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Beyond victims and villains

Summary:
I’ve often argued against the “victims and villains” discourse on poverty. This refers to the tendency of progressives to view the poor as victims of a flawed economic system, and conservatives to blame poverty on bad personal decisions (drugs, crime, lack of education, single parenthood, etc.) I don’t like either view. Noah Smith has an excellent article on this subject, which helps to clarify some of the issues. In the end, I’ll interpret the data in a slightly differently, but the thrust of his argument seems correct. The headline and subhead nicely summarize Smith’s key points: Stop Blaming America’s Poor for Their Poverty In Japan, people work hard, few abuse drugs, crime is minimal and single mothers are rare. The country still has lots of poverty. And

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I’ve often argued against the “victims and villains” discourse on poverty. This refers to the tendency of progressives to view the poor as victims of a flawed economic system, and conservatives to blame poverty on bad personal decisions (drugs, crime, lack of education, single parenthood, etc.) I don’t like either view.

Noah Smith has an excellent article on this subject, which helps to clarify some of the issues. In the end, I’ll interpret the data in a slightly differently, but the thrust of his argument seems correct. The headline and subhead nicely summarize Smith’s key points:

Stop Blaming America’s Poor for Their Poverty

In Japan, people work hard, few abuse drugs, crime is minimal and single mothers are rare. The country still has lots of poverty.

And here’s the statistic that caught my eye:

Finally, Japanese people almost all work. The working-age employment rate, at more than 77%, is higher than the 71% rate in the U.S.

Based on what I’ve read, Japanese gender roles remain somewhat more “traditional” than in America, especially for the middle class.  Unless there has been a recent change that I am unaware of, middle class Japanese women tend to drop out of the labor force after having children.  In America, a large number of middle and upper middle class women continue to work, even after getting married and having children.

In that case, the 77% vs. 71% split actually understates the difference between the two societies.  My hypothesis is that in Japan the 23% of non-working prime age adults are skewed toward middle class homemakers, whereas in America the 29% of non-working prime-age adults is skewed more toward the poor.  However, after the welfare reform of the 1990s we have become a bit more like Japan, with increasing numbers of working poor and fewer people who rely exclusively on welfare.

To summarize, my claim is that those on the bottom of Japanese society are likely to choose to work, and given the extremely low unemployment rate in Japan they are also likely to find jobs.

So let’s reframe Smith’s article, getting beyond the victims and villains discourse.  Perhaps conservatives who blame poverty on lifestyle choices should actually blame low rates of employment in America on lifestyle choices.  Smith notes that America has lots more crime, drug abuse and single motherhood than Japan, but doesn’t think this is the main cause of poverty.  After all, Japan also has lots of poverty.  That’s a strong argument.  Perhaps the real difference is that these lifestyle choices in America lead not to extra poverty, rather to lower rates of employment in the US, especially for low-skilled workers.  That is, while America does have working poor, Japan has a much larger share of its poor in that category.

Alternatively, perhaps the lesson from Japan is that even if America’s low-skilled unemployed were to change their lifestyle and get jobs, they’d still be poor because wages are low for unskilled jobs.

I would suggest replacing the victims and villains approach to poverty with a utilitarian approach.  One implication might be to adopt low wage subsidies, which both encourage people to work and also boost the welfare of those who do work.  This type of economic policy can make the economy more productive by encouraging employment, and also make it more equitable by boosting the incomes of the poor.  I believe that both the US and Japan could benefit from this approach.

Utilitarians understand that people are born into different situations.  While “blame” can be useful in discouraging anti-social behavior, we should never forget that babies born into homes with single moms that are addicted to drugs did not choose to be born into those homes, just as Donald Trump didn’t choose to be born into a family that would give him tens of millions of dollars to jumpstart his real estate career.  We need to recognize that society is deeply unequal, and that people often make decisions that push them toward poverty.  Utilitarianism helps us to look at social problems dispassionately, beyond victims and villains, and this allows us to come up with more effective solutions.

PS.  I use scare quotes for “traditional”, as I’ve read that what we think of as a traditional middle class lifestyle for families is actually a product of modern times.

Here’s a member of Japan’s working poor:

Beyond victims and villains

Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment". In May 2012, Chicago Fed President Charles L. Evans became the first sitting member of the Federal Open Market Committee (FOMC) to endorse the idea.

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