More on Poverty & Inequality

The article referenced by Lois,  “Poverty or Inequality: Does It Matter?”,  adds additional interesting background to this topic and several points that are worthy of further discussion.

If one is interested in solving a problem, the first task is to clearly define the problem and be certain that the specified definition is clear, concise and does not fold in additional problems.  While other worthy related problems might be brought to mind,  formulating a solution that has the highest probability of solving the original, clearly defined problem, requires straightforward lines of analysis where becoming sidetracked will likely sabotage achieving that specific goal.  Subsequent dealing with the worthy related problems can then be addressed, each also individually, and in turn.

Including the issue of inequality at the outset of attempting to address the problem of poverty is a good example of falling into the trap of trying to solve two problems simultaneously.  While both poverty and economic inequality may be considered problems well worth addressing, I would urge that each be addressed individually rather than as a package.  Many, including me, are tempted to begin with the assumption that economic inequality is an issue that must be resolved in order to solve the issue of poverty.  Upon further thought, I believe that the temptation to make this assumption should be resisted.  Rather than unconditionally accepting any of the politically charged dogma regarding this issue, I would urge using the technique that I have called “probabilistic rationalism” to identify a solution that could have the greatest probability of solving the specified problem.

In order to demonstrate how this might work, let’s specify poverty as the principal problem to be addressed and leave the issue of inequality for later.  To begin the search for a possible solution to the problem of poverty, one first needs to clearly define what is meant by the word poverty.  Starting with a dictionary definition, we learn that one definition indicates that poverty is the state of being extremely poor.  Now that definition really didn’t get us very far because now we have to define “extremely poor”.  Here is where we run into a major difficulty.  “Extremely poor” cannot be precisely defined.  It is a relative term that means different things to different people in different settings, i.e., poor compared to what standard?  For example, in the United States the 2014 poverty line for a family of four defined by the Health and Human Services Department of the U.S. government was an annual income of under $23,850.  On the other hand, the current World Bank international poverty line is suggested to be $1.25/person/day.  If we convert that to an annual income for a family of four, we come up with $1825.  In other words, the official U.S. definition of poverty is an income13 times greater than the official international definition of poverty.  We’ve often heard it said that those at the poverty line in the U.S. are richer than the majority of people in the rest of the world.  In fact, those at the U.S. poverty line are in the top 17.6% of the worlds most wealthy.  Additional facts may also help us with perspective in considering the subject problem.  In 2014, the United States, the world’s wealthiest country, possessed roughly 32% of the world’s total wealth.  Japan ranked second with approximately 9% and China third with about 8%.  France and the U.K. followed with 6% and 5% respectively.   The uneven distribution of wealth is further emphasized when we realize that the United States has only 4.3% of the world’s population.  

Considering the above, it should be understood that to be in poverty in the United States is vastly different and less severe than being in poverty in many other countries in the world.  While I don’t mean to minimize the problem of poverty in this country and certainly don’t suggest that it is a minor issue that can be ignored, I think we need to appreciate that, in spite of all of our faults, we must have done many things right in order for this country to have attained our lofty level of wealth.  In general, the U.S. population is better off financially than people anywhere else in the world.

So, what do we mean when we say we want to solve the poverty problem in the U.S.?  Do we mean we would like for everyone to be above the U.S. poverty line or at some multiple of that poverty line or do we mean something else?  In order to attempt to arrive at a solution, a specific goal has to be defined.  For example, one might suggest a goal of having everyone above the poverty line.  The goal would be achieved even if the poorest have an annual income of as little as $1 above the poverty line, i.e., every family of 4 in the U.S. should have an annual income of at least $23,854 or about $16.34/person/day, a necessary figure if we wish to consider individuals or other size family groups.  As we’ve previously seen, this income level is about 13 times the World Bank international poverty line.  Some may not be satisfied with this objective and may desire a greater leveling of wealth.  alternatively, a variety of other optional goals could also be considered.    

Having established a clearly defined specific goal, the next task would be to engage in brainstorming where as many potential paths as can be imagined would be listed.  For example, under the general heading of direct transfer of wealth would be a list of various tax situations where a tax on incomes of those above the poverty line would pass through government hands and into the pockets of the poor.  Such a tax could take a variety of forms and apply to various population segments,e.g., a one-time tax, an annual tax, a 5 year tax, tax on income or tax on total personal wealth, a tax on everyone above the poverty line or only on those above a specified income level.  Other approaches to solving the problem may focus on minimal government involvement, including sir-charges on some measure of wealth administered by a quasi-government organization similar to the FDIC, indirect methods such as policies to encourage job creation, policies to greatly improve the education of the poor, or policies to focus on various skills such as those needed for various trades.  Alternatively, there may be a list of various policies that would combine direct and indirect aid.  This kind of brainstorming is best done by a larger group but often reasonable success can be achieved on an individual basis. An important component of this step would be to define, to the extent possible, the extent of various causes of poverty, e.g., inadequate education, broken families or single parenthood, substance abuse, physical or mental disability, etc., etc.

The next step would be to carefully assess the likelihood of success of each listed plan.  This step would likely be very time intensive requiring extensive fact finding and research.  Once again this is best done in a group setting but can also be accomplished individually.  A potential pitfall at this stage is that personal bias can distort what should be a purely objective exercise.

Finally, that plan having the highest probability of success should usually be adopted.  However, if there are two or more plans with very close probabilities of success, further research, analysis, discussion and consideration may be desired.

The major question that arises in my mind at this point is why poverty has not yet been eliminated or at least reduced to a very low level in this, the world’s wealthiest nation?  I think that although everyone or nearly everyone would like to see poverty eliminated, we get hung up on the task by not adopting a systematic problem solving process/method such as outlined above.  Our national problem solving body ought to be the U.S. Congress but the reason less than 20% of the population gives them passing grades for their work is because they seem to be more interested in political dogfights than in solving the nation’s problems.

I’ve previously written about a number of the details that I feel derail effective government function.  In particular, when people box themselves into a narrow range of thinking by declaring  allegiance to a group such as a political party, most attempts at using a rational decision making process such as outlined above are stifled and the usual product is “gridlock”, i.e., no progress.  Unfortunately, many of us, as individuals, voluntarily  stifle our own thinking by crawling into a box, whether it be liberal, conservative, Democrat, Republican, particular religion or some other pack label.  That kind of self-imposed limitation on thinking seems to be a very popular aspect of human behavior that I find very troubling and feel has far reaching negative implications on the ability of humans to solve problems.  It may also be a major factor in leading to disputes at all levels of human organization.  Could it also be a key factor leading to warfare?

2/27/2015 UPDATE!

I recently came across an article (core197b.wikispaces.com) that designated four major causes of poverty in America: - Current Poor Economy, Drug Use, Lack of Education and Medical Expenses.  Two second tier causes specified were Gambling Addiction and Tornado Disasters.  I assume one should also include other natural disasters such as earthquakes and floods.

A second article (www.heritage.org) also pointed out some rather amazing statistics concerning the poor gathered from the Census Bureau and other government reports:

80% of poor households have air conditioning (in 1970 only 36% of the entire U.S. population enjoyed air conditioning.

92% of poor households have a microwave.

75% have a car or truck, 31% have two or more vehicles

two thirds have cable or satellite TV and on and on with more high tech devices.

More on the above plus insights gained from the book "Coming Apart" by Charles Murray