Saturday, June 18, 2005

How poor is poor?

In a similar vein to this post, albeit tangentially, totalitarianism today uses a CNN Money piece to consider the rich v. poor debate, one that all too often takes center stage with respect to political discourse.
How many policy debates about solutions to poverty end in confusion, since defining poverty in prosperous democracies has become increasingly complicated? Often, the debating parties assume different definitions of poverty without bothering to make their premises and assumptions clear to their opponents. Although economists might argue that "poverty" remains technically an economic description, I think policy advocates bring more to the table than economics when discussing policy solutions to the problem of poverty. For example, assuming a right to free health care is a very Western twentieth century perspective on how one might define poverty.
Could a new Theory of Relativity be in the making? Perhaps not, but the modern definition of poverty is certainly relative to the current ‘standard of living’ enjoyed by the wealthiest nation on earth.
The poverty thresholds were originally developed in 1963-1964 by Mollie Orshansky of the Social Security Administration. She published an analysis of the poverty population using these thresholds in a January 1965 Social Security Bulletin article. Orshansky based her poverty thresholds on the economy food plan — the cheapest of four food plans developed by the Department of Agriculture. The actual combinations of foods in the food plans, devised by Agriculture Department dietitians using complex procedures, constituted nutritionally adequate diets; the Agriculture Department described the economy food plan as being "designed for temporary or emergency use when funds are low."
In April-May 1965, it was decided to set farm poverty thresholds at 70 percent of the corresponding nonfarm thresholds, and to update the thresholds for annual price changes by the yearly change in the per capita cost of the economy food plan. In May 1965 — just over a year after the Johnson Administration had initiated the War on Poverty — the Office of Economic Opportunity adopted Orshansky's poverty thresholds as a working or quasi-official definition of poverty.
Since the inception of “the poverty threshold”, the definition of poor (an arbitrary government measurement) continues to be adjusted upwards. By any reasonable comparison to developing nations, the presumed poor in America have little to complain about. Moreover, the US economy has one of the lowest unemployment rates in the industrialized world. In light of the facts and just a little common sense, one might conclude that “poverty” is more of a political distinction than a literal state of impoverishment.

Update: Warbs the Unrepentant has an excellent piece that juxtaposes private charity and government aid, with respect to solving the problem of poverty.