Mercury Rising 鳯女

Politics, life, and other things that matter

Economic Gaslighting

Posted by Phoenix Woman on March 1, 2007

Is it really a boom if the vast majority of Americans keep losing ground while a tiny minority reap huge windfalls?

That’s the question that’s implicit in this article on poverty in Bush’s America:

The percentage of poor Americans who are living in severe poverty has reached a 32-year high, millions of working Americans are falling closer to the poverty line and the gulf between the nation’s “haves” and “have-nots” continues to widen.

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A McClatchy Newspapers analysis of 2005 census figures, the latest available, found that nearly 16 million Americans are living in deep or severe poverty. A family of four with two children and an annual income of less than $9,903 – half the federal poverty line – was considered severely poor in 2005. So were individuals who made less than $5,080 a year. The McClatchy analysis found that the number of severely poor Americans grew by 26 percent from 2000 to 2005. That’s 56 percent faster than the overall poverty population grew in the same period.

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McClatchy’s review also found statistically significant increases in the percentage of the population in severe poverty in 65 of 215 large U.S. counties, and similar increases in 28 states. The review also suggested that the rise in severely poor residents isn’t confined to large urban counties but extends to suburban and rural areas.

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The plight of the severely poor is a distressing sidebar to an unusual economic expansion. Worker productivity has increased dramatically since the brief recession of 2001, but wages and job growth have lagged behind. At the same time, the share of national income going to corporate profits has dwarfed the amount going to wages and salaries. That helps explain why the median household income of working-age families, adjusted for inflation, has fallen for five straight years.

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These and other factors have helped push 43 percent of the nation’s 37 million poor people into deep poverty – the highest rate since at least 1975. The share of poor Americans in deep poverty has climbed slowly but steadily over the last three decades. But since 2000, the number of severely poor has grown “more than any other segment of the population,” according to a recent study in the American Journal of Preventive Medicine. “That was the exact opposite of what we anticipated when we began,” said Dr. Steven Woolf of Virginia Commonwealth University, who co-authored the study. “We’re not seeing as much moderate poverty as a proportion of the population. What we’re seeing is a dramatic growth of severe poverty.”

There’s one sentence in the quoted passage above that I want to pull out for special study:

The share of poor Americans in deep poverty has climbed slowly but steadily over the last three decades.  But since 2000, the number of severely poor has grown “more than any other segment of the population,” according to a recent study in the American Journal of Preventive Medicine.

“The last three decades” is of course is the time period when the Republicans set to work on dismantling LBJ’s Great Society (work that was largely done by Donald Rumsfeld) and doing their damnedest to gut FDR’s New Deal.  That gutting was accelerated under Bush, as were the effects of that gutting.

2 Responses to “Economic Gaslighting”

  1. Charles said

    It may be even worse than the article suggests. My guess is that the statistical methods used to measure our well-being have been hopelessly contaminated by what is called the “hedonic adjustment.” Basically, if computers are now twice as fast as computers from a year ago, but it costs the same amount, that’s counted as an increase in income. Maybe the quality of life is improved by the faster computer, but it’s not the same as getting a raise. I’ve asked several economists to comment on whether the hedonic adjustment is being applied correctly in calculating the consumer price index and can’t get an answer.

    Even with the questionable hedonic adjustment to the consumer price index, the median family income, which is the gold standard in measuring these things, is not up very much over the last thirty years, and it’s up largely because more women work.

    When things are true, they make a consistent story. If wages are really up, why has the debt families carry risen so much? We are told that their net worth has risen because they took on debt to buy homes. Better to have $40,000 in debt and $80,000 in home equity than $20,000 in debt and $40,000 in home equity. But this is only true if you can service the debt.

    My guess is we are going to see a lot more people losing their homes before the recession that seems to be on the horizon is over.

  2. Elliott Lake said

    Sounds like eugenics from the 20’s is still with us. From the current Washington State Magazine article on eugenics classes in universities until mid-century: Eugenicists felt that too much time and money was spent on caring for the poor and “defective.” They also fought against unions, because they felt that men were not created equal and thus should not be paid equally for the same work. The rich should get richer so they could have bigger families, and the “poorly born,” if they must be around (and can’t be sterilized), should at least be paid less so that they could only support smaller families. ( http://washington-state-magazine.wsu.edu/stories/2007/February/eugenics-2.html )

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