The US Census has just released the poverty numbers for that country. There’ll be boundless debate about what they all mean: rising tides and all boats, it’s not statistically significant, it should be better, poverty ain’t what it used to be…

The New York Times, WaPo, you can find hundreds of stories on Google about it. All of them, every single one, entirely missing the point.

Unlike all of the other OECD nations the US reports its poverty numbers before the effects of most of the tax and benefits system. Except for direct cash transfers that is. So the number actually being reported is the number of people who would be in poverty if it were not for what help is given to them. Not included in these calculations are the major programs which are designed to lift people out of poverty: the EITC (earned income tax credit), food stamps, housing vouchers and Medicaid. Unfortunately the US does not, with any regularity, collect the numbers on those who actually live in poverty after such help.

It’s also true that, over the past four decades, there’s been a move from the alleviation of poverty by direct cash grants to the more indirect methods that are not included in this calculation. That’s the reason that measured poverty has not declined, because the measures intended to cause a decline are not being counted.

So far, of course, this is just the pedant in me lashing out. But, unfortunately, this confusion has serious consequences as this from John Edwards’ campaign shows. His proposals, by the way, to reduce poverty are a rise in the EITC and more housing vouchers. Unfortunately, he insists on counting poverty by the method that doesn’t include the effect of the EITC and housing vouchers, meaning that his efforts will have absolutely no effect whatsoever on the number, as calculated, in poverty.

From Adam Smith Institute

Tags: Libertarian, Politics, Liberty, Freedom