Benny's World

Saturday, July 29, 2006

Poverty is About the Poor, Tim Worstall

From a post I spotted today by Tim Worstall, a TCS Daily contributing writer:

Edwardian Poverty (published by Technology Commerce Society Daily on 7/25)

"I realize that I'm excessively optimistic in thinking that politicians should be economically literate. I might as well ask that they be fiscally continent. I am clearly whistling in the wind with a request that Senator John Edwards actually learn a little about poverty, how it is measured, what we already do about it and why his proposals will have little effect.

Allow me to linger on that last point first. Sen. Edwards' is suggesting billions upon billions of spending which will not, by the very measures he uses, have any effect at all on the number of people in poverty in the USA. That actually ought to make the man eligible for an award of some kind: much government spending is wasteful, inefficient, some even deleterious, but to spend billions and have precisely zero, nada, zip, effect is remarkable. So I shall remark upon it."


"Here was an important and wise man a couple of millennia ago who point out that the poor, you will always have them with you. Well, if you're going to state that there are 37 million people below the poverty line and then not add in all the things you're doing to stop them being poor this is pretty much a no brainer, isn't it?

Now despite my (carefully polished and assiduously guarded) reputation as a heartless libertarian I am all in favor of a reduction in the number of the poor in the USA. I do think it right that we organize society so that all may take part in its bounties and wonders. But before we start to do all of that, can we begin with measuring poverty -- including all the things we are trying to do about it -- properly? I realize it will be impossible to stop ambitious politicians trying to bamboozle us with statistics; but can we, ourselves at least, try to get them right? Only then can we begin to work out what we should (if anything) be doing. "

Tigers, Lions and Bears...oh my.

Well, let's look at the problem itself, Tim. To borrow from Hale Stewart, an economist:

According to a recent NPR poll, the economy is the second most important issue in competitive districts. Only that little thing in Iraq is more important. So – maybe you[one] should start talking about the incredibly poor performance of Bush’s economic policies for everybody except the top 10% of income earners in the country? Last week, I gave you three points to make over and over and over and over and over and over and over and over again. I even backed up all of my assertions with those silly things called facts – which are optional in Republican economic discourse. In case you forget them, here they are:




Aren’t those nice little sound bites? Imagine if a few Democrats started to say the same thing over and over and over and over and over and over and over and over and over and over again. Imagine if Hannity or Rush had to respond – they would be in deep shit. Rush would be reaching for his Viagra er oxycontin er, glass of water so fast it would make your head swim.

Today I will add a few more lines to your vocabulary that you can say over and over and over and over and over and over and over and again.

Republican’s fiscal mismanagement or CREDIT CARD REPUBLICANS (Tim, this should reasonate with you)


The beginning of the 1980s marked the Republican's return to power, as Regan took control of the presidency and the Republicans gained control of the Senate.

Reagan used the Laffer curve to justify cuts in marginal tax rates. As a result, tax receipts barely increased from 1981-1984, when receipts from individual taxpayers were $285 billion, $297 billion, $288 billion and $298 billion respectively. At the same time, outlays increased from $678 billion to $851 billion, respectively. As a result of the difference between receipts and expenditures, the federal budget deficit increased from 73 to 188 billion from 1981-1984. This pattern of events established in the early 1980s by the Republicans is clear: cut taxes on the wealthy, increase spending and bounce every federal check you write.

Reagan raised taxes in 1983 as a result of his administrations concern over the growing federal debt load. However, he did not curtail his spending. Ronald Reagan started his term with total debt outstanding of 930 million and increased total debt outstanding to 2.7 trillion. This is a 13.71% compound annual increase. He never balanced a budget.

Bush 41

The biggest point of Bush's presidency was his breaking the "no new taxes" pledge. However, it is important to note this was the fiscally responsible thing to do. It is also important to note that the increased taxes did not help the budget situation in the slightest. Receipts from individual taxpayers increased from 991 to 1091 billion. At the same time, federal expenditures increased from 1.064 trillion to 1.381 trillion.

Bush I started his term with outstanding debt of 2.7 trillion and increased total debt to 4 trillion. This is a 10.32% compounded annual increase. He never balanced a budget.

Bush II

Bush essentially tried to do the same thing Reagan did - cut taxes and increase spending. He cuts taxes for the wealthy which stagnated tax revenue from individuals from $994 billion in 2001 to $927 billion in 2005. While tax revenue from individuals should be over the 2001 figure this year, it’s taken him 5 years to get there. At the same time, he increased discretionary spending 48%.

Bush II started with 5.6 total outstanding debt and increased total outstanding debt to 8.4 trillion. This is a 7.6% annual increase. He has never balanced a budget.

IS ANYBODY SEEING A PATTERN While both parties grow the economy at comparable rates, one party does it with a balanced budget and one does it with deficit spending. While policy do you think is better?

Their record is very clear: THEY’RE THE CREDIT CARD REPUBLCANS

One party cares about the middle class. One doesn’t. Let’s see which one it is.

According to the Bureau of Labor Statistics, the hourly pay for non-supervisory workers increased from $10.63 in January of 1993 to $14.26 in December 2000 for an increase of 34.14%. Over the same period, the inflation measure increased from 138.1 to 174 for an increase of 25.99%. Therefore, the inflation adjusted hourly wage increased 8.15%.

