The Pathology of Poverty. THE REMIX

[Loren Pechtel]

That must account for short term thinking among poor whites. I knew rednecks and white trash were discriminated against! "SHORT TERM THINKERS OF THE WORLD UNITE...YOU HAVE NOTHING TO GAIN FROM A SCHEDULER"

Why are you bringing up such inconvenient facts?

 

[Loren Pechtel]

How, exactly does a market system of resource distribution exist without a poverty class?

And how does a dog exist without feathers?

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How, exactly does a market system of resource distribution exist without a poverty class?

It poverty measures are based on relative wealth, it can't. There is a bell curve to earnings, and an underclass is always going to exist in a market system.

Yes, there will be a range but nothing says that range extends into having too little.

 

[Loren Pechtel]

The better question is: how, exactly, does a non-market system of resource distribution exist without a poverty class?

By fucking things up badly enough that everyone's in the same boat.

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Just as a thought experiment, what would happen if the "poverty class" all dropped dead tomorrow? Would a new poverty class arise from those left alive?

yes.

If so, by what mechanism?

in terms of relative poverty, the next class up would by default become the new poverty class.

In other words, the problem can't be solved, period.

Quit tilting at ghost windmills.

 

[Jayjay]

The hypothesis that short term thinking causes poverty should be possible to verify scientifically:

Arrange a test where you take certain number of people in same income bracket. Test whether they are short term thinkers or long term thinkers by some means. Check back in ten years if their income has changed. If there is any correlation between people who initially got high scores on long term thinking and their improved financial situation compared to those that didn't, then the theory might have some merit.

 

[EricK]

Poverty is a result of policy and practice.
It is not generated by poor people.
It is systemic.

It is a socio-economic condition shaped by social, economic, and political decisions and enforcement.

Generally speaking, most people agree that food insecurity, periodic suspension of working utilities, homelessness, lack of ability to pay for adequate health care, and persistent debt are all characteristic of someone living in poverty.

So, hypothetically again, if everybody who suffered from these things suddenly dropped dead tomorrow, by what mechanism would a class arise who experience these things systemically, but who currently don't experience these things?

 

[AthenaAwakened]

Poverty is a result of policy and practice.
It is not generated by poor people.
It is systemic.

It is a socio-economic condition shaped by social, economic, and political decisions and enforcement.

Generally speaking, most people agree that food insecurity, periodic suspension of working utilities, homelessness, lack of ability to pay for adequate health care, and persistent debt are all characteristic of someone living in poverty.

So, hypothetically again, if everybody who suffered from these things suddenly dropped dead tomorrow, by what mechanism would a class arise who experience these things systemically, but who currently don't experience these things?

A regressive tax code
A stagnation of wages
Privatizations of public services

 

[EricK]

So, hypothetically again, if everybody who suffered from these things suddenly dropped dead tomorrow, by what mechanism would a class arise who experience these things systemically, but who currently don't experience these things?

A regressive tax code
A stagnation of wages
Privatizations of public services

That's not really a mechanism.

Why would tax get more regressive? I expect those in poverty are not net contributors, so there would seem to be no need to increase taxes on those now at the bottom.

One would have thought that there being fewer people in the potential employment pool would lead to an upward pressure on wages

Why would this lead to more public services being privatized?

Nothing you have said explains why you have reason to believe people who are currently not in poverty would enter poverty if those currently in poverty mysteriously vanished. Also, none of this seems to have anything to do with the 'market system of resource distribution' which you seemed to think relies on a poverty class.

 

[Loren Pechtel]

The hypothesis that short term thinking causes poverty should be possible to verify scientifically:

Arrange a test where you take certain number of people in same income bracket. Test whether they are short term thinkers or long term thinkers by some means. Check back in ten years if their income has changed. If there is any correlation between people who initially got high scores on long term thinking and their improved financial situation compared to those that didn't, then the theory might have some merit.

This test would be useless. If they are in the same income bracket there must be some counterbalance.


Instead, do the test before there are income brackets--test kids (give them a choice of a reward now or a bigger reward later if they don't take the reward now), see how they do as adults.

You do see an effect.

 

[thebeave]

The hypothesis that short term thinking causes poverty should be possible to verify scientifically:

Arrange a test where you take certain number of people in same income bracket. Test whether they are short term thinkers or long term thinkers by some means. Check back in ten years if their income has changed. If there is any correlation between people who initially got high scores on long term thinking and their improved financial situation compared to those that didn't, then the theory might have some merit.

