No, poverty is not a mysterious, unknowable, negative-spiral loop

I don’t have much to add on the “consensus plan” on poverty and mobility produced by the Brookings and American Enterprise institutes, referred to in their launch event as being on “different ends of the ideological spectrum” (can you imagine?). In addition to the report, you might consider the comments by Jeff Spross, Brad DeLong, or the three-part series by Matt Bruenig.

My comment is about the increasingly (to me) frustrating description of poverty as something beyond simple comprehension and unreachable by mortal policy. It’s just not. The whole child poverty problem, for example, amounts to $62 billion dollars per year. There are certainly important details to be worked out in how to eliminate it, but the basic idea is pretty clear — you give poor people money. We have plenty of it.

This was obvious yet amazingly not remarked upon in the first 40 minutes of the launch event (which is all I watched). In the opening presentation, by Ron Haskins — for whom I have a well-documented distaste — started with this simple chart of official poverty rates:


He started with the blue line, poverty for elderly people, and said:

The blue line is probably the nation’s greatest success against poverty. It’s the elderly. And it basically has declined pretty much all the time. It has no relationship to the economy, and there is good research that shows that its cause at least 90% by Social Security. So, government did it, and so Social Security is the reason we’re able to be successful to reduce poverty among the elderly.

And then everyone proceeded to ignore the obvious implication of that: when you give people money, they aren’t poor anymore. The most unintentionally hilarious illustration of this was in the keynote (why?) address from David Brooks (who has definitely been working on relaxing lately, especially when it comes to preparing keynote puff-pieces). He said this, according to my unofficial transcript:

Poverty is a cloud problem and not a clock problem. This is a Karl Popper distinction. He said some problems are clock problems – you can take them apart into individual pieces and fix them. Some problems are cloud problems. You can’t take a cloud apart. It’s a dynamic system that is always interspersed. And Popper said we have a tendency to try to take cloud problems and turn them into clock problems, because it’s just easier for us to think about. But poverty is a cloud problem. … A problem like poverty is too complicated to be contained by any one political philosophy. … So we have to be humble, because it’s so gloomy and so complicated and so cloud-like.

The good news is that for all the complexity of poverty, and all the way it’s a cloud, it offers a political opportunity, especially in a polarized era, because it’s not an either/or issue. … Poverty is an and/and issue, because it takes a zillion things to address it, and some of those things are going to come from the left, and some are going to come from the right. … And if poverty is this mysterious, unknowable, negative spiral-loop that some people find themselves in, then surely the solution is to throw everything we think works at the problem simultaneously, and try in ways we will never understand, to have a positive virtuous cycle. And so there’s not a lot of tradeoffs, there’s just a lot of throwing stuff in. And social science, which is so prevalent in this report, is so valuable in proving what works, but ultimately it has to bow down to human realities – to psychology, to emotion, to reality, and to just the way an emergent system works.

Poverty is only a “mysterious, unknowable, negative spiral-loop” if you specifically ignore the lack of money that is its proximate cause. Sure, spend your whole life wondering about the mysteries of human variation — but could we agree to do that after taking care of people’s basic needs?

I wonder if poverty among the elderly once seemed like a weird, amorphous, confusing problem. I doubt it. But it probably would if we had assumed that the only way to solve elderly poverty was to get children to give their parents more money. Then we would have to worry about the market position of their children, the timing of their births, the complexity of their motivations and relationships, the vagaries of the market, and the folly of youth. Instead, we gave old people money. And now elderly poverty “has declined pretty much all the time” and “it has no relationship to the economy.”

Imagine that.

19 thoughts on “No, poverty is not a mysterious, unknowable, negative-spiral loop

  1. We don’t want to because rich people gain power by having poor people at their mercy to work for them, pick up after them, be obsequious to them, etc. Rich people don’t want poor people’s kids competing for college with their kids, or competing for jobs with their kids, or buying up nice houses in nice neighborhoods, or going on vacation with them. That’s why.

    Liked by 1 person

    1. Homelessness is a very different problem — one related to mental health, not so much directly to poverty. The solution there involves restoring a working mental health policy, including sufficient institutions for treating mental health problems.


  2. There is no real honesty in these adhoc analyses. The population of 65+ is limited, and even there, the social security budget issues is threatening to swallow the federal budget. A similar outcome is feared for families in poverty, in particular single parent families, because the numbr of single parent families has steadily increased. Saying that once can solve the child poverty issue with 62 billion dollars is Matt Breunigian childishness. What happens when the population of families with single parnts increases steadily?

    A better solution would be to strengthen the present programs like SSI, TANF and SNAP, rather than adding more limiting clauses. Additional programs that can work are rewards for those who succesfully exit the SSI/TANF/SNAP programs by completing education/training and accept jobs, in form of a lumpsump downpayment. Reinventing the wheel is easy.


