I’ve often argued against the “victims and villains” discourse on poverty. This refers to the tendency of progressives to view the poor as victims of a flawed economic system, and conservatives to blame poverty on bad personal decisions (drugs, crime, lack of education, single parenthood, etc.) I don’t like either view.
Noah Smith has an excellent article on this subject, which helps to clarify some of the issues. In the end, I’ll interpret the data in a slightly differently, but the thrust of his argument seems correct. The headline and subhead nicely summarize Smith’s key points:
Stop Blaming America’s Poor for Their Poverty
In Japan, people work hard, few abuse drugs, crime is minimal and single mothers are rare. The country still has lots of poverty.
And here’s the statistic that caught my eye:
Finally, Japanese people almost all work. The working-age employment rate, at more than 77%, is higher than the 71% rate in the U.S.
Based on what I’ve read, Japanese gender roles remain somewhat more “traditional” than in America, especially for the middle class. Unless there has been a recent change that I am unaware of, middle class Japanese women tend to drop out of the labor force after having children. In America, a large number of middle and upper middle class women continue to work, even after getting married and having children.
In that case, the 77% vs. 71% split actually understates the difference between the two societies. My hypothesis is that in Japan the 23% of non-working prime age adults are skewed toward middle class homemakers, whereas in America the 29% of non-working prime-age adults is skewed more toward the poor. However, after the welfare reform of the 1990s we have become a bit more like Japan, with increasing numbers of working poor and fewer people who rely exclusively on welfare.
To summarize, my claim is that those on the bottom of Japanese society are likely to choose to work, and given the extremely low unemployment rate in Japan they are also likely to find jobs.
So let’s reframe Smith’s article, getting beyond the victims and villains discourse. Perhaps conservatives who blame poverty on lifestyle choices should actually blame low rates of employment in America on lifestyle choices. Smith notes that America has lots more crime, drug abuse and single motherhood than Japan, but doesn’t think this is the main cause of poverty. After all, Japan also has lots of poverty. That’s a strong argument. Perhaps the real difference is that these lifestyle choices in America lead not to extra poverty, rather to lower rates of employment in the US, especially for low-skilled workers. That is, while America does have working poor, Japan has a much larger share of its poor in that category.
Alternatively, perhaps the lesson from Japan is that even if America’s low-skilled unemployed were to change their lifestyle and get jobs, they’d still be poor because wages are low for unskilled jobs.
I would suggest replacing the victims and villains approach to poverty with a utilitarian approach. One implication might be to adopt low wage subsidies, which both encourage people to work and also boost the welfare of those who do work. This type of economic policy can make the economy more productive by encouraging employment, and also make it more equitable by boosting the incomes of the poor. I believe that both the US and Japan could benefit from this approach.
Utilitarians understand that people are born into different situations. While “blame” can be useful in discouraging anti-social behavior, we should never forget that babies born into homes with single moms that are addicted to drugs did not choose to be born into those homes, just as Donald Trump didn’t choose to be born into a family that would give him tens of millions of dollars to jumpstart his real estate career. We need to recognize that society is deeply unequal, and that people often make decisions that push them toward poverty. Utilitarianism helps us to look at social problems dispassionately, beyond victims and villains, and this allows us to come up with more effective solutions.
PS. I use scare quotes for “traditional”, as I’ve read that what we think of as a traditional middle class lifestyle for families is actually a product of modern times.
Here’s a member of Japan’s working poor:
READER COMMENTS
nate
Aug 1 2019 at 2:31pm
I also saw this tweet criticizing Noah’s article yesterday, which I thought was interesting.
“Noah can’t even beat the strawman.
He picks a *relative* rather than *absolute* measure of poverty. In absolute terms it’s $23k in disposable income.
For comparison, the median disposable income in Italy/Spain is $26/23k.Poverty in Japan = average in Spain. ”
https://twitter.com/stucchio/status/1156367372791345152
Scott Sumner
Aug 1 2019 at 3:07pm
Nate, That data doesn’t seem accurate to me—Italy and Japan are not far apart in average income. Perhaps median income is much different, but I’m skeptical.
