The Weird and The Wacky Meet

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Poverty

                 As Latoya just mentioned, there are several facts that not a lot of people know about poverty.  Because the facts and figures are so overwhelming, people tend to escape the figures through whatever means possible, which is why we’re presenting the next section; myths about poverty.

                 The first myth is that poverty is caused by a refusal to work.  In 1999, 78% of poor children lived in families where someone worked all or part of the time.  In addition, the minimum-wage worker only earns 82% of the poverty level for a family of three.  Second, many of the poor who do not work are too young, too old or too disabled.  Since 1979, the main increase in poverty rates has been among the working poor.

                 This is mainly due to declining wages, an increase in working women who head households and the low federal minimum wage of $5.15 an hour.  In Connecticut, the minimum is $7.10, but many states do not rise above the federal limit.  These two figures come out to under $11 thousand and $15 thousand a year, respectively.  That’s not enough to live on, and is below even the unrealistic $15,200 poverty line for a family of three.

                 Marlene Kim, an economist, analyzed census data and concluded that “Most of the working poor would remain poor even if they worked 40 hours a week, 52 weeks a year.  In addition, of those who could climb out of poverty if they worked such hours, two out of five are either disabled or elderly or unable to find full-time or full-year employment. Thus it appears that most of the working poor are doing all they can to support themselves.”

                 The second myth is that people are overly dependent on welfare.  In 1996, massive welfare reform measures, called the Personal Responsibility and Work Opportunity Conciliation Act, were passed.  What this did is move welfare programs from the federal government to the states, required that welfare recipients find work within two years, limited welfare assistance to five years, and cut various federal assistance programs by $54.5 billion over six years.

                 Even before 1996, only one fourth the income of poor adults was from welfare.  Half came from working.  Three fourths of the poor received some sort of non-cash benefit, such as Medicaid, food stamps or housing assistance.  Only about 40% of those on welfare received cash benefits.  It’s important to recognize that the welfare population was always changing.  This didn’t mean that people could drag themselves out of being poor, but that they were able to become less poor and only relied on welfare during hard times.

                 The most prevailing myth about welfare is the idea of the welfare mother, who keeps having babies to avoid having to work.  First of all, welfare just doesn’t provide enough money to raise these children.  Most welfare recipients bring in extra money from work activities such as housecleaning, laundry, repairing clothing, providing child care and selling items they have made.

                 There is an assumption that government assistance goes only to the poor.  However, the greatest amount of government aid goes to those above the poverty line.  This is called wealthfare.  Three quarters of the federal budget for human resources, such as public education, social security and Medicare, goes to those who aren’t poor.

                 There are two more hidden wealthfare systems, in the form of tax expenditures, where money is given back to selected people by reducing their taxes.  For example, one of the biggest tax breaks is for homeowner mortgages, which totaled $53.7 billion in 1998.  This is more than twice as much as the federal budget for low-income housing.  With a pie so small, only a quarter of the poor qualify for federal housing subsidies, while three quarters of Americans benefit from home ownership.

                 This policy further magnifies the distance between the economic top and bottom, since a tax kickback to help the more affluent build equity in their homes puts them even further ahead of those who can only rent.  This is the equity that lets them finance a college education that once again increases the economic gap.

                 The second hidden system is in direct subsidies and tax credits to assist corporations, banks, agribusiness, defense industries and so on.  Savings and loan bailouts total $37 billion a year, for 30 years.  Agribusiness subsidies total $18 billion a year.  Media subsidies include $8 billion a year, plus the FCC gave away digital broadcast licenses to existing broadcasters, a gift that they valued at $20 to $70 billion that could have been collected in license fees.  Timber subsidies total $427 million a year, not including their tax breaks.  Business meals and entertainment that were deducted from taxes amount to $5.5 billion a year.  Aviation subsidies are also $5.5 billion a year.  Mining subsidies are $3.5 billion a year.  Finally, tax avoidance by international corporations total $12 billion a year.  This system of corporate welfare escaped the 1996 reforms.  If these had been cut back by a third, there would have been enough saved to fund continuing the full level of welfare without those brutal reforms.

                 Welfare for the non-rich was cut down just in time for the bursting of the economic bubble, leaving people with no economic safety net when good times turned bad.  Rising unemployment rates in 2001 hit former welfare recipients harder than the rest of us, since middle-range jobs, paying about $35 thousand a year, were the first to go.   These jobs are gone for good.  According to the Federal Reserve, the vast majority of the 2.7 million jobs lost during and after the recession in 2001 have been restructured out of existence.  As a result, the gap between the rich and the poor grew to record highs.  In 2001, for the first time, the top fifth made more than half the income while those in the middle made the lowest share in almost 50 years.

