Authors: Walter Williams
The views of the Authors are not necessarily the views of Enigmose.
Imagine that you are an unborn spirit in heaven. God condemns you to a life of poverty but will permit you to choose the country in which you will spend your life. Which country would you choose? I would choose the United States of America.
A recent study by Just Facts, an excellent source of factual information, shows that after accounting for income, charity and noncash welfare benefits such as subsidized health care, housing, food stamps and other assistance programs, "the poorest 20% of Americans consume more goods and services than the national averages for all people in the world's most affluent countries." This includes the majority of countries that are members of Organization for Economic Co-operation and Development, including its European members. The Just Facts study concludes that if the U.S. "poor" were a nation, then it would be one of the world's richest.
As early as 2010, 43% of all poor households owned their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage and a porch or patio. Eighty percent of poor households have air conditioning. The typical poor American has more living space than the average non-poor individual living in Paris, London, Vienna, Athens and other cities throughout Europe. Ninety-seven percent of poor households have one or more color televisions -- half of which are connected to cable, satellite or a streaming service. Some 82% of poor families have one or more smartphones. Eighty-nine percent own microwave ovens and more than a third have an automatic dishwasher. Most poor families have a car or truck and 43% own two or more vehicles.
We hear and read stories such as "Real Wage Growth Is Actually Falling" and "Since 2000 Wage Growth Has Barely Grown." But we should not believe it. Ask yourself, "What is the total compensation that I receive from my employer?" If you included only your money wages, you would be off the mark anywhere between 30% and 38%. Total employee compensation includes mandated employer expenses such as Social Security and Medicare. Other employee benefits include retirement and health care benefits as well as life insurance, short-term and long-term disability insurance, vacation leave, tuition reimbursement and bonuses. There is incentive for people to want more of their compensation in a noncash form simply because of the different tax treatment. The bottom line is that prior to the government shutdown of our economy in the wake of the coronavirus pandemic, Americans were becoming richer and richer. The question before us now is how to get back on that path.
Scientific surveys of U.S. residents have found that the mental health of about one-third to one-half of all adults has been substantially compromised by government reactions to the COVID-19 pandemic. There are deaths from non-psychological causes, such as government-mandated and personal decisions to delay medical care, which has postponed tumor removals, cancer screenings, heart surgeries and treatments for other ailments that could lead to early death if not addressed in a timely manner. Interesting and sadly enough, New York state enacted one of the strictest lockdowns in the U.S. but has 22 times the death rate of Florida, which had one of the mildest lockdowns.
As I pointed out in a recent column, intelligent decision-making requires one to not only pay attention to the benefits of an action but to its costs as well. Full Story @ TownHall
Author: James D. Agresti
The Poorest 20% of Americans Are Richer on Average Than Most Nations of Europe
A groundbreaking study by Just Facts has discovered that after accounting for all income, charity, and non-cash welfare benefits like subsidized housing and Food Stamps—the poorest 20% of Americans consume more goods and services than the national averages for all people in most affluent countries. This includes the majority of countries in the prestigious Organization for Economic Cooperation and Development (OECD), including its European members. In other words, if the U.S. “poor” were a nation, it would be one of the world’s richest.
Notably, this study was reviewed by Dr. Henrique Schneider, professor of economics at Nordakademie University in Germany and the chief economist of the Swiss Federation of Small and Medium-Sized Enterprises. After examining the source data and Just Facts’ methodology, he concluded: “This study is sound and conforms with academic standards. I personally think it provides valuable insight into poverty measures and adds considerably to this field of research.”
The “Poorest” Rich Nation?
In a July 1st New York Times video op-ed that decries “fake news” and calls for “a more truthful approach” to “the myth of America as the greatest nation on earth,” Times producers Taige Jensen and Nayeema Raza claim that the U.S. has “fallen well behind Europe” in many respects and has “more in common with ‘developing countries’ than we’d like to admit.”
“One good test” of this, they say, is how the U.S. ranks in the OECD, a group of “36 countries, predominantly wealthy, Western, and Democratic.” While examining these rankings, they corrupt the truth in ways that violate the Times’ op-ed standards, which declare that “you can have any opinion you would like,” but “the facts in a piece must be supported and validated,” and “you can’t say that a certain battle began on a certain day if it did not.”
