According to the Official Poverty Measure, child poverty fell only 4% from 2020 to 2021, not the SPM's 46% everyone is (rightfully) communicating. If Desmond thinks TANF cuts poverty more than all of ARPA did, I'd like him to say so directly.
Though you are correct in that simply giving those in poverty enough money to raise them out of poverty is a no brainer solution, the more difficult issue of why people are in poverty- single parent households, incarceration, poor schools is the greater challenge, and without that just handing out the money, and I am not against it, wont fully solve the dilemna of cultural poverty.
Another thing about the OECD to note is that unions are stronger too and eg Denmark has no minimum wage but McDonalds employees make $20/hr b/c they are unionized.
Lastly, although there is a logic that suggests that just giving people basic income whether through child tax credit or the UBI concept is attractive in that it eliminates the cost of all the means based welfare bureaucracy, it ignores the fact that a significant percent of the impoverished population cannot handle money properly- often why they are in poverty to begin with - and so instead of for example providing housing to the homeless, you just give cash, a significant percent will just party hard for a while and remain homeless.
Somewhere between the welfare Cadillac or generational poverty stereotype on the right and the inability to see poverty as a result of irresponsible choices, is where people really live. Where a simple non bureaucratic benefit like EITC is very good for the working poor (also unions and minimum wage), I think the social welfare system is needed for people who are less functional whether behavioral issues, substance issues, criminality, and to insure against welfare abuse which is likely not as prominent as the right believes but greater than the left will admit.
What is the opposite of Gell-Mann amnesia? As someone who has read and listened to more of Matt Bruenig thought than most, I have to say, it was nice to be nodding along in agreement as you hit all the major points.
I have increased faith now in your takes on topics I know less about
I don't wanna say it's a general principle, but I often find something to like in otherwise-incoherent or overly abstract positions. The conservative ethos that poverty solved via "honest work for honest pay" is preferable to automated checks delivered by impersonal bureaucracy does seem to have some merits? Call this the Weak Version of Bootstraps Theory. There's something very real and authentic about cultivating a feeling of pride in one's achievements, a sense of agency linking together cause and effect, that sense of "earning" something and being productive. Even crappy jobs can do this - maybe the work is stupid, maybe one works too hard for their too-few dollars, but by God, that paycheck is earned (and then hopefully appropriately valued more, as any chores-allowance kid might recall). Obviously, this can be projected to extremes - punitive means testing/work requirements on the right, denial that incentives matter on the margin on the left - but the basic idea seems correct. Work binds and ideally uplifts, and a politics that forgets that loses connection with something very important: https://freddiedeboer.substack.com/p/the-left-is-a-labor-movement-the
There's a reason why worry about actually-enough-to-live-on UBI is a bipartisan affair...I think we all know in our hearts that for every new startup entrepreneur, breakout artist, or new participant in civic life, there'll be several more who are content to now live off Grubhub and Netflix. And that's not a value judgement - it's a way better outcome for those Sympathetic Cases than being out on the streets, or burning the candle at all three ends to make ends meet! But let's not kid ourselves that it doesn't affect the fabric of society. Even with covid slowly fading in prominence, the effects of a generalized pullback from public life continue to resonate, e.g. in increased disorder. An atomized world of high-floor-income individuals might not be __materially__ impoverished, but there's more to a good life than just physical living standards...and as Matt writes about often, all those bullshit downtown office jobs going remote hollows out lots of other economic sectors that rely on regular commuter traffic. Crocodile tears for the <s>Twitter engineer</s> okay he's probably fired - uh, Alphabet engineer having trouble adjusting to WFH; real tears for the Starbucks barista who now qualifies for SNAP via no longer getting her daily tips. Or becomes unemployed entirely, which no one disagrees is Really Bad for health both mental and physical...even if it's a little more cushioned now than in the past.
"The conservative ethos that poverty solved via "honest work for honest pay" is preferable to automated checks delivered by impersonal bureaucracy"
avalancheGenesis, I agree with a lot of what you say, and I'm team Honest Work too! The problem, as you know, is that absolutely nothing about capitalism guarantees that the number of honest jobs = the number of people who need jobs. If the job market in a given location provides enough work for 3000 people, but 4000 people are looking for work, what are the remaining 1000 supposed to do?
honest work > paycheck from impersonal bureaucracy > having to choose between starving, stealing, and prostituting oneself.
