Poverty in America is still worse than in other industrial democracies
VISITORS from Sweden, Canada, West Germany, the Netherlands, and other countries often are horrified by slums and evidence of poverty in the United States. Despite both the 1960s ``war on poverty'' and the 1980s emphasis on free enterprise, the US suffers from far more poverty than other capitalist countries with similar standards of living. Why?
Gary Burtless, an economist with the Brookings Institution, offers several reasons in an article in the latest Brookings Review and in a telephone interview:
Economic rewards are more unequally distributed in the US than elsewhere in the Western industrialized world.
In Japan or Sweden, for example, corporate executives are not paid nearly as large multiples of the wages of ordinary workers as they are in the US. Nor are professionals, such as doctors, quite so handsomely rewarded for their work.
``Why is an economic mystery,'' says Mr. Burtless.
Most other industrial countries have a socialist or social democratic party on the left of the political spectrum pushing for ``social justice.'' The competition for votes results in a more developed social welfare system that redistributes income better.
In the US, the two major parties are coalition groups that tend to include both conservatives and liberals, rich and poor. The Democrats may attract many of the working class and poor. But this party also includes many conservative southerners.
As a rule, other issues than income distribution dominate US elections.
The US suffers from the legacy of slavery. Many blacks have not been able to burst through prejudice, slums, and poor education to reach the income levels of the middle class. Blacks, with a disproportionate number of poor, make up some 12 percent of the US population.
Burtless suspects that Hispanics and Asians will be indistinguishable economically from society as a whole in two generations. He's not sure blacks, who were brought to this country forcibly, will make the same progress.
Many in the US believe that a person's economic position is largely his or her own responsibility. If you are poor, it's your own fault. It doesn't matter if your parents were divorced, your mother poor and unable to afford college for you. You are supposed to boot-strap yourself somehow to become a lawyer or professor.
In Europe or Canada, there is a greater tendency to put some of the responsibility for curing poverty on the government. The government should intervene to provide more equality of opportunity and even increased equality of income.
American voters and policymakers dislike government intervention in income distribution even more than they dislike poverty.
Burtless doubts Americans have chosen ``to limit transfers to the able-bodied poor because of any careful calculus of the exact efficiency losses that would occur if more ambitious programs were adopted .... Greater equality would require that a highly prized distribution mechanism - the market - be replaced or greatly supplemented by a less popular one - government intervention.''
In the US there is more debate as to the morality of helping the poor through the government than in other industrial nations.
Some conservative Christians and Jews say that alms-giving should be a personal matter, that the Bible says nothing about the government taking taxes involuntarily for the purpose of helping the poor. Liberals and others often assume the government in a modern society should step in to mitigate the ills of capitalism.
``It does come down to a moral question, as to which there is a sharp disagreement,'' says Burtless, who was an economist in government exploring questions of poverty and social programs during the Carter presidency.
Through various experimental programs in the late 1960s and the 1970s, economists have learned considerably about the efficacy of various antipoverty programs. Some programs do help the poor financially. But they also may cost something in the way of less effort by the poor to help themselves.
There is little more than anecdotal evidence, however, that economic growth in nations with more ambitious social welfare programs has been hurt by those high social expenditures.
Burtless has assembled statistics showing that such nations as Sweden, West Germany, France, Italy, Norway, the United Kingdom, and Canada have spent a greater proportion of total national output on income redistribution (social expenditures) than the US. Yet all have grown faster than the US in the period from 1960 to 1984 - except for the UK. And the UK economy has stepped up the economic pace decidedly under Conservative leader Margaret Thatcher, who has not, contrary to impressions, trimmed social expenditures.
So it appears to be something of a conservative myth that income redistribution systems by themselves damage growth decidedly.
Through their social programs (and undoubtedly other factors), these industrial nations generally put the US to shame by their relatively low poverty levels. Poverty among the elderly is an exception. The social security system has lifted many older Americans from destitution. Nonetheless, Canada and Sweden have relatively fewer poor older people.
According to other statistics compiled by Burtless, the US has much more poverty among children and working-age adults.
Should the economic recovery continue and the number of jobless fall further, poverty should decline from its recent peak of 15.2 percent of the labor force in 1983. The poverty rate dropped to 14 percent by 1985 and 1986 figures to be published in August will probably show it below 14 percent.
Burtless points out that in 1977, when unemployment was about the same level as in 1985, the poverty rate was 11.6 percent - well below the 1985 level of 14 percent. This indicates the nation's income distribution problem is worsening, perhaps because wages have become less equal. There are more two-earner families in poverty.
It is unlikely that the Reagan administration will tackle the poverty issue, being ideologically disinclined. Perhaps a successor administration will face the issue.
