How To Lie with Poverty Statistics

Jimmying the definitions to make wealth-destruction look like poverty-reduction.

There are two clocks ticking down the remaining days of the Obama administration and his Democratic hegemony.  One is the ever-growing unemployment rate, now standing at about 10% "officially" and nearly twice that when you include the underemployed and people who have given up looking for work.  The other factor is the time left to Election Day in November, when American voters will have their first opportunity to vent their fury on the party which originated the saying "It's the economy, stupid!" but now seems to have utterly forgotten it.

In politics, when the going gets tough, the tough start lying.  There's not a whole lot Mr. Obama can do about the unemployment statistics; he's tried blowing smoke at Americans about the economy getting better for several months now and it simply isn't working.  It also doesn't help that he's partnered with buffoons like Harry Reid who last week enthused on the Senate floor:

Today is a big day in America. Only 36,000 people lost their jobs today, which is really good.

If that's really good, we'd hate to see what would be really bad.  With friends like these, who needs enemies?

No, there's not much to be done for employment, but at least Mr. Obama can claim to be fighting against poverty.

How, pray tell, can he claim to be reducing poverty considering that each and every day, another 36,000 people (at least) are sacked from paying jobs and thrown into the penury of the welfare system?  Simple: Change the definition of poverty.  The National Review reports:

The current poverty measure counts absolute purchasing power - how much steak and potatoes you can buy. The new measure will count comparative purchasing power - how much steak and potatoes you can buy relative to other people. As the nation becomes wealthier, the poverty standards will increase in proportion. In other words, Obama will employ a statistical trick to ensure that "the poor will always be with you," no matter how much better off they get in absolute terms.  [emphasis added]

We've previously written that, in America, the war on poverty is long since over and we won.  There is no such thing as poverty in the United States as it's understood throughout history and in much of the rest of the world - we do not have naked people starving in the gutters, literally unable to obtain food for themselves.  America's "poor" are wealthy by any reasonable standard: 97% own color TVs, three-quarters own a car, almost half actually own their own homes.

The only reason we talk about poverty in America when there isn't any is because it is politically expedient for Democrats to do so.  The more supposed poverty they can find, the greater the excuse to take money away from you in taxes and redistribute it to their supporters in return for votes.

But back to the lie of the statistics.  America's poverty statistics have long been indexed to inflation and economic growth in various ways to make sure that the poverty rate doesn't go down much even though the objective material wealth and comfort of the poor, like everybody else, is constantly increasing.  No news here.

Karl Marx, Call Your Office

Mr. Obama's changes go one step further: His administration plans to effectively index the poverty rate as a percentage of GDP per capita.  The implications of this are far from obvious, so let's look at some examples.

First, America's GDP is the amount of money the whole nation makes.  It's a whopping big number - in 2009, even with the recession, our GDP was around $14.25 trillion.  There are a bit over 300 million Americans; a little division gives you the average GDP per capita of $46,400.  Anybody making less than that is below average; anyone making more is above average.

Let's arbitrarily define poverty as someone making one-quarter of the average, or $11,600.  This is not a lot of money, it's true; but compared to the millions who live on less than a dollar a day, it's a king's ransom.  You cannot live a cushy life in America on $11,600, but you certainly will not starve or freeze to death.

So far, so good.  Now let's consider what would happen in a successful Reagan economy where the rising tide lifts all boats, but the yachts get lifted more.  In other words, everyone gets richer, but the rich get richer by more.

The GDP of the whole nation would increase - naturally, since everyone is getting richer.  The GDP per capita would also go up, so our arbitrary poverty line would go up too.  The poor are getting better off, but the bar has been raised, so despite a strong economy, it looks like we've made no progress.

But wait!  Remember, in this scenario the rich got richer by a greater percentage than the poor.  So while the poor's income went up - they objectively got richer - the poverty line raised by even more, since the distance between poor and rich has increased.