("sex work is work is a useful political litmus test" would be a great Mailbag question, hmm...)
There's probably a full SB post that could be written about how this worldview really matured during the GR years of ZIRP bullshit and weak job markets (possibly even as a generational thing, but those are always dicey takes)...when there are Many Such Cases of those remaining 1000s and everyone knows/is one, it definitely seems very preferable to have a handout instead of no hand at all! Plus the second-order coping behaviours, like everyone falling through the cracks into college instead of the schlerotic labourforce. And it seems fairly uncontroversial to say with the benefit of hindsight that what hands were given during that time, well..."you call this a hand? more like a foot!"
Of course, the macroeconomic situation is very different now, and it's all too easy to do a motte-and-Bailey's Irish Cream thing where "welfare for those who genuinely really aren't suitable for any form of dignified job" expands to "welfare for those who'd be inconvenienced by working, like students" to...etc. Yet I do think to the extent there is a moral hazard of some kind, the effect doesn't seem as robust as feared...Matt was likewise wrong about the eventual impact of pandemic-related UI on discouraging labour force participation, which seems to have been not much at all. We're not likely to get such "natural experiments" again easily, so I've certainly updated a little further towards Bill, Baby, Bill...the job market remains really hot too. Such a strange thing to see so many places in perpetual We're Hiring Mode. Feels like it's currently 4000 job openings chasing 3000 people, with the remaining 1000 vacancies getting increasingly desperate. (Remember when $15/hr sounded outrageously high for flipping burgers or whatever? That's less than table stakes now, at least around SF...)
Also, it should go without saying that restricting those 3000 jobs to 1500 even-more-rarefied jobs via credentialism, equity concerns, elimination of "contractor" status, etc. is a different perverse failure mode I'm also saddened by. Don't let Ford Prefect be the enemy of Mr. Goodwrench. Likewise, make-work is bad, actually - at that point it's more dignified to just cut a check and drop the facade.
A “poverty rate” number ought to be useful as a measure of how well we are doing at enabling economic opportunity. An able-bodied working age individual on public assistance is a “fail”.
It sure would be nice to have a comprehensive immigration package like that bipartisan 2013 bill Boehner spiked to undermine Obama, with $40+billion to fund improvements in border security.
The only way I can make sense of it is in a "not like that!" variant in which they specifically want public child care facilities out of fears that a child allowance/CTC would disproportionately nudge women into caretaker roles.
Yes! And this is a wide-ranging policy problem: overthinking everything. This is why "trust the experts" is a clarion call of academia. In econ, for most policy, you really do not need much more than an undergrad intermediate class in micro or macro. But merely saying this will probably get me bullied by some PhD student on this forum.
I'll like this, but I just want to say it's a little more complicated. "Trust the experts" is correct insofar as the facts, details, and nuances (usually). What is done incorrectly, in my opinion, is blindly trusting the experts on the final policy decisions, which are value judgements *based* on the facts.
If you think this article by Desmond is bad you should read his chapter in the 1619 book, which is tendentious and completely wrong on our economic history. He ignores all relevant scholarship and uses sources that have been shown to be incompetent at best, misguided and dishonest.
I'm kind of surprised at the number of people accusing Matt of strawmanning Republican/conservative positions on poverty. If anything, I think he's being generous in treating them as though they have any sort of actual policy/theory on the subject these days. (And I say that as someone who is still a registered Republican!)
How do you explain that the US spends a higher share of it's GDP on social welfare than Australia, Canada, the Netherlands, Switzerland, and Ireland? We are pretty low compared to a lot of rich countries, but can we stop for a minute and figure out what Switzerland and the Netherlands are doing that we aren't?
Focusing on the GDP side of the equation, the Netherlands can be considered petrostate, so they are not as comparable to the US as other countries (although the Dutch government doesn't own as much of Shell as say the Norwegian government owns of Equinor). Ireland's GDP is artificially inflated by foreign corporate headquarters (Ireland doesn't keep their money). Switzerland has weird laws regarding immigration/residency, currency, capital, and banking that if implemented in the US would probably cause mass riots. Canada and Australia are interesting comparisons, because they are both Anglophone, although they have incredibly low populations and population densities (even compared to the US) and the majority of their land area is basically uninhabitable. Canada's GDP definitely benefits from sharing a land border with the US. Australia can also be put in the petrostate category, because resource extraction makes up 15% of their GDP. All this to say, the countries you list have low social spending relative to GDP not because of their spending policies perse, but likely because of endogenous factors that contribute to relatively high GDPs.
