The Haves and Have-Nots

by Russ Roberts on January 8, 2007

in Standard of Living

The Haves: Almost every living American born after 1920

The Have-Nots: Almost anyone born anywhere before 1920.

As David Henderson once pointed out to me, if you consider the universe of people ever born, even a poor person in America today lives better than most people who have ever lived, putting almost all living Americans’ standard of living in the top 1%.

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{ 33 comments }

Half Sigma January 8, 2007 at 12:05 pm

A poor person in America has live in a neighborhood full of other poor people, which is a pretty bad thing. It's hard to compare that to the experience of a well off person a hundred years ago.

Most white people from the DC area afraid to even VISIT SE DC, not to mention actually living there.

Leviathan January 8, 2007 at 12:25 pm

The problem of poverty is having to live with other poor people?

As for DC, Bush needs an exit strategy. :P

Nathan Benedict January 8, 2007 at 12:27 pm

While living in a poor neighborhood carries some obvious risks, I would contend that it's still much better than being well off 100 years ago. Average life expectancy at the turn of the century was somewhere around 50 years. I don't have the stats handy to prove it, but I'd bet that if we were to look at the worst off Americans today–those living under the poverty line, with no health insurance, in the most dangerous ghettos, doing the unsafest jobs (e.g., drug dealer)–their average life expectancy is still well above that. Plus they have TV, air conditioning, indoor plumbing, and a variety of other luxury goods unavailable or scarce a century ago.

I wouldn't care to live in SE DC, but I'd rather live there today than in the most palatial estate in 1920.

Half Sigma January 8, 2007 at 12:55 pm

A nerdy academic white guy might have a lower life expectancy than 50 years living in SE DC.

And yes, the problem with being poor is that you have to live next to other poor people. If poor people were nice folks with middle class values, then yes, it would be much better to be poor today than well off 100 years ago. But that's not how poor people are.

Robert Coté January 8, 2007 at 1:40 pm

Well gee, more than 99.7% of everyone born before 1920 is dead so yes, they are have-nots.

Yes, being abjectly poor in 2006 was formery considered comfortabe in 1916 but that comfortable was in context of the reduced life expectancy, etc.

We are so much better off collectively than in any other time that the reasons for the improvemnt are lost. It isn't about a floor that raises all but an unlimited ceiling that pulls the median along.

Avatar300 January 8, 2007 at 1:45 pm

"If poor people were nice folks with middle class values, then yes, it would be much better to be poor today than well off 100 years ago. But that's not how poor people are."

You, sir, are a disgusting ass.

Bill January 8, 2007 at 1:51 pm

Nathan,

I don't think you would. Also, if you lived in the most palatial house in the 20s, your life expectancy would be way over 50, in fact, it would be very close to the average life expectancy now. The average back then was brought down by rapant childhood and workplace deaths. Even the Pilgrims had a life expectancy of almost 65 years, assuming they lived to be 45.

Bruce G Charlton January 8, 2007 at 1:58 pm

On this topic, there is a simply-superb forthcoming book by Gregory Clark of U Cal, Davis – A Farewell to Alms: a brief economic history of the world. See
http://www.econ.ucdavis.edu/faculty/gclark/Farewell%20to%20Alms/ftahome.html

Mike January 8, 2007 at 2:23 pm

Bill,

While I believe there is much merit to that fact you mention, don't you think the lucky people that did make it to 75 or beyond were still affected by the shorter life expectancy all around them? Children and grandchildren were at greater risks. Friends did not live long. And so on.

And Russ, one thing to consider on the plus side of the pre-1920's lifestyle is how much "freer" people were in the 18th and 19th century (at least in America) than today. Though, I am treading tenuously here.

-Mike

ben January 8, 2007 at 2:27 pm

Robert Cote

Russell's post said: "even a poor person in America today lives better than most people who have ever lived"

Which is not the same as saying the overall average is being dragged up by the very wealthy, which is what you seem to think it says when you write, "It isn't about a floor that raises all but an unlimited ceiling that pulls the median along."

ben January 8, 2007 at 2:33 pm

Half Sigma said:

"And yes, the problem with being poor is that you have to live next to other poor people. If poor people were nice folks with middle class values, then yes, it would be much better to be poor today than well off 100 years ago. But that's not how poor people are."