                 The third myth is that the poor get special advantages.  The common belief is that they get handouts for what other people have to work for, such as food stamps, Medicaid, and housing subsidies.  As I just explained, these are a drop in the bucket compared to what the non-poor receive, and even this amount is decreasing every year.  Moreover, the poor pay more for many services.  In the inner city, they don’t have access to full-size supermarkets, discount stores, outlet malls and warehouse clubs.

                 The New York City Department of Consumer Affairs found that groceries cost 8.8% more in poor areas than in middle-class ones, even though the people there could afford it less.  A survey in Chicago found that the poor pay 18% more.  Financial services are cut off to the poor due to bad credit, lack of credit and fees and lost benefits for dropping below minimum balances.  Poor people pay 230% interest for rent-to-own companies, 240% interest to pawn brokers, 300% for a finance company loan and as high as 2000% for a quick, pay-day loan from a check-cashing outfit.  They also have a harder time obtaining insurance and pay higher premiums.  Finally, because sales tax is flat, the poor pay a higher percentage of their income to it.

                 The next myth is that welfare primarily benefits African-Americans and Hispanics.  In fact, the most numerous group on welfare are non-Hispanic whites, making up 48% of the poor.  Of the remainder, 27% are African-American and 22% are Hispanic.  This myth, like all the rest, disappears when you look at the facts objectively instead of relying on political stereotypes that justify the continuation of problem by perpetuating ignorance.

                 The obvious costs of poverty are that the poor receive inferior education, live in substandard housing, are disproportionately exposed to toxic chemicals, are malnourished and have health problems.  However, some of the less known costs are 43 million people, include some 10.8 million children, having no private or public health insurance.  The U.S. has one of the highest infant mortality rates among industrialized nations.  In poor urban neighborhoods it can exceed third world countries.

                 In 1999, an estimated 27 million people, including 11 million children, were hungry or at least food insecure.  60% of those 65 and older are at high to moderate nutritional risk.  5.3 million U.S. families, or 12.5 million people, with low incomes pay more than half of their income for rent.

                 The poor people are disenfranchised.  Poverty is a stigma that causes low self-image from feelings of perceived deviance.  They are more likely to be angry and are much more likely to feel that they don’t have a voice in society.

                 Poor children are twice as likely to die from birth defects, three times more likely to die from all causes combined, four times more likely to die from fires, five times more likely to die from infectious diseases and parasites, six times more likely to die from other diseases.

                 It’s easy to look at the human cost of poverty and say that it would be great to fix all this but we simply can’t afford it.  This is completely wrong because the most important cost is that these people aren’t being used effectively to create wealth for society.  The UNCF reminds us that “a mind is a terrible thing to waste”, but what they don’t point out is that this waste can be measured in dollars and cents.  Spending to correct social problems can therefore be highly profitable for society.

                 How can social programs make money by spending it?  According to a 1997 Rand study, “They do this by diverting participants from welfare and crime, by reducing their need for special education and health services, and by generating higher tax revenues from increased earning.”  In other words, their poverty is our poverty, and their success is our success.

                 The Rand study, which is entitled “Investing in Our Children: What We Know and Don’t Know about the Costs and Benefits of Early Childhood Interventions”, cites specific examples.  One was a program which provided prenatal and early infancy support to 400 disadvantaged, mostly white families and showed savings four times the program’s cost.  It has since been replicated in other parts of the country.  Another was a pre-school program that enrolled 123 disadvantaged African-American children in the mid-60’s.  Almost thirty years later, the participants earned 60% more than the control group and savings were more than twice the program’s cost.

                 The benefits of such programs don’t stop at simple dollar amounts, but are also measurable in terms of human success.  Beck writes that those who had received the pre-school education “had half as many arrests as the comparison group.  Four times as many were earning $2,000 or more a month.  Three times as many owned their own homes. One third more had graduated from high school on schedule.  One fourth fewer of them needed welfare as adults.  And they had one-third fewer children born out of wedlock.”

                 What this shows is that, by failing to invest in our people, we are cheating ourselves of the benefits that they could have contributed to society.  Not only can we afford to help the poor, we can’t afford not to.

                 So why does poverty still exist?  There are three types of theories to explain it.  A traditional answer comes from innate inferiority theories, which say that poverty is biologically determined because the poor are simply not as good as the rest of us, either morally, physically or intellectually.

                 This appeals to people such as skinheads and Klansmen by providing pseudo-scientific justification for the social order, thus legitimizing segregation and unequal treatment, and promoting the comforting belief that poverty is inevitable.  Libertarian political ideals such as social Darwinism and what is sometimes called biological determinism are examples of this view.

                 The fact of the matter is that environment plays just as much a role in IQ scores as heredity, and is more within our control.  Scientifically, advantages of heredity are not enough to account for the difference between the rich and poor, especially since there is no isolation of genes, nor any biological basis for the social construct that we call race.

