Structural poverty, obviously the case

Here is my piece on structural poverty. Here is Noah Smith’s piece on structural poverty. His piece is not narrative, so my reaction won’t be narrative either.

Structural Poverty
To rehash the basic idea: structural poverty refers to poverty that is derivative of the way that we have structured our economy. In particular, when I use it, I am generally referring to the way in which market economic structures (which, recall, are imposed by governments) distribute income, and how that distribution causes regular patterns of impoverishment.

One very simple example of this phenomenon is elderly people. You’ll notice that when people get old, their market poverty rates spike to ungodly levels. This happens even though “the elderly” does not describe the same individuals every year. In fact, tons of the elderly poor find their way out of poverty each year by dying, but you’ll notice the elderly market poverty rate hardly budges. The proximate reason for this is because many elderly cannot work and, given the way market structures distribute income, that spells poverty.

It is not just the elderly where we see this pattern though. Disabled people have the same problem and are structurally impoverished by market economic systems. Young workers have a slightly different problem, which is that entry-level jobs don’t pay well and that they are often taking care of children, but this too consistently causes them to have very elevated poverty rates. Unemployment has the same effect and boy do market institutions churn people out of jobs. The conventional wisdom is that to whip inflation, the Federal Reserve needs to make sure at least 1 in 20 people looking for work cannot find it. Needless to say, unemployment — a structural requirement of market capitalism — is an impoverishing condition. We can throw children in the mix as well, whose elevated poverty rates are persistent and patterned in ways that reflect defects in the market system.

In fact, if you are clever, you’ll be able to find where the structural failures of market systems exist because almost every developed country has made non-market efforts to combat each of them. We have Social Security for the elderly, SSDI and SSI for the disabled, UI for the unemployed, and in countries better than ours, it’s also very common to have a universal child benefit. Why do you suppose these types of institutions pop up in basically every single market economic system? The answer is obvious.

Noah’s Piece
Like I said, not a narrative response. So here goes.

Assuming that he succeeds in demonstrating [that structural poverty is real], why does that mean that individual behavior does not factor in poverty at all?

Individual behavior can cause poverty, for instance with ascetics and priests who vow poverty and the like. You can certainly choose poverty. But it is possible to structure an economy where there is nearly no poverty at all. Some countries have done it. You can’t get that way by relying heavily on the market to distribute national income of course, but you can adopt other structures that make poverty nearly impossible.

Next, there’s the question of how to differentiate “structural” factors from “individual” behavior on a mass scale.

This isn’t difficult for someone who is good with numbers, like Smith is. You can track certain categories like age (which nobody has control over) and see the same patterns year after year and country after country. Young adulthood, childhood, and old age show persistent market poverty spikes in every year and every country. Disability is the same way. Unemployment is the same as well, but people want to quibble over whether this is voluntary sometimes for whatever reason.

It occurs to me that if poverty is entirely “structural,” then depending on who gets assigned to the poverty “holes”, we might not care about poverty at all! For example, suppose that income depends only on age – for some reason, you make less when you’re young, more when you’re middle-aged, and less when you’re old, but everyone who is the same age makes the same amount. In other words, suppose that the structural factor identified by Bruenig were 100% of the poverty story. In that case, we wouldn’t really care about poverty, since people could just borrow when they’re young, save when they’re middle-aged, and then consume their savings when they’re old, thus smoothing their consumption over their lifetime.

We care about poverty because having very little income is hard on you in the episodes where that is the case. It literally scrambles young children’s brains, for instance, fucking them up for the rest of their lives. One in four children in this country are born into it, and this is attributable to the structural problems families have in market systems (including that adding a child increases income needs but the market does not respond and that people make the least amount of money right at the same time they have kids). The existence of structural child poverty is not excused because, when children get to be middle-aged adults, they generally are not in poverty. You don’t eat food across the life-course. You eat it every day.

Or alternatively, suppose that income is completely random, but changes at a high frequency? Suppose that everyone is assigned to a random spot on the (fixed, structural) income distribution every year, but that your income one year doesn’t affect your chances next year. In this case, people could just buy insurance from each other, and this would solve almost all of the entire problem, since people could then smooth their consumption over the years.

You know what’s funny is that Ronald Dworkin’s egalitarianism is based upon this exact premise. It also reaches the right conclusion: since income varies so dramatically over the life course, causing identifiable structural holes, the solution is to use (social) insurance to smooth that out. That’s what civilized countries do. Even us somewhat.

A family of 4 making $18,000 in 2014 is not “poor” by the U.S. government’s definition

It is actually. Well below the poverty line for a family of four, in fact.

Bruenig also draws an inference about age and poverty that I believe is invalid. He notes that younger workers consistently get paid less than older ones, and assumes that this is a structural reason, unrelated to individual behavior. But what if workers simply learn as they work, increasing their productivity with experience?

This is the structural reason. Young workers cannot help but be less experienced in the same sense that elderly people cannot help that their bodies cannot sustain work. That market structures distribute income in part based on experience is the proximate structural cause of high young adult poverty. You don’t have to distribute income that way, if you don’t want to. In fact, I have been working on, but not yet written about, a young adult basic income idea that would smooth this problem. One such structure would feature what I call the “disappearing universal basic income” in which people get, say, $4,000/yr basic income at age 25, and then that amount falls by $100 every year subsequently, zeroing out at age 65.

  • Roland Petit

    In a barbaric purely for profit socioeconomic system, such as ours, these are the results. Time to “reboot” from scratch a different “operating system.”