Liberals erroneously blame things like the Sandy Hook shootings on economic inequality. But America is actually one of the world’s most egalitarian countries, if you measure equality in terms of living space and material possessions (like consumer goods and appliances) rather than just nominal income.
Most Americans below the poverty line live better than the average Western European, and possess things — like air conditioners, cable TV, and dryers — that many European households lack. Moreover, nearly half of Americans below the poverty line own their own home, with an average of three bedrooms.
There are plenty of people below the poverty line who aren’t really poor, and a smaller number of people above the poverty line who are indeed quite poor. The poverty line is a very arbitrary measure seemingly designed to justify lots of spending on welfare and social services for “disadvantaged” people who aren’t really poor, spending that generates jobs for government employees (and government-subsidized non-profits) who provide welfare and handouts.
Robert Rector of the Heritage Foundation explains how many people below the poverty line aren’t really poor at all:
There is a wide chasm between the public’s concept of poverty and “poverty” as it is defined by the Census Bureau. The public generally thinks of poverty as . . . homelessness, or malnutrition and chronic hunger. In reality, the vast majority of those identified as poor by the annual census report did not experience significant material deprivation.
In a recent Rasmussen poll, adults agreed (by a ratio of six to one) that “a family that is adequately fed and living in a house or apartment that is in good repair” is not poor. By that simple test, about 80 percent of the Census Bureau’s “poor” people would not be considered poor by their fellow Americans.
In the same Rasmussen poll, however, 73 percent said poverty was a severe problem. Why the disconnect? The answer: Public perception of poverty in the U.S. is governed by the mainstream media, which invariably depicts the Census Bureau’s tens of millions of poor people as chronically hungry and malnourished, homeless or barely hanging on in overcrowded, dilapidated housing.
The strategy of the media is to take the least fortunate 3 percent or 4 percent of the poor and portray their condition as representative of most poor Americans. . .[But] they are far from typical among the poor. . . a poor child in American is far more likely to have a widescreen plasma television, cable or satellite TV, a computer and an Xbox or TiVo in his home than he is to be hungry. . .In 2009, the U.S. Department of Agriculture asked parents living in poverty this question: “In the last 12 months, were [your] children ever hungry but you just couldn’t afford more food?” Some 96 percent of poor parents responded “no”: Their children never had been hungry because of a lack of food resources at any time in the previous year. . .
Here are more surprising facts about Americans defined as “poor” by the Census Bureau. . .
Eighty percent of poor households have air conditioning. By contrast, in 1970, only 36 percent of the entire U.S. population enjoyed air conditioning. Fully 92 percent of poor households have a microwave; two-thirds have at least one DVD player and 70 percent have a VCR. Nearly 75 percent have a car or truck; 31 percent have two or more cars or trucks. . .Nearly two-thirds have cable or satellite television. Half have a personal computer; one in seven have two or more computers. More than half of poor families with children have a video game system such as Xbox or PlayStation. . . A third have a widescreen plasma or LCD TV. . .
At a single point in time, only one in 70 poor persons is homeless. The vast majority of the houses or apartments of the poor are in good repair; only 6 percent are over-crowded. The average poor American has more living space than the average non-poor individual living in Sweden, France, Germany or the United Kingdom. . .Forty-two percent of all poor households own their home; on average, it’s a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio. . . among the lowest-income fifth of households, inflation-adjusted consumer spending actually increased modestly during the recession.
Given these facts, how does the Census Bureau conclude that more than 40 million Americans are poor? They identify a family as poor the family’s cash income falls below specific thresholds. For example, in 2009 a family of four was “poor” if annual cash income fell below $21,954. But as Rector notes, in counting income,
the Census Bureau ignores almost the entire welfare state. This year, government will spend over $900 billion on means-tested anti-poverty programs that provide cash, food, housing, medical care and targeted social services to poor and near-poor Americans. . .This means-tested welfare spending comes to around $9,000 for each poor or low-income American — virtually none of which is counted by census officials for purposes of calculating poverty or inequality.
I am a lawyer, but I actually live worse than many so-called “poor” people collecting government welfare due to their being below the poverty line. As Rector notes, among the substantial fraction of people below the poverty line who own their own home, the average home is “a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.” I have a two-bedroom house with no garage and no porch or patio. (I live in a high-living-cost area — metropolitan Washington, D.C., where well-paid government contractors and federal employees are able to bid up the cost of housing — with the result that I cannot afford a larger house. My little two-bedroom house is assessed at $570,000, and a larger house would cost more.) But because I live in a high-cost area, I am paid a salary that is above average for the American worker, meaning that I am treated as being “rich” by the Obama administration for purposes of things like phasing out the child-tax credit I would otherwise receive for my daughter if my income were lower.
America also has higher rates of taxation on capital gains from investments than most countries. America’s capital gains tax rates, which Obama wants to raise, are already higher than in Canada and much of Europe, and much higher than in Germany and Japan. Even countries with higher tax rates than the U.S. sometimes actually tax less than the U.S. does, because they allow taxpayers to avoid capital gains taxes based on inflationary gains, unlike the U.S. Mitt Romney pays more in tax in America than he would have to pay in Canada and many European countries.
Impoverished investors can be forced to pay capital gains taxes even during huge slumps in the stock market, when inflation masks the slump. Capital “gains” are not indexed for inflation; the seller pays tax not only on the real gain in purchasing power, but also on the illusory gain due to inflation. The liberal economist Alan Blinder, a former Federal Reserve Board member, conceded in 1980 that “most capital gains were not gains of real purchasing power at all, but simply represented the maintenance of principal in an inflationary world.”
Between 1970 and 1980, U.S. stock prices fell by half after being adjusted for inflation. But if you sold stock in 1980, after a decade of getting poorer and poorer you would have had to pay capital gains tax, since inflation made stock prices rise in nominal terms
People treated as “poor” by government welfare programs often get more money in food stamps than many taxpayers (like me) actually spend on food. A record 46.2 million people are now on food stamps, including some millionaires who are treated as “poor” because although they have lots of assets, they have little monthly cash income (or because their income is tax-exempt).