Is Poverty a Choice?

Visit the interactive tool below from the Congressional Budget Office (CBO), a nonpartisan office that creates independent analyses of budgetary and economic decisions for the U.S. Congress. Democratic and Republican congressional members alike rely on the CBO score before voting on legislation including the Build Back Better (BBB) agenda.

How Increasing the Federal Minimum Wage Could Affect Employment and Family Income (Links to an external site.)

Questions to Think About: Is poverty a choice or a consequence of poor policies? Is it beneficial for politicians to ensure that poverty exists? Would increasing the federal minimum wage help lift people out of poverty?

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For this discussion, we are going to examine the wealth gap. During the first week in January, the newly elected mayor of New York City, Eric Adams drew criticism and a large debate regarding his comments on the role of “low skilled workers (Links to an external site.)”. The debate between the haves and have nots is not new. Many Americans have opted to join the “great resignation” rather than continue to work for low wages and inhumane conditions. Working-class Americans now have more power in the labor market.

There has been a new discourse surrounding capitalism and socialism. Some people believe that since America was built on capitalism, a free-market society allows poor people to achieve the American dream. While others believe that a capitalistic society has permitted America to build wealth on the backs of historically excluded groups, and the system perpetuates wealth inequities. You may have heard this statement before, “a small number of the wealthiest Americans own more wealth than the bottom 90%”. If you follow the stock market, you may remember the Robinhood/GameStop fiasco from January 2021. A small number of investors manipulated the stock market and won huge gains until trading platforms halted trade. (Thorbecke, 2021) The vast majority of conservatives and liberals agreed that ordinary people were being punished and considered as market manipulators; while the wealthy were able to legally short stock and trade freely.

In President Biden’s Build Back Better (BBB) agenda, he mentions lowering the cost of childcare, college, and healthcare among other things; plans to pay for it by raising taxes on corporate America and Americans making over $400K a year. (Biden’s Build Back Better is currently stalled in Congress and does not have bipartisan support.) House Democrats also plan to raise taxes on corporations and high-income earners to pay for social programs. (Schroeder, 2021). The Trump Administration’s 2017 tax bill drastically cut the individual income tax rate for high earners, reduced the tax on large inheritances, reduced the corporate tax rate from 21% to 35%, and created new deductions to benefit wealthy business owners. (Iacurci, 2021) Many conservatives felt that the tax cuts were needed to fuel business growth and that business growth would create more jobs. So, essentially, President Biden aims to reverse the tax cuts of the Trump Administration. Most of the governmental programs (stimulus, child tax credit, etc.) established during Covid to help lift people out of poverty are gone or will be gone soon. The aforementioned examples demonstrate how the powers of the president and governmental policies directly impact the ability of Americans to gain or obtain wealth. Does the president have the power to eliminate poverty in America? Should reducing the wealth gap and poverty be a higher priority for President Biden?

According to the Economic Policy Institute, in America before the pandemic, “140 million were either were poor or one emergency away from being poor, including approximately 60% of Black, non-Hispanic people (26 million); 64% of Hispanic people (38 million); 60% of indigenous people (2.15 million); 40% of Asian people (8 million); and 33% of white people (66 million)”. The middle class is shrinking, and the Federal Reserve estimates that the wealthiest Americans have 16 times more income than the bottom 50% of Americans.

In most societies, capitalism and socialism are not binary; they are very much intertwined. They both exist, and they are both needed to create a balanced society. Many of us enjoy the ability to use Uber or Lyft (capitalism) while riding on a highway (socialism). Is it necessary to recalibrate the levels of capitalism and socialism to create a more equitable society? Or, is capitalism vital for America to remain a superpower on the world stage?

Here is an interesting quote, ”how can someone be anti-capitalist in politics and yet still participate in capitalism (in order to sustain oneself)” -Unknown

Data

Aladangady, A. & and Forde, A. (2021, October 22). Wealth Inequality and the Racial Wealth Gap. Washington: Board of Governors of the Federal Reserve System. https://www.federalreserve.gov/econres/notes/feds-notes/wealth-inequality-and-the-racial-wealth-gap-20211022.htm (Links to an external site.)

