Poverty and what we can do about it


Part 2 of 2 [to read part 1, click here]

 

As the current pack of Republican presidential nominees stand before large crowds praising free-market capitalism, President Obama has been concluding seven-year long negotiations for a free-trade agreement that would encompass nearly forty percent of the world’s economy. In 1993, the Democrat Bill Clinton passed another expansive free-trade agreement. Clinton also signed the Personal Responsibility and Work Opportunity Act of 1996 in order to “end welfare as we know it,” causing three assistant secretaries at the Department of Health and Human Services to resign in protest.

There seems to be at least some agreement between both major parties regarding economics, which might leave us wondering if any viable alternatives actually exist. Corporate jobs and free-trade aren’t perfect solutions to our poverty problem, but are they the best solutions we have available?

Capitalism is often regarded as an American virtue which stands in opposition to the communism practiced in China, the old Soviet Union, and Cuba. In fact, true communism, which involves the shared ownership of the means of production (e.g. factories, farms) without the guiding hand of a state government, has never existed on a national scale. The Soviet Union instead practiced what is described as a planned economy, where a strong central government makes all decisions regarding production and investment. In such a system, the only “free markets” were black market sales of Western consumer goods like Levi’s jeans. The people of the Soviet Union were denied economic freedom, but were they at least free from poverty? Not at all; during the 1980s, their poverty rate was higher than the US rate.

Certainly, the Soviet Union was far from the shining example of equality claimed in its propaganda, but we shouldn’t conclude from one country’s example that socialism as a whole could never be successful. Quite the opposite is true – every developed country today has incorporated some aspects of socialism into its national government. For example, public libraries could be considered a socialist method of book distribution and social security is probably a socialist retirement program. In most countries, including ours, aspects of socialism and capitalism exist side-by-side. Examples of “pure” socialism are as rare as examples of pure capitalism, but that doesn’t stop philosophers and economists from thinking up new ways of life that might be more equal and more democratic. From Parecon to Market Socialism to Social Democracy, the variations are endless and it would be impossible to give a complete overview of all socialist economic models here. It all boils down to cooperation over competition, sharing rather than hoarding, and making sure that everyone has the basics they need to live a healthy life.

Moving away from broad concepts, what specifically can we be doing to fight poverty in the real world? It seems clear that free markets and economic growth will not eliminate poverty on their own. Real GDP per capita in the US has doubled since the 1970s (see below), but poverty has continued and actually even increased during this time.

 

RealGDPperCapita-650x450

 

It’s not enough to be producing more wealth as a nation, it’s about how that wealth is distributed. We’ve done a bad job of offering those with little a chance to earn a little more. In fact, we’re slipping — real wages have stagnated and the minimum wage has not even kept up with inflation, nevermind worker productivity, which has more than doubled relative to inflation.

 

productivity-and-real-wages

 

Even so, we are doing some good things that really do reduce the number of Americans in poverty, many through what we call the “social safety net.”

A 2014 study by the Pew Charitable Trusts shows that without food stamps, overall US poverty would jump 2.6% to 17.1%. Without the Earned Income Tax Credit, child poverty would increase to 22.8%, and without social security the poverty rate for people 65 and older would balloon from 14.6% to 52.7%! Those who say good paying jobs are the only way to lower poverty must have no idea how wrong they actually are. Government action lowers poverty effectively and it does so every single day. The Federal government has the most power in this regard, and if both parties agreed that poverty reduction was a priority, our legislators in Washington could enact further programs to do so much more. For example, a universal basic income program could completely eliminate poverty in our lifetimes by directly giving every American about $1,000 a month. We could also reform the tax code (e.g. adopt a negative income tax for the lowest earners), adopt single-payer health insurance, and provide paid sick leave and parental leave to all workers.

paid leave

At the very least, we should refuse to cut the safety net programs that already exist. We’re unlikely to adopt any of these policies anytime soon, but not because they are unworkable or unaffordable. They’re barely even being discussed; most of the dialog focuses on how much we should be cutting!

Closer to home, we see a lot of the same inaction and focus on non-issues. If it were up to the Georgia legislature, our minimum wage would be stuck at $5.15. Yet, tipped workers can only wish they were guaranteed that much — their minimum right now is $2.13 per hour. To say ‘we could be doing more’ to fight poverty in Georgia is an understatement. Our state legislature won’t even accept thirty-six billion dollars in federal money to expand Medicaid for low-income adults, even though it would come at no net cost to the State budget.

Here in Athens, we could also be doing more. As individuals, we can do more by spending our money differently, such as by shopping in stores that pay their workers a living wage. Companies like the grocery store Aldi pay all employees a living wage, while Kroger does not. Even better, some companies are actually owned by the workers themselves. The cooperative economic model turns top-down capitalism on its head and has successfully lifted people out of poverty. Daily Groceries is an example of a consumer-owned cooperative, and Athens even has one example of a worker-owned cooperative: cleaning service Peachy Green Clean. It’s also important to spend more of our money locally, rather than shopping in Oconee county or online (Amazon.com’s employment practices are particularly bad). This keeps more money in circulation locally and gives our county government the sales tax dollars it needs to implement any anti-poverty program we decide upon.

 

cooperative

 

The now defunct group Partners for a Prosperous Athens made a list of 155 recommendations to fight poverty in Athens, most of which have yet to be put into effect a decade later. We may not be able to do everything on this list at once, but we can certainly be doing more. We can increase funding for quality child care and lower bus fares instead of raising them (fare-free transit is a great option for Athens). We can support worker-owned cooperatives like Mayor Bill de Blasio did in New York City. We could even give homes to the homeless while saving money at the same time. Simple solutions like an inclusionary zoning ordinance could also help ensure that housing in the Athens area remains affordable.

Most of the solutions to poverty are found at the federal (and international) level, but there is a lot that we can do here in Athens. Before taking any action, however, we may need to change the discourse around poverty. While running for re-election in 2014, Mayor Nancy Denson said that poverty has been with us “since Biblical times” and that “the only way to reduce poverty is through educational and employment opportunities.” She is wrong — poverty is not inevitable and there is so much more we could be doing to fight it. In some ways, we can view poverty as a deliberate marginalization of people, but at its core, it is just a lack of income sufficient to obtain the necessities of a decent life. Poverty could be completely eliminated if, as a society, we made the choice to do so. We can also make choices that increase poverty, such as “reforming” welfare or refusing to accept Medicaid expansion. Many countries around the world do not have a choice to eliminate poverty, of course; they don’t have the resources. The United States, however, with its abundant resources and wealth, keeps millions of people in poverty. With our daily actions and inactions, this is a deliberate choice we make as a society.

Chris Dowd
11/14/15

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