Friday, March 7, 2008

It's the pay -- not the pain of poverty -- brain

Being barely above poverty, barely meeting minimum needs is not a satisfactory political or social goal -- not if we are talking about a quarter or a third of families it is not! A satisfactory life is a satisfactory social goal.

A materially satisfactory (that's what we are talking about today: economics) life is about Disney vacations and big screen TVs and nice vehicles -- it is if we are talking about a quarter or a half of the country -- which it is when the American median (50 percentile) wage has grown only 10% while average income has grown 70% over the last 35 years -- albeit with a lot more family members working. A satisfactory life is even about keeping up with the Joneses -- it is when between a quarter to three-quarters of the country has not kept up even closely with overall economic growth.

Eliminating poverty is nevertheless a satisfactory social goal when a quarter of the workforce is earning less than the federal minimum wage of 1968 (double the average income later!). It is when that quarter cannot afford replacement teeth and their kids join gangs to make $10/hr and children have children because they cannot have anything else. Nevertheless, the genesis of much social pathology (not talking mental pathology) is stated in the opening proposition in this paragraph: unavailability of a living wage even if willing to do the most strenuous work.

The materially unsatisfied in America are for the most part not left back because they are undereducated or pathological or because America is undercapitalized -- neither are they satisfaction poor because they are short on some kind head start in life. Most are short on life's goodies because they are short on sheer bargaining power in the free labor market. All this is why I worry more about pay than the pain of poverty as America's core social and economic concern. In any case it may be easier to kill these two birds with one stone than one at a time.

I do think about pain more than pay when thinking about taxing high incomes: how much will they actually suffer? Not enough for me to worry about.

No comments: