Why Poverty Persists

I found this excerpt from Matthew Desmond’s new book of interest because it has a different view. He believes that poverty perpetuation is not so much about the amount being spent on poverty reduction but for other reasons. He believes a greater problem is how the poor are exploited through the cost of the goods and services provided to them. Undoubtedly a big part of the problem but this, rather than increasing spending on poverty programs, is the main problem in his view.

The link below is gifted so is accessible to all.





I assume that this is for health care . . .

But I wouldn’t read too much into the number for deductibles since going from a $50 deductible to a $100 deductible would already be a large percentage compared to a 5% increase on a $25,000 wage.

But agree that the overall family premiums is a bit concerning.

It’s three of the example that came to mind.

Wages of regular folks have not kept pace with wages of executive. There are probably a lot of reason for this but #1 is very likely the decline of Union Labor in the US as a percentage of the work force which gives management huge upper hand in the labor market.

College costs have vastly exceed the rate of inflation taking away one of the most common pathways for many to “improve their job prospects” and instead are often saddled with crushing debt when starting their careers.

Healthcare costs which also have out stripped inflation remain one of the leading cause of personal bankruptcy in the US.

They aren’t the only reasons poverty persists but they are 3 of the leading causes in my opinion.


Those were good examples of expenses disproportionately affecting the poor.

Personally I had focused, before reading this article, on the income rather than the expense side of poverty. On the income side, I saw two main problems: (1) poverty programs were not efficiently delivering resources to the poor and (2), income inequality resulting in large numbers of working poor because of low wages. Desmond extensively discusses how the low rate of unionization has contributed to this.

However Desmond thinks the expense side is the bigger problem so I found that enlightening. Whether folks agree with his thesis or not, it is an interesting, thoughtful article.

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I guess it comes out somewhat the same whether the expense side is too high or the income side is too low might just depend on which angle you are observing it from.

But with poverty there are certain expenses that everyone will have and I think shelter, food, health care and job related travel expenses are something that nearly every one will have and those with a smaller income those items will generally be a much larger percentage of their income leaving less room for “non-essentials” such as entertainment and savings with savings being the thing that generally raises folks out of poverty.

if you’re an actuary, you’re part of the reason poverty exists.


Tennessee Ernie Ford - Sixteen Tons - YouTube


I’ve had a chance to go through most of the article now and agree with much of it. But there is one thing that I’m having trouble with.

But even if we exclude Medicaid from the calculation, we find that federal investments in means-tested programs increased by 130 percent from 1980 to 2018, from $630 to $1,448 per person.

He goes on to talks about the aid “more than doubling” but over a 38 year period that means aid increases at roughly ~2.25% annually (if I did the math right) which seems a bit below the inflation rate which I think comes out somewhere between 3% - 4% over time. So sure the dollars are more, but aren’t they worth less in purchasing power?

He makes that point but also the additional point that shelter expenses are disproportionately higher because the landlords are making larger profits off of poor people than from higher income people. There is a much better return on investment being a slum landlord than being a landlord in a middle class neighbour hood. He makes similar arguments about banking costs with respect to account fees. Poor people are more likely to be hit with account fees than wealthier customers.

And those were all parts of the article I agree with.

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No kidding.
We had a rental property. A century+ rooming house in a small city which shared a driveway with an identical house.

Ours had 2X2 bedroom apartments, one ground floor one top story. I kept the grounds landscaped and clear of snow. We installed air conditioning. Everything renovated, new appliances. I spent way too much installing in-suite laundry as well because I figured young families don’t want to be going to the laundramat. I grossed about $2500 or a bit less, and ignoring capital expenditures, cleared a couple hundred a month (and actually cleared nothing after I spend many 10k’s on upgrades).

Same house next door, Absolutely falling down. Like tarps on the roof to stop it from leaking pretty much. Garbage in the back yard. No outside maintenance. From what I saw from outside, the inside was trashed. But, they had it set up as a rooming house and had as many as 9 people in there. They were grossing over $4K a month. Then they started charging each tenant $50/month for parking on top of that. I was making couple hundred a month, they were making $1-$2k for the same house. Oh, and the other difference was, the landlord was a self-entitled arrogant prick that I had to explain one time how things worked lol.

tl’dr of that blog post was, yeah, you can make a lot more money being a slum landlord than trying to do things properly.


And typically employers pay some/most of the premiums, so when health premiums go up your total comp goes up but your wages may stagnate.

But do US employers even provide health insurance for the folks at the very lowest income levels? Guessing most poor folks only have Medicaid?

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Yes. It varies by state but a good working number is that the income limit is 138% of the federal poverty level, which is around $28k right now for a family of two.

So for people who are truly in poverty or very near, I think many are on Medicaid. But $28k isn’t much, so for people over that line I think you hope for employer coverage, or you can try the exchanges.

!? I certainly pay disproportionate tax which should help relieve it. If I quit my job it would only hurt the prospects of the impoverished, imo.

Poverty will always exist. Some people are incompatible with the economy. We have a safety net because of this. They get a bare minimum of services because they are non-productive members of the economy.


The fact that humans have to be required to be productive in the presence of extraordinary automation is a travesty in itself.

It’s all because a few own the automation, as a consequence of capitalism.


I think you’re overstating the automation. Even if you went full Communist and redistributed everything we need productivity to maintain anything like a 1st world living standard.

That’s the lie people continue to tell themselves so they are willing to continue to slave away.

There’s absolutely 0 chance that everybody still needs to work 40 hours/week with our current automated productivity.

Maybe 5 hours a week MAX.

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