Blog #44 – Poverty or Inequality: What’s the Problem?


Poverty or Inequality: What’s the Problem?

The language in the slogans used to address what most see as the basic social problem in the United States varies significantly. The key terms run from “war on poverty” to “ladders of opportunity” to “upward mobility” to “fight against inequality.” President Lyndon Johnson declared the War on Poverty. Mayor Bill de Blasio of New York in his inaugural address as Mayor of New York City called on the City “ to put an end to economic and social inequalities,”[1] President Obama before his second inaugural wanted to make inequality the “defining issue” of his second term,[2] but that language changed to creating “ladders of opportunity” in his State of the Union address.

Do those different terms all mean the same thing, or what difference is there among them? Lots.

The War on Poverty (see Blog #43 on the phrase), in fact as well as in words, addressed itself to the condition of the poor: lack of educational opportunities, weak family structure, discrimination in employment, residential segregation, gender discrimination, inadequate workplace safety, predatory ending. It contained an undercurrent focusing on encouraging the poor to help themselves, “empowerment,” enabling the poor to pull themselves up by their boot straps. That undercurrent becomes the dominant theme in the conservative Republic answer to poverty through education and job training of the poor, “making the workforce investment system more responsive to the needs of employers.”[3]

The ladder of opportunity” language to which President Obama has turned at least permits the image of a ladder with both a bottom and as well a top. De Blasio’s language of inequality pushes that image to recognition of the fact that those at the top are in fact responsible for the fact that others stay at the bottom. Recent research on upward income mobility similarly raises the question of the inability of the poor to improve their relative position over several generations.

The conclusion, then, if inequality rather than just poverty is the focus, is that something must be done about what keeps some so rich, as well as what keeps some so poor.  Calling in “inequality” is easily mistaken for substituting a measurement for a cause. The conservative challenge that inequality doesn’t cause poverty is quite right. But the conclusion that limiting the wealth of the rich won’t help the poor is quite wrong. It raises the question of the relation between rich and poor, exactly the question that the language of the War on Poverty or the enabling/opportunity approach conceals.

For in fact it is indeed the way the rich obtain their wealth that accounts for the poverty of the poor. A short piece like this is no way to engage that issue fully, but the outline of an answer may be suggested: The specific mechanisms are known:

  • Exploitation at the work place. Keeping the pay for workers as low as possible is an inherent part of running a business and making a profit: the lower wages are, the higher profits are. Employers are “job creators” only against their will; the fewer workers they need use to produce a different product or service, the better off the employer is. The high pay for business executives and dividends to shareholders are directly at the expense of the workers in their businesses. .
  • Exploitation at the consumption end. Increasing the demand for ever more consumers goods, of course necessarily paid for out of wages, increases the profits of the producers of those goods and the wealth of the owners of the firms that produce them. Inducing demand artificially, through advertising and the wide array of cultural patterns of the kinds long documented by sociologists and economists,[4] supports the consumption exploitation of poor (as well as middle class[5]) consumers, to the benefit of the rich.
  • Exploitation at the financial end. Where, after all, do extraordinary profits of hedge fund managers and bankers come from? Ultimately, of course, from the prices paid by the purchasers of the goods and services they are financing. Their interest and dividend incomes and high salaries are really based on the profits of those making their money from more direct exploitation of the poor.
  • Exploitation of the benefits of land ownership, an obvious and pervasive monopoly, paid, as economists put it, by rent not for anything that the recipient of rent payments has produced or done, but solely extracted by him through the possession of something in limited supply for which there is demand. Property owners and developers are among the richest of the rich (think Donald Trump), in large part because they are able to benefit from the speculative increases in the pries of land which they own.  Ultimately, those benefits are paid for in the prices consumers pay and the rents that tenants pay, a regressively distributive system enriching land owners at the expense of all others.
  • All four of these forms of exploitation are among the primary causes of poverty and, centrally, inequality.

Digging deeper into what a war on poverty ought to be about would lead to examining, not only how the poor might be directly helped, but also how the rich might be constrained in those actions that keep the poor in poverty. Digging deeper into how inequality might be reduced would lead not only to measuring the extent to which it is reflected in income inequality and be ameliorated by boosting the incomes at the bottom rungs of the ladder of opportunity but would lead also to the same concern for limiting the way the rich get to the top of the ladder to begin with.