                 In the end, it’s not that the poor are held back by something biologically innate, but that their natural potential is untapped.  Poor children enrolled in Head Start have a 9 point IQ increase, which goes away as soon as they’re sent back to their substandard schools.

                 Another answer comes from cultural inferiority theories, which say that the difference is in culture, not biology.  These claim that the poor have deficient values and lifestyles, which deviate from those of affluent society.  They’re thought to be more permissive in raising their children, less verbal, more fatalistic, less likely to defer gratification and less likely to be interested in formal education.  The idea here is that, even if we just handed them the money to end their poverty, they’d just waste it anyway and become poor again, thus providing society an excuse to do nothing about the problem of poverty.

                 The fatal problem for this theory is that poverty is a matter of economics, not culture.  There simply isn’t any culture of poverty, but rather a condition that afflicts those who wind up with less income.  As the working poor show, even those who value labor and commit themselves to tedious, arduous tasks can still wind up below the poverty line.

                 Then there is also the problem of mixing cause and effect.  For example, if the only available education is substandard, it would make sense that it’s less valued.  If your economic future is uncertain, there is less reason to defer gratification.  If your prospects are genuinely gloomy, it’s not fatalism to admit this.  In short, cultural inferiority theories fail to match up with the facts.

                 The only kinds of theories that actually have any basis in scientific fact are structural ones.  In many of the examples given earlier, it was shown that the poor are in a position that reinforces their status.  Once you become poor, it costs a larger proportion of your income to just get by and credit is difficult to obtain, making it harder to crawl out of the hole.  The poor suffer from institutional discrimination, such as higher prices for necessities, reduced government aid, inferior schooling and those huge interest rates and fees.

                 Medically, because they can’t afford to treat problems promptly, they wind up spending (and costing society) more in the long run when these diseases progress unchecked.  Sociologically, because of the popularity of inferiority theories, the poor are not expected to do well, which becomes a self-fulfilling prophecy, since there’s no point putting in time, money and effort on those who are bound to fail.

                 The fundamental reason for these structural causes is that the political economy of capitalist society requires that there be an underclass desperate enough to work the unwanted jobs for low pay.  The basic tenet of capitalism is to seek private profit instead of address collective needs.  Under the laws of the corporation, employers have a legal obligation to their shareholders to pay the least that they can get away with in wages and benefits.  The measure of a successful corporation is its benefit to its owners, not to its employees or society at large.  To ensure their success regardless of their competiveness, corporations spend large sums of money to influence policy-makers and twist the laws to their own benefit, thus perpetuating their advantages over potential competitors.

                 On a macro level, a “free market” economy has been shown to generate boom/bust cycles, which if left unchecked, benefit the rich disproportionately.  During booms, they own more of the capital and therefore gain more of the increase in wealth.  During busts, they not only have the savings to ride out the bad times but to profit from the misery of others.  For example, when people lose their homes to foreclosure during a recession, it’s those with money to spare who can afford to buy these houses on the cheap and later resell them at a profit.

                 In summary, as Claude Fischer and his colleagues wrote, “Inequality is not fated by nature, nor even by the ‘invisible hand’ of the market; it is a social construction, a result of our historical acts.  Americans have created the extent and type of inequality we have, and Americans maintain it.”

 

Eliminating Poverty

 

                 If we’re to work towards the goal of eliminating poverty the following premises have to be our starting assumptions.

· Poverty is a social problem and the source of other social problems; therefore it must be eliminated.

· Poverty can be eliminated in the United States.

· We have the technology and wealth to provide every member with all the necessities of life and more.  The only reason we have poverty is because we allow for an inequitable distribution of that wealth.

· A good example of this is the hidden surplus of wasted budget appropriations in our excessive military spending, which exceeds the next ten biggest spenders’ combined.

· Poverty is caused by a lack of resources, not a deviant value system.

· Poverty is not simply a matter of deficient income; it results from other inequities in society as well.

· It involves a reinforcing pattern of restricted opportunity, deficient community services, powerful predators who profit from the poor and institutional racism and sexism.

· We need to enforce the laws regarding equal opportunity regarding jobs, advancement and schooling.  School spending should be from a national pool, distributed on the basis of need, not privilege.

· Politically, we need to re-enfranchise and re-empower the poor by giving them a voice in society that is not possible under a winner-take-all, non-proportional representational system.

· Poverty cannot be eliminated by the efforts of the poor themselves.

· Poverty cannot be eliminated by the private sector of the economy.

· Private enterprise is focused on profit, with an emphasis on the short term.  It is demotivated from investing in society at large because it is not in the position to reap the rewards of such an investment.  Only the government is.  More to the point, the corporation answers to its owners, the government answers to all of its citizens, at least when it’s not corrupt.

