Sunday, September 25, 2005

A different approach to poverty...

there is no such thing as "poverty". Only "stupid people.

Therein is the core of our disagreement about poverty. Perhaps you could enlighten me as to the real cause(s) of impoverishment.

Well, there is a challenge. Here is my reply. Regrettably, I can not link (where it might be appropriate) to the words of Robertopia for the simple reason that his (out of all the blogs I troop through) is one of the only two or three that do not process properly through IE6. I am not going to load up Firefox or any other browser, free or otherwise, simply because one little blogger is too lazy to fix the style sheet on his page.

It has been interesting researching for this – there are essentially two sources –

First are all the “do-gooder liberal” people whose ideas would not wash with the right whinge at all.

And then there is David T Ellwood who, on his own, seems to have written the “definitive text” on poverty in the US. Certainly he seems the most quoted and the most authoritative researcher (writer?) and whose thoughts would be far more in tune with the American right whinge.

First thing to be said, we are debating poverty within the context of a wealthy nation and not the “third world” variety.

Second premise is that I want to use NZ examples – I am familiar with them and I doubt that there is much difference if any in principle between NZ and US. So if I start quoting dollars they will be NZ.

Finally, I want to take an approach which is far wider than any of the texts and work from macro down to micro rather than the usual approach of going the other way.


    Poverty – the official NZ measure is income less than 60% of the national median income. In NZ that equates to about $20,000 p.a. Is that too high? Yes, if you consider that the universal super is roughly $18,000 p.a. for a married couple. A propos of which I note a trend in recent times (in the US mainly) to express poverty in terms of "per head" income. The most logical conversion that I can think of is the 18 children per family, and to deduce that results in a "family" size of 4.8 people. That would equate to a poverty level of $4,166 p.p.p.a I think that is somewhat unrealistic as a measure as it factors costs, particularly accomodation, in a manner that is quite inappropriate.

    Cost of living – there are marked regional variations. Residential rentals in Auckland (3brm 900 sqft) is around $220 per week and upward. So the minimum for a family in Auckland would cost in excess of $11,000 p.a. Outlying areas (Kaitaia, Paeroa, Gore…) rentals bottom out for a similar property at about half that. Food is about the same in both. Clothing and other family costs are definitely cheaper in the major urban centres than the outlying areas as one might expect.

    Unemployment – Auckland and the other major centres have a shortage of skilled labour. That includes the process workers my employer is looking for; machine operators, certified forklift drivers. The national unemployment rate is 3.6%, one of the lowest in the OECD. Contrast that with the fact that in the outlying areas (where rentals are cheap) unemployment runs in excess of 25%, and for Maori in excess of 35%.

    Income parities – despite NZ’s history as an egalitarian nation there has always been graduation of labour cost based on skill and availability. There is not the level of disparity between “high” and “low” incomes that there is in the US but it is still quite marked. Of those in employment the median income in the top 3% (by number, not value) would be in the vicinity of $500,000 from all sources. Of those in full time employment, the median for the bottom 3% would be around $20,000. The point is not the scale of the disparity, so much as the bottom end median income.

    Education - In all of the texts that I read in working toward this answer, education featured prominently as a fundamental in the causes of poverty. I don’t know if Robert will recall in the 1970’s the “Batchelor of Garbology” jokes that were doing the rounds at the time. The point of the jokes then was the scarcity of employment opportunities rather than needed skill or knowledge. It started (in NZ at least) with people leaving university with science and commerce degrees unable to find work because there was a major level of unemployment and an over-abundance of labour. There is no question in my mind. Education is critical to the definition.

    Race – I made a distinction earlier for Maori unemployment rates. Is there a discrimination involved here? There may be. I believe that it is over-represented as a cause of poverty.

    Culture – Here I believe that we get closer to another cause than just by debating “race”. There is a “culture” in poverty. It can be seen in the writings of Dickens in the Pickwick Papers and A Christmas Carol. It can be seen in the stories of the Great Depression of the 1920s and 30s. The modern display of this culture is most likely include the “Gangsta”, the “colours”, in addition to the racial aspects. The common elements of the culture are –

    a) hatred of the wealthy

    b) denigration of education

    c) acceptance of crime as a source of income

    d) a general depression of ambition and spirit.


I suggested to Robert that he might like to pay a visit to Mr Babylon and that that gentleman should be a “Hero of the United States of America”. Why? Well he strikes me as a good man, well educated, and he is teaching in a school that is obviously in one of the less “desirable” urban areas of the US. I drop in on him from time to time, have done now for at least 18 months.

