The Poverty Connection

What liberals and conservatives get right and wrong about fighting poverty.

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An unnamed homeless person waives his sign soliciting money amongst political campaign sign wavers in Anchorage, Alaska on Tuesday, Nov. 4, 2008.

Most of the commemoration of the 50th anniversary of the March on Washington has focused on Dr. King's famed "I Have a Dream" speech, especially the "Dream" passage itself with its lyrical invocation of a color-blind world where we are all "free at last."

 But the March had been billed as a call for economic as much as racial change. The earlier, harsher sections of King's speech dealt with poverty, upon which he remained focused at the time of his death. Fifty years later, poverty rates are (except amongst the elderly) essentially what they were at the time of the March on Washington.

Why would this be? Our ideas about how to treat poverty have evolved in much the same way as our understanding of health and disease: In pre-modern times, the sick were blamed for their affliction, obviously having earned the scorn of the gods who inflicted the condition, and often were punished for it. People eventually learned that most symptoms could be treated – but this didn't always cure the condition. 

[See a collection of political cartoons on the economy.]

Eventually, we learned to treat the underlying disease rather than the symptoms. A more sophisticated understanding of disease has emerged more recently, however, that recognizes individual health issues as resulting from a complex of factors – some personal, but many environmental and social.

When it comes to poverty, we've advanced to somewhere in the middle of that continuum: It's become clear that simply giving away money may alleviate some important aspects of poverty, but that generally isn't enough to end it for the individual, let alone for society as a whole. Some argue for going back to Step One and washing our hands of the problem; others have recognized that the problem of poverty goes deeper than a lack of income, curable by income supplements, and instead lies rooted in a lack of capital, treatable through asset-building strategies. 

In fact, these two poles share a basic assumption: the old shibboleth about teaching a man to fish instead of giving him a fish. Few people believe anymore that fish giveaway programs are solutions; everyone concurs that we should teach people to fish. The difference lies in whether you believe in actually funding government fishing-education programs.

[See a collection of political cartoons on Obamacare.]

Liberals in "blue" states and cities tend to view conservatives as opposed to such public efforts and the taxes to support them purely out of selfishness, bigotry and callousness. But, as study after study has shown, red-staters give far more of their incomes to charity than those in blue states, and a higher proportion of their charity goes to aiding the poor, whereas the city slickers are more apt to fund cultural institutions that benefit mostly, well, city slickers. One study last year found that minorities are better treated in smaller, red-state cities than in bastions of so-called liberality

Meanwhile, conservatives in red states see liberals as elitists bent on destroying freedom and self-interested "takers" intent on enforced redistribution. But there is a less sinister explanation:  In denser, and more anonymous, social settings, there is a much greater "free rider" problem – some will shirk their social responsibility to care for others if not forced to do so. Hence the preference for mandatory (thus, government) programs. 

Smaller, more traditional communities don't exactly eschew coercion, but tend to exercise it through mechanisms short of state enforcement (shaming is a popular one). My guess is that if we added up per-capita payments of both taxes and contributions to support the needy, red and blue areas would come out roughly the same – they just get there by different mechanisms.

[See a collection of political cartoons on the budget and deficit.]

As with health, it's therefore time to recognize poverty as a complex phenomenon implicating social and environmental, as well as personal, factors. Financial resources may alleviate the condition, but, by themselves, will not cure it.  So, if "it's not about the money," what is poverty about? To borrow another phrase, it's the network: Poverty, like so many other aspects of our social and economic world, is a network phenomenon – or, more accurately, a lack-of-network phenomenon.

The most incisive statement I've seen on this was attributed to Robert G. Evans of the University of British Columbia in a December 2005 Scientific American article, "Sick of Poverty": "Most graduate students have had the experience of having very little money, but not of poverty. They are very different things." 

What is the difference? In a word, connections. Sure, the grad student can expect high future earnings thanks to educational advantages. But that "earning potential" is built on a robust collection of networks – financial, familial, informational, social – including access to the job market; financing for food, rent and tuition; and the means to consider graduate school in the first place.

[Read the U.S. News Debate: Is Obama Turning the Economy Around?]

People in poverty don't simply lack financial resources – they lack access to the means to obtain, grow and enjoy those resources. These include social networks, within which middle-class children, not to mention the ultra-rich, grow up; transit networks, essential for many to reach jobs (especially those for whom "third shift" jobs are often a necessity) and school; distribution channels for healthy food, provision of medical services, and insurance – all part of the so-called "high price of being poor"; and often the network of networks, the Internet. 

Defeating poverty ultimately means not more traditional transfer programs but better access to connections – to institutions, to information, to markets, to networks.  The key to networks is that their value increases for everyonewhenever another individual joins it (the classic example is email, worthless when there is only one user, essential now that it is ubiquitous).  In a networked economy, which turns many basic notions of traditional economics on its head, cross-subsidization – such as "charity" or "welfare" – actually can be profitable (see last week's discussion of human capital investment), turning poverty reduction from a zero-sum game into a "win-win."  Ending poverty would then be perhaps not "free," at last, but at least highly remunerative.

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