The dispute between Governor Cuomo and Mayor de Blasio over the financing of preo-kindergarten for poor children a vivid example of the difference, Cuomo’s insistence on paying out of general funds, does help to alleviate poverty, but it also avoids de Blasio’s proposal for  paying through a dedicated tax on incomes over %$500,000 addresses inequality directly. Thus Cuomo may alleviate poverty but de Blasio aims further to directly reduce inequality, looking both at the top and the bottom of the ladder. Reducing poverty is much less controversial than reducing inequality, which confronts more basic vested interests.[6]

———————

[1] Text at http://www.nytimes.com/2014/01/02/nyregion/complete-text-of-bill-de-blasios-inauguration-speech.html.

[3] Republican Senator Tim Scott, setting out h is bill to implement the war on poverty, at http://www.scott.senate.gov/press-release/senator-tim-scott-introduces-opportunity-agenda.

[4] See the work of writers such as C. Wright Mills, Herbert Marcuse, Thorsten Veblen, and many others.

[5] It should be clear that exploitation is not limited to “poor”  workers, but is drawn from the contributions of the unemployed, the excluded, as well as the “idle class,” in the multiple ways they contribute to the functioning the system that perpetuates the unequal division of wealth.

[6] The debate between David Brooks who has the same political analysis as above and comes to the conclusion we should all focus “on opportunity and mobility, not inequality, on individual and family aspiration, not class-consciousness.” http://www.nytimes.com/2014/01/17/opinion/brooks-the-inequality-problem.html?_r=0 and Robert Reich,who concludes “The concentration of power at the top — which flows largely from the concentration of income and wealth there — has prevented  Washington from dealing with the problems of the poor and the middle class,” http://robertreich.org/post/73764746576, reflects almost exactly the above discussion.

Advertisements

Blog #43 – Who Lost the War on Poverty, and Who Won It?


Blog #43 – Who Lost the War on Poverty, and Who Won It?

Odd, in all the discussion of whether “we” lost the war on “poverty,” the question of who the combatants were or are quite escapes notice. Presumably, if the war was lost, the “poor” were the losers – but they’re not the “we” who undertook that war, but if anything they are third party beneficiaries, in the eyes of those who “declared” the war. A cynic might of course argue that some who voiced support for the war were as much concerned with social peace and undercutting of the painful protests of the 60’s urban uprisings and the currents that led to President Kennedy’s assassination as they were concerned with justice for the poor. But be that as it may, if the poor were the losers, who were the winners?

Calling it a war on “poverty” is an elegant way of avoiding that question. “Poverty” is not a combatant, a set of people, of actors, but a condition from which some people, the poor, suffer, a condition other people create. . A real war on the causes of poverty would have to look at who the poor are – surely we are not declaring war on the poor, but rather on those who are causing their poverty. And the question is “who,” not “what,” is responsible: the conditions, institutions, laws, economic and social relations, policies, that produce poverty in as rich a society as ours. These are all conditions produced by “who’s”, by people. And, unless one wants to revert to the discredited mantra of blaming the victim, it is the non-poor who are responsible for poverty. But while that formulation may be logically and morally correct, but it will hardly fly politically. Hence, opportunistically, a war on a condition, not its cause.

So, generally, it must be the non-poor who are the winners, who are or believe they are better off if the war on “poverty” is lost. Are they the 1%, or the top 10%, or those earning over a million dollars a year, or simply those “in power?” A debatable question, but one which the language of “a war on poverty” elegantly avoids.

A war on inequality would be another story. If taken seriously, it highlights that some are getting more, and others less, of society’s wealth. It requires, if really thought about, naming the winners as well as the losers in the fight. That is the Pandora’s Box the Occupy movement’s 1%/99% opens, and that Bill de Blasio highlighted in attacking inequality in the New York City mayoral race. But think about it this: a tax increase of less than ½ of 1% on those earning over $500,000 to help poor children have pre-kindergarten, as he proposes – if that is defeated, won’t it be crystal clear who lost the war on poverty, and who won it?

(On “poverty” vs. “inequality” as the target, see Blog #44, coming.)

Peter Marcuse

——————–

Postscript:

The debate between Governor Cuomo’s Pre-K plan and Mayor de Blasio’s plan  is a perfect example of the different between attacking poverty and attacking inequality.  Both wish to provide universal pre-kindergarten education of all children. Governor Cuomo wishes to finance it out of general revenues, and combine it with tax cuts primarily favoring corporations and upper income households.[1] De Blasio wants to finance it with a dedicated tax on incomes of $500,000. Cuomo’s approach is legitimated as an attack on poverty, de Blasio’s as an attack on inequality.

—————

[1] On the proposed tax cuts, see Michael M. Grynbaum and Thomas Kaplan, “Pre-K Plan Puts Cuomo at Odds with de Blasio,” New York Times, January 22, 2014, p. 1 and 16.

