Andrew White

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Andrew White
Research VP
8 years at Gartner
22 years IT industry

Andrew White is a research vice president and agenda manager for MDM and Analytics at Gartner. His main research focus is master data management (MDM) and the drill-down topic of creating the "single view of the product" using MDM of product data. He was co-chair… Read Full Bio

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The Politics and Paradox of Poverty

by Andrew White  |  January 9, 2014  |  1 Comment

The article was called “How the War on Poverty Was Lost” and was in the Wall-Street Journal, US print edition, January 8 2014.  It was an Opinion piece by Robert Rector from Heritage Foundation

 This article calls out the politics of poverty – neither left or right can agree how to “solve” the poverty problem.  It also calls out the paradox of what is meant by “poverty”. 

So many ideas ran through my head as I read this piece.  I almost envisaged writing a book in response!  The premise of the article is that on the face of it, poverty in the USA has not reduced in the last 50 years.  Additionally, the article explains some real issues with this apparent finding.  Finally the article recommends some policies to reduce poverty by addressing what I would describe as the articles real ‘drivers’ of poverty.  Some of these policies are not popular with the largest sector of society that deliberately ditched such or similar policies in the last 50 years, as such polices seemed to favor one group of society, or one form of behavior, over another.  As such, some of these policies are not politically correct and so won’t get the review they truly need.

Now for some of the points I am willing to make or ask.

First, how is poverty defined?  It is measured in the US, one of the few advanced/western nations to measure it, as a percentage of income.  As such, 15 percentage of the US population live in poverty.  This percentage has not changed much since 1964.  However, there are some major issues with this:

  • The transfer payments (e.g. aid) the US government gives to its people are not included as ‘income’.  I have to ask the obvious, “why not?”
  • According to a range of government sources, “the typical American family living below the poverty level in 2013 lives in a house or apartment that is in good repair, equipped with air conditioning and cable TV.  He has a car, multiple color TVs and a DVD player.  More than half the poor have a computer and a third has wide, flat-screen TV.” 

With respect to the first item there is an amazing point in the piece.  In 2012 the US government spent $916 billion on means tested welfare programs for poor and low income families.  Once adjusted for inflation, this is 16 times greater than what was spent in 1964.  Now here is the kicker:  “If converted to cash, current means-tested spending is five times the amount needed to eliminate all official poverty in the US.”  There is more: In the last 50 years, the US has spent (in 2011 dollars) over $20 trillion on such programs- so Rector suggests.  These numbers are staggering.

Seems to me we should explore the resulting poverty line after including transfer payments.  In other words, poverty should not be defined by income but wealth.  The metric is wrong and it is leading to the wrong kind of government behavior.  In fact we might even conclude that politics has taken precedence over the idea business outcome. 

Second, we should ask ourselves if the word ‘poverty’ needs to be redefined.  I did not have everything listed above when I was a boy living in the UK but 30 years ago.  I did not, and was not, regarded as below the poverty line then, or now. So expectations clearly change.

As to the policies proposed by Rector to help address equal opportunity (over the doomed to fail equal outcome rhetoric of others), I cannot comment.  But they are worth listing:

  • Family structures have broken down and this leads to lower incomes for “broken” families. 
  • Marriage has collapsed, and there has been a growth in single parent families as a result, and education and crime has been impacted. 
  • We should encourage those that collect transfer payments to work for them.  Thus we should change the way we reward non-work.

Rector’s suggestions are nitrous – there is argument written all over them.  There is no simple answer.  I accept that poverty exists, but I think we cannot see the wood for the trees.  A better definition of what constitutes povery may allow us to figure out a better set of polcies to reduce it.   

I found much in this article that coincided with ideas from the following books:

 

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  • 1 In pursuit of the politics and paradox of poverty   January 22, 2014 at 10:28 am

    [...] blogged the other day on the politics and paradox of poverty.  In a nutshell the analytic used to report on poverty levels in he USA are, to put it mildly, [...]