The result?  Under Mr. Obama's self-serving calculations, in a good economy such as we saw under Reagan, Clinton, and for a few years under Bush, the official statistics would say poverty is getting worse - even as the actual poor people were getting more money, able to buy more stuff, and living more comfortably in every objective way!

OK, so it's a long-term plot to make Republican governance look bad, is that it?  No: this statistical fraud has a far more immediate goal of flattering Mr. Obama's wealth-destroying policies.

For instead of a good economy, consider the opposite scenario of Mr. Obama's economy, where everybody is losing money, but the rich most of all.  The financial crisis has certainly harmed ordinary Americas, but in both absolute numbers and percentages, it's been a bloodbath for the very wealthy.

What happens when the very rich lose their shirts?  They stop buying Learjets and investing in new companies which means that ordinary people lose their jobs.  However, on average, in this recession the wealthy have lost more than normal folks have.  In other words, everyone has gotten poorer, but the rich have gotten poorer by more.

Don't feel too bad for them, they've still got way more than you or I, but the effect on Obama's newly rigged poverty statistics is startling.

When the rich lose their shirts, GDP falls enormously.  So does the GDP per capita, and so does the poverty line.  Now we have poor people getting poorer, but the poverty line drops beneath them because of what the rich have lost.  Sure you may be making even less money than you were last year, but you're not poor anymore!  The statistics say so!

What sort of a system is it where making the nation richer raises the poverty rate, and making it poorer lowers the number of people who count as poor?  There's a very simple phrase that explains both this sort of system and Mr. Obama's core beliefs:

From each according to his ability; to each according to his need.

It is now crystal clear: Mr. Obama does not want America to be a land where each individual can rise by his own efforts to whatever heights his abilities enable him to reach with the unavoidable result that some will be rich and successful and others will be poor and failures.

Instead, he wants an America where we all are pretty much the same, no matter our talents or hard work, and there is a much smaller gap between rich and poor.  For Mr. Obama, poverty isn't being hungry or cold; it's knowing that there are other people out there with more than you.

And when, as in the Soviet Union, there is equality in poverty - we are all equally poor, cold, and miserable, by force of government policy - then the statistics will show poverty has been eliminated, and the great dream of liberalism will finally have been achieved.

There's a better way: Recognize that absolute poverty has already been eliminated in the United States, and that our current command-and-control welfare system simply perpetuates the relative poverty of laziness and failure.  But that would mean there'd be no need for liberals, leftists, Democrats, or any of their liberty-destroying government programs.

Petrarch is a contributing editor for Scragged.  Read other articles by Petrarch or other articles on Economics.
Reader Comments
this begs the question that there is no need for right-wing, liberty-hating, anti-capitalist Republicans either, especially ones from Texas.. you would make an excellent lassiez-faire educator, except for your penchant for thinking Republicans are never wrong- which they are, especially in the last decade.
how about a commentary on the textbook scenario in Texas, wherein Thomas Jefferson is replaced with John Calvin as a moral example?
March 15, 2010 7:24 PM
I do believe this has been repeatedly pointed out before, but for those of you still deluded enough as to think Scragged worships the Republican party, you have only to read our endorsement article for the 2008 Presidential election:

As far as MORAL examples go, John Calvin (a theologian, minister, and sometime public leader) is arguably a better one than Thomas Jefferson (whom, liberals claim, impregnated an enslaved girl in his possession.) Or does sexual immorality not count as wrong in liberals' eyes?

As POLITICAL leaders go, naturally I'd vote for Jefferson. But that's a different question entirely.
March 15, 2010 7:44 PM
You stated in the article that some will be rich and successful and some will be poor and failures. There is the option of being rich and a failure as well as being poor and a success. It all depends on what your goals are.
March 16, 2010 7:50 AM
Sir; as my day's end draws nigh, I humbly succumb to your suggestion; be it known i cannot consider the morals of one [Jean Cauvin, John Calvin ] who adopts a omnipotent Creator as the source of unblanketed love & devotion, as well as the font of a moral code as this "moral paragon".. the Puritans made a mockery of his theology vís-á-vís Liberty, especially in the US colonies.
M. Cauvin is a saint compared to the Scottish, Dutch, & other Brits who called themselves "Calvinists" yet were no better than theocrats politically.
good night, and thank you.
March 17, 2010 12:38 AM
They don't seem to have been able to lie enough.

