Who Are "The Poor"?

Rev. John Cullinan, in his blog "Your Life is a Gospel" discusses the leaked Mitt Romney 47% video. He expresses frustration with the way pundits on both the left and the right have been reporting on it.

America (red and blue), you are pushing all my buttons this week. Let’s have a chat. Let’s begin with the most basic question: “Who are the poor?”

Actually, it may be easier to answer the question of who the poor are not. To begin with, the poor are not a distinctive, discrete class. Not an ethnicity, not a race. Not some secret society whose mysteries are impenetrable. Not some strange alien species bent on invading our home territory. The poor are not a monolithic block of partisans, either. Hell, they’re not even the same people from year to year. But, mainly, the poor are not something “other” than us.

Hopefully, this is not an earth-shattering revelation for most of you.

And yet, there is so much rhetorical energy spent in this country on painting just that picture...
In America, we tend to think of “the poor” as a distinct, discrete class – a “them” – and tend to speak of the poor, the middle class, and the wealthy as fixed segments of the population...

Census statistics could conceivably bear this idea out. Looked at from year to year, the percentage of the population that could be classified as “poor” remains relatively stable. However, when we track the life of an individual throughout its course, we are presented with a very different picture.

Since 1968, the Panel Study of Income Dynamics (PSID) has studied the economic situation of nearly five thousand Americans household... According to the findings of the PSID, over the course of a lifespan, by the age of 75, nearly 80% of Americans will have lived at least one year, and most likely more than one, at or below 1.5 times the poverty line. Not just 47%, but nearly 80%. Poverty is a systemic issue. We are all part of the system. We are all at risk of paying the price. Who are the poor? We all are... If we are the poor, then the responsibility falls to us to contribute to the end of poverty. Not only is it the right thing to do, but now it falls well and squarely into the realm of our own self-interest and sense of self-preservation (just in case “the right thing to do” is not a compelling enough argument for you).

Deserving of Careful Study

"The connection between deteriorating economic and social conditions and high corporate profitability deserves careful study as does the question of whether this is a stable relationship. Regardless, these charts provide important insight into our national policy-making nexus. As long as our large corporations are prospering we should not expect our political process to produce meaningful change. The problem isnt a lack of good ideas for how to strengthen our economy and generate jobs, it is the lack of interest on the part of our elected leaders — on both sides of the aisle – to seriously consider them. It appears that meaningful economic change will have to await either a further unraveling of our economic and social infrastructure or the rise of a powerful social movement with a new economic vision."-The conclusion of Martin Hart-Landsberg writing in Sociological Images after examining an International Monetary Fund report on the U.S. economy.

Ad Age Reports the Middle Class has Become Irrelevant

As Too Much reports:

“Mass affluence,” as a new white paper from Ad Age, the advertising industry’s top trade journal, has just declared, “is over.”

The Mad Men 1960s America — where average families dominated the consumer market — has totally disappeared, this Ad Age New Wave of Affluence study details. And Madison Avenue has moved on — to where the money sits.

And that money does not sit in average American pockets. The global economic recession, Ad Age relates, has thrown “a spotlight on the yawning divide between the richest Americans and everyone else.”

Taking inflation into account, Ad Age goes on to explain, the “incomes of most American workers have remained more or less static since the 1970s,” while “the income of the rich (and the very rich) has grown exponentially.”

The top 10 percent of American households, the trade journal adds, now account for nearly half of all consumer spending, and a disproportionate share of that spending comes from the top 10’s upper reaches.
“Simply put,” sums up Ad Age’s David Hirschman, “a small plutocracy of wealthy elites drives a larger and larger share of total consumer spending and has outsize purchasing influence — particularly in categories such as technology, financial services, travel, automotive, apparel, and personal care.”

As the very rich become even richer, they amass greater purchasing power, creating an increasingly concentrated market for luxury goods and services as well as consumer goods overall.

America as a whole, the new Ad Age study pauses to note, hasn’t quite caught up with the reality of this steep inequality. Americans still “like to believe in an egalitarian ideal of affluence” where “everyone has an equal shot” at “amassing a great fortune through dint of hard work and ingenuity.”

GDP: America's New Misery Index?

Truthout published an article today that is well worth a read in its entirety.  Mark Provost in "Why the Rich Love High Unemployment" argues that the "jobless recovery" is not a fluke, rather high unemployment has been a boon to the super rich.  Political focus on the GDP and corporate profits as the sole measure of economic health have made jobs a low priority.  While the U.S. has the second largest GDP growth from 2008-2010 (after Canada) of the G-7 countries, it has the highest unemployment. Provost writes:

A JPMorgan research report concludes that the current corporate profit recovery is more dependent on falling unit-labor costs than during any previous expansion. At some level, corporate executives are aware that they are lowering workers' living standards... Call it the "paradox of profitability." Executives are acting in their own and their shareholders' best interest: maximizing profit margins in the face of weak demand by extensive layoffs and pay cuts. But what has been good for every company's income statement has been a disaster for working families and their communities...

