Posts Tagged ‘poor’

Issa

From Jessica Roy [ht: sm]:

Worth over $448 million, Republican congressman Darrell Issa is by far the richest congressman in America, so he has a lot to be thankful for. Know who else has a lot to be thankful for, at least according to Congressman Issa? America’s poor people. After all, it’s not like they’re living in one of those *sniffs* third-world countries.

“If you go to India or you go to any number of other Third World countries, you have two problems: You have greater inequality of income and wealth. You also have less opportunity for people to rise from the have-not to the have,” Issa said, according to CNN Money. America has actually made “our poor somewhat the envy of the world,” he added.

Personally, I’m more envious of the guy with the $448 million than I am of the 48 million Americans living below the poverty line, but that’s just me.

place

The neighborhood you grow up in matters. A great deal. Especially in a highly unequal society like the United States.

Just consider the chart above [ht: ja]. It shows that poor kids (at or below the 25th percentile) who grow up in Baltimore City county—where Freddie Gray was killed—will make, on average, nearly $3,500 less than the national average.

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The same is true across the country, including Cook County, Illinois. There (as shown in the chart on the left), a child in a poor family would make $3480—or 13 percent—less at age 26 compared to poor families nationwide (and they’d be much better off if they were raised in DuPage county). By the same token (according to the chart on the right), if a child in the top 1 percent were to grow up in that same county, they would make $1290 more at age 26 compared with children in families in the top 1 percent elsewhere in the country (but they’d do even better in Kankakee county).

That’s what we’ve learned from the new study by Raj Chetty and Nathaniel Hendren. Neighborhood matters. A great deal. Especially in a highly unequal society like the United States.

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But, in all honesty, we’ve known that neighborhood matters for a long time. Since at least 1901-02, when Charles J. Bushnell published his pioneering study of the Stock Yards neighborhood in the American Journal of Sociology (as if to confirm Justin Wolfers’s observation that “sociologists have typically been quicker than economists to embrace the idea that neighborhoods are important”). Which, remember, was the same neighborhood (referred to as Back of the Yards) Upton Sinclair wrote about in The Jungle.

Bushnell’s analysis was particularly compelling because he compared two neighborhoods that butted up against one another on the south side of Chicago: Back of the Yards and Hyde Park (where the University of Chicago is located). What he showed, for example, is that in 1897, 70 per cent of the families in economic distress were found in 27 per cent of the territory, while in 1900 92.5 per cent of the distress was found in 27 per cent of the territory—and that the territory referred to was located wholly within the Stock Yard district. The difference between the two neighborhoods could not have been more stark.

But, Bushnell also observed,

it is significant to note the fact, indicative of the vaguely apprehended and poorly organized conditions of life in our large cities, that the very community which is thus helping to support the agency which is trying to rescue the people of the Stock Yard district from the effects of their bad sanitary and economic conditions, is at the same time, perhaps without recognizing the fault, sending its garbage over into the Stock Yard district to make its sanitary and economic conditions worse.

It is not just that conditions and outcomes were different in the two neighborhoods; the poor conditions in the Stock Yard district were caused, at least in part, by the fact that the residents of Hyde Park were using the Stock Yard district as their dumping ground.

And that’s the lesson we learned then but seem to have forgotten now: not only that neighborhood matters, but also that—”perhaps without recognizing the fault”—we continue to create and treat our poorest neighborhoods as both a source of enormous wealth and a dumping ground for the detritus of the tiny minority who manage to live elsewhere.

In other words, the solution to the slim prospects of children in poor neighborhoods is not to somehow encourage their families to move into better neighborhoods. What we have to do, as a society, is eliminate the very fact that neighborhood matters—in Baltimore, Chicago, and elsewhere—by transforming the economy that creates such unequal neighborhoods in the first place.

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Back in 1939, John Steibeck wrote (in chapter 14 of The Grapes of Wrath):

One man, one family driven from the land; this rusty car creaking along the highway to the west. I lost my land, a single tractor took my land. I am alone and I am bewildered. And in the night one family camps in a ditch and another family pulls in and the tents come out. The two men squat on their hams and the women and children listen. Here is the node, you who hate change and fear revolution. Keep these two squatting men apart; make them hate, fear, suspect each other. Here is the anlage of the thing you fear. This is the zygote. For here “I lost my land” is changed; a cell is split and from its splitting grows the thing you hate—”We lost our land.” The danger is here, for two men are not as lonely and perplexed as one. And from this first “we” there grows a still more dangerous thing: “I have a little food” plus “I have none.” If from this problem the sum is “We have a little food,” the thing is on its way, the movement has direction. Only a little multiplication now, and this land, this tractor are ours. The two men squatting in a ditch, the little fire, the side-meat stewing in a single pot, the silent, stone-eyed women; behind, the children listening with their souls to words their minds do not understand. The night draws down. The baby has a cold. Here, take this blanket. It’s wool. It was my mother’s blanket—take it for the baby. This is the thing to bomb. This is the beginning—from “I” to “we.”

