#503 Poverty and inequality

Introductory activity: inequality in the United States

• First, students put away any electronic devices and instead reference this handout (Google Doc – to be printed).
  
• Next, students imagine that all wealth in the United States is represented by one dollar. This dollar is to be shared among five groups, representing: the top 20%, next-to-top 20%, middle 20%, next-to-bottom 20%, and the bottom 20%. In pairs, students write down two scenarios for how this wealth is shared:
  
  • Scenario 1: How this wealth is actually shared?
    
  • Scenario 2: How this wealth should be shared?
    
• Ask one student to calculate the average for the class as students report their responses.
  
• Share this chart from Mother Jones magazine based on data produced by researchers at Harvard Business School and Duke University. Ask:
  
  • • How do our class estimates match against the data sample (of 5,000 people) used by the researchers?
      
  • Is there a discrepancy between what we view as ideal, what we thought was actual, and official data? If so, where are those discrepancies and what might be the cause of them?
    
  • What might be the implications of these discrepancies for public policy discussions?
    

Background

• Consider this chart from researchers at the London School of Economics showing the “share of total U.S. wealth owned by the top 0.1 percent of families, 1913-2012.” Note: we only have data going back to 1913 because of legal changes ushered in by the sixteenth amendment to the U.S. Constitution, but the chart helps show the fall and rise of wealth concentration personified by the captains of industry/robber barons discussed last class.
  
• Latter part of the nineteenth century (1870s to about 1900) known as the “Gilded Age,” based on the title of a novel co-written by Mark Twain early in his career in 1873.
  
  • Meaning: characterized by the sharp contrasts in society, in which America’s surface gleamed with gold while camouflaging the cheap base metal underneath.
    
• During this period Democrats and Republicans largely avoided interfering with the business cycle, leading to wide swings from boom to bust (this might have been mentioned when discussing the 1873 “panic”). Bust cycles hit common laborers the hardest.
  
• Even when economic times weren’t dire, consolidation of large trusts put downward pressure on wages and urbanization added new strains to quality of life (examples: smog, sanitation, and overcrowded housing)
  

Guided discussion

• George uses the following analogy: “Murder is a crime; but it is not a crime to be murdered” (Zinn and Arnove, 216). If we follow his line of argumentation, who does he think might be responsible for the “crime of poverty”? Do you agree with his conclusion? Why or why not?
  
• If individuals that are poor are not responsible for their economic condition, what kind of “conditions imposed by society at large” might be at fault? (Zinn and Arnove, 217).
  
• George argues that poverty “runs through all classes.” Why does he make this argument? Can you think of a concrete way in which middle- or high-income people also might suffer from the existence of poverty (Zinn and Arnove, 216)? (One way to reframe this is to think about the link between poverty and inequality).
  
• George suggests that “nine tenths of human misery . . . [is] due to poverty.” (Zinn and Arnove, 217). In what ways does poverty lead to a decline in quality of life in the individuals that experience it as well as their neighbors and fellow community members?
  
• If “man’s ability to produce wealth seems almost infinite” (Zinn and Arnove, 217), is it possible to direct some of that energy to the eradication of poverty? Is this a goal worth pursuing?

Wrap up

• ​View “We know how to end poverty. So why don’t we?” Vox (video, 2:17) (video 2.5 min + time remaining for discussion)
  • Consider the solution of the negative income tax as a possible solution. What are the possible arguments for and against such a proposal? How can public policy impact inequality? Are there trade-offs to consider? (Opportunity to explore frameworks like laissez-faire, “equality of opportunity,” “equality of outcome,” etc.)
  • ​​The proposition of this video—as well as of Henry George—is that poverty is a problem that is solvable. Do you agree with this argument in the context of a free-market system? Why or why not?
    

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Homework: Assignment #504