· The growth of the new poor show that even when the private sector provides employment, it is not enough to end poverty.  The solution to their problem is an investment in education.

· Poverty will not be eliminated by a rising economy.

· Poverty will not be eliminated by volunteer help from well-meaning individuals, groups, and organizations.

· While volunteering to ladle soup in a free kitchen may make people feel better about themselves and even help fill a few stomachs, it is a band-aid approach to something that can only be cured structurally by a national program that ensures that all of the needs of the poor are met.

· Moreover, many such organizations are motivated more by the opportunity for religious conversion than genuine social welfare.  This problem is magnified when government funds are selectively funneled to approved religious organizations, which mostly means Christian ones.

· This also opens up the opportunity to distribute funds so as to win support from churches that then campaign to convince their congregants to support the party in power.

· Finally, many things are outside the scope and power of such organizations to provide, including affordable health care, low-cost housing and education.

· Poverty will not be eliminated by the efforts of state and local governments.

· Poverty is a national problem and must be attacked with massive, nationwide programs financed largely and organized by the federal government.

· Poverty has to be addressed at the federal level so that everyone receives equal benefits and services.  Historically, block grants to states have resulted in a disparity of services from region to region.  Structural changes have to come from above, from an institution large enough to resist the forces of stasis.  Moreover, the federal government is the only branch that has enough money to make this happen, including a military budget ripe for cutting.

There are three categories of poor that require three sorts of solutions.

· The able-bodied poor, who are unemployed and underemployed.

They need adequate training, guaranteed employment and a living wage with healthcare and other benefits.

· The home-bodied poor, who are burdened with young children.

They need subsidized childcare that’s safe and nurturing, and a living wage with healthcare and other benefits.

· The disabled poor, including the elderly.

They need low-cost housing, subsidies to rise above the poverty level, and access to health care benefits.

· The children of the poor.

They need a fully-funded Head Start program, and sufficient spending on public schools from non-local funds so that they are not substandard even in less wealthy areas.

 

Works Cited

 

Eitzen, D. Stanley, and Maxine Baca Zinn. Social Problems. 9th ed. : Allyn & Bacon, 2002.

by Amanda Evans

Date: 09/21/04

Poverty Fact Sheet

Myths about Poverty:

1. Poverty is caused by a refusal to work.

2. People are overly dependent on welfare.

3. The poor get special advantages.

4. Welfare is an African American and Latino Program.

Costs of Poverty:

· 43 million people, including 10.8 million children have no health insurance whatsoever.  1 million families per year are refused medical treatment for financial reaons.

· The U.S. has one of the highest infant mortality rates among industrialized nations.  In poor urban neighborhoods it can exceed third world countries.

· In 1999, an estimated 27 million people, including 11 million children, were hungry or at least food insecure.

· 60% of those 65 and older are at high to moderate nutritional risk.

· 5.3 million U.S. families, or 12.5 million people, with low incomes pay more than half of their income for rent.

· Poor people are disenfranchised from society.

· Poor children are twice as likely to die from birth defects, three times more likely to die from all causes combined, four times more likely to die from fires, five times more likely to die from infectious diseases and parasites, six more time likely to die from other diseases.

· Poor people aren’t being used effectively to create wealth for society.  Spending to correct social problems can be highly profitable for society.  “They do this by diverting participants from welfare and crime by reducing their need for special education and health services and by generating higher tax revenues from increased earning.”  --Rand Study Investing in Our Children:  What we know and don’t know about the costs and benefits of early childhood interventions.

Causes of Poverty

1. Innate inferiority – Poverty is biologically determined.  Not only is this unsupported, but also has horrific consequences.

2. Cultural inferiority – Poverty is caused by a cultural deficiency of values and life-styles.  This is easily disproved by the sheer amount of working poor.  Also causes long-term harm with the blame the victim mentality.

3. Structural Theories – Poverty is caused by the structure of society itself due to institutional discrimination and the political economy of capitalism.  This is the theory with the most support, but is also the hardest to get people to accept.

Eliminating Poverty

If we’re to work towards the goal of eliminating poverty the following premises have to be our starting assumptions.

1. Poverty is a social problem and the source of other social problems; therefore it must be eliminated.

2. Poverty can be eliminated in the United States.

3. Poverty is caused by a lack of resources, not a deviant value system.

4. Poverty is not simply a matter of deficient income; it results from other inequities in society as well.

5. Poverty cannot be eliminated by the efforts of the poor themselves.

6. Poverty cannot be eliminated by the private sector of the economy.

7. Poverty will not be eliminated by a rising economy.

8. Poverty will not be eliminated by volunteer help from well-meaning individuals, groups, and organizations.

9. Poverty will not be eliminated by the efforts of state and local governments.

10. Poverty is a national problem and must be attacked with massive, nationwide programs financed largely and organized by the federal government.