Thursday, September 15, 2011

Poverty is winning

This is an extraordinary chart showing a rapid fall in the poverty rate that more or less ended with passage of the War on Poverty. Since then the rate moves up and down within a relatively narrow band in correlation with the general performance of the economy. Of course, past results are no indication of future performance and it is not at all clear that the poverty rate would have continued to decline. But Vietnam was not the only war that LBJ escalated and lost.


Anonymous said...

Funny that in the 1950s unions were much stronger than they are now, the government was injecting money into the economy through the implementation of the interstate system, and we were still reaping the rewards of WWII and the Marshall Plan (all government funded); not to mention government programs like the GI bill and housing support.

All that graph shows, really, is that poverty is hard to eradicate.

Tom said...

What that chart makes me wonder is if it's comparing apples to oranges. The poverty line is a wholly-arbitrary number anyway, and you would need to know how it was defined throughout that time period to make any sense out of the chart.

@Anon, the fact that you think the government is actually capable of "injecting" money into an economy says worlds about your ideas. Unless government happened to be sitting on huge stashes of cash that it all of a sudden decided to spend, there was no injection, only reshuffling.

Anonymous said...

The government is capable of injecting money into the economy. You obviously don't understand how monetary policy works. However, you are right in the specific example of the interstate system, since it was implemented with the new gasoline tax.

Interestingly enough though, I forgot to point out that the top marginal rate during the period spotlighted by the folks at Cato was in the 90s. Reminds me a lot of how the GOP claimed the Clinton tax increase would destroy the economy. Didn't exactly happen now, did it?

Tom said...

Anon #2, exactly where is that money coming from that the government is "injecting" into the economy? It's either collecting it in taxes (shifting spatially) or borrowing it (shifting temporally). The only way money gets "injected" into the American economy is somebody spending a stash of money that was completely dormant (not even in a savings account), or foreign money comes in (exports, tourism).