Bhutta, N., Chang, A., Dettling, L. & Hsu, J. (2020, September 28). Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances. Board of Governors of the Federal Reserve System. https://www.federalreserve.gov/econres/notes/feds-notes/disparities-in-wealth-by-race-and-ethnicity-in-the-2019-survey-of-consumer-finances-20200928.htm (Links to an external site.)

Bivens, J, Barber, W. J., Theoharis, L, & Gupta Barnes, S. (2020, October 30). Moral policy = good economics. Economic Policy Institute. https://www.epi.org/blog/moral-policy-good-economics-whats-needed-to-lift-up-140-million-poor-and-low-income-people-further-devastated-by-the-pandemic/ (Links to an external site.)

Pew Research Center. (2020, January 9). Trends in income and wealth inequality. https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/ (Links to an external site.)

U.S. Census Bureau. (2021, September). Income and Poverty in the United States: 2020. https://www.census.gov/data/tables/2021/demo/income-poverty/p60-273.html (Links to an external site.)

Discussion Overview

You will need to examine the various aspects of the wealth gap. Select a topic that is directly impacted by the wealth gap. (There are sample topics below.) For example, in discussion 3 we covered voting rights. How does a person’s ability or inability to vote for elected officials impact their financial status? For this discussion, you will develop a modified case study to make recommendations and create an implementation strategy to support your findings. I am more interested in your knowledge of the subject matter (you will need to do your own research), how you apply course content to the subject matter, and your ability to synthesize the information while formulating your own well-formed opinion based on facts. (You are building on knowledge from discussion 3 and now discussion 5 that will help prepare you for your public policy proposal in discussion 8.)

Assignment

1. Watch the optional videos below; Dr. Thomas J. DiLorenzo discusses his book on why socialism is not a viable solution to problems, and author Anand Giridharadas details how the elite fight for equity only to maintain the status quo.

Harvard Kennedy School’s Institute of Politics. (2019, November 12). A Conversation with Anand Giridharadas. YouTube. [Video].

https://youtu.be/7m2AumufJfw (Links to an external site.)

misesmedia. (2020, July 15). Ten Things You Should Know About Socialism | Thomas J. DiLorenzo. YouTube. [Video].

https://youtu.be/V_NvazLOYIo (Links to an external site.)

2. Draft a modified case study on the wealth gap. For the purposes of this discussion, here is how I am defining a case study.

Case Study: An analysis of a real-life situation where existing problems need to be solved. It should apply ideas and knowledge in a way that attempts to explain the behavior of individuals or situations.

Your submission must include the components below in essay format (A breakdown of each individual component has been provided below.):

Synopsis: Select a topic related to the wealth gap and give context and/or background on it. Write what you hope to gain or prove from your research. (I challenge you to select a case study topic that is unusual, neglected, or an outlier. However, if you are unsure about this assignment or concerned about time, feel free to select a topic below. Each topic has been well researched and you will be able to locate data points.) 1-2 sentence(s)

Synopsis Breakdown: What topic surrounding the wealth gap directly impacts your life or the lives of your loved ones? Select a topic and write why your topic is important. What details of your topic should we be concerned about? How does your topic impact society and future generations?

Discuss the Powers of the President (You will need to answer all of these questions.): What past or present policies have hindered the ability of people in America to obtain wealth and/or contributed to the increasing wealth gap? What powers does the U.S president have regarding the wealth gap? What responsibility do presidents have to maintain a functioning economy? How should they balance the well-being of citizens and the desires of corporations? 1-2 sentence(s)

Discuss the Powers of the President Breakdown (You will need to answer all of these questions.): How have current policies or laws impacted your topic on the wealth gap? Have they made it harder for people to pay their bills, increase their savings account, or buy a house? It will help your grade if you can list a specific policy and its impact. What can the president do to reduce the wealth gap? You may want to name a specific policy that they should implement. How should the president balance the need to help Americans and pay for those services that help Americans?

Findings: After you have researched your topic, identify at least 3 problems that you found. Are there any underlying problems that have never been addressed? Use data and statistics to support your work. 3-4 sentence(s)

Findings Breakdown: Example: If your topic is on free community college, then you may want to list 3 barriers to offering free community college. Who should it be offered to? What requirements should students abide by? Should undocumented students receive free community college? What would critics say? Is there data that supports free community college? Is there data that supports that requiring students to commit to community service hours would benefit the community? Would offering free community college help lift people and generations out of poverty?

