In Sunday’s USA Today there was an article on what is seen as growing poverty in America:
The Associated Press surveyed more than a dozen economists, think tanks and academics, both nonpartisan and those with known liberal or conservative leanings, and found a broad consensus: The official poverty rate will rise from 15.1 percent in 2010, climbing as high as 15.7 percent. Several predicted a more modest gain, but even a 0.1 percentage point increase would put poverty at the highest level since 1965.
It is an interesting observation. While one could quibble about comparisons to the poor in the U.S. versus other countries, the fact remains that the data tell us that people are slipping backwards. I don’t believe it’s fair to criticize the poor for their predicament. Face it, some portion of society is going to be relatively down and out compared to the rest of us. But today’s newly poor are victims of bad economic policies of the Fed and the government.
In a typical story of the new poor, the article says:
“I grew up going to Hawaii every summer. Now I’m here, applying for assistance because it’s hard to make ends meet. It’s very hard to adjust,” said Laura Fritz, 27, of Wheat Ridge, Colo., describing her slide from rich to poor as she filled out aid forms at a county center. Since 2000, large swaths of Jefferson County just outside Denver have seen poverty nearly double.
Fritz says she grew up wealthy in the Denver suburb of Highlands Ranch, but fortunes turned after her parents lost a significant amount of money in the housing bust. Stuck in a half-million dollar house, her parents began living off food stamps and Fritz’s college money evaporated. She tried joining the Army but was injured during basic training.
Now she’s living on disability, with an infant daughter and a boyfriend, Garrett Goudeseune, 25, who can’t find work as a landscaper. They are struggling to pay their $650 rent on his unemployment checks and don’t know how they would get by without the extra help as they hope for the job market to improve.
It’s not funny.
Perhaps the data is skewed coming from mostly liberal institutions who have a stake in the programs out there that have failed to alleviate poverty. Let’s not get into a debate over statistical analysis. What we can say is that, assuming the data is correct and we are comparing apples to apples, poverty levels are higher than they have been for many, many years.
I will let you read the entire article, but I think we can take some things away from it.
1. The Great Society anti-poverty programs have failed to alleviate poverty.
2. There is still a vast government welfare system that helps people on the bottom. These programs include disability payments, unemployment welfare, food stamps, Medicaid, and myriad of other federal, state, and local programs. These programs have expanded substantially under the Obama Administration, but while they may have kept people off the streets, so to speak, they have not alleviated poverty or have gotten people back to work.
3. The last two business cycles have been devastating to our economy. The Dotcom boom and bust, and the Great Recession of 2008, from which we haven’t fully recovered, have taken America on a financial roller coaster ride.
4. These business cycles have increased unemployment and as a result have increased poverty.
5. Like our parents or grandparents who experienced the Great Depression, these two business cycles, especially the current one, are changing social attitudes about how secure their financial lives are. I think growing insecurity exists not only among the endemic poor, but in the middle-class who have seen their assets shrink away. The prize of easy wealth was held out in front of them only to be dashed as the bubbles burst. I am not saying they are all discouraged, but neither was everyone in the Great Depression. Like our grandparents who used to save string, insecurity is becoming more widespread.
6. These business cycles have been caused by reckless monetary policies of the Fed. As well, the federal government has done much to delay a recovery and perpetuate the misery of millions of people. The Fed has now proven that there is little they can do but make mistakes.
We can’t alleviate all poverty, ever. But we can create an economy that is stable and growing and which will provides the jobs necessary to create wealth. All we need is a monetary system that the Fed can’t manipulate (the gold standard). Add to that the elimination of regulations that inhibit entrepreneurs and business growth and we’ll get off the roller coaster.