One Hand Clapping

Wealth and poverty in America and the world
Several sites in the blogosphere have referenced a page called the Global Rich List that lets you enter your annual income, click a button, and learn where you sit on the global pile of dough. I learned that I am the "44,982,565 richest person in the world."

The explains its methodology via a link at the bottom of the page; its results page is a plea for contributions to CARE International.

In 1999 a local paper profiled a family in Nashville, the family of Tommy Slush. He lived with his wife and two daughters in a mobile home in a trailer park. Tommy has had a steady job for thirty years. His employer praised Tommy's work ethic as one of the strongest he has ever seen. Tommy often worked double shifts as an assistant pressman at Ambrose Printing and Office Supply. He makes four hundred and twenty-five dollars per week. His wife and oldest daughter work also.

The Slush family is part of the "working poor," people who are one step away from poverty. The working poor don't ever sit in fifty dollar seats at Titans games or take weekend trips down to Destin. For Tommy Slush and his family, a dinner at Ponderosa is a major excursion that they can afford maybe three or four times per year.

They are not on welfare. They just don't have a savings account because they have to spend all they make to pay for their home, their food, their clothing and their transportation.

If you input Tommy's $22,100 (1999) annual income on the Global Rich List page you discover that he is in the top 6.8% richest people in the world and his income ranks 408,329,049 in the world.

Here is a profile of American "working poor," defined "by scholars as families earning between 100 and 200% of the federal poverty levels." Understand that in 2001, the percentage of Americans living at or below the poverty level was 11.7 percent, “lower than in most of the last two decades” when "the rate exceeded 12 percent. “A family of four was classified as poor if it had cash income less than $18,104 last year.”

That means that analysts classify a family of four as "working poor" if they make between $18,000 - $36,000 per year. In some parts of the country, $36K would not be a lot, of course, but in most places a family of four can live okay on that amount if they practice good budgeting and wise spending. The linked report names some barriers that keep the working poor from moving to self-sufficiency. Three of them are key:

Their income does not increase from year to year, or barely keeps up with inflation

Babysitting is a major problem because many of the jobs they work have irregular or odd hours. And child care is expensive.

Transportation is a problem.

To which I would add another important one: As a rule, the working poor are lousy personal financial managers with high consumer debt (so are a lot of higher income folks!) because they use credit cards to bridge cash-flow gaps. But that deepens their hole.

I'd like to introduce you to "Rhonda," a woman I spotted yesterday walking along a state road in the country, 50 yards from her flat-tired car. I pulled up, displayed my sheriff's department badge and credentials and asked whether I could give her a ride. She accepted.

She was en route from Murfreesboro, 30 miles distant, to my town of Franklin to appear in court appearance for a non-traffic misdemeanor charge. She was late, so I took her to the court and went in to verify her reason for lateness to the judge if necessary. It wasn't, but I hung around anyway.

Rhonda was in her mid-thirties, a single, welfare mom with a four-year-old daughter. She had no family in Tennessee, nor any real friends, being a fairly new resident to the area. She had lost her job last week (she had been a restaurant hostess) because no child care was available for her evening shift. She had been taking her daughter to work but management had let her go for that reason.

I had called the sheriff's dispatch and asked them not to tow her car if possible, but when thuinderstorm moved in the deputy on patrol decided it had to go. Knowing the road, I can't blame him. But the tow charge would cost Rhonda $75, which she didn't have, and she'd still have to fix her tire.

The judge threw out the legal charge. Her public defender wrangled a deal with the tow operator and the sheriff's department that if the department called that tow company for the next tow, they'd not charge Rhonda. Everyone agreed, so that was a relief. The tow lot hosed enough air into her tire to get up the road a stretch to a a Marathon gas station that had a garage.

Marathon patched the puncture enough to get Rhonda to the Franklin Wal-Mart. She'd bought her tires at another Wal-Mart and said she had the hazard warranty. Wal-Mart replaced her tire free under warranty. While they did I drove Rhonda to Murfreesboro to pick up her daughter at Kindercare, who had told Rhonda on the phone that the girl could not stay late, period, even at extra cost. When we got back to Franklin her car was ready. She took her daughter and drove home. (Yes, I gave her some money.)

Rhonda wants to work. She named a long list of places she had applied to no avail. She has a paralegal degree, office-management skills and computer skills. She presents herself well, has a good vocabulary and was remarkably even tempered throughout the long day.

And there are thousands of women just like her. I don't have a solution, either.