His experience sits well with that of friends of mine who are now semi-retired after teaching for some 35 years at a “low-decile” school here in Auckland. Let me explain “low-decile” because it is going to crop up. One of the “government gradings” of schools in NZ is based upon the (census measured) economic standing of the community to which the school provides it services. So, because I live in a comparatively wealthy area, my kids went through “Decile 10” schools – the community ranks in the top 10% of the country for income and wealth. The school where my friends taught was ranked “Decile 3” despite being no more than 10km from where I live. There are at least four high schools within the same 10km radius of my home which rank as Decile 1.

OK, so this ranking reflects the “poverty” of an area – an interesting concept but not the true point here.

First thing to know here is that teachers in NZ are NOT well paid. A new teacher graduate (effectively a double Batchelor) will start on $35,000, and after 4 years could reasonably expect to be earning $45,000. I think that teachers being underpaid is probably a universal truth.

I think too, that while the remuneration for teachers does not vary markedly between schools, their working conditions do. That is why Mr Babylon is (for me at least) a hero.

So in the “free market” of school teachers, the working conditions are a considerable part of the decision in selecting where to teach. It is obvious too, that a very large part of those working conditions comprises not the staff room or the availability of coffee, but the kids who are to be taught.

The impact of this process, borne out at least by the experiences of my friends, is that the best teachers end up at the “best” schools. The “bad” schools – and the correlation with low decile numbers is astonishing – end up raking for what they can get. The consequences are obvious. After three months of advertising and interviews of “possible” candidates for a science teachers position results in the employment of a youngish immigrant lady with MSc. She leaves after 4 months when it is found that her knowledge is nowhere near the level of her qualification. Students in one class of 17y-o’s were teaching her about Newton’s laws of planetary motion. Isolated example? Not at all in a Decile 3 or lower school.

Do I have to spell out the conclusion?


There was an op-ed in the Herald this past week, posing the question at the end “Should the US pour aid into New Orleans, or should the government just stand back and wait for everyone to leave for better pastures?”

There are parallels here in NZ, not as the consequence of any disaster but directly linked to the unemployment data that I mentioned at the beginning.

For example, there was a drastic shortage of fruitpickers in three of our major fruit regions this year. Usually that shortage is filled from backpackers, “tourist labour”, with a few locals joining in for the pocket money. The labour is employed by contractors, not the growers. Two major contractors were prosecuted for tax fraud – not accounting for the tax that should be paid by the pickers. The rules relating to “tourist labour” – mostly Asians brought here for the work on temporary permits – were changed making it the responsibility of the contractor to ensure that his employees observed the terms of their work permits and left the country.

But what about the unemployed?

Well it happens in the fruit growing areas there are not a large number of them.

The pay rate for fruit pickers is the minimum adult rate - $8.50 per hour. Payment is conditional upon picking a minimum quantity (after rejects) per hour for the day. Assume $8.50 and 14 hour day, total earnings from 12 weeks work is $8,000 before tax. Then move on to the next region. The total picking season might get you 16 or 18 weeks work. Out of that you buy your rent and food. So, pay more? Why? It is as much as the growers can pay, there are people available usually… why pay more?

Another example - Since WW2 there has been a steady “urban drift” in this country. This has created a number of difficulties, among them;
    a) Cultural. For the Maori and Pacific Islanders in particular, the connection between self and birthplace and family is very strong.

    b) Educational. The standard of education from rural schools was (still is) poor. See earlier comments but apply location in place of teaching problems. There is an added complication of access to schools in rural areas.

    c) Lifestyle. What is acceptable in a rural area – keeping chickens or butchering in the backyard for example – is not in an urban setting. Having to buy food rather than “grow it” has been an often unexpected surprise.

    d) Income insecurity. Unskilled labour is usually the very first level to be affected by an economic downturn. From the mid-1950’s through until the early 1980’s (almost a complete generation and half) the NZ economy was a three-year cycle of “boom and bust” – one year boom, general election, two years bust. There was nothing natural in this – it was entirely artificial and created by governmental desire to retain power. For those who want to blow trumpets, most of that period was dominated by the centre right, rather than the left.

The point here is that while Keynesian economics might preach the “market forces” solution to solving long term unemployment, the preaching completely ignores a number of non-economic forces that slow or even prevent the migration of labour to the markets that require it.