But yes, he is looking at relative poverty. Keep in mind that America is richer than Japan, so in absolute poverty terms his argument would be even stronger.
AMT
Aug 1 2019 at 4:26pm
No Scott, Noah hasn’t even made a coherent argument about poverty. When he uses relative income statistics, it by definition literally only tells us something about the distribution of income, which itself doesn’t even say that much about actual poverty, which is about consumption, not taxable income. Especially if Japan has an aging population with a larger proportion of retired people living off of their savings and with an apparent low income, though not actually living in poverty, his statistics are going to be very misleading. I think it’s fair to assume that he knows this full well, so he chooses to use meaningless, garbage statistics since the truth would not support his argument. Why not just say “x% of the Japanese live in absolute poverty because they consume less than x dollars per year”? If that’s too hard to measure, At least an absolute income number would make sense when trying to compare countries with different median incomes.
According to his methods, Mao’s China had ZERO poverty because practically everyone there lived at the subsistence level, so 0% were under 50% of the median income! He should have been referencing that as the ultimate utopia!
Scott Sumner
Aug 1 2019 at 5:14pm
AMT, There are arguments either way. For the “cultural” argument of conservatives, it would seem like relative poverty is the issue. Or do American conservatives want to claim that drugs, lack of education, crime, single parents, etc., are not a problem because America’s poor are as rich as our middle class was in 1900? If you want to make a cultural argument, you are inevitably going to be talking about relative poverty. Absolute poverty is determined by technology, the overall economic regime, etc.
Having said all of that, I suspect that Japan has roughly as much absolute poverty as does the US. We are a much richer country than Japan. So switching to absolute poverty makes Japan look even worse. Smith is right either way.
Floccina
Aug 2 2019 at 12:05pm
About your point on an aging population, he also mentions from time to time the percent of Japanese children that live in “poor” households.
AMT
Aug 2 2019 at 3:50pm
Scott,
The conservative “cultural” argument can be arguing causation for either relative poverty (inequality) or poverty. Poverty is absolute poverty, not inequality. My point is that he is pretending to talk about poverty, but using completely tangential statistics that are only about inequality. These are entirely different things. I am saying he obfuscates them because I suspect that the actual poverty rate in Japan is substantially lower, which would destroy his argument. You suspect they are similar, but I am inclined to think the opposite, because otherwise Smith would just use the relevant data! (How could Smith, a PhD economist, be so stupid to think that inequality and poverty are the same thing?! It’s much more likely that he thinks he can trick his readers with irrelevant data that makes his argument look stronger.) I doubt he really cares about poverty, because otherwise he would actually talk about poverty instead of inequality!
Instead of providing an apples to apples comparison, which we need to actually evaluate the cultural argument as it applies to poverty, he provides us an apples to ramen noodles comparison. He has only shown that inequality can still exist with lower levels of the cultural problems discussed. That’s not at all surprising! I can pretty easily imagine inequality in a world that has eliminated poverty…but I think it’s much more important for us to know if we can reduce poverty by reducing those cultural problems. Smith’s analysis provides us with zero information on that.
The conservative cultural argument says that bad behaviors lead to worse outcomes for people. They’re not saying “drugs…etc.” are not a problem because the welfare state now props people up out of poverty, but saying they are a problem because people are significantly worse off than they otherwise would be. It implies that equality of opportunities are more equal than people think when they just look at the outcomes, and implies something about desert. Bad behaviors can be causal for both inequality and poverty. But, if reducing bad behaviors reduces poverty, even if inequality still exists, is that not an improvement?! Smith’s analysis is not at all inconsistent with this, because he provides zero actual analysis of poverty!
He has disproven nothing. He doesn’t even show that these “relatively impoverished” Americans would not be better off if bad behaviors were reduced, which is the most important point that he could make to counter the conservative cultural argument! It’s pretty likely that if someone’s income goes from $10,000 a year up to $20,000 a year that they are better off, even if they are still “impoverished” according to his definitions. Does he thinks that’s meaningless because, “still technically impoverished according to a stupid, unnuanced definition”? A lot more detail is required to show anything meaningful.