Looking deeper in the data provided by the Federal Reserve's Survey of Consumer Finances for 1998, the change is apparent:

In the 1998 survey, inflation-adjusted mean and median family incomes continued the upward trend between the 1992 and 1995 surveys; they also surpassed the levels observed in the 1989 survey toward the end of the previous expansion....

From 1995 to 1998, the proportion of families with incomes of $50,000 or more rose from one-fifth to 33.8%, while the proportion with incomes below $10,000 fell about one-sixth to 12.6%.

And from the 2001 survey:

Between 1998 and 2001, inflation-adjusted family incomes rose notably faster than they did in the 1995-98 period. The median rose 9.6% percent (2.5 percent during the 1995-98 period) and the mean rose 17.4% (12.2 during the 1995-98 period).

Under Clinton, the median family income increased from 27,900 in 1992 to 32.7 thousand in 1995, 33,400 in 1998 and 39,900 in 2001. Over the same period inflation increased 28%, making the total inflation adjusted gain 15%. Average income increased from $44,000 in 1992, to $47,500 in 1995, to $53,100 in 1998 to $68,000 in 2001 for an inflation adjusted increase of 23%.

Now, let’s look at that champion of the middle class Bush:

According to the National Bureau of Economic Analysis, this expansion started in November 2001 when according to the Bureau of Labor Statistic the average hourly pay of non-supervisory workers was $14.70. This figure was $16.62 in May of 2006 for an increase of 13.06%. Over the same period, the inflation gage according to the Bureau of Labor Statistics increased from 177.4 to 202.5, or an increase of 14.15%. Therefore, wages for non-supervisory employees have decreased a little over 1% since this expansion began.

However, the unemployment rate dropped below 5% in December 2005, signaling "full employment". Has the decrease in labor supply increased wages? No. In December 2005 the average hourly wage of non-supervisory employees was $16.35. In May that number was $16.62 for an increase of 1.65%. Over the same period, the overall inflation measure increased from 196.8 to 202.5 or an increase of 2.89%. Therefore, since the economy hit "full employment" wages have decreased 1.25%.

From the Fed’s 2001-2004 Survey of Consumer Finances

The survey shows that, over the 2001-04 period, the median value of real (inflation-adjusted) family income before taxes continued to trend up, rising 1.6%, whereas the mean value fell 2.3 percent....THESE RESULTS STAND IN CONTRAST TO THE STRONG AND BROAD GAINS SEEN FOR THE PERIOD 1998 AND 2001 SURVEYS AND TO THE SMALLER BUT SIMILARLY BROAD GAINS BETWEEN THE 1995 AND 1998 SURVEYS.

The record is pretty clear: IF YOU WANT A PAY RAISE, VOTE DEMOCRAT

So there you go, Dem leaders (again, using that word really liberally). Voters are concerned about the economy – probably because CEOs are making a ton of money but employees aren’t. Voters want you to say these things. So say them, assholes. Did you forget them already? Here you go:


So to you, Tim Wortstall, your ilk have taken my niece's newborn's lunch money and have squandered it on a War unjustified in Iraq. Now the ME is out of control, and WWW is on the brink, more bills for us, in the name of smaller government.

The bill to raise the minimum wage that passed in the House on Friday night is crock. Yes, we should raise the minimum wage, but the poison pills are there. Deplorable, you bet. And what is your answer to the poor and keeping a solid middle class? Nada. Without the middle class, this country, and/or any other one, could not exist peacefully.

Tags: John Edwards, poverty, Bonddad, working poor, BOPNews, Hale Stewart, credit card Republicans


  • Just to let you know, I’m not a Republican, not a conservative: I’m not even An American nor do I live in the USA. So the politics part of it isn’t quite my bag.
    Why are wages static? Try this recent piece of mine at the same place.

    Wages are static because productivity is rising so quickly. Pretty much nothing to do with any politician at all. Purely technological change.

    By Blogger Tim Worstall, at 11:53 PM  

  • Hi Tim,
    Thanks for dropping by. I was hoping you would.

    I guess I'm confused by your post if you say the "politics of it isn't quite your bag." Being non-US native doesn't excuse that comment.

    Your whole post to me was about poverty is political and how you perceive that John Edwards does not understand how to interpret data. John Edwards is the Director of the Center for Poverty, Work and Opportunity at UNC-CH, and he has brought in many experts on this topic, including economists. He's a very smart guy, although too many comment on his looks as opposed to his intelligence. To me, that image of him with money in the background that accompanies the piece suggests the same: fluff and money. Sorry to see that. He's not like that at all.

    Wages are static, but GDP went down last month. I would argue that there is a cause and effect there.

    Do drop by again. I am a Blue Moderate and do not believe in government to decide for us, unlike today's Congress and Senate, especially since big business should be able to generate plenty of profit without Dick Cheney and his ilk's help, if looking at the Libertarian view. The government has been deciding too much for us in the last 6 years and doesn't have any respect for our Constitution.

    By Blogger benny06, at 12:39 AM  

  • nice post, thx

    By Anonymous Anonymous, at 11:18 AM  

  • nice post, thx

    By Anonymous Anonymous, at 11:19 AM  

Post a Comment

<< Home