Category: War on Poverty

MLLG

The “Root” Cause of Poverty

George Noga

The “Root” Cause of Poverty

America has spent $25 trillion in its war against poverty

GEORGE NOGA
FEB 25, 2024

This is a companion post to my offering of last week declaring victory in America’s war against poverty. If you missed that post, it is available on Substack and on my website: www.mllg.us. The above headline notwithstanding, poverty has no root cause; it is the natural condition of mankind. We begin in paleolithic times.
The Natural Condition of Mankind

The Natural Condition of Mankind

At the dawn of civilization our ancestors subsisted as hunters-fishers-gatherers. There was no economy per se. People were divided into small families or clans, each of which functioned as a putative economic unit. They coexisted with other such units, mostly peaceably, sometimes not. Their lives, short and brutish, were on a bare subsistence level – wholly dependent on the fickle bounty of the sea, the exigencies of the hunt and the caprice of nature.

What economic lessons can we sophists of the twenty-first century glean from such primitive people? What, if anything, can they teach us? Surprisingly, they teach us an ineffaceable economic truth applicable across all time and space, i.e. the natural and normal condition of mankind is poverty. There is no known instance where any aboriginal population existed in any state other than poverty.

Most people understand the natural condition of man is poverty, but fail to grasp its implications. Progressives prattle about the root causes of poverty and even have declared war against it. America has spent $25 trillion since it declared war on poverty in 1964. In 60 years of that war, poverty has not been reduced one whit.

Those who consternate about the causes of poverty are wasting their time. They are asking the wrong question. The question we should be asking is: what causes wealth and how can we bring it about. Wealth is not a natural condition of mankind and is rare throughout the sweep of human history. Wealth creation must be understood and fostered. It is only by understanding wealth that poverty can be alleviated.

Progressives assert that, for example, lack of education creates poverty. This is a posteriori reasoning. People are born uneducated. To create wealth they need to become educated. Education creates wealth; ignorance does not create poverty.

What Causes Wealth?

Harken back to our paleolithic fishermen ancestors. They struggled to spear enough fish to survive, until a nascent capitalist thought of a net. Since capital did not yet exist anywhere to finance the construction of this fisherman’s net, he had no choice but to create his own. He worked every waking hour for months accumulating enough extra fish (his capital) to allow him the time to construct his net.

The net worked as planned and our budding capitalist now generated a surplus of fish to trade for other goods – in the process giving birth to the division of labor. His capital investment made him wealthier than the others in his clan – but it also made everyone else better off. He now generated capital which could be used by other entrepreneurs in his clan to increase the prosperity and well being of everyone.

Capitalism Creates Prosperity and Eliminates Poverty

What worked for our capitalist paleolithic fisherman is the same thing that worked for the capitalists who founded Wal-Mart, Amazon, Tesla, Apple and Microsoft. They have become immensely wealthy, but in the process they have enriched all our lives and increased our productivity. Not one of these successes was created by government or socialism. Who has done more to benefit the common man – Henry Ford, Steve Jobs and Sam Walton – or any king, president or commissar?

Capitalism has created a cornucopia of wealth unprecedented in human history. Extreme poverty worldwide is nearly eliminated and every metric of human well being is improving. Average folks live better than monarchs a few decades ago. Luxuries a short time ago are selling for ridiculously cheap prices at Wal-Mart and Costco.

To continue to improve the lives of everyone and to end poverty, we must shed our shibboleths. Unlike our stone age ancestors, we do not blame poverty on deities, animal spirits or the position of stars. Today, progressives and the media blame poverty on bogeymen like greed, multi-national corporations, western civilization, capitalism, fossil fuels, racism, free trade and lack of diversity, equity and inclusion.

In the twenty-first century we understand how to create wealth and eliminate poverty, but we fail to do so because of obeisance to the false gods of progressivism.

© 2024 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

MLLG

Victory in the War Against Poverty

George Noga

Victory in the War Against Poverty

There is no poverty per se in America

GEORGE NOGA
FEB 18, 2024

According to official US Census Bureau statistics compiled in 2023 (based on 2022 data), the poverty rate¹ is 12.4% resulting in 38 million Americans in poverty. This means the US has one of the highest poverty rates and child poverty rates of any developed country, with more people living in poverty than Indonesia and a higher poverty rate than Europe. This simply doesn’t pass the smell test.

man in black jacket and black pants sitting on white snow covered ground during daytime

As demonstrated herein, there is virtually no poverty in America. The true poverty rate is between 2.5% and 3.5% and consists almost entirely of people with severe cognitive challenges. The real problem is not poverty per se, but social dysfunction resulting from low IQ which then leads to poverty – more about this infra.

Following are some of the most egregious flaws in the official measure of poverty.

  • Excludes income from 88 government programs for low-income Americans
  • Fails to include refundable tax credits including the EITC
  • Debit cards loaded with food stamp benefits not counted as income
  • Based on spending² rather than income, only 2.5% are below the poverty line
  • No income from the underground (cash) economy is included
  • 42% of poor households own homes with an average of 3 bedrooms, 1.5 bathrooms, a garage and a patio or deck; 80% have air conditioning³
  • Poverty is defined in relative terms; it rises along with median income
  • 70% of the those below the poverty line report they suffer no material hardships and can meet all their essential needs for food, shelter, clothing and health care

The True Poverty Rate

As reported supra, when based on spending, the poverty rate falls to 2.5%. A BLS⁴ study based on spending (excluding only taxes) found that the poorest quintile of Americans spends only about $1,200 per year less than the second lowest quintile and only $3,000 less than the middle quintile. The richest quintile spends only double that of the poorest quintile. How’s that for equality?

