A Nation Rich In Poverty

How does a nation that spends itself into bankruptcy trying to eradicate poverty end up with an explosive demographic:  the statistically poor?  Easy, it spends itself into bankruptcy, creates incentives to stay poor and thus creates the very opposite result.  Happens every time.

Incomes for the typical U.S. household fell slightly last year as substantial government aid and such self-help actions as families doubling up and young adults moving in with their parents muted the impact of the worst recession since the 1930s, the Census Bureau reported this morning.

The nation's poverty rate jumped to 14.3% in 2009, its highest level since 1994, and the 43.6 million Americans in need is the highest number in 51 years of record-keeping.

President Barack Obama said that economic-stimulus spending had kept millions more Americans out of poverty. "Even before the recession hit, middle-class incomes had been stagnant and the number of people living in poverty in America was unacceptably high, and today's numbers make it clear that our work is just beginning," he said in a statement.  Uh-huh.

The median household income, the pretax income of households smack at the middle of the middle, fell 0.7% to $49,777 in 2009, down 4.2% from the prerecession year of 2007.

The Office of Management and Budget defines the poverty threshold level as less than $21,954 for a family of 4 in 2009 and $10,956 for an individual.  The poverty rate increased for all racial groups except Asians.

The income used to calculate poverty status includes earnings, workman's compensation, unemployment insurance, Social Security, veteran's payments, pensions, interest and dividends, and just about every other source of cash.  Non-cash benefits, such as food stamps or subsidized rents, also do not count as income.

Some believe, that the poverty rate, like most statistics produced by the meticulous statisticians in Washington, does not fairly portray the rate. Perhaps the biggest problem is that the official poverty rate doesn’t account for the lion’s share of antipoverty measures such as subsidized housing and the earned income tax credit.  It is also believed to overstate inflation.  Huh?  Doesn't government reporting typically UNDER-state inflation?

Now, if the definition of poverty is on the order of $20,000 per year, and we have a broad unemployment rate of more than 16%, how do we arrive at a poverty rate of 14%?  Don't unemployed people make zero?

And, since we have a sea of UNDER-employed and working poor at minimum wage jobs, it's hard not to imagine a truer poverty rate of more like 30%, using our own definition.

But isn't our definition of poverty relative, as opposed to absolute?  It is.  And, if we compare ourselves to other nations, using our very own definition, we learn some amazing things.

Think China's rich?  The second largest economy.  Our worst economic foe?  Turns out, that their median income is less than one-tenth of ours.  ONE-TENTH!  How about India?  Their median income is less than one-third of China's!

About 20 countries have higher median incomes, but even here, the statistics are misleading.  Kingdoms such as Lichtenstein and Monaco are pretty high, as are the populations of many oil producing countries.  Among the oil producers, much of the wealth is very, very concentrated in the hands of very few.

As you can judge,  the poverty statistics are absurd.  If true, more than 80% of the world's population is poor.  If poor is relative rather than absolute, how can virtually the whole planet be poor?

The reason is simple.  Politicians have a vested interest in proclaiming people poor and then offering government programs to fix it.  It doesn't work, but what do results have to do with getting re-elected?

Marko's Take