A recent editorial in the New York Times would have you believe that there isn't really much difference between the rich and the poor in America. Basing its conclusions on household consumption statistics, it finds that "the gap between rich and poor is far less than most assume, and that the abstract, income-based way in which we measure the so-called poverty rate no longer applies to our society". All for the best, in this best of all possible worlds.
These conclusions depend on a rather blatant manipulation of statistical data. Let's take a look at one of the article's more bizarre claims.
"The bottom fifth earned just $9,974, but spent nearly twice that — an average of $18,153 a year. How is that possible? A look at the far right-hand column of the consumption chart, labeled “financial flows,” shows why: those lower-income families have access to various sources of spending money that doesn’t fall under taxable income. These sources include portions of sales of property like homes and cars and securities that are not subject to capital gains taxes, insurance policies redeemed, or the drawing down of bank accounts. While some of these families are mired in poverty, many (the exact proportion is unclear) are headed by retirees and those temporarily between jobs, and thus their low income total doesn’t accurately reflect their long-term financial status."
What this means, on the article's own terms, is that so-called poor families aren't really poor, they just have access to non-taxable income or are in transition, temporarily skewing the statistics. That is, the statistics are reliable only insofar as they are interpreted correctly. The authors, with an act of hermeneutical violence and a bit of logical legerdemain, have actually based their conclusions on their own personal authority, while making them appear to rest on objective data.
Even if the data are to be trusted, one could draw quite different conclusions. Presumably, an impoverished household, mutatis mutandis, requires the same basic necessities for its maintenance as a rich household. After all, we live in the same communities (although some sections are gated), and have the same essential requirements for survival. Left out of the article's analysis, however, are many other factors that contribute to what is prosaically known as "quality of life". Education, for instance, is not mentioned. Savings, pensions, 401k plans, are not mentioned. Hours worked each day are not mentioned. Quality of child care is not mentioned. One could go on. More importantly, the bottom fifth of households are spending nearly twice as much as they earn. The article attributes this to a rather mystical self-generation of wealth: sale of homes and cars, redemption of insurance policies, etc. One wonders how much property the lowest fifth of income earners have to sell. Even if the authors' assumptions are legitimate, property sales among the lower class do not necessarily represent a positive development. Only an economist could see the liquidation of property as being intrinsically good. From the point of view of the seller (often forced by circumstances to sell at an unfavorable price), these transactions look and feel like dispossession. Besides, the gap between spending and income is more easily attributable to credit spending.
The low-wage earner, after spending interminable hours at work, has few pleasures other than those she obtains from creating at least the illusion that her labor has not been in vain. From television we know that successful people have "pimped rides" and luxurious "cribs". The typical laborer, in order to repair his damaged dignity, will try to replicate the trappings of wealth valorized by the culture industry. Meanwhile, expenditures for education, health care, and other important indices of "quality of life" are out of reach. The article myopically points out that the poor and the rich spend a similar amount on health care. The difference is obvious: the rich buy insurance while the poor pay for emergency room visits.
At a deeper level, the article reinforces the manufactured belief that shopping equals happiness. As long as we all have access to cheap cars and electronics, all is well in the world. (Laughably, the authors present the VCR as exhibit A in their defense of global capitalism; its price has dropped, so the globalization of free-market ideology must be beneficial. Who still has a VCR?) This ignores macroeconomic factors such as exploitative labor conditions in the less-developed countries that supply us with cheap goods and ecological factors like the environmental cost of ever-increasing consumption. More troubling is the intentionality of the article: to erase class difference vis-à-vis blind optimism. This echoes the neoliberal economic logic of this and previous administrations: what Bush I, before joining the Reagan administration, criticized as "voodoo economics". Our Papa Legba is Capital, and we are all his serviteurs.
What can the article's authors, one of whom is president of the Federal Reserve Bank of Dallas, presume to tell us about poverty? Once again, the New York Times reveals who its masters are. They are also our masters, unless we are to naïvely believe, as the article would have us do, that we are all sailing smoothly in the same boat.
These conclusions depend on a rather blatant manipulation of statistical data. Let's take a look at one of the article's more bizarre claims.
"The bottom fifth earned just $9,974, but spent nearly twice that — an average of $18,153 a year. How is that possible? A look at the far right-hand column of the consumption chart, labeled “financial flows,” shows why: those lower-income families have access to various sources of spending money that doesn’t fall under taxable income. These sources include portions of sales of property like homes and cars and securities that are not subject to capital gains taxes, insurance policies redeemed, or the drawing down of bank accounts. While some of these families are mired in poverty, many (the exact proportion is unclear) are headed by retirees and those temporarily between jobs, and thus their low income total doesn’t accurately reflect their long-term financial status."
What this means, on the article's own terms, is that so-called poor families aren't really poor, they just have access to non-taxable income or are in transition, temporarily skewing the statistics. That is, the statistics are reliable only insofar as they are interpreted correctly. The authors, with an act of hermeneutical violence and a bit of logical legerdemain, have actually based their conclusions on their own personal authority, while making them appear to rest on objective data.
Even if the data are to be trusted, one could draw quite different conclusions. Presumably, an impoverished household, mutatis mutandis, requires the same basic necessities for its maintenance as a rich household. After all, we live in the same communities (although some sections are gated), and have the same essential requirements for survival. Left out of the article's analysis, however, are many other factors that contribute to what is prosaically known as "quality of life". Education, for instance, is not mentioned. Savings, pensions, 401k plans, are not mentioned. Hours worked each day are not mentioned. Quality of child care is not mentioned. One could go on. More importantly, the bottom fifth of households are spending nearly twice as much as they earn. The article attributes this to a rather mystical self-generation of wealth: sale of homes and cars, redemption of insurance policies, etc. One wonders how much property the lowest fifth of income earners have to sell. Even if the authors' assumptions are legitimate, property sales among the lower class do not necessarily represent a positive development. Only an economist could see the liquidation of property as being intrinsically good. From the point of view of the seller (often forced by circumstances to sell at an unfavorable price), these transactions look and feel like dispossession. Besides, the gap between spending and income is more easily attributable to credit spending.
The low-wage earner, after spending interminable hours at work, has few pleasures other than those she obtains from creating at least the illusion that her labor has not been in vain. From television we know that successful people have "pimped rides" and luxurious "cribs". The typical laborer, in order to repair his damaged dignity, will try to replicate the trappings of wealth valorized by the culture industry. Meanwhile, expenditures for education, health care, and other important indices of "quality of life" are out of reach. The article myopically points out that the poor and the rich spend a similar amount on health care. The difference is obvious: the rich buy insurance while the poor pay for emergency room visits.
At a deeper level, the article reinforces the manufactured belief that shopping equals happiness. As long as we all have access to cheap cars and electronics, all is well in the world. (Laughably, the authors present the VCR as exhibit A in their defense of global capitalism; its price has dropped, so the globalization of free-market ideology must be beneficial. Who still has a VCR?) This ignores macroeconomic factors such as exploitative labor conditions in the less-developed countries that supply us with cheap goods and ecological factors like the environmental cost of ever-increasing consumption. More troubling is the intentionality of the article: to erase class difference vis-à-vis blind optimism. This echoes the neoliberal economic logic of this and previous administrations: what Bush I, before joining the Reagan administration, criticized as "voodoo economics". Our Papa Legba is Capital, and we are all his serviteurs.
What can the article's authors, one of whom is president of the Federal Reserve Bank of Dallas, presume to tell us about poverty? Once again, the New York Times reveals who its masters are. They are also our masters, unless we are to naïvely believe, as the article would have us do, that we are all sailing smoothly in the same boat.