Blo #42 – Neither Austerity Nor Affluence, but Abundance


Austerity, Abundance, or Affluence: Visions for a Post-Scarcity World

AUSTERITY, ABUNDANCE, OR AFFLUENCE: VISIONS FOR A POST-SCARCITY WORLD

Is ending poverty really the limit of our ambitions for a good society? Is equality really the right measure of our ultimate hope for a re-imagined city? We don’t want austerity, and we question affluence; what do we want?

At a recent Re-imagining the City visioning session, the term “abundance” was suggested as characterizing the desirable city being envisioned. It was in the context of what public policies are ultimately wanted to achieve a sound vision of a good thoroughly re-imagined city. It aroused the beginning of a serious discussion. And provoked the following thoughts, focusing on the concept of abundance as the answer to the controversial current policy issues of austerity and growth.

As a first reaction: we have too much abundance now. Even if “abundance” is not limited to the physical, we have too much of the physical aspect for an ecologically sustainable city,  We need, if anything, a redistribution of what we have to those that need it most, and most of us have more of it than we need or can really appreciate. And even in the non-physical area, we have too much communication pressing in on us, too many demands on our time, too many people we would enjoy seeing more of but don’t have the time for, too many things we want to see and do and experience for our limited lifetimes. So not abundance, with its implication of more, but rather less, but differently distributed and maybe differently formed.

But there’s another way of reading the claim for “abundance.” Over the long course of history, and until very recently, most societies have struggled to create both the social relations and the physical goods necessary to meet all people’s basic needs: the needs for adequate shelter, food, water, security, care, that are necessary to sustain life.[1] They have been societies of scarcity. Consequently, some measure of austerity was inevitable, even as to basic needs, and if some were in a position to get more than they needed, that was at the cost of even more austerity for the rest. Even if  slowly a net societal surplus was created, it did not eliminate austerity, because of two limiting conditions:  1) the ability to produce a surplus over basic needs was still limited, and 2) the social arrangements included inequalities of power that permitted some to take more than they needed, reducing what was available for others. Thus, a large measure of austerity as to basic needs was existed for very many. Not to speak of austerity as to the many elements that would be desirable for a rich and fully developed human life to flourish for all.

But times have changed.  Neither of the limiting conditions that have brought about austerity the past longer need to exist. As to the technical, since at least the middle of the last century technological advances have gone so far that it is readily possible for a society to produce enough to provide all with the basic necessities of life and in addition  produce a surplus to enable all lives to flourish. Even with today’s technology, if we eliminated both the production of the weapons of war and the devastation their use causes, if we ended the waste in the production and marketing of socially unneeded goods, if we stopped making luxury goods and providing luxury services used more as shows of status than for actual use, we would have an abundance of what was actually needed. And today, as to the social, we have the knowledge to organize our societies rationally and to organize production and distribution in a way to enable a just and sustainable life for all. (The difficulties in applying that knowledge is discussed below) Austerity is no longer needed.

The opposite of austerity is abundance. Abundance is today both technologically feasible and desirable.

But an abundance of what, and how much of it? No absolute answer can be given to either  question, but some conclusions relevant to public policy and social relationships can be suggested. They lead to one answer: what is desired in abundance is what is appropriate not only for the basic necessities of life, the traditional physiological needs for food, water, and shelter, but includes the availability of the social services and supports that are generally accepted as being among the rights of man, things like health care, education, recreational opportunities. And beyond these basic necessities, the higher levels of needs in Maslow’s hierarchy, for social solidarity, security, respect, belonging, opportunities for self-expression, etc. . The aspiration for a level of abundance that can fully meet the hopes of all for this full range of needs, for what constitutes a full, rich life, is today a reasonable and feasible aspiration.

Abundance is a good term for what is wanted. Its precise formulation can, and should be, debated. It is not “growth,” for its own sak, certainly not as measure by GNP, or average incomes. Rising tides don’t lift all boats  equally, and growth of some activities can be positively harmful. “Abundance”  as used here is the generous availability of that which permits human flourishing and supports the full development of individual capabilities, that which optimizes happiness for all, that which promotes  living the most fully possible human life.[2] The aspiration for abundance goes beyond goals such as the elimination of poverty, the reduction of inequality, even the provision of justice based on performance. These are criteria that belong to a society of scarcity; in a society of abundance, they can be met and exceeded.

I take it for granted that what is wanted must meet criteria of social justice[3] and of sustainability. Neither of those criteria requires austerity today; both can be met consistent with the provision of abundance through the reasonable uses of technology and reasonable social arrangements.

