Saturday, September 17, 2011

Why the Increase in the US Poverty Rate is a Hoax

There will be much wailing and gnashing of the teeth in the press and across the blogs in the next few days over these poverty numbers. And I warn you now that almost all of the commentary will simply be wrong. Anyone, anyone at all, be they Nobel Laureate, economics professor, newspaper editorial writer or simple blogger who tries to compare the poverty levels of the 1960s with those of today without adjusting for the above will just be wrong: plain, flat out, wrong.

We used to measure those who were poor after we’d helped them. Now, by and large, we’re measuring who would be poor if we didn’t help them. These just aren’t the same thing and so the numbers are not directly comparable.

This explanation will also aid you in understanding one of the great conundrums of modern America. How on earth can the US be spending hundreds of billions of dollars a year on beating poverty without actually beating poverty? Simple, we spend the money but don’t measure how much poverty we’ve beaten by spending it.