Generally agree with David R and John from Fla. I also think American higher education is a unique strength of America. Do you see the world’s youth flocking to Chinese and Indian universities over Stanford and Harvard? I don’t
1. If poverty is a relative measure there will always be a bottom 10% of the income distribution. So measuring without benefits could be more compassionate if your hope is to lower the number of people who actually need help not just arbitrarily give them money and call the problem solved.
2. As we see with labor participation and inflation after the generous COVID assistance, “just giving people money” really does have risks like high inflation that can go up faster than wages and end up counterproductive. And *if* we think that high labor participation is good then we should be mindful that generous assistance does work against it at the margins.
3. I never see people on the left to talk about this, but there are a lot of studies that show that the people who are in the bottom income quintile in any particular year are generally not still there when you measure again later. It’s actually a pretty important question to ask how many people are *stuck* in poverty, versus how many people only temporarily pass through. Why do they get stuck, and is there anything we can do about that?
4. We do not talk enough about trying to solve the poverty on the cost side if we were very serious about driving down the cost of housing, that would greatly alleviate poverty, no matter how you measure it. We’ve got this idea that basic education needs to be free but not any other basic human needs? Lowering the costs of health, and education, and housing, or possibly more important for quality of life than raising incomes.
When I got to this line- "I bought into the idea, popular among progressives, that the election of President Ronald Reagan (as well as that of Prime Minister Margaret Thatcher in the United Kingdom) marked the ascendancy of market fundamentalism, or “neoliberalism,” a time when governments cut aid to the poor, lowered taxes and slashed regulations." - I had to wonder if I even knew what neoliberalism was... now I wonder if maybe the "Pulitzer Prize-winning sociologist" even knows.
According to the Official Poverty Measure, child poverty fell only 4% from 2020 to 2021, not the SPM's 46% everyone is (rightfully) communicating. If Desmond thinks TANF cuts poverty more than all of ARPA did, I'd like him to say so directly.
Excellent article Matthew.
A few thoughts.
Though you are correct in that simply giving those in poverty enough money to raise them out of poverty is a no brainer solution, the more difficult issue of why people are in poverty- single parent households, incarceration, poor schools is the greater challenge, and without that just handing out the money, and I am not against it, wont fully solve the dilemna of cultural poverty.
Another thing about the OECD to note is that unions are stronger too and eg Denmark has no minimum wage but McDonalds employees make $20/hr b/c they are unionized.
Lastly, although there is a logic that suggests that just giving people basic income whether through child tax credit or the UBI concept is attractive in that it eliminates the cost of all the means based welfare bureaucracy, it ignores the fact that a significant percent of the impoverished population cannot handle money properly- often why they are in poverty to begin with - and so instead of for example providing housing to the homeless, you just give cash, a significant percent will just party hard for a while and remain homeless.
Somewhere between the welfare Cadillac or generational poverty stereotype on the right and the inability to see poverty as a result of irresponsible choices, is where people really live. Where a simple non bureaucratic benefit like EITC is very good for the working poor (also unions and minimum wage), I think the social welfare system is needed for people who are less functional whether behavioral issues, substance issues, criminality, and to insure against welfare abuse which is likely not as prominent as the right believes but greater than the left will admit.
What is the opposite of Gell-Mann amnesia? As someone who has read and listened to more of Matt Bruenig thought than most, I have to say, it was nice to be nodding along in agreement as you hit all the major points.
I have increased faith now in your takes on topics I know less about
We can't simply give money to people because some small number of the recipients may not deserve it!
