Vail Daily column: Poverty ain’t what it used to be
August 14, 2017
Editor's note: Find a cited version of this column at http://www.vaildaily.com.
A scruffy man rang the doorbell and asked for a meal. The man who answered the door prepared a heaping plate of food. The hungry man ate his meal sitting on the sidewalk and then thanked his benefactor and left.
It's a custom in Chile to give a meal to anyone who asks. One. The hungry must visit another house to get another meal.
In Belize, a bright-eyed young woman had emigrated from poorer Guatemala next door. Magda described the life she left behind, "My family slept on the dirt floor of our house. We ate beans and tortillas every day. We could afford chicken once a year. Here, my husband and I have jobs. We have a bed with a mattress."
Almost no one is immune to deep feelings of sympathy, of caring for the poor. These intense emotions fuel what is likely to be the most powerful political force of the past century. A snapshot view of the world's poverty shows 1 billion rich and 6 billion poor people. The movie view shows the poor getting rich very fast.
The financial success of China's masses is astounding. Globally, the United Nations says people living above extreme poverty grew from 65 percent of the world's people in 1990 to 89 percent in 2013. Abandoning communism and the contagiousness of rich world prosperity are key factors.
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Poverty in the rich world is not about food, shelter and clothing. It's about education, marketable skills, substance abuse and the collapse of marriage.
It is also about immigration, although immigrant poverty is temporary. They might leave a $10,000 a year income at home, quickly move into a $25,000 a year budget in the United States and ratchet up from there.
That immigrant family is rich compared to the peers they left behind, but poor relative to their new neighbors in the United States. So which are they: rich or poor? The answer is both. Defining who is poor is less about the person being evaluated and more about the evaluator's income.
The original, official U.S. poverty line attempted to cut through that fuzziness. It defined poverty as an income below a basic food budget times three. The Census Bureau estimates that 13.5 percent of the U.S. population lives below the official poverty line, as of 2016. Colorado stands at 11.5 percent.
In ski country, the official poverty is lower. Garfield County poverty is estimated at 10.3 percent, Pitkin at 7 percent, Eagle at 7.6 percent and Summit County registers 8.7 percent poverty.
The numbers are hogwash.
Jencks says poverty calculations miss much income that people have. First, poverty estimates skip the value of health care, food and housing subsidies. Second, they miss the income retirees have from spending down their home equity and non-retirement investments.
Third, they miss the large, special tax refunds targeted at the working poor. Fourth, inflation is overstated. That exaggerates poverty.
Fifth, poverty numbers miss the fracking of marriage. Two co-habitating individuals might be classified as poor individually, but a married couple earning the same money is not.
The errors are due not to technical incompetence at Census, but due to political preferences inside government. Jencks adds it all up and figures that poverty was not 14.5 percent of the population in 2013, but 4.8 percent.
That is profoundly better. It is even worth cheering about.
It also means that a widespread, basic understanding of our country is wildly wrong. What other self-perceptions might be similarly wrong?
One political tribe may resist the implication that anti-poverty programs work. Another tribe may fear that there is now less pressure to do more about it. All Americans can rest assured there is more work to be done and that there are undoubtedly more efficient ways to do it.
Nonetheless, poor people at home and across the globe are rapidly climbing up the income ladder. As a taxpayer, consumer and investor — small or big — you are helping them mightily. Pat yourself on the back.
Vince Emmer is a financial analyst who runs Citizens Due Diligence in his off hours. Reach him at email@example.com.
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