The World Bank published a progress report on global poverty that shows while globally the number of poor people has gone down, progress has been uneven and extreme poverty – 700 million projected to be living on less than $1.90 a day in 2015 – remains unacceptably high. Check out these charts:
And Forbes reports on a recent Credit Suisse study that finds there are more poor people in the United States than in China...(um what?):
It is possible to have negative wealth. To have debts that are greater than your assets. But this is only possible in a reasonably advanced society, where there’s a financial and banking system that will lend to people without assets. And that’s what that negative wealth is. Part of the financial life cycle rather than evidence of great poverty. For example, that newly minted Harvard graduate, carrying perhaps $150k of debt and now coining it on Wall Street as a junior analyst would be counted, in this wealth measurement, as being in those poorest 10% of the world. Those poor people in India and Africa aren’t poor in this same manner. They’re the people standing there with their labour and the clothes on their back and nothing else. But the people in the rich countries who are in that bottom 10 and 20% of the world’s wealth distribution are simply people with more debt than assets. And the reason there’re no Chinese in there is because the Chinese financial system doesn’t work that way.
In Bloomberg View, Noah Smith looks at new research that finds giving more cash to impoverished families may improve outcomes for children:
In a study published this year in Nature Neuroscience, a large team of neurologists led by Kimberly Noble found a correlation between child brain structure and family income. Simply put, family income is correlated with children’s brain surface area, especially among poor children. More money, bigger-brained kids. Now as we all know, correlation doesn’t equal causation, so it’s important to establish that income differences are actually causing brain development to change. That’s why Noble and a team of social scientists are planning an experiment. They are going to randomly dispense cash to a number of poor families, and observe whether the brain structure of their children changes over time. Noble points out that cash transfer experiments have shown encouraging results in developing countries, in terms of boosting kids’ long-term economic outcomes. Now, we will find out if the neurological outcomes match up.
Also in the New York Times, Paula Span argues income inequality actually also affects who gets to grow old.
Following debate over a kid who died in jail while locked up for minor offense, Pulitzer Prize winner Tina Rosenberg argues in the NYTimes to make jail fines "proportional to an offender’s ability to pay":
In America, people are routinely jailed for failure to pay fines. Since the 1990s, courts in many parts of the country have had to pay for themselves, or even support their cities, so fines can be exorbitant. Ferguson, Mo., is the most notorious example...
Someone pulled over for a missing taillight can be given multiple fines, plus court fees that might equal or exceed the original fines. If the accused can’t pay, her case may be turned over to a private company that supervises “pay-only probation” — bill collecting, really. The company collects the money and charges the offender for doing so. (Here’s an excellent summary of the process, written in plain English.) The offender could pay off her whole fine and still owe thousands of dollars. If she doesn’t pay, she could go to jail, which would probably mean losing her job...
One way is to use the day fine. Rather than a set dollar amount, it is a percentage or multiple of an offender’s daily income — hence the name. In some countries, “daily income” is simply after-tax earnings. Others adjust for the number of dependents or fixed obligations like child support, and some consider only what is earned above a basic living allowance.
Over at TalkPoverty, Stephanie Land talks about the difficulties of making ends meet even when you are working:
I find myself asking how people in poverty are supposed to work their way out. We work so we won’t need assistance for food or health insurance, but even still, we’re not earning enough to sustain ourselves. Meanwhile, legislators are always looking for ways to pass laws that compromise our eligibility for help. Then there are always the other mishaps of life that can send your ledger spiraling. A broken transmission or a sick child can mean the loss of a hard-earned job.
The possibilities to upend the ledger are endless, real, and exhausting...Paying the bills is like walking on rotted floorboards in your own house; at any moment an unexpected expense will cause you to fall through a hole. What’s worse, I have no back-up. No emergency credit card, no savings, and no family to help us out of a bind.
Speaking of making ends meet, if you are poor and need childcare, you may be paying more than college tuition reports the Economic Policy Institute.
You might be interested in this video about thinking on social capital and whether we need to rethink society so that it is based on empathy rather than self-interest:
BALLE's Michelle Long discusses being local and what it is has to do with prosperity:
Ownership is really the key to building the opportunity for everyone to be able to benefit from the labor that they put into something. That is the key to building wealth and jobs for more people. We need to decentralize ownership and this requires the rebuilding of infrastructure as well as technical assistance at the local level. This requires investing in the technical assistance and capacity providers locally, which come in multiple forms. Its a spectrum. There are those who are doing pre-entrepreneur work. People who are working in low income communities that have been historically oppressed and are helping young men to graduate high school. Being there with young men who have not had the same opportunities, to get them even to a place where we can talk about equality. Equality and equity are not the same thing. To get people to a place of equity requires more pre-investment and pre-entrepreneurship work. This is so so critical. Especially in low income communities of color. We have to invest in those communities if we ever have any hope of having an equitable society. And money is now concentrated in so few hands that philanthropic gifts or government support are needed to distribute that money back into a wider circulation.
Is corporate short-termism really a problem? Yes, says Roger Martin in the Harvard Business Review:
One reason the question of short-termism still hasn’t been settled is that the answer is fundamentally unknowable. There is no control group; we can’t compare the performance of America with short-termism to that of America devoid of short-termism — or even prove beyond a doubt that short-termism exists in the first place...