I have two problems with this. One, poor people have always lived near poor people. Indeed, class divisions have broken down in the last century. Two, apart from being a self-evidently stupid comment, if middle class values really were better for the poor then the poor would simply adopt them (if they haven't already).

Kent Gatewood January 8, 2007 at 2:50 pm

Isn't the failure to adopt middle class values the reason the poor are poor?

python January 8, 2007 at 2:55 pm

Half Sigma,

Did you really type:

"And yes, the problem with being poor is that you have to live next to other poor people. If poor people were nice folks with middle class values, then yes, it would be much better to be poor today than well off 100 years ago. But that's not how poor people are."

You sound like an angry person.

Poor people don't have middle class values? Classic bigotry!!!

Actually, it's nice to see the true Half Sigma that has been posting crackpot ideas. For a while I thought you were just a misinformed individual, now I know that you are much more than that.

Don Boudreaux January 8, 2007 at 2:59 pm

Folks,

Please let's keep the tone civil here at the Cafe. Vigorous disagreement is fine — indeed, encouraged. But I advise that we all follow advice that years ago I heard the late Ludwig Lachmann offer on how to read a book: put the very best possible interpretation on what the author says.

Please let's all heed this wise counsel.

Don

faultolerant January 8, 2007 at 3:05 pm

I'm gonna do something I never thought I'd do: Defend HalfSigma.

The point (whether craftily worded or not) is that it is empirically easy to show that the values espoused by the non-poor are markedly different than those who are socio-economically disadvantaged.

Yes, you can argue until you're purple in the face that economic standing doesn't correlate with values – but a simple expiremtn will prove you wrong: Spend 15 minutes standing in the wealthiest area in your town, then do the same thing in the poorest. You can see some significant differences that are directly related to values.

Avatar300, you make the mistake in presuming that HalfSigma is wrong. Further to that you cast aspersions because HalfSigma points out a truism you don't like. Not exactly a reasoned response to a point you disagree with.

Kent, I think you're exactly correct: Poverty IS, indeed, escapable and failure to adopt the appropriate behaviors the enable one to exit poverty is (IMHO) one of the prime reasons people continue that kind of existance. I'd hesitate to call those behaviors "upper class", because education, hard work and self-control are universal attributes tending toward success.

Ben, just exactly how is HalfSigma's perspective "self-evidently stupid"? There were no assertions of anything other than a fact: The poor live near the poor. That's demonstrably true. Why is a provable fact "self-evidently stupid"? Again, just because you disagree doesn't make the comment wrong.

Wild Pegasus January 8, 2007 at 3:22 pm

If you:

* Don't do or deal drugs.
* Graduate high school.
* Don't get pregnant (or get a woman pregnant) out of wedlock. AND
* Get a job, stick with it for a year, and do a passing work.

What's your poverty rate in America? Pretty low, I'm guessing.

I caught up with a friend of mine from my hometown recently. He's probably dead average in intelligence, certainly not a genius. I think he has an associate's degree from a local community college, but it's nothing extraordinary. Yet, he followed every one of those steps above. He's now installing cable, making $55k/yr., and his wife is studying at the local community college for her nursing degree.

There's nothing extraordinary about these folks (although they're my friends and I love them), yet they're going to have a household income above $90k/yr. before either turns 30.

It takes hard work to stay poor in America.

