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

Israel: Same Playbook, 24 Years Later

As BW readers know, I try my best to write more about upbeat topics, such as the positive activism of One America Committee, most especially by John and Elizabeth Edwards. But some one posted on OAC blog about the Conflict in Lebanon. I had been reticent to say any thing because I'm fully aware that JRE met with members of the Israeli cabinet in early June. Let me be very clear: JRE has not spoken about this issue (doesn't have to either at this juncture) and what I'm about to blog is in no way connected to him.

Yesterday, I listened to C-SPAN on XM Radio and heard a group of panelists speak about the conflict in Lebanon. None of them were Jewish, and none of them took Israel's side. But none of them took Hizbollah's side either. They stated what the net causes were concerning Israel's invasion of Lebanon.

James Zogby, President of Arab American Institute and Amr Hamzawy, Senior Associate at the Carnegie Endowment for International Peace and expert on Middle Eastern affairs, were the first two panelists. They laid out astute analysis of the situation and some of their perspectives were similar. These were my takeaways:

1) This is a replay of what happened in 1982 when Israel felt threatened and destroyed the infrastrure in Lebanon. Reagan did nothing about Israel's invasion for 3 months and after 18,000 were dead, and the Israelis had destroyed a US marine barracks, killing some our men as well.

2) The Shi'as have not been invited to the political table and feel ignored. These are the same people who support Hizbollah.

3) Syria and Iran do financially support Hizbollah, but Zogby's polls show that the Lebanese do not wish the US or Syria to meddle in their affairs. The UN is favored the most to be the mediators. The US is heavily unfavored because of their support to Israel.

4) Because 40% of the Lebanese Army is Shi'a, the Army is not going to make Hizbollah disarm without a political solution.

5) Unemployment is around 75% because businesses had to shut down. There are so many poor people.

6) All panelists said a cease fire needs to happen first, then bring in humanitarian aid. There are thousands of people trapped without food, water, and are without any transportation because the infrastructure (roads, power plants, airport) have been destroyed. This has been echoed by Rt. Rev. Riah H. Abu El-Assal, Anglican Bishop in Jerusalem. (hat-tip to Iddybud)

7) Also, there needs to be a political solution, not a military solution because no one wins. As Dr. Zogby posted on the Huffington Post Thursday (another hat-tip to Iddybud):

While Hizbullah's provocation and the horrific toll exacted by Israel's assault have only complicated matters, Lebanon remains a remarkable and resilient country in need of internal renewal. The wounds of this war will take a long time to heal. Lebanon needs today what it needed in 1990, at the end of its civil war: a representative political system, that opens new opportunities for the disenfranchised Shi'a community of the south, and that retains the special character of Lebanon, i.e., the protection and freedom of all confessional groups.

I've been following Juan Cole's blog about this horrible tragedy, in order to get a more objective opinion. And my bottom line, I agree with the panelists I heard yesterday. I feel for the Israelis to defend themselves, but not to exercise diplomacy and resort to war was just repeating the old play book. Now it's a mess again.

War in this instance will not bring peace. It will harden the hearts of the Lebanese and other Arabs, and we are no safer than before 9/11. The New York Times reports that 6 people were shot at Jewish Federation of Greater Seattle.

Moreover, we will have to fork over more money we don't have (or needed to spend on Katrina, which is still a mess too). Condi has already carried $30M with her as a peace pipe, yet in our own country, the Congress bitches about giving $25 more million to restore the Gulf Coast area. Granted there was fraud, but it happened, and we still need to help our people.