Poverty Not Dented
A friend sent us a link to an article at Marketwatch, which bemoans that in spite of an improved labor market, “poverty has been barely dented in the US”. Of course, people living in some third world hell-hole would be quite surprised what kind of incomes are considered to constitute poverty in the US, but from a developed world perspective these thresholds do seem to make sense to us:
“The U.S. poverty rate was unchanged at 14.8% in 2014, according to a release today from the Census Bureau. This was the fourth consecutive year that the poverty rate was not statistically different from the previous year.
The lack of change shows that the progress in the U.S. job market–in 2014 the economy added 2.6 million jobs, the most in more than a decade–have remained insufficient to lift the fortunes of the nearly 47 million people living in poverty.
The official definition of poverty varies depending on the size, age and composition of the family. For a couple with no children under age 65, the threshold for income below which they are considered in poverty is $15,853. For a couple with two children, the threshold is $24,008.
Our friend sent along the suggestion that perhaps this dichotomy between an improving labor market and a “sticky” poverty rate might be explained by
“…the fact that a majority of the new jobs created are in the “working poor” category”.
To this we replied in similar Twitteresque staccato style that
“…we could always ditch socialism and give the free market a chance. Might help.”
What isn’t going to help is whatever decision the central economic planning committee bestows upon us on Thursday, since it seems highly unlikely that it will announce its imminent disbandment.
Could the Free Market Really Improve on This?
Our friend felt inspired to add a further comment, in the form of a collage of charts that has apparently been posted at Zerohedge earlier today, adding a rhetorical question, namely:
“How could the free market possibly improve on this record …. :)”
Could the free market be expected to improve on this stellar record?
We think it probably could and would, so we keep (perhaps naively) praying for its return. On the other hand, it might also prove to be less bubble-prone, and it seems entirely possible that assorted cronies would object to that (to be sure, that wouldn’t be their only objection).
All kidding aside, we know for a fact that in the few decades preceding World War I, when sound money was used in practically the entire world, assorted “robber barons” were free to serve customers with ever cheaper and more fantastic goods and services (as an aside, these evil capitalists often ended up donating their vast fortunes to worthy causes) and government spending never exceeded 4% of economic output, real economic growth per capita was faster and more equitable than it has been ever since.
In those decades of rising prosperity, the cronies were busy making their plans and they succeeded in the end. The misnamed “progressive” movement made socialism acceptable in polite society, and we soon ended up with a central bank and barely a moment later a big war, and another few moments later a “Great Depression” and yet another huge war, events which in typical “never let a crisis go to waste” style were used to to expand government to the mind-boggling size we have become accustomed to since then.
How much economic progress has this acceptance of central banking socialism and the accommodation of the cronies cost us? It is hard to say, but our personal estimate is that we have fallen at least a century behind relative to what could have been had the relatively unhampered free market economy of the late 19th century been allowed to continue unmolested. The poverty problem would be unlikely to be a topic of discussion, mainly for lack of poverty, but we might have a few unemployed armchair social engineers sitting around.
Try the unhampered free market – it really might help. Let the cronies pound sand for a change.
Charts by: Marketwatch, Zerohedge / St. Louis Federal Reserve Research, BigCharts