So, as a matter of policy, austerity is not needed today as to neither the basic necessities of life, or as to the conditions permitting life beyond the basics to flourish. Imposing austerity on the level of governmental and social provision and actions is clearly the opposite of what is wanted, and stands in the way of achieving the good city and society that can be re-imagined today. Abundance is what is wanted.

But the question of the how much abundance is desired must also be answered.  Whatever that level is, it must of course be within the limits of ecological sustainability. That such a limit can technically be met and yet permit production of what is needed is not seriously debated.  It will certainly require alteration of some basic social arrangements. Detailing the requirements in concrete detail is in fact is one of the purposes of advocating re-imagining the city; the point here is only to clarifying the goal. The next step is appropriately a matter for democratic decision-making, there being agreement on the goal.

But, under existing social and political arrangements, there is a difficulty here. For there is a tendency among some within the  affluent portion of today’s societies to read into the goal of abundance, into the definition of what they need to flourish, an desire for recognition of  superiority,  a desire to have more than others, for a level of conspicuous consummation over and above their needs. The capitalist system inherently is based on the drive to accumulate; accumulation is an end in itself. We have the knowledge to change this and to do better, but the system blocks putting that knowledge to use. And it has been enormously successful in producing great wealth for some with poverty for others. And it is a self-perpetuating arrangement, for the possession of wealth brings with it power to keep the arrangements that provide it. Capitalism provides more than abundance for the affluent, and leaves less for the non-affluent, leaving as a result abundance for the few and austerity for the many.

Nor is that result accidental, or even unwanted, by the affluent.   The very dictionary definition of affluence makes the point clear

Affluence in the United States refers to an individual’s or household’s state of being in an economically favorable position in contrast to a given reference group.[4]

Affluence for the few contradicts abundance for the many.

And it is not only for the very few really affluent that this negative argument holds. The system that produces affluence for the few also creates a desire for affluence by many.  When people are asked why, if their income is modest, they object to raising taxes on the very rich, many answer that they hope to be very rich themselves some time in the future. They hope to change their position from one less favorable than that of the already affluent to one of affluence for themselves. Hence the phrase “affluent society,”[5] is used not because everyone in it is affluent, but because the pursuit of affluence is seen as a driving force in the whole society.

So the re-imagined image of the desirable society is neither one of austerity nor one of affluence, but one of abundance, somewhere in between.

A final important note: the vision of a society of abundance includes a vision of human beings quite different from what they tend to be in societies of austerity or of affluence.  They will not be like the suffering, worried, insecure, exploited and discontented and oppressed members of a society of deprivation and austerity. Nor will they be like the driven, one-dimensional, competitive, aggressive, self-satisfied but insecure top echelons of the society of affluence. Abundance would permit a society of individuals at peace with themselves, each other, and nature, relaxed, secure, other-regarding men and women. Acquisition of goods and services will not be for their commercial value, their exchange value, but for their direct use, in ways fostering sharing with others both for reasons of efficiency and solidarity.

No one will have to worry about whether they have enough of what they really need, as in a society of austerity, nor will anyone worry that others might have more than they have, as in a society of affluence.

The above description sounds utopian and a pipe dream. Abundance will not by itself produce such a society, but will make it possible. The path to it begins with a rejection of the necessity for austerity and a rejection of fixation on ever growing affluence, and an alteration of those social arrangements that today block the peaceful road to creating abundance for all.

————————-

[1] There’s a long discussion in the sociological literature about just how to define these needs. Maslow, A.H. (1943). A theory of human motivation. Psychological Review, 50(4), 370–96. is probably the seminal text, suggesting a hierarchy of needs, ranging from Physiological needs to Safety needs to needs for Love and Belonging to Esteem to Self-actualization. I use “basic needs” generically here as equivalent to physiological needs, and consider the other four as needs needing to be satisfied for a flourishing life. .

[2] For urban policy, Susan Fainstein’s The Just City, Cornell University Press, 2010, is good starting point for an examination of the possibilities, but the definitions of the good life have concerned philosophers, religions, political theorists, sociologists, economists, from time immemorial.

[3] Many different definitions of social justice have of course been put forward, with key contributions ranging from Plato to Kant to Marx to Rawls to Harvey to Fainstein and my own. The issues there involved again are not pursued in this paper.

[4] From  Cambridge International Dictionary of English. Cambridge: Cambridge University Press, 1995

[5] The phrase was first popularized by John Kenneth Galbraith. In “The Affluent Society” Fortieth Anniversary Edition. Houghton Mifflin Company: New York, 1998. It was further critically explored in the appropriately named talk on “Liberation from the Affluent Society,” reprinted in Unpublished  Papers of Herbert Marcuse, Volume III:The New Left and the 1960s (Routledge, 2005),