Poverty in America

Poverty is an often misunderstood phenomenon in America. The liberal perspective can be summed up with John Edwards’s famous “Two Americas” spiel:

We can also do something about 35 million Americans who live in poverty every day… I mean, the very idea that in a country of our wealth and our prosperity, we have children going to bed hungry? We have children who don’t have the clothes to keep them warm? We have millions of Americans who work full-time every day to support their families, working for minimum wage, and still live in poverty.

So, there’s the implication that 12% of Americans are naked and hungry (not to mention lacking expensive haircuts). That would speak to a massive failure in free market capitalism to provide basic necessities, right?

Before we begin, I’ll say that poverty is an important issue, and that people will always struggle with bad luck. However, people like Edwards always overemphasize the problem, underemphasize the ability of the market to improve things, and overstate the ability of government to solve it. Let’s look at the facts.

Poverty is a Broad Definition

If you define poverty as something like “the bottom 20%,” then it is impossible to eradicate by definition. If you define poverty as “hungry and living on the street,” then the problem is much more discrete.

The Census Bureau calculates an income level they take to be necessary for food and shelter depending on family size–without accounting for geography–and scale it to the CPI. Notice how the definition is based on food and shelter, but the Census Bureau does not factor food stamps, public housing, and Medicaid as part of income.

The Typical Home in Poverty has Modern Amenities

The Heritage Foundation blog has a good post about poverty in America. Check out the chart I posted above: according to the Census, only 7.4% of the poor report that they do not have “enough food,” with 92.6% having enough to eat. I suspect some under-reporting, but those are still startling numbers.

The Heritage Foundation also finds that:

  1. The typical poor household, as defined by the government, has a car and air conditioning, two color televisions, cable or satellite TV, a DVD player, and a VCR. If there are children, especially boys, the family has a game system, such as an Xbox or PlayStation.
  2. In the kitchen, the household has a refrigerator, an oven and stove, and a microwave. Other household conveniences include a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker.
  3. The home of the typical poor family is in good repair and is not overcrowded. In fact, the typical average poor American has more living space in his home than the average (non-poor) European has.

Uuunfortunately, there is no data about the rate of the poor owning clothes made out of milk.

“The Poor” Are Better Off than “the Average” A Generation Ago–Thanks to the Market

Check out these two charts, and see if you picked up what I saw right away:

Twice the rate of poor households had air conditioning in 2005 than the rate of all Americans in 1970. Again, twice the rate of poor households owned a computer in 2005 than the rate of all Americans in 1990. Not only that, but the air conditioners and computers are definitely far more powerful than their 1970 and 1990 counterparts, respectively. (And this is just two examples.)

Did we have some sort of computer and air conditioner entitlement program over the last generation? No. The free market, in its natural drive towards efficiency, innovation, and serving new customers, slowly but surely found a way to reach out to the poor. As President Kennedy said, “A rising tide lifts all boats.” Check it out:

Would you permanently give up the internet for a million dollars? Probably not. And yet a third of poor households have this “near priceless” service in their own home. Things that make you go hmmm.

For more on how free markets help social justice and the poor, check out Bleeding Heart Libertarians or see this article on How Libertarianism Helps the Poor.

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