The Poor & the Near Poor and other BS Categories

I really thought all this BS had ended in the 1970s, but it looks like a new generation has grown up w/o the experience of the lost war on poverty and as soft-headed as we (me too) were in the 1970s. The census has come up with a new category The “near poor” will ensure that 33% of the population is always called poor. Yes, there will be poor always and no progress is possible.

The terrible and always true fact is that half of all Americans will always fall below the median in any particular measure. There will always be a lower 33%. As our president said in a related context, this is math.
So why even have such a dumb category? I think that some people are fooled by it and some people want to fool them. Many Americans, often even those well-educated in fields such as law or liberal arts, are functionally innumerate, or at least they really don't understand statistics, so they believe it when they are told that the poor and the near-poor are worse off than they were a generation ago. An interesting permutation is that 20% of the near-poor own their own homes - MORTAGE FREE. What this tells us is that many are retired with low income but decent assets.

I feel qualified to talk about the near-poor because I expect to become one of them soon and I have planned for that contingency for nearly thirty years. When I retire, I expect my income to drop into that near-poor range. But I will not be poor. I have planned this for many years. My income will be relatively low, but I will have assets like my home, my forests, cars etc. My disposable SPENDING will equal or exceed what I do today, since I will not be paying mortgages; I will not be paying for the kids educations; maybe most importantly, I will not be saving 20% of my income for retirement. Since I don't believe I will live forever, I will be spending more than I have in income. So please, don't cry for me because will be "near-poor."

I have another point that is important to recall. I am a forest owner. Forest owners have good assets but low income most of the time. Once in every 32-35 years I can make a big timber harvest. I estimate that if I live to be 86 years old, in that year my income will be around $500,000. It comes to a little more than $14,000 a year, which is not so much, but one year it will all come at once.
Think of how this messes up the statistics. If you take thirty-five of my tree farming neighbors and have one harvest every year, your statistics would tell you that you had a fantastic income gap between the rich in this case around 3% and the poor 97%. In fact, we are all in the same financial positions. There is no income gap when you look at the situation over the course of the years.
This is a strong example, but it is true more generally too. I have been in the lowest 20% and in the highest 20% of the income. Currently, my lifetime yearly earnings, adjusted for inflation, are just a little above the American mean. When I retire and my income drops, my median will go down. I estimate that by the time I die, my median income will settle very close to the median. Yet I have been among the "rich" and among the "poor".

Anyway, don't be fooled or dismayed by this "near poor" BS. My guess is that several of our Watchblog contributors are near-poor, but not really suffering very much, except maybe from hangovers. I will be in that group within about five years. I will have low income but I will be spending more than the "high income" guy that I am today.

Posted by Christine & John at November 22, 2011 6:09 PM
Comment #332353

You’ll be working off of retirement savings, and will be free of some of your biggest expenses. But imagine somebody who starts from that position, rather than ending up there in relatively comfortable retirement. Imagine a person who has a mortgage or rent to pay, and may never be able to retire because the notion of saving twenty percent of their income is impractical.

What is it with Republicans these days, and this competition to most callously disregard the troubles of people in financial distress? Are Republicans trying to convince people to become Democrats?

Posted by: Stephen Daugherty at November 23, 2011 6:09 PM
Comment #332355


I saved money when I worked at McDonald’s. If an American with anything approaching normal abilities has managed to get to the age of 50 w/o saving money or acquiring assets he is either among the most unlucky people in the world or profligate. Since it is hard for more than a few people to qualify as “most unlucky” I expect that profligate covers the majority.

In any case, your alternative is what? I expect that the state will get stuck paying for the profligate, but I don’t think they deserve as much in retirement as I will get from my good behavior.

I apologize, but I am just not the egalitarian. Justice demands that people NOT be treated equally who have behaved differently for decades.

Posted by: C&J at November 23, 2011 6:27 PM
Comment #332356


BTW - I had two aunts, both called Loraine. They lived near each other and their husbands has similar jobs.

I recall Loraine G would ridicule Loraine K for not enjoying life, for saving too much and for spending on her own home.

Both their husbands died and left modest pensions. Then I recall Loraine G telling Loraine K how “lucky” she was to have a house and savings. This drove Loraine K crazy. She would point to decades of profligacy that Loraine G enjoyed.

Both Loraines were right. Loraine G took her enjoyment up front. Loraine K took hers later. After decades of living at or beyond her means or living prudently respectively, is it just to equalize outcomes of the two Loraines?

No - I do not propose to share my savings with the lazier or profligate. Let me point out, before you start moralizing that we save 20+% of our income but give away around 10%, which I am sure is more than you or most liberals.

We will continue to give to charity after we retire, but I will figure out legal ways to keep my savings our of the hands of the profligate unless I choose to give it to them.

Posted by: C&J at November 23, 2011 6:35 PM
Comment #332359

When you were working at Mcdonalds, what time period was it, and were you the only person drawing in an income?

Also, let me be blunt: many people acquired assets. But today’s market seems to have been created with taking those assets right back. Products aren’t made to last. Debt financing in the form of credit cards, was encouraged by your party’s policies, while you made it harder for people to discharge said debts through bankruptcy. People saved for retirement, speculated in the stock market as your people advised them to, and got their asses kicked when your irresponsible speculators and CEOs tanked the markets.

For years, whatever you did, you could find your money under assault. Healthcare costs blew through many people’s savings. The S&Ls, not regulated or insured like the banks were, ended up taking many people’s savings with them to the bank’s destruction. Home equity loans, which your people pushed to legalize in many states, and predatory lenders, which your people pressed to defend, saddled many people with high value mortgages that went underwater when their homes value dropped in the bursting of the bubble.

If you invested in the stock market, and put your money in the hot companies, many times you were in danger of seeing your fortunes gutted by a scandal or the bursting of a bubble.

Federal Reserve policy put prime rates low, encouraging the build up of debt, and discouraging the build up of savings. While people in your party moved to get rid of Social Security as a non-speculative retirement insurance option, your friends in the corporate world moved to do away with defined benefit pension plans.

On and on and on. Your people built a system hostile to savings, hostile to consumers getting fair deals, hostile to investors who are just in it to make low-risk, stable investments. There’s a reason the economy is in the particular shape it is in. You beat up on the middle class’s ability to pay out of pocket, and then you ripped away their ability to pay on credit, to get things financed.

Then you wonder why the economy all of a sudden got sluggish. Well, the facade dropped. The promise of keeping wages stagnant, but standards of living ever improving fell through. The wages of working class and middle class men and women are no longer liabilities, they’re the main support for the economy, even after years of erosion.

Your system is fundamentally unable to encourage moral behavior in the markets. Those who save money at lower incomes than yours are penalized, and find themselves involuntarilty forced to dip into savings as all the costs that didn’t use to land so hard on people now work to knock them off balance. So, long term, they have to run to stand still, spend more than they have in order to avoid things getting worse for them.

People have tried to do things right, but when you allow the system to get increasingly stacked against them, there is nothing left but the lesser of two evils.

Posted by: Stephen Daugherty at November 23, 2011 7:25 PM
Comment #332361


I lost money in the stock market and in the home market. What is your point on that?

Let’s ask a simple question. Do you think that someone who successfully saved and deferred income during his/her working years should receive the same retirement as one who did not?

Don’t give me that crap about “not being able” etc. Assume that good or bad luck applies in a more or less random fashion. Consider the case of my two aunts. Should they get the same retirement?

Let me answer from my point of view it is an emphatic NO. Equality of results in the face of inequality of effort is unjust and it is indeed a communist idea.

Posted by: C&J at November 23, 2011 7:48 PM
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