In the first Great Depression, President Roosevelt created an alphabet soup of institutions - the Works Progress Administration (WPA), the Tennessee Valley Authority (TVA) and the Civilian Conservation Corps (CCC) - to directly relieve the unemployment problem, a crisis the private sector was unable and unwilling to solve. In the current crisis, banks were handed bottomless bowls of alphabet soup - the Troubled Asset Relief Program (TARP), the Public-Private Investment Program (PPIP) and the Term Asset-Backed Securities Loan Facility (TALF) - while politicians dithered over extending inadequate unemployment benefits...

Proponents of labor-market flexibility argue that it's easier for the private sector to create jobs when the transactional costs associated with hiring and firing are reduced. Perhaps fortunately, legal protections for American workers cannot get any lower: US labor laws make it the easiest place in the word to fire or replace employees...

America's labor market depression propels asset price appreciation. In the last two years, US corporate profits and share prices rose at the fastest pace in history - and the fastest in the G-7. Considering the source of profits, the soaring stock market appears less a beacon of prosperity than a reliable proxy for America's new misery index.

The Illusion of Money Part 2: The Rich Think They're Broke

Great article over at Good today (why do you think they gave it that name?) with charts and graphs and all that stuff. Comes to the fascinating sociological conclusion that the wealthiest Americans don't realize that they're making more than everyone else. Folks who make $250,000 know they're not poor, but they compare themselves to the Warren Buffets of the world and see themselves as being in the middle:

Only 6 percent of people making $250,000 say their own taxes are too low, but 30 percent of people making $250,000 say that "upper-income people" pay too little in taxes. That suggests that a large number of people making $250,000 don't think of themselves as being "upper-income people."

The bottom line is that many wealthy people have simply no idea how wealthy they are relative to the rest of Americans. Chalk that up partially to a consumer culture that was for years defined by living outside of one's means. Thus, even rich people found themselves struggling to pay bills when the economy went south.

Catherine Rampell at the New York Times also theorizes it's the "Middle Kingdom effect": "[P]eople who are rich but not the richest—in the $250,000 zone, say—see they have more than lots of poor people, but also much less than a few very visibly rich people. Then they conclude they’re in the middle, so they must be middle class."

Psychology Today on Income Inequality and its Effects

Ray B. Williams, writing for Psychology Today, poses the question "Will Income Inequality Cause Class Warfare."

The article presents some fascinating stats:

Dan Ariely of Duke University and Michael I. Norton of Harvard Business School, showed that across ideological, economic and gender groups, Americans thought the richest 20% of American society controlled about 59% of the country's wealth, while the real number is actually 84%. At the same time, the survey respondents believed that the top 20% should own only 32% of the wealth. In contrast, in Sweden, a country with significantly greater economic equality, 20% of the richest people there control only 36% of the wealth of the country. In the American survey, 92% of the respondents said they'd rather live in a country with Sweden's wealth distribution...

The United States is the most economically stratified society in the western world. As The Wall Street Journal reported, a recent study found that the top .01% or 14,000 American families hold 22.2% of wealth, and the bottom 90%, or over 133 million families, just 4% of the nation's wealth. The U.S. Census Bureau and the World Wealth Report 2010 both report increases for the top 5% of households even during the current recession. Based on Internal Revenue Service figures, the richest 1% have tripled their cut of America's income pie in one generation.

The gap between the wealthiest Americans and middle- and working-class Americans has more than tripled in the past three decades, according to a June 25, 2010 report by the Center on Budget and Policy Priorities. New data shows that the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest parts of the population in 2007 was the highest it's been in 80 years, while the share of income going to the middle one-fifth of Americans shrank to its lowest level ever.

So will we experience a "class war" over these inequalities? Read the original article for the author's conclusion.




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Who cares if Wall Street 'talent' leaves?

CNN Money asks Who cares if Wall Street 'talent' leaves?

"But maybe the best reason not to fret about talent flight is one familiar to cubicle dwellers everywhere: just because someone has a big, high-paying job doesn't mean they're good at it."

Think You're the Only Poor Slob in the "Richest Nation on Earth?"

Broke is Beautiful: Living and Loving the Cash Strapped Life, due out in Spring, is now listed on Amazon.com for pre-order. It has no cover yet, but you can put in your order anyway!

As we get closer to its release date I will start posting stories related to its theme: Enjoying your life as a broke person and being the best darned broke person you can be.

The Huffington Post put up a clip today from Bill Maher's show on HBO. (Who can afford premium channels?) I am passing it along because the panelists discuss one of the themes in the book. You're not worse off than everyone around you! Studies have shown that television viewers tend to mistake the characters they see on the box for their actual peers on some level, yet the folks on TV live lives of material abundance well beyond what you can get with your meager salary. How? The magic of fiction. Unfortunately those of us in the reality-based economy find it a bit hard to keep up, which gives us the impression that we're the only ones treading water. Relax. There's a lot of company in your pool.