HE is the one who is arguing that Americans are basically no worse off for the “drugs, lack of education, crime, single parents, etc.”! Does that make any sense? Can it make sense for any single individual? Can it somehow make sense in aggregate for the less fortunate classes? Isn’t it literally a tautology that things that are bad choices for someone in the long run, are bad for them? In fact, he concedes that argument, admitting “violence, drugs and family breakdown undoubtedly make life worse for poor people in any country,” but he mainly blames “the capitalist system” for allowing “unemployment, sickness, injury, or other bad luck” to cause “poverty.” Interestingly, he doesn’t seem to see much connection between people’s bad choices and the problems the capitalist system allegedly causes.
If he wants to talk about poverty, he is an adult that knows how to talk about poverty. If he wants to talk about inequality, he can use the right words. He also ought to know which statistics actually show the relevant information. You have to immediately suspect something is wrong when they don’t fit. He obviously is not talking about poverty when he complains “the market, on its own, simply doesn’t create enough well-paying jobs for everyone to be able to afford a comfortable lifestyle.” Ah, THAT’s when we will have solved “poverty”!
Floccina, his discussion of “impoverished” Japanese children is meaningless since it is also tied to his flawed definition of poverty.
Gaurav
Aug 3 2019 at 11:52am
https://www.nationalreview.com/2019/07/what-noah-smith-gets-wrong-about-poverty/
Kevin Williamson had an excellent response to Noah Smith. One additional point – even if we want to use relative poverty instead of absolute poverty as the relevant metric, it seems some context is necessary. Is the college student or retiree, whose incomes are generally much below the median, in the same boat as a single mother of two scraping by? Any reasonable person would so ‘no’, but Smith lumps them all into the same category by using income. Maybe Japan doesn’t have as much ‘poverty’ when you exclude those who are on the path to something better (like college students and entry-level workers) and those who are past prime working age (retirees).
Floccina
Aug 2 2019 at 12:02pm
Median PPP adjusted income in Italy is $20,860, in Japan it is $21,675 (link: https://en.wikipedia.org/wiki/Median_income) en.wikipedia.org/wiki/Median_in…
MarkW
Aug 1 2019 at 3:48pm
Smith notes that America has lots more crime, drug abuse and single motherhood than Japan, but doesn’t think this is the main cause of poverty.
For the most part I agree. But where those factors are present, they’re what makes poverty in the U.S. suck so much (crime, particularly) — even when material deprivation is low by world and historic standards. And there must be at least some causal impact on poverty, since crime and disorder in poor neighborhoods surely must contribute to their isolation and lack of development. People who can afford not to, don’t want to live in or near those poor, high-crime areas, or even venture into them. Here in Michigan, we have high rates of poverty in Detroit and Flint but there are some equally poor rural areas in the northern part of the state. These poor rural areas, though, have nothing close to the violent crime rates of Detroit or Flint, nor the same levels of desperation. Middle-class people who avoid high-poverty inner-city neighborhoods don’t hesitate to own or rent weekend places in equally poor northern counties (even though there’s often little distance between the waterfront cottages and the old trailers with cars on blocks nearby).
One implication might be to adopt low wage subsidies, which both encourage people to work and also boost the welfare of those who do work.
Agreed — the EITC should receive much more political support than it does. But I’m not sure how much effect increasing it would have on the crime and disorder problems that seem to be the worst features of poverty in the U.S.
Scott Sumner
Aug 1 2019 at 5:15pm
Yes, crime is very bad regardless of its impact on income.
Matthias Görgens
Aug 1 2019 at 9:14pm
I do really like the peace of mind that comes from low crime in Singapore.
You can just leave your phone or wallet on the table in a cafe when you are going to the loo. Just like you would at home. Less need for constant paranoia.
MarkW
Aug 2 2019 at 11:50am
I think crime and social dysfunction are more than just very bad — I think they’re now the main things that matter about poverty in the U.S. In the mid 20th century there were still 10-20% of Americans living without electricity or indoor plumbing or heating their shacks with wood or coal (or all of the above). This photo, for example, is not from the dust bowl but from a 1964 Life magazine article. That kind of absolute poverty is gone. About the only people in the U.S. living without electricity and indoor plumbing are the Amish, and nobody’s worried about how the government should address their poverty simply because the levels of crime and social dysfunction in their communities are low.