This argument isn’t going to get resolved any time soon. As Malcolm Gladwell pointed out in his piece about concussions and chronic traumatic encephalopathy (CTE) in football, when clever interested parties employ lack of definitive scientific evidence as their defense, they can keep the gravy train going for a long, long time. Coal-mining companies did this to stave off concerns about black lung for half a century. Tobacco companies did it to ignore concerns about lung cancer for decades.
Now hedge funds and their friends are doing it — really successfully. I agree that the scientific evidence isn’t definitive. But if you were a coal miner’s wife or the husband of a two-pack-a-day smoker, you didn’t need definitive scientific evidence. You saw it with your own eyes.
Meanwhile, in NYTimes Steven Davidoff Solomon looks at the move by a for-profit education firm to become a public benefit corporation ahead of its IPO.
Now for a cartoon:
Research now finds that private firms invest more than similarly situated public ones, while the corporate sector as a whole now returns virtually all profits to shareholders in the form of dividends and buybacks. This was unheard of before the 1980s. Where finance used to get money into firms, now finance is about getting money out of them.
This has serious consequences for work. Investment has numerous spillover effects, and the subsequent decrease in investment affects the entire economy. So much power concentrated in the hands of shareholders means wages suffer. Less investment and risk-taking means less innovation and less of the cumulative effects that innovation has on the economy as a whole. It is harder to achieve full employment if investment is less sensitive to interest rates and more sensitive to shareholders.
Meanwhile, the International Labour Organization's Janine Berg argues worker protections are being reduced all over the world:
The economic model of globalization coupled with advances in communication have made the world more interlinked than could have been imagined. And while extreme poverty has fallen in China and other parts of Asia that were able to benefit from the shift in manufacturing to their countries, the world, both among and within countries, has become highly unequal, with the middle classes of the ‘‘glorious years’’ wading into uncertain times.
Yet the response of policymakers to these trends remains the same: Labor markets need to be further de-regulated and workers need to improve their skills in order to keep up with technological advances...
As we look to the future, we shouldn’t forget to reflect on the past and learn from the struggles and decades of institution building that ensured that workers’ incomes kept pace with productivity growth and that social policies provided for a minimum standard of living. Shared prosperity didn’t happen by chance; it was constructed. Thus, if we want shared prosperity in the future, we will need to act collectively to design, adapt, and establish laws, policies, and institutions that address the many changes and challenges that lie ahead.
Danny Meyer joins a growing group of restaurateurs ending tipping in order to improve wages in the kitchen. Waitstaff wages are predicted to stay the same. Did Walmart's move to up wages by a whole dollar an hour kill its profit margin? The chief investment officer says yes it did. You also might be interested in this on-demand cleaning service app that actually employs people as employees rather than contractors. Are medieval guilds back in style? Check out this New Yorker article from Daniel Schneider on new experiments in shoring up labor.
So um yeah, democracy...this lengthy NYTimes story looks at how just 158 families are providing roughly half the political spending for presidential hopefuls:
They are overwhelmingly white, rich, older and male, in a nation that is being remade by the young, by women, and by black and brown voters. Across a sprawling country, they reside in an archipelago of wealth, exclusive neighborhoods dotting a handful of cities and towns. And in an economy that has minted billionaires in a dizzying array of industries, most made their fortunes in just two: finance and energy.
Now they are deploying their vast wealth in the political arena, providing almost half of all the seed money raised to support Democratic and Republican presidential candidates. Just 158 families, along with companies they own or control, contributed $176 million in the first phase of the campaign, according to a New York Times investigation. Not since before Watergate have so few people and businesses provided so much early money in a campaign, most of it through channels legalized by the Supreme Court’s Citizens United decision five years ago.
Despite this weird American narrative about poor people getting over on the government, the NYTimes' Bryce Covert argues everyone gets stuff from the U.S. government no matter what their economic lot in life:
The government loses about $900 billion in revenue every year on just the 10 largest tax expenditures — called expenditures because while they aren’t direct outlays, they come at a cost just like direct spending. It’s a pot that includes credits like the earned-income tax credit and Child Tax Credit as well as deductions and exclusions that help mainly middle-class people reduce how much they owe each April. It also includes special tax rates such as the lower burden on money made through investments instead of a salary. Tax credits mainly help the poor, but the rest help the well off: According to the Congressional Budget Office, more than half of the benefits of these expenditures go to the richest 20 percent of American households.
So while low-income Americans are more likely to get health insurance through Medicaid, well-off Americans are the ones who reap the benefit of health insurance tax breaks. Poor families might be able to get Section 8 apartment vouchers or spots in public housing, but the mortgage interest deduction overwhelmingly helps people who make more than $100,000 a year buy their homes.
Hey y'all, think you know what the Koch brothers think? Maybe you do maybe you don't. Check out what David Koch had to say on poverty in this interview in Forbes on the upcoming presidential election:
Q. What are the key issues?
A. There are a lot of topics we could talk about but two really big ones. One is we have out of control, irresponsible spending by both parties that are taking us toward bankruptcy as a country and as a government. Related to that is we’re headed toward a two-tiered society. We’re destroying opportunities for the disadvantaged and creating welfare for the rich. This is coming about by misguided policies creating a permanent underclass, it’s crippling the economy and corrupting the business community.
Q. How do you fix poverty?
A. Our priorities are criminal justice reform and eliminating the barriers to low-income people starting a business or even getting a job. The biggest is occupational licensure. There are hundreds of these. You name it, depending on the locale or the state you have to get a license. They’re knocked out of it and of course, this is all cronyism corporate welfare. Those who are in the business don’t want all these newcomers coming in undercutting ‘em and destroying their profit margins.