I don't wanna say it's a general principle, but I often find something to like in otherwise-incoherent or overly abstract positions. The conservative ethos that poverty solved via "honest work for honest pay" is preferable to automated checks delivered by impersonal bureaucracy does seem to have some merits? Call this the Weak Version of Bootstraps Theory. There's something very real and authentic about cultivating a feeling of pride in one's achievements, a sense of agency linking together cause and effect, that sense of "earning" something and being productive. Even crappy jobs can do this - maybe the work is stupid, maybe one works too hard for their too-few dollars, but by God, that paycheck is earned (and then hopefully appropriately valued more, as any chores-allowance kid might recall). Obviously, this can be projected to extremes - punitive means testing/work requirements on the right, denial that incentives matter on the margin on the left - but the basic idea seems correct. Work binds and ideally uplifts, and a politics that forgets that loses connection with something very important: https://freddiedeboer.substack.com/p/the-left-is-a-labor-movement-the
There's a reason why worry about actually-enough-to-live-on UBI is a bipartisan affair...I think we all know in our hearts that for every new startup entrepreneur, breakout artist, or new participant in civic life, there'll be several more who are content to now live off Grubhub and Netflix. And that's not a value judgement - it's a way better outcome for those Sympathetic Cases than being out on the streets, or burning the candle at all three ends to make ends meet! But let's not kid ourselves that it doesn't affect the fabric of society. Even with covid slowly fading in prominence, the effects of a generalized pullback from public life continue to resonate, e.g. in increased disorder. An atomized world of high-floor-income individuals might not be __materially__ impoverished, but there's more to a good life than just physical living standards...and as Matt writes about often, all those bullshit downtown office jobs going remote hollows out lots of other economic sectors that rely on regular commuter traffic. Crocodile tears for the <s>Twitter engineer</s> okay he's probably fired - uh, Alphabet engineer having trouble adjusting to WFH; real tears for the Starbucks barista who now qualifies for SNAP via no longer getting her daily tips. Or becomes unemployed entirely, which no one disagrees is Really Bad for health both mental and physical...even if it's a little more cushioned now than in the past.
"The conservative ethos that poverty solved via "honest work for honest pay" is preferable to automated checks delivered by impersonal bureaucracy"
avalancheGenesis, I agree with a lot of what you say, and I'm team Honest Work too! The problem, as you know, is that absolutely nothing about capitalism guarantees that the number of honest jobs = the number of people who need jobs. If the job market in a given location provides enough work for 3000 people, but 4000 people are looking for work, what are the remaining 1000 supposed to do?
honest work > paycheck from impersonal bureaucracy > having to choose between starving, stealing, and prostituting oneself.
("sex work is work is a useful political litmus test" would be a great Mailbag question, hmm...)
There's probably a full SB post that could be written about how this worldview really matured during the GR years of ZIRP bullshit and weak job markets (possibly even as a generational thing, but those are always dicey takes)...when there are Many Such Cases of those remaining 1000s and everyone knows/is one, it definitely seems very preferable to have a handout instead of no hand at all! Plus the second-order coping behaviours, like everyone falling through the cracks into college instead of the schlerotic labourforce. And it seems fairly uncontroversial to say with the benefit of hindsight that what hands were given during that time, well..."you call this a hand? more like a foot!"
Of course, the macroeconomic situation is very different now, and it's all too easy to do a motte-and-Bailey's Irish Cream thing where "welfare for those who genuinely really aren't suitable for any form of dignified job" expands to "welfare for those who'd be inconvenienced by working, like students" to...etc. Yet I do think to the extent there is a moral hazard of some kind, the effect doesn't seem as robust as feared...Matt was likewise wrong about the eventual impact of pandemic-related UI on discouraging labour force participation, which seems to have been not much at all. We're not likely to get such "natural experiments" again easily, so I've certainly updated a little further towards Bill, Baby, Bill...the job market remains really hot too. Such a strange thing to see so many places in perpetual We're Hiring Mode. Feels like it's currently 4000 job openings chasing 3000 people, with the remaining 1000 vacancies getting increasingly desperate. (Remember when $15/hr sounded outrageously high for flipping burgers or whatever? That's less than table stakes now, at least around SF...)
Also, it should go without saying that restricting those 3000 jobs to 1500 even-more-rarefied jobs via credentialism, equity concerns, elimination of "contractor" status, etc. is a different perverse failure mode I'm also saddened by. Don't let Ford Prefect be the enemy of Mr. Goodwrench. Likewise, make-work is bad, actually - at that point it's more dignified to just cut a check and drop the facade.
A “poverty rate” number ought to be useful as a measure of how well we are doing at enabling economic opportunity. An able-bodied working age individual on public assistance is a “fail”.
Would you consider the 10 million Americans with an IQ below 70 able bodied?
Could US poverty and income inequality be related to an open border with the Third World?
It sure would be nice to have a comprehensive immigration package like that bipartisan 2013 bill Boehner spiked to undermine Obama, with $40+billion to fund improvements in border security.
But we can’t have nice things.
The border is secure!
