we need to fix them to get people participating, not lock them into assistance, except for those few individuals, who by reason of disability, are unable to provide for themselves.

Not Your Mama said...

The point of the article was more that we never actually give people enough of a hand up to get them going, we just give them enough to keep squeaking by and any attempt to improve their situation gets them cut off...hence no incentive to try.

Woozie said...

Someone who gets it?

RJ Adams said...

Poverty is a vicious circle and while money, or lack of it, is an essential ingredient, the problem runs much deeper. I agree that failing to lift the poor to an economic level where self-help becomes at least an option is unproductive as well as inhumane, but the true cause of poverty is insecurity, inferiority, and inadequate education, coupled with a (possibly) genetic belief that being poor is somehow 'right', because all rich people are bad. In Britain, it used to be a well-worn adage, "Ah'm workin' class, an' reet proud o' it." Of course, the working class in Britain today don't live in the same poverty as fifty years ago, but the misplaced pride is still there.
The poor will always be with us, and social welfare is a necessary factor in any civilized society. Find ways to make the poor feel an integrated part of society, reduce their inferiority and provide them with the same educational chances afforded to better off kids - and NO, that is not presently the case in America - and you'll have the beginnings of a reduction in the poverty levels. You'll also have a huge number of additional trained workers, a massive reduction in the crime figures, and an overall increase in property values. Of course, none of this really makes the rich any richer - which is why it never happens.

Not Your Mama said...

RJ:It's the same here, hillbilly pride and all...or in urban areas taking pride in being a thug. Only the accents have been changed.

I agree there will always be people who have less, it just doesn't serve anyone well to hang them out to dry.

Believe it or not it was a staunch conservative who said it best, when that fuckhead O'Reilly tried to argue with Ben Stein (Stein told him he needed to pay more taxes to fund education and healthcare for the poor) saying what about people who created their own troubles Stein responded that it didn't matter, they're family and we have an obligation to help family.

anan said...

I realize it's a different system but a social worker once explained to me that the Canadian gov't needs a certain amount of people to remain on welfare because... why? Because when they get their cheques, they put it right back into the economy and don't have anything left over to put into savings. It's like money in the bank for gov't... whatever they 'donate', they always get back, and businesses in poorer districts (who charge exorbitant rates for their services) always thrive because they have a constant income with low overhead.

In addition, the poor have so many social programs earmarked for their 'development' that 'charitable organizations' actually fight over them to obtain the grant money, thus keeping a large whack of potentially dangerous social workers off the street.

Not Your Mama said...

Lot of truth there, low-income families seldom save and you're spot on about businesses in low-income areas. Some do even worse, I've personally witnessed store owners give low-income women 50% cash to buy the baby formula they'd purchased with WIC checks which they would then resell at overinflated prices to other low-income people.

Naturally most Americans only put the blame on the cash-strapped poor themselves, almost never on the businesses that help keep the cycle going. The mistake most of us on the "left" make is blaming corporations for the poverty cycle...the truth is large corporations are the least likely to engage in these practices, they're under far too much public scrutiny. It's the "small businesses" that commit the worst frauds.

TomCat said...

Good, Mama. I thought that was it. It was also the point of my comment. :-)

Woozie said...

I was trying to be subtle but you're missing an "s" in the first sentence. Pearlstein knows what he's talking about and W's misfortunes and missteps are so frequent they're almost routine so I had nothing else to say :)

Omnipotent Poobah said...

Every time I hear some rockhead prattling on about social net programs failing because of all the loopholes, it occurs to me that many of them came from other rockheads trying to torpedo any possible success.

They're right, something's screwed up, but it's not necessarily the programs.

Not Your Mama said...

Woozie: oops...I'm a chunkhead sometimes, thanks ;).

Flimsy Sanity said...

thus keeping a large whack of potentially dangerous social workers off the street

Funny.

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