We Can’t Fix Anything If We Don’t Fix Poverty

How many times have we heard, “We can’t afford to provide everybody government healthcare. It will add too much to the deficit.” We have heard the same thing about Social Security, and other major federal programs. This statement might be true if government income were a fixed number, but who says it has to be? It seems to me that our elected representatives are going about the process from the wrong direction. Instead of stepping back and having a conversation about what kind of country we want to be, what programs it will take to achieve that vision, and then figuring out how to pay for it, they start with the amount of money ‘available’ and then argue over what to include and what to exclude. We are the wealthiest country on the planet, and yet we have between 5 and 15 percent of Americans living below the poverty line. Whichever point along the line between those two estimates you choose, that equates to 15–45 million citizens! If our leader’s vision for America includes millions of citizens living in poverty, it is time to change leaders.

How can we be the wealthiest country on the planet and still have these outrageous economic conditions? The simple and obvious answer is that the wealth is concentrated in a very small percentage of the population and the politicians appear to be feebly unwilling to take any of it from them. It’s a conscious decision by the people in power. The current healthcare debate is a perfect illustration of the point. Instead of starting by designing the best possible healthcare program, modeled after lessons learned from successful programs around the world, Congress is considering providing less coverage for more cost to the consumer, and using the savings to continue to provide huge tax breaks to those who already have most of the country’s wealth. Shame on them! The people with the power are debating about tweaking and cutting an already inadequate national healthcare program. They are not even considering anything that would ensure that everybody is covered. While the Democrats are promoting universal healthcare, the Republicans are fighting in court to destroy some of the essential elements of the Affordable Care Acct. This political season is ripe with solutions from cutting back to universal healthcare. The supporting rationale for the positions feels more like political rhetoric than an attempt to find a workable solution. Catastrophic healthcare bills are one of the major causes of poverty.

Most Americans are not upset that a few citizens have done extremely well financially. The uber-wealthy have achieved the American dream beyond most reasonable expectations. We cheer for them and hope someday to become one of them. The thing that causes anger and unrest is realizing how many Americans are living in poverty — at very little fault of their own. A combination of societal, cultural, economic, demographic, geographic, racial, and political factors have converged to create an environment that greatly limits their opportunity for success. By any measure, America has enough wealth to allow some people to be extremely wealthy while also ensuring that nobody has to exist in extreme poverty. Unfortunately, because of greed and an under-regulated capitalist economy, we fall far short of that ideal. Read, “Why the U.S., One of the World’s Richest Countries, Struggles with Diseases of Poverty”[1] for a depressing reality check.

Following the Great Depression, the US created a number of Social Safety Net programs like Welfare, Food Stamps, housing and education assistance, Social Security for the elderly, monthly stipends for single mothers and the disabled, public healthcare, and a minimum wage. These programs fueled the post WWII economic growth. Putting money into the hands of the consumer created real jobs and everyone benefited. In the early 1970s, these programs came under political pressure and began being reduced. For example, changes in welfare eligibility reduced the number of families on Welfare from 4.6 million in 1996 to 1.1 million in 2017. It was not done because 3.5 million of them no longer needed assistance. It was done because the Congress was afraid to raise the money to pay for the program. The decline in enrollment does not represent a commensurate decline in poverty. To the contrary, it resulted in an increase in poverty. I am not advocating increasing spending on social safety net programs. Instead, if we invest in infrastructure and public service jobs, we can reduce poverty and the need for the social safety-net programs that we traditionally used to treat its symptoms.

The problem is not that a relatively small number of Americans have done well. The problem is how they did it. Some of the wealth gains of the few at the top have come at the expense of a vast number of working-class citizens. In recent election cycles, people wanting to reverse the current conditions that provide huge economic advantages to the wealthy and powerful have supported efforts to tax the wealthy more heavily as a part of a plan to reduce poverty. The wealthy people targeted for the proposed tax increases struck back by inaccurately describing these efforts using the dreaded “Socialism” tag, and labeling the efforts as “Income Redistribution” or “Wealth Redistribution” programs. Ironically, the very wealthy got wealthy by a long-term, gradual, but unspoken income and wealth redistribution program that moved the vast majority of the wealth into the fortunes of the top 1%. If things do not change drastically, the amount of poverty in America will continue to grow. As that inequity becomes more apparent, it causes anger and resentment that manifests itself as social, cultural, political, and racial unrest.

“Middle-class wages are stagnant — Middle-wage workers’ hourly wage is up 6% since 1979, low-wage workers’ wages are down 5%, while those with very high wages saw a 41% increase. While the rich are getting richer, everyone else is losing ground. Look at this chart, which shows how for most Americans, real wages have been stagnant or falling for decades…[2]

Low wage is 10th percentile, middle wage is 50th percentile, very high wage is 95th percentile. The middle class — the most politically and economically stable part of our society — is disappearing.”[3]

The impact of this inequity is even greater than it appears on the graph above because the graph does not emphasize the continuing growth in the degree of difference between the rich and poor, and the unavoidable collapse of the middle class if conditions do not change. If the percentage difference were stable at today’s levels, the results would be devastating. Unfortunately, the percentages are following trends that will make the problem even worse. The resulting concentration of wealth hurts the economy by diminishing the consumer spending power that drives the rest of the economy.

People who are struggling to get by, and often failing, are angry and looking for someone to blame. Rather than providing solutions, Trump provides the ‘others’ to blame. He has a list that he chooses from, including immigrants, Muslims, Minorities, Democrats, etc. The list of problems in the US today include, homelessness, incarceration and criminal justice, quality affordable healthcare, crowded and inadequate public schools, income and wealth inequality, gender discrimination, no equal pay for equal work, voter suppression, and the opioid epidemic. Fixing poverty will not fix any of these problems, but you can’t fix any of them if you don’t fix poverty.

[1] https://www.huffingtonpost.com/entry/america-diseases-of-poverty_us_5a69f610e4b0dc592a0fe66a

[2] https://www.epi.org/publication/charting-wage-stagnation/

[3]https://orders.cloudsna.com/chain?cid=MKT342135&eid=MKT343196&step=start&hpmv=2&mp_distinct_id=1608444bc68353-0fb0e4da596a8b-b7a103e-144000-1608444bc69449#AST74018