Summarize the Major Problems: Identify alternative solutions to solve each of the 3 problems that you described above. Briefly outline each alternative solution and evaluate its advantages and disadvantages. 3-4 sentence(s)

Summarize the Major Problems Breakdown: If your topic is on providing a universal basic income (UBI) payment of $1K a month to every person making under $40K a year. You will need to list 3 possible solutions to get your plan accomplished. For example, you will need to discuss how it would benefit them and how it would impact society. What would critics of the plan say? You are just listing the 3 problems, this can be done with 3 bullet points.

Recommend the Best Solution to be Implemented: Select one of the alternative solutions above that should be adopted. How will your solution solve inequities in the wealth gap? Explain and justify your reasoning. Convince the reader as to why your solution should be implemented. 1-2 sentence(s)

Recommend the Best Solution to be Implemented Breakdown: If your topic is on the need to increase the minimum wage. Then, you will select 1 of the 3 major problems and detail how it will help lift people out of poverty. You will want to detail why minimum wage should be increased. Why should we care?

Implementation: Detail how your selected alternative solution should be implemented. How should it be done, who/whom should do it, when should it be done? Do you have a timeline? Will it take 1 year, 5 years, or 10 years? How much will it cost to implement? 2-3 sentence(s)

Implementation Breakdown: You will need to provide specifics as to how your 1 solution should be implemented. If your topic is on how discriminating against members of the LGBTQ+ community impacts the wealth gap. Then you will need to discuss specific details on how you will implement your plan. For example, is the Equal Rights Amendment (ERA) enough to ensure equity? How should the ERA be enforced? How long will your implementation plan take? How much will it cost? Who will you need to support it?

Summary: What assumptions did you have to make? If you had more time, what would you have liked to research further? Is there a group of people who have been misrepresented in the media or public opinion? Why have they been misrepresented? Is there a group of people whose voices are missing from the discourse? Why is their voice important? How do we use the current momentum to create lasting change? What should be demanded or asked of elected officials? What accountability standards should be implemented? Is there a political motive for or against your topic? 1-2 sentence(s)

Summary Breakdown: Summarize your topic. What did you learn about your topic? What would you do differently if you had more time? Who’s voice is missing from the topic? Children? People, who make a certain income? Who’s voice seems to dominate the conversation? The wealth gap impacts a lot of people, how will you ensure that the topic gets attention? What marketing tools would you use to bring attention to the topic? How would you hold elected officials and decision-makers accountable?

Cause and Effect: Write a cause and effect statement on how the wealth gap has impacted society. This should be a persuasive statement. (Ex: Due to de jure segregation practices like redlining, many historically excluded groups have been denied the ability to gain equity in their homes which has exacerbated the wealth gap.) 1 sentence

Cause and Effect Breakdown: Write a cause and effect statement on how the wealth gap has impacted society. This should be a persuasive statement. Example: Due to de jure segregation practices like redlining, many historically excluded groups have been denied the ability to gain equity in their homes which has exacerbated the wealth gap.

Citations: Cite research and data points.

(I added the sentence length just in case you wanted a guide.)

Possible Topics Related to the Wealth Gap:

The “great resignation”

Universal basic income (UBI)

Opportunity gap

Achievement gap

Free community college

The rising cost of college tuition

Poverty

Capitalism & the disabled community

Welfare

Lack of corporate responsibility

Capitalism

Socialism

Health disparities

Racism, classism, or both

Housing inequities

Environmental injustice

Criminal justice reform

LGBTQ+ discrimination

Minimum wage

Inequities in education

No universal early childhood programs

Inequities in the tax system

Immigration reform

Digital harms

Questions to Think About

Should a plutocracy exist?

Is socialism bad for democracy?

How would people pay for goods in a socialist society?

Is capitalism bad for working-class people?

Is racism a by-product of capitalism?

Is capitalism dependent on racism and class inequalities?

Does it have to be either capitalism or socialism? Is there a balance between the 2 that will create an equitable society?

Is “our political economy structured to create poverty and inequality”?

Do you believe that universal basic income (UBI) is an effective measure to bridge the wealth gap?

Would UBI help create a trickle-up economy vs a trickle-down economy?

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