Tuesday, August 27, 2019

Study finds America's poorest 20% consume more than national averages of most European and OECD nations - Thomas Lifson

by Thomas Lifson

Studies that ignore substantial untaxed benefits supplied to low-income people are worthless.

Most of the articles you read decrying the purportedly wretched state of the poor in the United States, blaming prosperous people for the "inequality" of our "income distribution" (as if rich people got that way by expropriating the earnings of the poor, because someone "redistributed" their income to the rich) are phony. They rely on income reported to the IRS and ignore the substantial untaxed benefits supplied to low-income people.

A new study from the public policy research group Just Facts corrects for this ignored income and finds that our poorest 20% consume as much as the average in many European and other developed countries. James D. Agresti of Just Facts writes:
A groundbreaking study by Just Facts has discovered that after accounting for all income, charity, and non-cash welfare benefits like subsidized housing and Food Stamps — the poorest 20% of Americans consume more goods and services than the national averages for all people in most affluent countries. This includes the majority of countries in the prestigious Organization for Economic Cooperation and Development (OECD), including its European members. In other words, if the U.S. "poor" were a nation, it would be one of the world's richest.
Notably, this study was reviewed by Dr. Henrique Schneider, professor of economics at Nordakademie University in Germany and the chief economist of the Swiss Federation of Small and Medium-Sized Enterprises. After examining the source data and Just Facts' methodology, he concluded: "This study is sound and conforms with academic standards. I personally think it provides valuable insight into poverty measures and adds considerably to this field of research."

The study cites and rebuts a recent New York Times video op-ed decrying our poverty, as well as other such studies.

It is worth a careful read.

Ever since I first went to live in Japan in 1967 and observed that middle-class people there had a lower material standard of living than American blacks in Watts who had recently rioted, I realized that poverty in rich countries is a mental state more than a material situation in the modern world, where starvation is not an issue in rich countries. I would not argue that poor people in America are not miserable. But I would argue that "free money" — whether a welfare check or an Andrew Yang–style guaranteed income — will not solve their problems.

Hat tip: Dustin Siggins

Thomas Lifson

Source: https://www.americanthinker.com/blog/2019/08/study_finds_americas_poorest_20_consume_more_than_national_averages_of_most_european_and_oecd_nations.html

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