"A time series of the SPM shows a Great Society drop, then a Clinton drop, and then an Obama drop"
I also see a Nixon drop, a Reagan drop, and definitely a Trump drop. A GDP growth overlay might be useful here to measure any relationship.
It is still astounding to me that progressives preferred no CTC to one with a work requirement
The only way I can make sense of it is in a "not like that!" variant in which they specifically want public child care facilities out of fears that a child allowance/CTC would disproportionately nudge women into caretaker roles.
Yes! And this is a wide-ranging policy problem: overthinking everything. This is why "trust the experts" is a clarion call of academia. In econ, for most policy, you really do not need much more than an undergrad intermediate class in micro or macro. But merely saying this will probably get me bullied by some PhD student on this forum.
I'll like this, but I just want to say it's a little more complicated. "Trust the experts" is correct insofar as the facts, details, and nuances (usually). What is done incorrectly, in my opinion, is blindly trusting the experts on the final policy decisions, which are value judgements *based* on the facts.
I don't disagree.
If you think this article by Desmond is bad you should read his chapter in the 1619 book, which is tendentious and completely wrong on our economic history. He ignores all relevant scholarship and uses sources that have been shown to be incompetent at best, misguided and dishonest.
I'm kind of surprised at the number of people accusing Matt of strawmanning Republican/conservative positions on poverty. If anything, I think he's being generous in treating them as though they have any sort of actual policy/theory on the subject these days. (And I say that as someone who is still a registered Republican!)
How do you explain that the US spends a higher share of it's GDP on social welfare than Australia, Canada, the Netherlands, Switzerland, and Ireland? We are pretty low compared to a lot of rich countries, but can we stop for a minute and figure out what Switzerland and the Netherlands are doing that we aren't?
Focusing on the GDP side of the equation, the Netherlands can be considered petrostate, so they are not as comparable to the US as other countries (although the Dutch government doesn't own as much of Shell as say the Norwegian government owns of Equinor). Ireland's GDP is artificially inflated by foreign corporate headquarters (Ireland doesn't keep their money). Switzerland has weird laws regarding immigration/residency, currency, capital, and banking that if implemented in the US would probably cause mass riots. Canada and Australia are interesting comparisons, because they are both Anglophone, although they have incredibly low populations and population densities (even compared to the US) and the majority of their land area is basically uninhabitable. Canada's GDP definitely benefits from sharing a land border with the US. Australia can also be put in the petrostate category, because resource extraction makes up 15% of their GDP. All this to say, the countries you list have low social spending relative to GDP not because of their spending policies perse, but likely because of endogenous factors that contribute to relatively high GDPs.
Wow, thanks for the analysis! That's very interesting.
Generally agree with David R and John from Fla. I also think American higher education is a unique strength of America. Do you see the world’s youth flocking to Chinese and Indian universities over Stanford and Harvard? I don’t
Contrarian points on poverty:
1. If poverty is a relative measure there will always be a bottom 10% of the income distribution. So measuring without benefits could be more compassionate if your hope is to lower the number of people who actually need help not just arbitrarily give them money and call the problem solved.
2. As we see with labor participation and inflation after the generous COVID assistance, “just giving people money” really does have risks like high inflation that can go up faster than wages and end up counterproductive. And *if* we think that high labor participation is good then we should be mindful that generous assistance does work against it at the margins.
3. I never see people on the left to talk about this, but there are a lot of studies that show that the people who are in the bottom income quintile in any particular year are generally not still there when you measure again later. It’s actually a pretty important question to ask how many people are *stuck* in poverty, versus how many people only temporarily pass through. Why do they get stuck, and is there anything we can do about that?
4. We do not talk enough about trying to solve the poverty on the cost side if we were very serious about driving down the cost of housing, that would greatly alleviate poverty, no matter how you measure it. We’ve got this idea that basic education needs to be free but not any other basic human needs? Lowering the costs of health, and education, and housing, or possibly more important for quality of life than raising incomes.
When I got to this line- "I bought into the idea, popular among progressives, that the election of President Ronald Reagan (as well as that of Prime Minister Margaret Thatcher in the United Kingdom) marked the ascendancy of market fundamentalism, or “neoliberalism,” a time when governments cut aid to the poor, lowered taxes and slashed regulations." - I had to wonder if I even knew what neoliberalism was... now I wonder if maybe the "Pulitzer Prize-winning sociologist" even knows.