Framing Poverty

Mark Thoma had a recent post that got me thinking about how people see the issue of poverty.  But first a quick story.

When I was young my dad had a very tiny general store.  (I worked there when I was 2 years old, and have a picture to prove it.)  Once he tried to give away some toys and games to charity.  Toys that were slightly defective, like Monopoly games missing a few pieces.  The charity wouldn’t take those gifts.  They said it could cause psychological damage to the children if they had to play with inferior toys.  My dad would roll his eyes when he told this story.  So he ended up giving these toys to us kids for Christmas.  (Please, no jokes about “that explains why Sumner . . . “)

He had lots of stories that probably sound a bit reactionary today.  He once said he could never be unemployed.  He’d said he’d take a pencil and go door to door selling it.  When he sold it he’d buy two pencils and go door-to-door selling those.  Don’t think he could pull it off?  He was much more charming and outgoing than me.  When the banks were closed in 1933 his father (a college prof at Wisconsin) couldn’t get at his money.  My dad went upstairs and came down with several hundred dollars he had saved up.  He had earned the money wheeling and dealing things like bicycles and scrap metal.  He was 11 years old, and that was a lot of money for a kid to have saved up in March, 1933.

Now that I’ve convinced you that he was a reactionary with no sympathy for the poor, you might also be interested in knowing that he was actually a liberal and a strong supporter of civil rights his whole life.  He was an FDR Democrat who hated prohibition and favored welfare and easy money.  He knew his unemployment anecdote didn’t apply to most workers.  He didn’t change, the world changed around him between the 1930s and the 60s.  That picky charity’s attitude would have been viewed as absurd in the Depression years.

I’m starting to feel like that as well.  Imagine my reaction when I read this from a Mark Thoma post:

It’s true people don’t literally starve on the streets anymore, but is that our goal as a society? I think a relative standard that says that people who, because of their incomes, cannot participate fully in society are poor. A child getting enough to eat, and with clothes to wear, who cannot afford the toys needed to be part of the group of kids in the neighborhood is socially isolated and socially disadvantaged (we don’t want to play at your house because you don’t have a TV, you can’t come with us because you don’t have a bike, you didn’t get my text message about baseball practice being moved?, etc., etc., etc.). Giving people, children in particular, what they need to participate in the society around them is an important element of how successful they will be in the future. It helps to determine their ability to give back to society as fully participating adults.

I don’t even have a cell phone.  Or how about this (Thoma quoting Jamelle Bouie):

With microwaves, air conditioning and cell phones, it’s clear that poor people aren’t nearly as poor as we think they are! I mean, it’s not as if poverty is concentrated in the nation’s two warmest regions — the South and the West — where air conditioning is a necessity, and it’s not as if cell phones are a cheaper alternative to landlines, and critical to navigating the world of low-wage service jobs.

Air conditioning is a necessity!?!  Nobody in the South had air conditioning during the first 150 years of the country.  Should we feel sorry for upper middle class Southerners who in 1925 lacked AC?  So that’s my gut reaction.  I am getting to be a reactionary.

By now you are thinking you have me pegged.  You always knew I was a right-winger, so these views are no surprise.

But just as with my dad, you may have jumped to the wrong conclusion.  My reactionary gut instincts have zero impact on my policy views.  When I sit around the table with a bunch of liberal college professors, I am often the most liberal in my attitudes toward today’s students.  They mock all the luxuries of today’s college students, like spa services in dorms.  And my gut instinct is the same.  But my response is; why shouldn’t today’s students have it easier than we did?  We are a much more affluent country today than in the 1970s.  We grew up in smaller homes with one or one and a half baths; they grow up in McMansions with 5 bedrooms and 4 baths.  They have their own cars in college.  They don’t want to live in a little dorm cubicle, they want a nice apartment.  So in a way I agree with Mark Thoma and Jamelle Bouie.  I may even have pretty similar values (assuming they favor income redistribution for utilitarian reasons.)

It seems to me that there are lots of binaries in the framing of poverty:

Past vs. present:  What’s the appropriate benchmark; how thing used to be, or how the middle class lives today?

American vs. South Asian poor:  Vastly different living standards, but what does that mean?

Relative vs. absolute poverty:  This is closely related to the previous distinctions.  In absolute terms, the living standard of America’s poor has improved.  In relative terms it may not have.   Income has become less equal.  Consumption inequality seems more stable, but it’s hard to get figures everyone agrees on.

Migrants vs. the native-born:  Do we have less obligation toward those who came here from even poorer countries, as compared to the native-born poor?

Deserving vs. undeserving poor:  This is one of the most emotional issues, where there is a clear split between liberals and conservatives.  Here are a couple examples of how people think about poor people:

From the Daily Mail:

He became the self-proclaimed king of the chavs after turning up to collect his £9.7 million lottery win wearing an electronic offender’s tag.

