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Poor Thinking

March 10, 2010

Apparently, the Obama administration is going to re-define poverty and they seem to be confusing it with inequality:

Under the new measure, a family will be judged “poor” if its income falls below a certain specified income threshold. Nothing new there, but, unlike the current poverty standards, the new income thresholds will have a built-in escalator clause: They will rise automatically in direct proportion to any rise in the living standards of the average American.


The weird new poverty measure will produce very odd results. For example, if the real income of every single American were to magically triple over night, the new poverty measure would show there had been no drop in “poverty,” because the poverty income threshold would also triple. Under the Obama system, poverty can be reduced only if the incomes of the “poor” are rising faster than the incomes of everyone else.

Of course, to some degree it makes sense to define poverty in relative terms, at least as long as you are inclined to think that the richer a nation, the more willing its citizens are to share their wealth with the relatively poor among them. It would be kind of cruel to say that, in the US, you are only poor if your meals consist of dirt. But given that already by the current definition you can be “poor” in the US and not lack a single basic need (nor even the less basic like a microwave, a car or a DVD player) you have to wonder whether the term “poor” isn’t bereft of its meaning if you expand the definition even more.

The really sad thing about this planned redefinition of poverty is that genuine improvements in living standards for anybody except those considered as poor will at least temporarily increase the poverty rate. Surely, the Obama administration must be aware of this perverse linkage. It seems they want to put the entire nation into a state of arrested development. Don’t they realise that even the poor benefit when the richer cohorts improve their living standards? If that weren’t so we’d have the same poverty threshold in the US as in Bangladesh.

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