    1. Social Security is doing just fine, thanks. (That’s OASI and DI.)
      People talk about social security debt as if the program itself was short of money; the opposite is true. Money has been borrowed from the fund and used for other purposes. The SS debt is the amount of money the federal government owes to the SS program.
      It is possible that – decades from now – the amount of money coming in from payroll taxes might be less than the amount going out in benefits. It is even possible that – decades from now – the funds could run completely out of money. Would that end social security? Nope. At worst, benefits would be cut to match the payroll tax income; the tax itself could easily be raised or funds from other sources could be applied.
      Right now the Social Security tax is only taken from the first ~$100k of income. If we eliminate that restriction and tax all income for SS then the fund will take in more money than it pays out and we can afford to increase benefits.

      In fact, SS stands as a model program for how we can fight poverty – give people cash. Straight up, minimal restrictions, money in the bank. It works. It’s the cheapest, least intrusive, lowest-management option in the playbook. If fairness is a concern then call it a basic income – give every citizen enough money to survive whether they need it or not and we can save on the expense of administering our bewildering array of programs with their nonsensical requirements. This could be done without increasing the amount we spend on assistance today, but doing a little bit more than that would generate further positive effects.


      1. That is a good example of using an existing program; the question is, since SS is dedicate to people > 62, how to pay for families with chilren in poverty. The bigger issue is, SS calculations make use of a predicted rediree lifetime of payments, whereas families with children in poverty do not have a predicted lifetime under payments. Fuurther issues include, what happns after the children leave the household at 18; then we may have to support two sets of families.

        These are serious issues being considered by government (monthly payments for WIC under povery) and in some cases, thinktanks; the academics make fun of these issues with adhoc analyses like 62 billion dollars to solve all chil poverty, and “I am ready to wrirte my check, are you?”.


      2. Source for your comments:


        As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.1 At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits. Thus, the Congress will need to make changes to the scheduled benefits and revenue sources for the program in the future. The Social Security Board of Trustees project that changes equivalent to an immediate reduction in benefits of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some combination of these changes, would be sufficient to allow full payment of the scheduled benefits for the next 75 years.


        1. It is Medicare that is hopeless. Former Republican presidential candidate Gov. Mike Huckabee, of all people, has advanced the only proposal that can possibly work: beat Alzheimer’s, cancer, and heart disease medically within Medicare’s current budget planning horizon. The alternative is that said unholy trio will beat us fiscally.

          To save the medical part of Medicaid, we will have to beat obesity and the diseases that come with it, most especially type-II diabetes.


    2. Vijay,

      Yes, the central problem with Dr. Cohen’s analysis is that raising Social Security benefits does not increase the number of people turning 62, but government subsidies to men to father children they cannot/will not support absolutely does increase the number of such children. The way an economist would voice this difference between subventions to poor families with children and our poor elderly is, “Incentives Matter”.

      The way an evolutionary psychologist would voice the source of the “mean-spiritedness” that Dr. Cohen describes is that tax-paying fathers will never be keen on “cuckoldry by taxation”.

      Returning to economics, “compassion” is an economic “superior good”–the percent of GDP/capita the people who create that GDP are willing to devote to charity goes up faster than GDP/capita grows. (Contrast is with economic “inferior goods” such as potatoes where the percent of GDP/capita devoted to human consumption of them falls as GDP/capita rises (true even if the waistline of your typical American seems to belie this statement).)

      My assertion is that the timing of LBJ’s War On Poverty was not random. The fall in America’s dependency ratio caused by us Baby Boomers leaving home (we actually did that ‘back when!) and entering the workforce allowed for the addition to society of a new category of dependents, the members of a permanent, multi-generational underclass.

      Alas, the Baby Boom was followed by a Baby Bust, and now that we Boomers are retiring, America’s taxpayers are facing a conundrum that I prophesied to some Heritage Foundation wonk in 1992 or so: They can support 1) themselves, 2) their own dependent children, 3) their retired parents and grandparents, and 4) their nation’s ever-growing underclass–PICK ANY THREE.


  3. Yes. It kills me whenever I speak about poverty cross-nationally, and audiences in the U.S. are SHOCKED to realize what outliers the U.S. is among wealthy countries. So many of the things that people in this country worry about in terms of “competitiveness” would be solved by a welfare state that recognizes that having children is a public good, even though having children is costly, and that this problem can be solved with better services (childcare) and subsidies (EITC).


  4. Solving poverty is fairly simple if the government had the will and the issue as a priority. The issue is a lack of money (capital). Give them them capital and teach fundamental skills like budgeting, saving and access to banking like everybody else


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