Title: Poverty, By America
Rating: 5 Stars
This is a fierce polemic. It’s a call to action. The thesis is that poverty is not an inevitability. The fact that the US, despite being the wealthiest nation in the entire history of humanity, has such a significant share of its citizens living in poverty is a choice. Such large amounts of people living in poverty is the result of explicit policy choices. Since having so many people living in poverty actually benefits those of us who live in more fortunate circumstances, we are, at the least, tacit in our approval of these policies.
Desmond’s previous book, Evicted (written about here), was much more personal / anecdotal in its structure. He embedded himself with people always seemingly on the edge of eviction. It was a heartbreaking read.
Instead of just focusing his lens on the housing problems in Milwaukee, here he takes a much broader, national look at poverty. In doing so, he simply bludgeons you with, again I have to use the same adjective, heartbreaking facts.
Here’s just a few things that I learned.
The poverty line for an individual is $6,380. The poverty line for a family of four is $13,100. Can you imagine feeding, clothing, and housing a family of four on barely a thousand dollars a month? Well, 18,000,000 people live below this poverty line.
Even worse, there is an even more desperate form called the absolutely poor. These are the people that you hear about globally that subsist on $1 a day. Seriously, a country with a 23 trillion dollar GNP can’t have anyone living at that level, right? Well, in a developed nation, the equivalent value is $4 a day (not even $1500 a year). In the US, 5.3 million people are classified as absolutely poor.
There are 1.3 million homeless children.
OK, that’s bad, but things are getting better, right? I mean, think how much wealthier our country has gotten over the last fifty years. There can be no question that we’re doing a much better job of eliminating poverty, right? Well, the poverty rate in 1970 was 12.6%. In 2019, that number had plummeted all of the way down to, checks notes, 10.5%.
We already give so much money to the poor, right? Why can’t they just spend the money that we give them wisely? Families that qualify for cash assistance only receive, on average, 22 cents out of every dollar in actual cash. Depending upon the state, some of that money is diverted to faith based marriage services, abstinence only sex education, and anti-abortion pregnancy crisis centers. Most infamously, Mississippi paid Brett Favre 1.1 million dollars for speeches that he never gave.
Well, we can’t raise the minimum wage, right? That’ll just increase labor costs which will actually depress employment. Not only that, it’ll increase the price to the consumer and drive inflation up, right? Interestingly, economists used to not believe that. It was George Stigler, in 1946, that first proposed it. Stigler did not actually use empirical data to bolster his argument. It was essentially a thought experiment. It turns out that there have been cases where, for example, one state raised its minimum wage while a neighboring state didn’t. In such real world scenarios, Stigler’s effect either was not seen or was quite minimal. After all, a McDonald’s worker in Denmark makes twice as much per hour as an American worker without an equivalent difference in Big Mac price.
If you’re broke, you should just go out and get yourself a job, right? Get off that couch! It turns out that most Medicaid / SNAP (ie food stamps) recipients worked full time for at least part of the year. Yes, corporations use government programs like these to keep from having to pay higher wages or to provide full time employment . 1/7 of all Dollar General employees are on Medicaid. Wal-Mart, as part of its employee onboarding program, steers new employees to federal programs to provide them assistance. You know, instead of actually paying them a living wage.
Well, if you don’t make much money, you can make up for it by renting in a cheaper neighborhood, even if it does have higher crime and worse schools, right? Shockingly enough, rental profits are higher in poorer neighborhoods than richer ones. I’m not talking higher rates. I mean actual higher profits. Landlords in poorer neighborhoods average $300 a month profit per unit while landlords in wealthy average $250.
If you’re poor, all you have to do is to open up a savings account and just save a little each month, right? That’s great until that unplanned expense comes in unexpectedly and you end up overdrawn. Immediately penalties start kicking in. Even worse, those penalties build on top of each other and suddenly you’re down a couple of hundred dollars just because you were overdrawn. Banks made $11.68 billion in such fees. 84% of those fees were paid by 9% of the customers. Their average account balance was less that $350.
So, don’t bother with banks. Just go down to the local check cashing place, right? Well, in Texas, a two week $300 loan can have an APR of 664%. 80% of payday loans are extended, keeping the cycle going.
Can you feel how angrily I just typed the preceeding paragraphs? I was absolutely pounding on my keyboard.
Let’s take a look at the other side. Let’s talk now about the welfare that the middle class enjoys.
Do you have a house? Do you have a mortgage deduction? Do you have children that want to go to college? Have you started a 529 plan for them? Do you work for an employer that offers you health insurance? Well, guess what, these are all devices that keep you from paying your fair share of taxes. If, instead of a tax deduction, you actually got a monthly government check (which amounts to the same thing), you’d be receiving a pretty sizable handout.
You don’t think so? Well, homeowners that make less than $20,000 got $4,000,000 in mortgage deductions. Homeowners that make more than $200,000 got $15,500,000,000 in mortgage deductions. On the one hand, that’s not surprising. People that don’t make much money aren’t going to buy houses, and if they do, they’ll be cheaper. On the other hand, a cohort that makes more than ten times the salary of another garners over a thousand times more benefit. That’s staggering. Ironically (and perhaps unsurprisingly), voters who claim a mortgage deduction are more like to oppose housing subsidies.
We’ll do anything to protect the value of our house. Even in liberal cities (like my old hometown Seattle), homeowners will proudly fly Black Lives Matter flags in their houses but once there’s talk of multifamily housing or subsidized housing being planned in their neighborhood, all of a sudden they’re the ones screaming at local council meetings and hiring lawyers to stop all progress. As a result, restrictions are in place in 75% of residential lands that mandate that only detached single family houses can be built.
If you take a look at all subsidies (not just housing), you’ll find that the top 20% of our population receives 40% more subsidies than the lowest 20%.
Well, what can we do? The government is already spending so much money. We’re practically broke as it is. We can’t just eliminate poverty, right? In 1955, government spending as part of the GDP was 22%. In 2021, government spending was, check notes again, 17.6%.
Desmond estimates that eliminating poverty would cost $177 billion. That’s a lot of money, right? It’s been estimated that there is an estimated $1 trillion in tax fraud.
When a certain political party wants to cut IRS spending, understand what they are doing. I know that they use scare tactics to try to convince you that an IRS agent will be peering through your window just looking for an excuse to haul you off to jail.
Here’s the thing, the IRS doesn’t care about you. In fact, if it was up to them, they’d just automatically calculate your bill and send it to you (like other countries do). It’s companies like Quicken that make money off of you that prevent that from happening.
No, they’re after the extremely wealthy people and huge corporations that are utilizing every shady trick in the book to avoid paying their fair share of taxes. In this war, the corporations have tanks and the IRS agents have squirt guns. I’m personally offended that, while I’m diligently paying my taxes, such entities manipulate the tax code however they see fit and happily skip away scot free.
Throughout this book are bumper sticker aphorisms that exactly sum up our current state:
- “Private opulence and public squalor”
- “Socialism for the rich, free enterprise for the poor”
- “Better choices do not lead to economic security; economic security leads to better choices”
And yes,
“Poverty anywhere is a threat to prosperity everywhere”
This is an essential book.
dorkenstein 