If you who own the things people must have could understand this, you might preserve yourself. If you could separate causes from results, if you could know that Paine, Marx, Jefferson, Lenin, were results, not causes, you might survive. But that you cannot know. For the quality of owning freezes you forever into “I,” and cuts you off forever from the “we.”

Today, we have the spectacle of a major U.S. political party that puts forward a series of budgetary proposals that couldn’t be more obvious in attempting to freeze the “I” and cut themselves (and, if the proposals pass, the rest of us) off from the “we.”

As Teresa Tritch explains,

This week, House and Senate Republicans will be working on a final budget plan. They are operating from templates that call for cuts of about 40 percent on average by 2025 in programs for low and moderate income households — things like food assistance, college aid and tax credits for the working poor.

The damage would be severe. For starters, sixteen million people would be pushed into poverty, or deeper into poverty, after 2017.

At the same time, the Republican plans leave untouched nearly $1 trillion worth of annual tax breaks that overwhelmingly benefit the top 20 percent of households.

If that’s not flabbergasting enough, there’s this:

Separate from the budget plans, nearly all House Republicans and seven Democrats passed a bill last week to repeal the federal estate tax on inherited wealth. Repeal would benefit the 5,500 wealthiest families in America each year and would do nothing for everyone else, because the estate tax applies only to those at the very top of the wealth ladder. For estates valued at $50 million and up, for example, repeal would save the heirs about $20 million per estate, on average, in 2016.

Update

For more on the estate tax, see this piece by Edward Rodrigue and Isabel V. Sawhill, in which they take up and challenge the usual claims for repeal. Their conclusion (against the “I” and in favor of the “we”):

The estate tax is one of the most progressive aspects of our tax system. In a time of increasing inequality, it provides a way to counteract the formation of a “permanent ownership class.” If anything, we should consider raising the rate and lowering the exemption to pay down debt and invest in opportunities for the unlucky children at the bottom of the wealth ladder.

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In a now-famous study (and video-gone-viral presentation by Colin Gordon), Dan Ariely and Michael I. Norton showed both that Americans underestimate the current level of wealth inequality in the United States and that they prefer a much more equal distribution than exists right now.

In a more recent study, Shai Davidai and Thomas Gilovich [pdf] used a similar approach to assess perceptions of economic mobility within the United States. Their work is important because, as they explain, “a core tenet of the American ethos is that there is considerable economic mobility.” In other words, even as various forms of inequality have grown over time, Americans can still argue the situation is not so bad if people can move up the ladder, making the transition “from rags to riches.”*

However, what Davidai and Gilovich found is that (1) people believe there is more upward mobility than downward mobility, (2) people overestimate the amount of upward mobility and underestimate the amount of downward mobility, (3) poorer individuals believe there is more mobility than richer individuals, and (4) political affiliation influences perceptions of economic mobility, with conservatives believing that the economic system is more dynamic—with more people moving both up and down the income distribution—than liberals do.

Their findings are important because the belief that upward mobility is more prevalent that downward mobility serves to justify the existing economic system. It reinforces the idea that capitalism is fair, legitimate, and just—that is, one can “make it” with appropriate effort. If they can’t, then existing inequalities look even harsher and more unfair.

If, however, the actual story is rags to rags and riches to rags—that is, it’s highly unlikely to move from the bottom to the top, and also unlikely to be able to stay at the top—it becomes much more difficult to justify the growing disparities between the top and the bottom. To put it differently, if the rungs of the ladder have grown further and further apart and people understand their misperceptions of actual rates of upward and downward mobility, they’re going to be less prone to accept the empty promises of increased opportunity offered by academics and politicians. What that means is they may become more open to the possibility of imagining and creating alternative economic institutions, in which the ladder of inequality is rendered less important.

 

*Although, as I often explain to students, even if workers can become capitalists, it is still the case that, qua capitalists, they find themselves in the position of exploiting others who occupy the position of workers.