By Felix Salmon
September 17, 2010
Economics of Contempt

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Some Unsolicited Advice for Regulators — Economics of Contempt

There are 43.6 million Americans living in poverty — Reuters

The Bloomberg terminal wedding cake — YouTube

The stupidity of Comic Sans, it’s contagious! — The Atlantic

Flavorwire on author photos: “Who wouldn’t trust someone who likes a good couch sitting now and then?” — Flavorwire

Of 294 terror attacks in Europe in 2009, 1 was Islamist (vs 237 separatist, 40 leftist, 4 rightist) — Geographic Travels

Assessing the TARP on the Eve of Its Expiration: The COP‘s last report — COP (Update: Not the last report, it turns out: they’ll continue through April 2011.)


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“There are 43.6 million Americans living in poverty”

No, there aren’t. Everyone always gets this wrong every time the US poverty statistics come out. And it’s very damn annoying.

The number under the poverty line is the number of people who would be living in poverty if they weren’t offered government help to not live in poverty.

We *do not* include the major poverty alleviation programs in our definition of poverty. We ignore Section 8 vouchers, we completely disregard Medicaid and the $40 billion odd a year we hand over (Federal only, the States roughly double this) through the EITC is completely disregarded.

The poverty line and the number of people below it are interesting and useful statistics. But they are not the number of people living in poverty. Haven’t been since about 1975.

Posted by TimWorstall | Report as abusive

The Bloomberg post takes me to a YouTube sign in screen, not an active post or video, Felix.

==Bob D.

Posted by REDruin | Report as abusive

It should be noted that the Basque separatist movement in Europe (where all those separatist terror numbers are coming from) is socialist in nature. This brings the European terror totals to 277 on the left versus 4 on the right. Almost a 100 to 1 difference.

Posted by DanHess | Report as abusive

You know you’re still doing a great job Felix as long as commenters like TimWorstall, DanHess and numerous others take the time to post inciteful commentary on your pages.

Tim’s point about our social safetynet is spot on… while perhaps not as generous as northern Europe’s its strong enough that the poverty line in the US is above the average per capita income of half of the world’s population.

For 21,000 a family of 4 can live pretty darn well in a rent subsedized appartment, supplement food needs with EBT and reliably stocked foodbanks, and qualifies for zero cost healthcare at any hospital in my state (Maine.)

In no way am I saying that those social safetnets need to be deminished… but much much more could and should be done to encourage upward mobility and discourage downward mobility.

For example if you’re going to give someone an earned income tax credit shouldn’t you at least put half of that in an untouchable retirement account so that when people hit 67 years old they had something to supplement social security?

Posted by y2kurtus | Report as abusive

What does that mean, “socialist in nature”? ETA is crazy in nature, too. But it exists to create a separate home for Basques, so it should be categorized as a separatist movement.

Posted by Citoyen | Report as abusive

Inciteful or insightful? Good work either way, Dan Hess. :)

Agreed with y2kurtus that our social net is livable. The biggest obstacle to “upward mobility” is the work ethic and discipline necessary to grab at a thread of hope and hang on to it for dear life. More than anything else, it is this that differentiates American-born poor from destitute immigrants.

To be fair, wide swaths of middle-class America also lack that work ethic and discipline. It just isn’t as critical if you are born to wealth.

Posted by TFF | Report as abusive

I believe the first comment on poverty numbers is half right/half wrong. The commenter, TimWorstall, is right when he says that the income used to measure poverty is money income only and does not include the money equivalent value of Food Stamps, Medicaid and other non-money income.

But the poverty count itself defines poverty as pre-tax money income from all sources being less than the poverty line. There is nothing in the definition about people who would have been poor but for government aid.

Posted by flevy | Report as abusive

Tim, flevy, what’s the best source of information on the number of Americans who are actually living in poverty?

Posted by FelixSalmon | Report as abusive

Felix, “living in poverty” is an arbitrary distinction. You might as well define it according to the official government measure, as that at least gives you a reasonable picture of short-term trends, but you have to be cautious of comparing across decades as the non-cash assistance varies greatly over time.

I consider myself to be “moderately wealthy”, with income well above the national median, yet our total cash expenses are under $40k/year once you take out housing, taxes, and tuition. It would be difficult to live on half that amount, but not THAT difficult. We are lucky to live in a country where the “poverty line” represents a survivable lifestyle.

Posted by TFF | Report as abusive

“But the poverty count itself defines poverty as pre-tax money income from all sources being less than the poverty line. There is nothing in the definition about people who would have been poor but for government aid.”

That’s rather my point.

Every other country (as well as using a relative, not absolute, poverty measure) defines poverty after the efforts to alleviate poverty….after the influence of the tax and benefit systems. The US alone defines it as before the influence of the major poverty alleviation efforts.

The numbers are really rather large: add in Medicaid, EITC, Section 8 and the rest and there’s over $500 billion being spent on those 50 million ish people being defined as poor. While the money isn’t distributed evenly if it were that would mean that the mythical family of four, Mom,, Pop and two kinds, is getting $40k a year….which isn’t really, anyone’s definition of poverty.

So we don’t in fact know who is not now poor because of the aid they get….but that’s actually the one number we’re really interested in. How much more do we have to do to get rid of poverty?

As to hte best sources, well, there really isn’t one that’s updated. Back in, I think, 2004, the Census did run through the calculations of what the effects of poverty alleviation were. You’ll have to hunt to find it though, it’s been moved since the last time I looked it up. Also, it’s not updated. The general poverty rate fell to around 8% and the child poverty rate to something tiny, 2 or 3% as I recall it.

Posted by TimWorstall | Report as abusive