- Josh

Don Boudreaux January 8, 2007 at 3:29 pm

Dwight Lee's and Richard McKenzie's book Getting Rich in America (2000) makes a pretty clear case that keeping your head (way, way, way) above-water in America is not so difficult to do — as Wild Pegasus correctly argues. Here's the link to the Lee-McKenzie book:

http://www.amazon.com/Getting-Rich-America-Fortune-Satisfying/dp/0066619831/sr=8-1/qid=1168288030/ref=sr_1_1/105-2040693-5714803?ie=UTF8&s=books

Don

Alan January 8, 2007 at 3:34 pm

Another difficult thing about SE DC is that even good folks with good hearts and values cannot defend themselves from predatory criminal types because they cannot carry firearms. Shopkeepers can't keep them either (I think), which can't help local prices much. There has also been extended one-party rule in DC which tends to lead to some stagnation in developing new ideas for local governance- though I will certainly concede that Tony Williams was very different from Marion Barry, though they were both in the same party!

python January 8, 2007 at 3:35 pm

FaultTolerant,

I can understand your defense of HS in regards to your interpretation of the word values. But my interpretation can not be tested on the street corner. To me, "values" connotes a deep mentality about who you are and what you believe. I don't think my values have changed even though I have far more money then my parents did, or when I did growing up. I still believe in honesty, working hard, loving my neighbor, yadda yadda.

If Half Sigma had said something like "Poor people have fewer options and therefore their standards may seem lower than others." I could understand that because it is a utilitarian way of thinking about behavior. But I think of the word "values" the same way I think of "character".

And it's not just the "values" crack. He basically says that poor people are not 'nice folks'. "If poor people were nice folks with middle class values…but that's not how poor people are." I don't think I am taking that out of context.

Making generalizations about any large group of people (except the French :-) ) is simply asking for trouble.

I'm sorry if it appears that I have not heeded Don's wise counsel. This is my last comment regarding this subject.

bbartlog January 8, 2007 at 3:39 pm

if middle class values really were better for the poor then the poor would simply adopt them (if they haven't already).

The point is that a great many of the poor *have* adopted those values, become not-poor, and left for suburbia. I believe that HS is implying that the degree to which poverty is a culturally self-inflicted state has increased over time in the US. A hundred years ago you could fairly say of a great many people that they were born into crushing poverty and had little chance to escape it (though even then there were doubtless opportunities). It's a lot harder to make that case today, when you can save thousands of dollars a year working at a menial job (assuming no dependents). To say that people are poor 'by choice' is disingenuous, but many people are surely poor as a result of poor choices. Or at least easy choices, in the form of consumption rather than saving.

As for living in a neighborhood full of poor people being a bad thing, it's obvious that a great many Americans agree (look at demographic trends and property values). But this doesn't necessarily say anything about the poor themselves; people who are concerned with signaling status, or with the quality of local schools, or nice shopping within walking distance, would avoid living in poor neighborhoods even if the poor were perfectly pleasant neighbors.

TGGP January 8, 2007 at 4:22 pm

I don't think Half Sigma has a good grasp of economics, but his sociology is better than most of the morally indignant responders. Studies show that people in poor neighborhoods tend to trust each other less, and for good reason because studies also show that crime is much higher in poor neighborhoods. Immigrants with middle class values (Thomas Sowell's middlemen minorities or Amy Chua's market dominant minorities) often start out on the bottom but quickly rise up to middle class status.

Half Sigma January 8, 2007 at 5:02 pm

Middle class people would be flocking to live in neighborhoods like SE DC, close to work in downtown DC and with much lower rent, if it were not for the fact that they'd have to live next to truly vile neighbors. And even worse, their children would have to get beaten up by their children in the local public schools.

I think it's ironic that most of the readers of this blog seem to support all laissez faire government policies which screw the poor, but then you say something negative but true about the poor and they get all mad.

I think there's some glamorized anarcho-capitalist notion of poor people, that they choose to be poor because they prefer not to work hard, but otherwise they are just like the middle class.

In fact, the typical poor person is not someone whose company that you (the middle class and upper middle class readers of this blog) would enjoy. This usually doesn't apply to poor immigrants because they weren't part of the underclass in the country they came from and therefore don't have underclass values.