The best illustration of this perhaps is the IT labour market in the US which has been high skilled high remuneration and drastically undersupplied over perhaps a ten year period. Rather than "suitable" (i.e. the right skill and cost) labour moving to where the work is, the industry has been moving itself to areas where there is a large number of suitably skilled workers and much lower costs. That, I submit, is why so much of the IT development industry has moved from the US to India, Indonesia, and Malaysia. Keynes in reverse in fact. But what is the effect in the US? Highly skilled workers who previously commanded high salaries are now moving down into the lower levels of the industry, there is downward pressure on wages, and while it may take 15 years to completely shake out, someone ends up unemployed or broke or both.

I know that health and diet are not CAUSES of poverty, but they sure are KEEPERS of poverty. Until such time as that link is broken, then long-term unemployment / poverty will be a problem.

Do we really know just how far that link extends.

First up, lets “limit the bell-curve” a bit. Let’s just leave out for the moment the people who through systemic health problems will never be able to work. I include here those with multiple physical and intellectual disabilities; the son of our next door neighbour who died at the age of 14 with the abilities and intellect of a two week old child. If Robert wants to preach eugenics he may. I will not because I am “the collectivist” and I have some regard for the value of all human life.

So we are going to look to those who have the capability to earn at some level.

If a family on an income of $20,000 is expected to pay 50% of their income in rentals, then there is not a great deal left in the purse each week. Yes, we can argue that mum should get a job as well. See my note below on the “economic single parent family”. But assume for the moment that is not possible. Take out food for a family of four, utilities, clothing, transport and there is not a great deal left. So, illness tends to go untreated until it is totally incapacitating for no reason other than “I can’t afford it. A visit to the doctor is a weeks power, or a weeks petrol or bus fares.

The other aspect, and the reason behind including diet here, is the “cheap fast food” aspect. It is cheaper to feed the family with $15 of the Colonel’s finest or a couple of BigMacs each than it is to buy meat and veg and cooking it. And at this almost subsistence level , “cheap” is everything.


Another prominent factor in the “cause of poverty” discussions is the single parent family. I am going to leave out all of the garbage that goes with “what makes a single parent family” as immaterial. In some instances (such as one of my sisters) it is a matter of choice. For most it is not choice but circumstance.

I want to add in here the family that is economically “single parent”. This is the family which has both parents working full time, whether wage or own business is immaterial. The critical factors are low income and children left unsupervised for lengthy periods. There is no difference in that world to the single mum trying her hardest to make a living between family and alimony.

Robert makes much of the idea that pooor people "choose poverty, that poverty is "the consequence of poor choices". As regular readers might know, my rebuttal to that is "the choice of one's parents".

A kid who is born (just for the sake of the argument) with a P habit is sure going to have a lot of choices to make. Which school? Any that will take him. Not a case of the "best" or anything else.

The kids who live 25 miles from the nearest school, whose parents are trying their best to farm a living on marginal land, who start their day helping with the morning milking at 5 a.m., and if they are lucky catch the school bus at 7 a.m. after a good breakfast, and who get home at 4.30p.m. in time to cook the evening meal for the parents who are beginning the evening milking... Yeah, they had a choice? Right? The fact that they used to end up in my father's "slow learner" class is just the result of a bad decision. The challenge my father put himself of having 25% of his class leave at the end of the year with an acceptable level of literacy was just a simple sop to the left wing soul I suppose, apart from highlighting "the failure of the education system".

The "latchkey kids" who leave for school on foot at 7.30 with $2 in their pocket to "buy lunch". For whom a BK is a square meal and lollies a breakfast snack. They arrive home at 4 p.m. and the parents get home at 6.30. The evening meal is burger or fried chicken or pizza... Did they make it to school? Who cares!! Wouldn't do them any good if they did.

Yeah, sure those kids chose their lifestyle, the poverty culture, the crime ( You want it? Take it! We can't buy it...)


Let’s just assume, for the moment, that we in Robertopia have reached that point where poverty has been overcome. Where everyone who wants a job has a job. Where all of the lazy good-for-nothing druggies have died out, there are no single parent families, there are no families where both parents need to work in order to make ends meet.

Let’s just assume, for the moment, that everyone earns an income that affords them a reasonable lifestyle without hardship.

The question is IS SUCH A UTOPIA SUSTAINABLE?” and my reply is “I doubt it”.

That doubt is no more than hunch, gut feeling, that there will always be a group who fall below the income level that meets the Robertopian requirement.

Is it an inevitablility? I think that it is.


Some other links I referred to in putting this together...

left wing

left wing

right wing


As a closing note, it was interesting that at least one of the papers I read on the subject noted that most people below the poverty line in the US, did not remain there for much over seven years. There was only one attempt to explain this, in terms of federal and state government policy.


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