Surprise! Surprise! America is actually getting poorer

I found an article written by Left-wing blogger Angry Bear about the state of the US economy. While I was happy to concede to others the fact that the US is a very rich nation that nevertheless needed to direct resources to help the poor, I was never aware of any study that shows that the nation is actually getting poorer.

Angry Bear uses something called The Kudlow-Malpass-Tamny definition of savings. I searched for a link for this but couldn't find one that seemed reputable (feel free to find one for me).

I'll just simply copy and paste from the Angry Bear article:

Since I have been on a bit of a tirade per this issue as to whether real wealth has been rapidly increasing, let me recommend a graph from Michael Mandel who writes:
I like to keep track of what I call "real net household wealth". That is, household net worth, subtracting out federal government debt, and adjusting for inflation. In effect, this measure assumes that households will have to eventually pay back all of the debt, and it accounts for debt owned to foreigners as well. And guess what? This measure hit a new high of $45.3 trillion in second quarter, up 7% over a year earlier, and significantly higher than the boom peak of $44.4 trillion.
This 2% increase since the end of 1999 should be compared to the nearly 5.5% increase in population. In other words, real per capita wealth is still below where it was 5.5 years ago.

It's that last sentence that slays me - in the end, although America is "richer" in terms of numbers on a page, if you divide it by population, the numbers begin to drop.

Amazing - America is getting poorer. No wonder poverty rates have increased since 2000 while, at the same time, unemployment has been relatively low and the economy has grown at a moderate pace.

Check out the Wikipedia article on US poverty rates. There is a graph half-way down the page that shows the growth in poverty since 2000.

From the Osostrian School Department

1 comment:

Anonymous said...

OSO — how much of US poverty is related to financial planning issues (how they budget), to the ever increasing amounts of oil they are having to import as we approach world peak oil, and to the policing of Iraq? Which do you think has the most impact on America's economy at this stage, and which do you seeing becoming the most significant issue over the next decade?

Also, I found this interesting page that discusses the way war or the potential for war shapes a society.

Marx was wrong, then: It is not only the "means of production" that shape societies, but the means of destruction. In our own time, the costs of war, or war-readiness, are probably larger than at any time in history, in relation to other human needs, due to the pressure on nations not only to maintain a mass standing army -- the United States supports about a million men and women at arms -- but to keep up with an extremely expensive, ever-changing technology of killing. The cost squeeze has led to a new type of society, perhaps best termed a "depleted" state, in which the military has drained resources from all other social functions. North Korea is a particularly ghoulish example, where starvation coexists with nuclear weapons development. But the USSR also crumbled under the weight of militarism, and the United States brandishes its military might around the world while, at this moment, cutting school lunches and health care for the poor.

Do you like that one? There's more at...