This test would be useless. If they are in the same income bracket there must be some counterbalance.


Instead, do the test before there are income brackets--test kids (give them a choice of a reward now or a bigger reward later if they don't take the reward now), see how they do as adults.

You do see an effect.

There actually have been some famous studies just like this:

http://en.wikipedia.org/wiki/Stanford_marshmallow_experiment

also

http://www.nytimes.com/2014/01/12/magazine/we-didnt-eat-the-marshmallow-the-marshmallow-ate-us.html

The results seem to suggest that short term thinkers don't do as well as the long term thinkers, but like most social science experiments, there is always room for doubt.

 

[AthenaAwakened]

A regressive tax code
A stagnation of wages
Privatizations of public services

That's not really a mechanism.

Why would tax get more regressive?

taxes have gotten more regressive. Some taxes are automatically more regressive such as sales taxes. The deferentiations in "income" and "capital gains" lead to the situation Warren Buffet has alluded to where his secretary pays more taxes than he does. Right now, even with the differing tax rates as income increases, the poor still pay more in taxes than the CEOs of the companies for which they work. Payroll taxes such as social security, not only are a flat rate, but cut off completely over a certain amount of income, effectively becoming less as income grows. This says nothing of property taxes which tend to take a bigger bite out of working people's income than the incomes of the 1%.

And with every tax cut comes a call for further ones. In this last tax bill in the US, some poor people's taxes actually increased, while the top .1% saved millions.

I expect those in poverty are not net contributors,

that would depend on what you mean by contributors and which taxes you are speaking about. And considering how worker productivity has risen over the last three decades with real wages remaining pretty much stagnant, the record profits reaped by many transnationals in more than enough of a contribution to the economy as a whole.

so there would seem to be no need to increase taxes on those now at the bottom.

One would have thought that there being fewer people in the potential employment pool would lead to an upward pressure on wages

one would think that, wouldn't one? And if a nation's employment existed in a vacuum perhaps it would, but forces such as technology, outsourcing, and immigrant labor hardly make such a perfect market possible.

Why would this lead to more public services being privatized?

why would what lead to more public services being privatized?

Nothing you have said explains why you have reason to believe people who are currently not in poverty would enter poverty if those currently in poverty mysteriously vanished.

I beg to differ, although I may not be seeing what you are asking for.

Also, none of this seems to have anything to do with the 'market system of resource distribution' which you seemed to think relies on a poverty class.

A poverty class is enivitable in a market system left to its own devices.

Be back in a bit and I'll tell you how.

 

[Jayjay]

The hypothesis that short term thinking causes poverty should be possible to verify scientifically:

Arrange a test where you take certain number of people in same income bracket. Test whether they are short term thinkers or long term thinkers by some means. Check back in ten years if their income has changed. If there is any correlation between people who initially got high scores on long term thinking and their improved financial situation compared to those that didn't, then the theory might have some merit.

This test would be useless. If they are in the same income bracket there must be some counterbalance.


Instead, do the test before there are income brackets--test kids (give them a choice of a reward now or a bigger reward later if they don't take the reward now), see how they do as adults.

You do see an effect.

Sure, the test could be for kids, but you still need to take the family income of those kids into account. If poverty is the cause of "short-term thinking) then you'd expect to see kids from poor families exhibit such behaviour.

 

[Loren Pechtel]

This test would be useless. If they are in the same income bracket there must be some counterbalance.


Instead, do the test before there are income brackets--test kids (give them a choice of a reward now or a bigger reward later if they don't take the reward now), see how they do as adults.

You do see an effect.

There actually have been some famous studies just like this:

http://en.wikipedia.org/wiki/Stanford_marshmallow_experiment

also

http://www.nytimes.com/2014/01/12/magazine/we-didnt-eat-the-marshmallow-the-marshmallow-ate-us.html

The results seem to suggest that short term thinkers don't do as well as the long term thinkers, but like most social science experiments, there is always room for doubt.

Yeah, I knew there were studies. That's why I said that we do see a difference.

