Why are people poor? - Island of Sanity

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Policy Issues

Why are people poor?

Why people are poor

Some people are poor because of circumstances beyond their control. They are the victims of global economic forces, discrimination, medical problems that make it impossible for them to work, etc.

Other people are poor because they are lazy and irresponsible.

In the middle are people who just make bad decisions. They don't plan for the future.

Do we need to do this experiment?

It has been said that if tomorrow you divided all the money in the world equally, the day after tomorrow some people would be richer than others.

Suppose you gave everyone in the world $1000. (For this discussion, let's not worry about where this money comes from. It comes from a magic genii.) Different people would do very different things with the money.

Some would run out and spend it on alcohol, drugs, strippers, and gambling. In a few days it would all be gone and they'd have nothing to show for it except a hangover and an STD.

Some would use it to pay off bills, buy groceries, etc. I presume we'd call these people responsible. But again, in a few days or weeks the money would be gone.

A few would invest the money, and a year later they'd have $2000.

I've made comments like this in the past, and at this point someone always says, "Oh, easy for you to say. You don't understand that some people are so poor that they just have to spend every dime on food and housing and other necessities. They just can't save because they don't have anything left."

Yes, there are people in the world who are so poor that they spend every penny they have on food just to keep from starving to death. But few people in America (or Europe) are in such dire straits. American poor people routinely have money to spend on air conditioning, cable TV, alcohol, etc.

An Example

Let me give a concrete example of what I mean. I saw a spot on the news not long ago about a woman who, the reporter explained, was caught in a poverty trap. She lost her apartment, and so she was living in her car. Because she did not have a kitchen, she just had no choice but to eat three meals a day in restaurants. Not five star restaurants -- mostly fast food places. But still, eating out is expensive, even fast food, and so it was impossible for her to save enough money to get an apartment. She had a job, by the way, it just didn't pay enough to let her eat out three meals a day and save money for an apartment.

Except ... Let's assume that she lost her apartment through no fault of her own. Or anyway, that even if she did lose it because she did something foolish, spent her rent money on something frivolous or whatever, that's water under the bridge. Let's go from where we are. Did she really have no choice but to eat three meals a day in restaurants? Why couldn't she, for example, go to a grocery store and buy a loaf of bread and some peanut butter and jelly, and make herself sandwiches? Even if she insisted on a hot meal: She had a car. I don't know about where she lives, but in my area that are plenty of parks and rest stops with picnic benches and grills that you can use for free. When I was poorer, when my family went on a road trip we brought along food and cooked at rest stops. And to be blunt, from the images of this woman that they showed in the news story, she wasn't on the brink of starvation. She could have done with missing a meal every day or two.

I think this story epitomizes the difference between people who stay poor and people who get ahead. People who stay poor say, "I just have no choice but to spend money on these necessities. You can't expect me to do without a TV and a nice car! I just have to spend money on these things. I have no choice." People who get ahead find ways to economize or do without. Even on things that really are necessities, like food, there are always ways to economize. Instead of eating beef, you can eat chicken. Instead of convenient microwave meals, you can buy basic ingredients and cook from scratch.

But poor people DO work hard!

There was a study that was much in the news recently that found that poor people work almost as many hours per weeks as rich people. Do the rich work more hours than the poor? Liberal media pounced on this as proof that poor people aren't poor because they don't work hard enough. And so the problem must be with "the system" and not individual responsibility.

Except it was a trick. They admit that they are not counting how hard anyone works, just how many hours they put in at the job. So if person A shows up, does the bare minimum, takes a long lunch, and goofs off all day, and person B works hard all day long, is it fair to say that both worked just as hard because both put 40 hours on the time clock? And that if person B gets raises and promotions while person A does not, that that proves that person A is a helpless victim of "the system"? I think not.

But more concretely, read the fine print. They say that they are only counting those who have full time jobs, which they define as working at least 35 hours per week. So of thouse who work at least 35 hours per week, the average works a little over 40. What a nonsense statistic! It's like saying that you can prove that the average American is over 6 feet tall. If we only count those who are at least 5 foot 11, the average is over 6 feet. The serious question is, What percentage of poor people have jobs or are trying to get jobs? This study, Employment and Poverty, found that only 41% of poor people (aged 18-64, so excluding children and old people) work at least 27 weeks a year. And according to this report, Working Poor, of people who have full time jobs, only 4.5% are poor.


So, you don't want to be poor?

Step 1: Get a job. Yes, this requires showing up for work and making an effort.

Step 2: Save and invest. Yes, this requires sacrifice.

But the important conclusion

Isn't this "blaming the victim"?

You can call it that if you want. I call it, Telling people to be responsible for their own lives.

Soft-hearted rich people think they're helping the poor by reassuring them that their problems are not their own fault. "You're not poor because you're lazy and irresponsible, and anyone who says that is just being mean. You're poor because you are the helpless victim of a system that is rigged against you."

In the short term, I suppose this makes the poor person feel better. He doesn't have to feel guilty -- it's not his fault.

But in the long term, the problem with this is that the obvious conclusion is, Therefore, there is nothing you can do to improve your situation. So why bother? But the reality is that, in America at least, there is plenty that a poor person can do to help himself. He can start by getting off the drugs, getting off the sofa, and getting a job. Will it be easy? No, of course not. But that's exactly the problem. If your attitude is, "I want to solve my problems ... but I don't want to have to work very hard at it", then your problems will never be solved.

© 2022 by Jay Johansen


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