The devil of it is that if she accepts a full-time job she will lose her welfare benefits. (If you think about it, it makes sense.) State-run welfare is paying her tuition at trade school plus a stipend, but only during the two semesters. The idea is that once she gets a trade certification, she can get a decnt job and stay off welfare permanently. I can't argue with the concept. But it's difficult to do.

That's the nutshell problem: babysitting or child care, low wages and generally unreliable transportation.

It may well be true, as Dean Esmay writes (a citation or three would be nice, Dean),

. . . surveys have been done of the people living "below the poverty line" in the U.S. Almost all have homes or apartments that they don't share with another family. Few have dirt floors. Almost all have hot and cold running water and flush toilets indoors, and internal heating. Almost all have more than one change of clothes, and shoes. Most have at least one color television, a telephone, and an automobile. A substantial percentage have cable television and a video game console. Few miss many meals, and a majority are actually overweight. All have access to educations that, while it may often be substandard, offer basic reading and math literacy to anyone who wants it. While many do not have access to the greatest health care available, all have access to free medical care that includes ready access to antibiotics, vaccines, painkillers, and emergency care for fixing broken bones, giving birth, or other major traumas. . . .

The rare exceptions--the chronically homeless--are generally either mentally ill or severely drug addicted. Those who are homeless for other reasons generally find new places to live within a few weeks or months at worst. For them still, generally meals are to be found and emergency medical care is always available if they just know where to look.

I know from personal experience overseas what non-US poverty really means - try visiting a Honduran family, as I have, who has a single-room sapling cabin (not a log cabin, a sapling cabin) with a dirt floor, no electricity, no medical care, two sets of homemade clothing, and whose total net worth consists of one cow and three chickens, which they bring into the cabin each night to keep the animals safe.

Spend some time in the Third World, away from the airport and cities, and you'll learn what poverty means to about a billion people.

Yet as a whole, the world's population is not really poor, especially by historical standards. According to economist Richard A. Esterlin in "The Worldwide Standard of Living Since 1800 (p. 23), published in Journal of Economic Perspectives, Winter 2000,

By most measures here, the rates of change in the less developed countries in the last half century have substantially exceeded those in the historical experience of western Europe. If there are limits to growth in the standard of living—an imminent stationary state—it is not evident in the historical record.

Indeed, Berkeley scholar J. Bradford DeLong writes that 25 years ago you could assert that the world's economic structure was not working.

The difference in living standards, productivity levels, and life chances between rich and poor parts of the world was greater in 1975 than it had been in 1925, and vastly greater in 1975 than it had been in 1800.

Since 1975, however, we have turned a very important corner. As Yale economist T. Paul Schultz was the first (to my knowledge) to point out, since 1975 global inequality in personal incomes has not been rising but falling. Since 1975 the world has not only become a richer place, but the world's poor have seen their incomes grow faster than the world's rich.

And he asks excellent questions:

Why, then, has no one noticed? Why are our newspapers full of reports of growing economic gulfs between rich and poor in our world? And why are they full of reports of the crisis of a model of economic development that does not serve the interests of the world's poor?

The answer, he thinks, is because most of the improvement has taken place among the 2.5 billion people who live in only two countries, India and China, which have both freed their economies substantially from statist suffocation since 1975. Says DeLong, "Centrally-planned states have managed to invest more and grow faster for short periods only, and at immense and unacceptable human cost."

How can the remaining billion people of the world climb to higher standards? Well, this is a start, the work of pioneering Peruvian economist Hernando de Soto, who says that the world's poor people actually have trillions of dollars of assets, but lack personal property rights that are protected by law and preserved in systems of records.

It seems clear to me that the main causes of poverty in the world today are political, not material.

Endnote: The greatest engine of economic well-being in the West was the drive toward universal literacy, according to Esterlin. And the drive toward literacy was religious:

What one can say with some assurance is that the early 19th century differences cited above [in his paper - DS] are the product of trends that reach as far back as the 16th century, well before the onset of modern economic growth, trends that are connected in part to the Protestant Reformation with its emphasis on the need for each individual to be able to read the Bible himself (Cippola, 1969; Easterlin, 1981; Melton, 1988; UNESCO, 1957).

This drive for every adherent of Christian faith to be able to read the Bible really began with Humanism in the 15th century. Erasmus, who strongly influenced Martin Luther, thought that the Scriptures should be accessible to all, rather than the property of the priesthood. Luther strongly agreed, and translated the Latin Catholic Bible into German for that reason. The printing press, recently invented then, made widespread literacy possible, but theology gave literacy its raison d'etre.

by Donald Sensing, 9/3/2003 11:06:09 PM. Permalink |

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