But eight years on, having blown all that money, Michael Carroll is practising for a return to his old job as a binman.

The 26-year-old, who squandered his multi-million fortune on drugs, gambling and thousands of prostitutes, has since February claimed £42 a week in jobseeker’s allowance.

And this is from the NYT:

MEMPHIS — For two decades, Tyrone Banks was one of many African-Americans who saw his economic prospects brightening in this Mississippi River city.

A single father, he worked for FedEx and also as a custodian, built a handsome brick home, had a retirement account and put his eldest daughter through college.

Then the Great Recession rolled in like a fog bank. He refinanced his mortgage at a rate that adjusted sharply upward, and afterward he lost one of his jobs. Now Mr. Banks faces bankruptcy and foreclosure.

“I’m going to tell you the deal, plain-spoken: I’m a black man from the projects and I clean toilets and mop up for a living,” said Mr. Banks, a trim man who looks at least a decade younger than his 50 years. “I’m proud of what I’ve accomplished. But my whole life is backfiring.”

So which view is right?  I think they are both right, and both wrong.  The NYT is clearly the much more respectable paper.  And the example of a lottery winner that ends up poor is obviously extremely rare.  So that favors the NYT.  On the other hand the NYT tends to be politically correct, and most of their readers are too affluent to know many poor people.  During my life I’ve found that the periods where my income was fairly low, I tended to know many more low income people.  And I met lots of people in that category who had “issues.”  So in one sense I agree with the Robert Samuelson column that Thoma finds so distasteful:

Who is poor in America? This is not an easy question to answer, and the Obama administration would make it harder. It’s hard because there’s no conclusive definition of poverty. Low income matters, though how low is unclear. Poverty is also a mind-set that fosters self-defeating behavior — bad work habits, family breakdown, out-of-wedlock births and addictions. Finally, poverty results from lousy luck: accidents, job losses, disability.

Surely there are lots of people with what is viewed as “bad luck” and lots of others who seem to have made “bad decisions.”  On the other hand from a philosophical perspective (whatever that means) I don’t see how this distinction is defensible.  Consider that lottery winner.  How did he end up like that?  At age 2 did he stand up in his crib, use his “free will” to decide “I’m going to head down the road to being a pathetic loser?  I rather doubt it.

If categories like “deserving” and “undeserving” are too be defended, in my view they must be defended on utilitarian grounds.  I.e., conservatives might argue that they are “useful fictions” that encourage people to shape up.  I guess society is free to think about these issues as they wish.    But in terms of public policy, I’d rather just focus on utility maximization.  How do we do that?  I have already made some suggestions such as a welfare state that combines low taxes, forced saving, and meaningful subsidies for the poor.  I won’t argue that it solves all the dilemmas associated with the deserving/undeserving distinction.  For instance, there is the issue of what sort of distinction is too be made between able-bodied people who aren’t working, and the disabled.  I don’t have any good answers.  But I think it’s a start, and it reduces the amount of framing that we need to do.

Conservatives tend to look down on the poor.  Liberals are more inclined to romanticize the poor.  Neither attitude helps in coming up with sensible public policy solutions.  Liberals are right that we need some empathy in order to become motivated to address the issue.  But once we get to the stage of drawing up legislation, we are better of thinking about the issue with as little emotion as possible.  I saw Samuelson taking a clear-headed and reasonable look at a technical issue—how to measure poverty.  Thoma thought he was exhibiting a lack of compassion for the poor.  The more blogging I do, the more I realize that people see very different things when they read a post.

PS.  The NYT story is why I feel so passionate about the unemployment problem.  The cost of this recession in terms of human suffering is immense.  Just consider the effect of using monetary policy to raise the inflation rate from 1% to 2%.  That would make inflation more stable, which is one of the Fed’s goals.  And if the SRAS is fairly flat right now, it would put millions of people back to work.  That’s a win-win.  That’s a massive free lunch just waiting to be exploited.  Think of all the people in situations like that black guy in Memphis.   And we aren’t even lifting a finger to make it happen.

(That’s me being emotional in trying to get others to see that we need to address the problem.)

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About Scott Sumner 492 Articles

Affiliation: Bentley University

Scott Sumner has taught economics at Bentley University for the past 27 years.

He earned a BA in economics at Wisconsin and a PhD at University of Chicago.

Professor Sumner's current research topics include monetary policy targets and the Great Depression. His areas of interest are macroeconomics, monetary theory and policy, and history of economic thought.

Professor Sumner has published articles in the Journal of Political Economy, the Journal of Money, Credit and Banking, and the Bulletin of Economic Research.

Visit: TheMoneyIllusion

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