 

[arkirk]

There actually have been some famous studies just like this:

http://en.wikipedia.org/wiki/Stanford_marshmallow_experiment

also

http://www.nytimes.com/2014/01/12/magazine/we-didnt-eat-the-marshmallow-the-marshmallow-ate-us.html

The results seem to suggest that short term thinkers don't do as well as the long term thinkers, but like most social science experiments, there is always room for doubt.

Yeah, I knew there were studies. That's why I said that we do see a difference.

I think there are a lot more factors in play than simplistic experiments based on Calvinistic moral parables. Isn't "short term thinking" what they do in the stock market? That has nothing to do with marshmallows but it does have a lot to do with expansion of the underclass. It is rich people's short term thinking that is much more responsible for the expansion of poverty in America. Always we must blame the victims...it is their damned short term thinking....suppose they are poor because they have low IQ's.

 

[AthenaAwakened]

a big reason I say that markets must produce poverty, is because that's what they have done. Not for everyone, but definitely for some people. Here an analysis on a global scale.


http://prospect.org/article/free-markets-and-poverty

For better than two decades, the orthodox recipe for global growth has been
embodied in the so-called Washington Consensus. This approach, advocated by the
United States and enforced by the World Bank and the International Monetary Fund
(IMF), holds that growth is maximized when barriers to the free flow of capital
and commerce are dismantled and when individual economies are exposed to the
discipline, consumer markets, and entrepreneurs of the world economic system.
Proponents of this view have contended that the free-market approach to
development will also alleviate poverty, both by raising overall growth rates and
by bringing modern capitalism to the world's poorest.

Yet the actual experience since 1980 contradicts almost every one of these
claims. Indeed, the free-trade/free-capital formula has led to slower growth and
more vulnerability for poor countries--and to greater income disparity among
individuals. In 1980 median income in the richest 10 percent of countries was 77
times greater than in the poorest 10 percent; by 1999 that gap had grown to 122
times. Progress in poverty reduction has been limited and geographically
isolated. The number of poor people rose from 1987 to 1998; in many countries,
the share of poor people increased (in 1998 close to half the population in many
parts of the world were considered poor). In 1980 the world's poorest 10 percent,
or 400 million people, lived on the equivalent of 72 cents a day or less. The
same number of people had 79 cents per day in 1990 and 78 cents in 1999. The
income of the world's poorest did not even keep up with inflation.

Why has the laissez-faire approach worsened both world growth and world income
distribution? First, the IMF and the World Bank often commend austerity as an
economic cure-all in order to reassure foreign investors of a sound fiscal and
business climate--but austerity, not surprisingly, leads to slow growth. Second,
slow growth itself can mean widening income inequality, since high growth and
tight labor markets are what increase the bargaining power of the poor.
(Economists estimate that poverty increases by 2 percent for every 1 percent of
decline in growth.) Third, the hands-off approach to global development
encourages foreign capital to seek regions and countries that offer the cheapest
production costs--so even low-income countries must worry that some other, even
more desperate workforce will do the same work for a lower wage. Finally, small
and newly opened economies in the global free market are vulnerable to investment
fads and speculative pressures from foreign investors--factors that result in
instability and often overwhelm the putative benefits of greater openness. All of
these upheavals disproportionately harm the poorest.

 

[EricK]

a big reason I say that markets must produce poverty, is because that's what they have done. Not for everyone, but definitely for some people. Here an analysis on a global scale.


http://prospect.org/article/free-markets-and-poverty

For better than two decades, the orthodox recipe for global growth has been
embodied in the so-called Washington Consensus. This approach, advocated by the
United States and enforced by the World Bank and the International Monetary Fund
(IMF), holds that growth is maximized when barriers to the free flow of capital
and commerce are dismantled and when individual economies are exposed to the
discipline, consumer markets, and entrepreneurs of the world economic system.
Proponents of this view have contended that the free-market approach to
development will also alleviate poverty, both by raising overall growth rates and
by bringing modern capitalism to the world's poorest.

Yet the actual experience since 1980 contradicts almost every one of these
claims. Indeed, the free-trade/free-capital formula has led to slower growth and
more vulnerability for poor countries--and to greater income disparity among
individuals. In 1980 median income in the richest 10 percent of countries was 77
times greater than in the poorest 10 percent; by 1999 that gap had grown to 122
times. Progress in poverty reduction has been limited and geographically
isolated. The number of poor people rose from 1987 to 1998; in many countries,
the share of poor people increased (in 1998 close to half the population in many
parts of the world were considered poor). In 1980 the world's poorest 10 percent,
or 400 million people, lived on the equivalent of 72 cents a day or less. The
same number of people had 79 cents per day in 1990 and 78 cents in 1999. The
income of the world's poorest did not even keep up with inflation.