Floccina
Aug 2 2019 at 12:17pm
Great points. Another poor group doing fine here:
I think that today in the USA over 80% of the harm of what we call poverty is not due to lack of money and so probably giving low earners more money will allow them to consume more goods and services but not change much of anything else.
DeservingPorcupine
Aug 1 2019 at 4:50pm
Here’s the thing. We know with absolute certainty that abusing drugs, getting arrested, having kids out of wedlock, etc. makes one poorer. Noah wants to say these factors aren’t a big deal for America’s impoverished because of Japan’s situation, but since we know they contribute to some degree, he should quantify, or at least say he thinks is the actual contribution of those bad behaviors to poverty.
I wish I had a term to describe this kind of behavior when making an argument because I see it a lot.
Scott Sumner
Aug 1 2019 at 5:18pm
Maybe he should have made that clearer, but his focus was pushing back against conservative misconceptions. It’s fine to say that drugs aren’t good for you—neither is tobacco. But tobacco doesn’t cause poverty, and I’d say drugs play only a minor role, albeit not a zero role.
MarkW
Aug 1 2019 at 5:51pm
But tobacco doesn’t cause poverty
But, given insane levels of tobacco tax, it does (with a strong assist from government). In New York, poor smokers apparently spend a quarter of their income on cigarettes:
https://www.fightcancer.org/news/poor-smokers-spend-one-quarter-their-income-smoking
And the poor are much more likely to be smokers than the wealthy, so tobacco taxes are highly regressive. Vaping is much cheaper and healthier (as well as an effective route to quitting), so obviously governments are doing their best to choke off that option and/or impose the same regressive taxes on vaping products as on tobacco.
How much sense does it really make to talk about what governments should do to help the poor when it won’t even stop screwing them over on purpose?
[HTML fixed —Econlib Ed.]
Scott Sumner
Aug 2 2019 at 11:53am
I agree that tobacco taxes are highly regressive, and I’d favor abolishing them.
Mark Z
Aug 2 2019 at 2:18am
But… they’re not misconceptions, or at least most of them aren’t. Maybe regarding pot or tobacco, sure, but then use of those are probably correlated with poor impulse control or shortsightedness, and thus share a cause with poverty rather than causing it, leading to the misunderstanding.
Alcoholism, hard drug use, teenage pregnancy, criminality, and financial profligacy? These factors’ effects aren’t misconceptions.
I think Smith wants us to believe that behavior has little to do with poverty. He’s clearly wrong about this. Luck may explain much variation in wealth at the top and the middle, but in explaining the difference between the bottom and everyone else, behavioral differences are absolutely major factors.
Scott Sumner
Aug 2 2019 at 11:53am
Luck plays a huge role in behavioral differences.
MarkW
Aug 4 2019 at 6:47am
Yes — in a couple of ways. There are undoubtedly individual differences in inborn impulsiveness and sensation-seeking as there in height and hand-eye coordination. But then there’s the more important luck of being born into a culture that promotes bourgeois life choices, where doing what most of your peers do and what your adult relatives have done will lead you in a successful direction (and screw-ups are not fatal) vs being born into a culture where bourgeois patterns are not present and would not work. Where missteps are sometimes literally fatal. Where adopting bourgeois patterns is an isolating act (what–do you think you’re better than all of us?) and where, to pursue a bourgeois life as an adult, you’ll need to move away from your friends and family and the community and culture you grew up in. Life choices that are easy for a middle-class teen in the suburbs to make are very difficult for teens in poor inner-city neighborhoods to follow.
Mark Z
Aug 2 2019 at 1:54am
I’m sorry, but Smith’s argument is nonsensical. Within the US, each of these factors correlates with poverty. Within Japan, I expect each also correlates with poverty. What does that say about their effect on poverty? Sure, being Japanese rather than American is also a big predictor of poverty, but if drug addiction and single motherhood aren’t significant, the Japanese single mothers and drug addicts will be about as well off as non-drug addicted, non-single parent Japanese. Smith needs to learn about Simpson’s paradox.