It's not clear cut that it's better to live in the ghetto today than it is in good neighborhood a hundred years ago where you would have nice neighors who woudn't mug you or tag your house with graffiti, but you'd also be without televisions and penicillin. Furthemore, the television is a mixed blessing for poor people, because along with its cheap entertainment comes advertisements for things you can't afford to buy, thus constantly reminding you of your place at the bottom of society.

ben January 8, 2007 at 5:47 pm

My dispute is not that HS is saying the poor have different values – I don't know if they do but it is entirely plausible – nor do I dispute that negative social statistics like crime rates are different for the poor.

It is, as python points out, the comment that the poor are not nice people. That is what HS said. I think it is a comment reflects a snobbery and ignorance that cannot be justified by some separate contribution of anything meaningful to the debate.

This is not some do-good defense of the poor. I am equally annoyed when I see more frequent examples of hate speech directed at the wealthy and corporations. Such rhetoric adds nothing but heat, it attempts to create a barbaric us-and-them pack mentality, and is always unhelpful. I believe HS is rightly castigated for his comment.

JohnDewey January 8, 2007 at 5:59 pm

Half sigma: ""If poor people were nice folks with middle class values, then yes, it would be much better to be poor today than well off 100 years ago. But that's not how poor people are."

I think that's an incorrect generalization. Certainly there are many bad apples in most poor neighborhoods. I'm fairly certain, though, that religion is still an important influence for many poor blacks and hispanics in this country. Perhaps the bad guys are more visible, but most of the poor in the U.S. are actually "nice folks".

python January 8, 2007 at 6:22 pm

Half Sigma,

I think I am beginning to see your point. I now think you are trying to draw a counter-example to the original claim that people after 1920 are better off than those before 1920. But if you read the initial claim, it clearly says "ALMOST anyone" (my emphasis added), so I'm not sure why the need for a counter example.

And your choice of counterexample is to pick a particularly rough neighborhood to illustrate that poor people are "vile" and not "nice folks". Do you think all poor people live like the ones in D.C.? You must if you are using them as a representative group.

I'm sure glad that I am not in charge of differentiating between which poor people have middle class values, but then again I am probably one of those who has a weaker sociological intellect as TGGP mentioned.

And your conclusion that laissez faire screws the poor is very much up for debate. The poor sure were doing great before that darned laissez faire showed up.

undergroundman January 9, 2007 at 3:29 am

Sure, but that doesn't say all that much. Our productivity gains from the 1920s have been enormous, but the productivity gains have not, as much as they should have been, been passed on to the low and middle-class. Middle-class wages have STAGNATED as inflation consistently rises.

On the other hand, look at CEO pay. It's no longer even tied to performance – look at the Home Depot CEO. The CEOs stack the boards with other CEOs, who jack the prices up and then argue that the higher wages (in the hundreds of millions) are needed to get decent CEOs. Which is ridiculous. These guys are not geniuses and they make plenty of mistakes.

The gap between the rich and the poor is growing dramatically – even Alan Greenspan pointed out the problems of this.

The Fed chief than added that the 80 percent of the workforce represented by nonsupervisory workers has recently seen little, if any, income growth at all. The top 20 percent of supervisory, salaried, and other workers has.

The result of this, said Greenspan, is that the US now has a significant divergence in the fortunes of different groups in its labor market. "As I've often said, this is not the type of thing which a democratic society – a capitalist democratic society – can really accept without addressing," Greenspan told the congressional hearing.

http://www.csmonitor.com/2005/0614/p01s03-usec.html

Matthew January 9, 2007 at 5:13 am

"Middle-class wages have STAGNATED as inflation consistently rises."

You could argue that REAL middle-class wages have stagnated, but it's utterly wrong to then say "as inflation consistently rises." Real wages are used expressly to account for inflation. Nominal wages, if that's what you're really referencing, have in fact grown at a very high rate for all classes in America.