A prime example is their claim that “America is the richest country” in the OECD, “but we’re also the poorest, with a whopping 18% poverty rate—closer to Mexico than Western Europe.” That assertion prompted Just Facts to conduct a rigorous, original study of this issue with data from the OECD, the World Bank, and the U.S. government’s Bureau of Economic Analysis. It found that the Times is not merely wrong about this issue but is reporting the polar opposite of reality.
Poor Compared to Who?
The most glaring evidence against the Times’ rhetoric is a note located just above the OECD’s data for poverty rates. It explains that these rates measure relative poverty within nations, not between nations. As the note states, the figures represent portions of people with less than “half the median household income” in their own nations—and thus—”two countries with the same poverty rates may differ in terms of the relative income-level of the poor.”
The upshot is laid bare by the fact that this OECD measure assigns a higher poverty rate to the U.S. (17.8%) than to Mexico (16.6%). Yet, World Bank data shows that 35% of Mexico’s population lives on less than $5.50 per day, as compared to only 2% of people in the United States.
Hence, the OECD’s poverty rates say nothing about which nation is “the poorest.” Nonetheless, this is exactly how the Times misrepresented them.
The same point applies to broader discussions about poverty, which can be measured in two very different ways: (1) relative poverty or (2) absolute poverty. Relative measures of poverty, like the one cited by the Times, can be misleading if the presenter does not answer the question: “Poor compared to who?” Absolute measures, like the number of people with income below a certain level, are more straightforward and enlightening.
Unmeasured Income and Benefits To accurately compare living standards across or within nations, it is necessary to account for all major aspects of material welfare. None of the data above does this.
The OECD data is particularly flawed because it is based on “income,” which excludes a host of non-cash government benefits and private charity that are abundant in the United States. Examples include but are not limited to:
healthcare provided by Medicaid, free clinics, and the Children’s Health Insurance Program.
nourishment provided by Food Stamps, school lunches, school breakfasts, soup kitchens, food pantries, and the Women’s, Infants’ & Children’s program.
housing and amenities provided through rent subsidies, utility assistance, and homeless shelters.
The World Bank data includes those items but is still incomplete because it is based on government “household surveys,” and U.S. low-income households greatly underreport both their income and non-cash benefits in such surveys. As documented in a 2015 paper in the Journal of Economic Perspectives entitled “Household Surveys in Crisis”:
“In recent years, more than half of welfare dollars and nearly half of food stamp dollars have been missed in several major” government surveys.
There has been “a sharp rise” in underreporting of government benefits received by low-income households in the United States.
This “understatement of incomes” masks “the poverty-reducing effects of government programs” and leads to “an overstatement of poverty and inequality.”Likewise, the U.S. Bureau of Economic Analysis explains that such surveys “have issues with recalling income and expenditures and are subject to deliberate underreporting of certain items.” The U.S. Census Bureau says much the same, writing that “for many different reasons there is a tendency in household surveys for respondents to underreport their income.”
There is also a wider lesson here. When politicians and the media talk about income inequality, they often use statistics that fail to account for large amounts of income and benefits received by low- and middle-income households. This greatly overstates inequality and feeds deceptive narratives.
Relevant, Reliable Data
The World Bank’s “preferred” indicator of material well-being is “consumption“ of goods and services. This is due to “practical reasons of reliability and because consumption is thought to better capture long-run welfare levels than current income.” Likewise, a 2003 paper in the Journal of Human Resources explains that:
“research on poor households in the U.S. suggests that consumption is better reported than income” and is “a more direct measure of material well-being.”
“consumption standards were behind the original setting of the poverty line,” but governments now use income because of its “ease of reporting.”
The World Bank publishes a comprehensive dataset on consumption that isn’t dependent on the accuracy of household surveys and includes all goods and services, but it only provides the average consumption per person in each nation—not the poorest people in each nation.
However, the U.S. Bureau of Economic Analysis published a study that provides exactly that for 2010. Combined with World Bank data for the same year, these datasets show that the poorest 20% of U.S. households have higher average consumption per person than the averages for all people in most nations of the OECD and Europe: Full Study @ justthefacts.com