Is the jist of his point that other factors explain *more* of global poverty? Because this is irrelevant to domestic policy discussions, which is the context in which we discuss poverty. Beyond that, so what? Most of the causality of most cancers comes down largely if not mostly to noise, e.g. bad luck, somatic mutations as one gets older; I guess this means we shouldn’t ‘blame’ people who over-expose themselves to carcinogens for getting cancer? Should we stop blaming drunk drivers for getting into car accidents, since most of the variation in involvement in car accidents is due to factors other than drunkenness?
Also, it seems that Smith is pretty clearly the ‘poor people are victims of the system’ camp, so I’m not sure his post coheres well with your own point.
Scott Sumner
Aug 2 2019 at 11:50am
You said:
“Within the US, each of these factors correlates with poverty.”
No one disputes the correlation–that says nothing about causation. And I don’t think Smith would even dispute that there is some causation. He’s making a different point. It’s too easy to blame poverty on certain lifestyle choices when a society mostly lacking those characteristics has almost as much poverty as we do.
Floccina
Aug 2 2019 at 11:58am
Interestingly many Democrats contend that most joblessness, violence, drug use, and having children out of wedlock are caused by poverty.
Lorenzo from Oz
Aug 2 2019 at 9:24pm
The problem with victim-and-villains analysis is also why reparations for slavery and Jim Crow is a terrible idea. It only has any saliency because African-Americans on average do worse than other Americans on various indicators. (If they did the same or better, as recent African immigrants do, the idea would have no potency, as African-Americans would have clearly overcome past legacies.)
But as it is highly likely that a helicopter drop of money for descendants-of-slaves would have no substantive effect on the underlying problems, it would likely lead to some combination of the following:
(1) reparations being treated as an act of closure (so undermining any further claim on moral attention), or
(2) reparations not being so treated (so people would resent any further claims and there would be more of “we paid you, so any continuing problems must be your fault”).
But if you are Ta-Nehisi Coates and you are committed to a mystical, all-explaining idea of “white supremacy” then the grand symbolic gesture as of moral atonement by villains for victims is probably the only place you have to go.
If Democratic-controlled cities invested much more intelligently in policing services and strategies for urban African-American communities, the most salient problem (much higher homicide rates) could be addressed remarkably quickly. As Oakland demonstrated recently. But that sort of taking-responsibility policy approach is hard, calling for reparations is so much easier.
Seppo
Aug 3 2019 at 6:13am
I’d guess that the best way to reduce homicide rates would be to legalize and regulate currently illegal drugs, manufacturing and distribution.
This would cut the raison d’être from many many criminal organisations, which fight violently for market share in drug business.
Lorenzo from Oz
Aug 3 2019 at 10:32pm
The general problem of the war on drugs does explain the specific remarkably high homicide rates of African-American urban communities. Historical analysis provides a more useful explanation and indicates ways forward.
Lorenzo from Oz
Aug 16 2019 at 9:10pm
That should be “does NOT explain” …
Pyrmonter
Aug 2 2019 at 10:19pm
Supposing the Japanese male LF participation rate to be c. 82%, there is a time within the lives of most of the participants on this thread when that was also male labour force participation in the US (and, incidentally, a time to which many on both left and right are now treating as the Golden Age. It wasn’t, but let’s not be distracted). What has driven the fall? ‘Macro’ matters like recessions seem to increase the rate of decline, but even with ‘good’ times, the trend has, at most, plateaued (as can be seen from c. 2015 to date). Compare that with the UK: what is driving male LF participation down? Ability to depend on women? Job competition? Formal or regulatory rigidities in the labour market (surely this can’t be the work of minimum wage laws?)
https://fred.stlouisfed.org/series/LNS11300001
Thaomas
Aug 2 2019 at 11:03pm
I’ve never understood why more Libertarians do not argue for higher EITC an an alternative to minimum wages and GMI.
Jared J
Aug 3 2019 at 9:22pm
Is Smith’s data age-adjusted? It would seem to me that, given Japan’s percentage of over-65 year olds is nearly double the percentage in the United States, this would significantly, and unfairly, increase their relative income poverty measure.
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