I would also argue that real middle-class wages have appeared to stagnate for two reason:

- Immigration from poorer countries has brought down the income distribution. The people in the lowest quintile of income earners ten years ago aren't the same people in the lowest quintile of income earners today.
- The CPI has a very hard time measuring quality. How do you account exactly for something such as the internet? Access to all this information and entertainment simply didn't exist twenty years ago. Same thing with technological advances with TVs, Appliances, Cars and anything else.

ben January 9, 2007 at 6:20 am

CEO pay could barely have less to do with this topic. What little relevance it does have is consistent with the point made by Russell.

triticale January 9, 2007 at 10:09 am

I adopted middle class values, and when I did I started rising out of poverty. You don't even have to stop doing drugs. Just exercize some judgement as to which ones and when. I'd probably be smoking marijuana this morning except I'm due to begin a new job shortly, paying twentysome dollars an hour, which will require passing a whizz quizz.

As for whether we'd be better off being fabulously wealthy in 1920, that's eight years before insulin was discovered and my wee wifey is diabetic. End of story.

faultolerant January 9, 2007 at 3:44 pm

Python,

Now that I better understand your perspective on "values" – I think we may not be really disagreeing all that much. To wit:

If you consider "values" as:
-Do "the poor" love their children? Yes
-Do "the poor" cherish their spouses? Likely Yes.
-Do "the poor" exhibit attributes like kindness, caring, and "neighborliness"? Again, likely Yes.

If what you're talking about are closely-held beliefs and mores, then I won't argue with you at all – each of those attributes are held individually and it's just bad form to generalize on that subject.

(I will say that HS's use of the term "nice folks" was, I think, a throwaway term, a linguistical construct that has been given too much credence. Like saying "The Gentleman from Texas" in Congress….it's an honorific, not truly meant – or meant sarcastically)

However, when I think of "middle class values (MCV)" – at least in economic terms – I gravitate to some of the items listed by Wild Pegasus:
-Get a job
-Stay/get clean
-Keep your trousers reasonably zipped
-Education, Education, Education

When you look at those "MCV" factors – and not at the persona of the individual – I honestly do believe you'll see some pretty significant deficiencies in the poorest parts of town, vs the wealthiest. Just look at the education, wedlock, birth, death, incarceration, etc. statistics from "The Bad Part of Town" (Any town) and I doubt there are lot of MCV's there.

Now don't get me wrong, there are "not nice" people in all aspects of life – the rich don't have a corner on the values market. However, most of the upper and upper-middle class folks do seem to get a lot of the MCV's I listed right. After all, if MCV's were so common (The kind that lead to financial success, not the kind that describe a person's character) then wouldn't there be a lot fewer folks in poverty?

Half Sigma January 10, 2007 at 7:33 pm

"Do "the poor" cherish their spouses? Likely Yes."

Having worked in Phoenix Municipal Court, and seeing the stream of domestic violence cases, almost all of them poor people, I'd have to say that a lot of poor men don't cherish their wives.

JohnDewey January 11, 2007 at 8:32 am

Half Sigma: "Having worked in Phoenix Municipal Court"

Which automatically biases your observations, right? You may rightly claim that poor men are more likely to commit domestic violence than not-so-poor men. But can can you claim, based on your court experiences, that most poor men commit domestic violence? That seems to be what you're arguing when you comment on faultolerant's claim that "the poor cherish their spouses".

Just for the record, how did you determine that the men you saw in Phoenix Municipal Court were poor? Did you have access to their tax returns or paychecks?

Gary February 4, 2007 at 10:44 pm

I've lived in poor ares, middle class areas, and I've known and been around the upper-class. All have their nice and not-so-nice people, and all have their surplus and deficiencies concerning morals/values. It depends on how you define nice and not-so-nice, how you define what a surplus or deficieny in the morals/values department. I would equate a mugging and graffiti with something like Enron. What about people like William Kennedy Smith (I think I got his name right), and hi rape trial? What about Bill Clinton and his "sexual relations"? A lot of Catholic priests have moral deficiencies as they fondal children (not to generalize as the Pope protects them). There are moral deficiencies and suplus everywhere you look no matter what class you are, or what your education has been. There are a lot more poor people, so perhaps that accounts for why you see their deficiencies more. Hmmm.

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