Based on a 2022 population of 320 million, 2.5% is equal to 8.0 million people in poverty, while 3.5% equals 11.2 million people. The Census Bureau reports 38 million in poverty, but when we exclude the 70% who self report no hardship, we get 11.4 million or 3.6% below the poverty threshold. In yet another independent confirmation, a recent Wall Street Journal article pegged the true poverty rate at 2.5%.⁵ Based on all the prior data, the true US poverty rate is between 2.5% and 3.5%. It would approach zero percent if those with the most severe cognitive challenges were excluded.

No Poverty Per Se in America

In any normal population distribution, 2.5% have an IQ of 70 or below, i.e. they struggle to fill out a simple form. Not uncoincidentally, these are the very same people who fall below the poverty line, as low cognitive ability is associated with a myriad of social pathologies. If you looked at a Venn diagram, the two circles (those in poverty and those with low “G”, or general intelligence) would nearly completely overlap. These people deserve our compassion and assistance. We do not help them with political correctness and by ignoring the true cause of their predicament.

The conclusion is straightforward. The number of Americans in poverty is nearly precisely equal to the number with extremely low ”G”. They are one and the same. Therefore, poverty per se in America is incredibly rare and borders on non-existent. America can declare victory in its 60-year war against poverty.

The war on poverty is being waged against the wrong enemy. Public policy solutions must be redirected at the pathologies associated with low “G” and away from providing economic benefits. We need to tailor solutions focused on low ability and untreated mental illness. Poverty is a sociological, not an economic, problem.

Is America More Poverty Stricken Than Haiti?

Relative poverty is a metric used by international organizations to measure poverty; it defines poverty as less than 50% of median income. According to this convoluted statistic, a country that is uniformly and utterly destitute has less poverty than America. Where everyone is dirt poor, no one is relatively poor. According to relative poverty calculations, a much higher percentage of Americans are poor than in Haiti, Chad, Congo and Cuba. I can’t make this stuff up.

  1. The Census Bureau reports two different measures of poverty. The official measure, in existence since the 1960s, is 11.5%, and the supplemental measure first published in 2011 is 12.4%.
  2. The Census Bureau reports those in poverty spend two dollars for every dollar of reported income.
  3. This is larger than the average home of middle income families in France, Germany and the UK.
  4. Taken from a study by the BLS, or the Bureau of Labor Statistics.
  5. Wall Street Journal op-ed by John Early, former Assistant Commissioner of the BLS and Phil Gramm, former Chairman of the Senate Banking Committee.

© 2024 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

Victory in the War on Poverty!

George Noga
The War on Poverty is over. America won – poverty, hunger and homelessness lost.
Victory in the War on Poverty!
By: George Noga – September 30, 2018

          We have written for years that poverty per se barely existed in America; now,  it’s time to declare victory in the War on Poverty! The White House Council of Economic Advisers recently issued a report which included the following: “Based on historical standards of material well-being . . . our War on Poverty is largely over and a success.” Predictably, progressives and poverty pimps won’t accept victory; they continue to rant that anti-poverty programs are insufficient and must be expanded.

          Please note we use the term “per se“. There are about 8 million Americans, or 2.5%, living in material poverty. The normal distribution of human IQ dictates 2.5% will have IQ below 70, which is de facto retardation. That means there are 8 million Americans in that category – the same number as in material poverty. It should be incandescently obvious that those two cohorts are one and the same; a Venn diagram would show the two circles nearly 100% overlapping. This is the basis of our statement that there is no poverty per se, because the real problem is retardation, not poverty.

          In addition to poverty, low cognitive ability accounts for hunger, homelessness and a host of other social pathologies. Venn diagrams for these also would mostly overlap with low IQ. As with poverty, hunger per se has been eliminated. Nearly 40% of Americans are obese and food insecurity has replaced hunger in the liberal lexicon. We have reversed the centuries old paradigm; today, the wealthy are thin and the poor fat. Homelessness also is extinct, apart from low IQ and untreated mental illness.

        By far, the biggest flaw with usual measures of poverty is that they are based entirely on reported income. When we look at spending instead of income, the picture changes dramatically. The poorest quintile of Americans spend $2 for each $1 of reported income. Official measures of income fail to take into account benefits such as SNAP, EITC, public housing, Medicaid and many others. They ignore the underground (cash) economy estimated at $3 trillion and concentrated among low income groups. They also fail to account for quality changes and shifts to uber low-cost stores.

       Today, the bottom quintile of Americans live as the middle class did a generation ago – as measured by size of homes, number of rooms per person, air conditioning and  other amenities. The top income quintile spend only about twice as much per person as the bottom quintile, showing low inequality. The poorest 10% of Americans live equal to or better than most Europeans. If Sweden, touted by many as a socialist paradigm, were a US state, its per capita GDP would be similar to Mississippi, our poorest state.

         No discussion of poverty is complete without noting relative poverty, defined as less than 50% of a nation’s median income. By this stilted metric, the US has more people in poverty than many third world countries. A country uniformly and utterly destitute has less relative poverty than America because in places where everyone is dirt poor (Haiti, Congo, Guinea), no one is relatively poor. When you see news stories asserting high poverty rates in America, they invariably are based on relative poverty.

         America has extinguished poverty, hunger and homelessness per se. Nonetheless, there are 8 million still living in material poverty – many of whom also are hungry and homeless. These people deserve our compassion and assistance. We do not help them by being politically correct and ignoring the true cause of their predicament. Instead, we need to tailor solutions to deal with low ability and untreated mental illness.

         We also should recognize our victory over poverty. This truly is a great American accomplishment and worthy of being honored and celebrated throughout the land.

Next: The definitive account of socialism in the Nordic countries.