Recession Raises Poverty Rate to a 15-Year High
The report said that 44 million people, or one in seven residents, lived in poverty in the United States in 2009, the highest rate since 1994.

The Obama recession is the worse we've seen in a long time.

The percentage of Americans struggling below the poverty line in 2009 was the highest it has been in 15 years, the Census Bureau reported Thursday, and interviews with poverty experts and aid groups said the increase appeared to be continuing this year.

With the country in its worst economic crisis since the Great Depression, four million additional Americans found themselves in poverty in 2009, with the total reaching 44 million, or one in seven residents. Millions more were surviving only because of expanded unemployment insurance and other assistance.

And the numbers could have climbed higher: One way embattled Americans have gotten by is sharing homes with siblings, parents or even nonrelatives, sometimes resulting in overused couches and frayed nerves but holding down the rise in the national poverty rate, according to the report.

The share of residents in poverty climbed to 14.3 percent in 2009, the highest level recorded since 1994. The rise was steepest for children, with one in five affected, the bureau said.

The report provides the most detailed picture yet of the impact of the recession and unemployment on incomes, especially at the bottom of the scale. It also indicated that the temporary increases in aid provided in last year's stimulus bill eased the burdens on millions of families.

For a single adult in 2009, the poverty line was $10,830 in pretax cash income; for a family of four, $22,050.

Given the depth of the recession, some economists had expected an even larger jump in the poor.

"A lot of people would have been worse off if they didn't have someone to move in with," said Timothy M. Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin.

Dr. Smeeding said that in a typical case, a struggling family, like a mother and children who would be in poverty on their own, stays with more prosperous parents or other relatives.

The Census study found an 11.6 percent increase in the number of such multifamily households over the last two years. Included in that number was James Davis, 22, of Chicago, who lost his job as a package handler for Fed Ex in February 2009. As he ran out of money, he and his 2-year-old daughter moved in with his mother about a year ago, avoiding destitution while he searched for work.

"I couldn't afford rent," he said.

Danise Sanders, 31, and her three children have been sleeping in the living room of her mother and sister's one-bedroom apartment in San Pablo, Calif., for the last month, with no end in sight. They doubled up after the bank foreclosed on her landlord, forcing her to move.

"It's getting harder," said Ms. Sanders, who makes a low income as a mail clerk. "We're all pitching in for rent and bills."

There are strong signs that the high poverty numbers have continued into 2010 and are probably still rising, some experts said, as the recovery sputters and unemployment remains near 10 percent.

"Historically, it takes time for poverty to recover after unemployment starts to go down," said LaDonna Pavetti, a welfare expert at the Center on Budget and Policy Priorities, a liberal-leaning research group in Washington.

Dr. Smeeding said it seemed almost certain that poverty would further rise this year. He noted that the increase in unemployment and poverty had been concentrated among young adults without college educations and their children, and that these people remained at the end of the line in their search for work.

One indirect sign of continuing hardship is the rise in food stamp recipients, who now include nearly one in seven adults and an even greater share of the nation's children. While other factors as well as declining incomes have driven the rise, by mid-2010 the number of recipients had reached 41.3 million, compared with 39 million at the beginning of the year.

Food banks, too, report swelling demand.

"We're seeing more younger people coming in that not only don't have any food, but nowhere to stay," said Marla Goodwin, director of Jeremiah's Food Pantry in East St. Louis, Ill. The pantry was open one day a month when it opened in 2008 but expanded this year to five days a month.

And so on.
September 17, 2010 12:21 PM
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