Why has the laissez-faire approach worsened both world growth and world income
distribution? First, the IMF and the World Bank often commend austerity as an
economic cure-all in order to reassure foreign investors of a sound fiscal and
business climate--but austerity, not surprisingly, leads to slow growth. Second,
slow growth itself can mean widening income inequality, since high growth and
tight labor markets are what increase the bargaining power of the poor.
(Economists estimate that poverty increases by 2 percent for every 1 percent of
decline in growth.) Third, the hands-off approach to global development
encourages foreign capital to seek regions and countries that offer the cheapest
production costs--so even low-income countries must worry that some other, even
more desperate workforce will do the same work for a lower wage. Finally, small
and newly opened economies in the global free market are vulnerable to investment
fads and speculative pressures from foreign investors--factors that result in
instability and often overwhelm the putative benefits of greater openness. All of
these upheavals disproportionately harm the poorest.

Poverty has reduced massively since 1981, at least according to this: http://en.wikipedia.org/wiki/Poverty#Absolute_poverty

 

[ksen]

We need to get professional help for the 1%. They may very well destroy us all.

I agree.

 

[Jolly_Penguin]

In the OP I see a claim of learned helplessness and self perpetuating poverty, and I see is inexplicably linked to race. Why does it start with "black people have this problem" without giving any data that such family issues (like single parenthood) is exclusive or even more prevalent amongst poor black people than poor white people. It may be, but to just assert it with no evidence is irrational.

 

[AthenaAwakened]

http://www.slate.com/articles/busin...equality_it_may_not_be_falling_after_all.html

Let’s stop to consider what Milanovic and Lakner are really saying. It is possible that even as India and China have pulled hundreds of millions of people out of poverty, the incomes of the global rich have risen enough that overall inequality hasn’t budged. If true, that’s astonishing.


In a way, the entire issue of whether inequality is falling the world over is a bit of a red herring. Most of the reasons that liberals worry about the income gap have to do with its effects inside individual countries: the way income inequality can tilt the political system in further favor of the rich; the way it might breed tense, unhappy societies; etc.* And while the rise of living standards in Asia may be a major moral point in favor of free trade, it’s not much of an argument against redistributing income in the U.S. or Europe. (Some, like Cowen, warn that higher taxes and a bigger safety net could lead to lower global growth, but recent evidence suggests just the opposite.)


At the same time, most can agree that the progress against poverty in China and India has been one of the great developments of the past 30 years. The real question, as Matt Yglesias wrote here in January, is whether there needs to be “a zero-sum trade-off between the interests of the American middle class and Asian peasants.” But the idea that global inequality is on the wane may just be a bogus factoid—an artifact of incomplete data, and nothing more.

 

[ksen]

In the OP I see a claim of learned helplessness and self perpetuating poverty, and I see is inexplicably linked to race. Why does it start with "black people have this problem" without giving any data that such family issues (like single parenthood) is exclusive or even more prevalent amongst poor black people than poor white people. It may be, but to just assert it with no evidence is irrational.

I didn't see Athena linking this to blackness.

And I know I don't link this to blackness. It's a thing that affects anyone in poverty.

 

[Loren Pechtel]

Yeah, I knew there were studies. That's why I said that we do see a difference.

I think there are a lot more factors in play than simplistic experiments based on Calvinistic moral parables. Isn't "short term thinking" what they do in the stock market? That has nothing to do with marshmallows but it does have a lot to do with expansion of the underclass. It is rich people's short term thinking that is much more responsible for the expansion of poverty in America. Always we must blame the victims...it is their damned short term thinking....suppose they are poor because they have low IQ's.

This sounds like you don't like the research but have no meaningful rebuttal.

And we aren't so much blaming the victims as pointing out the cause of the problem. Upbringing has a lot to do with this. Those who aren't taught to think long term generally won't do a very good job of it.

Until you understand the problem (and it's not "racism" no matter how much you beat that drum) there's little hope of a fix.