Angus Deaton | How poverty in US became ‘fake news’
Many of us believe that, because the US social safety net is so imperfect, extreme poverty is more prevalent there than elsewhere—and certainly among developed countries
Under the administration of the incontinently mendacious President Donald J. Trump, everyone should worry about the integrity of America’s official statistics. They should worry about much more under Trump, particularly the fate of democracy in the US. But without credible official data, there can be no genuine accountability and, thus, no democracy.
Consider the Trump administration’s reporting on poverty in the US. It seems that the baseline numbers produced by the US Census Bureau are (so far) intact, but there has been a flurry of misinterpretations that go beyond the usual partisan spin.
Commentators on the right like to quote Ronald Reagan’s 1988 claim that in the War on Poverty, declared by Lyndon B. Johnson in 1964, poverty won. That claim, perennially used as a cudgel to beat the social safety net that was expanded under Johnson’s “Great Society” reforms, is consistent with official poverty estimates, the methodology of which has not been updated since the 1960s.
Because that methodology ignores taxes (including earned income tax credit) and programmes such as food stamps (now called the Supplemental Nutrition Assistance Programme, or SNAP), their effects are not counted, no matter how successful they are in reducing want. Such a widely acknowledged statistical flaw invites commentators to fill the hole with their prejudices, as Reagan did.
More recently, Trump’s Council of Economic Advisers, in a July report arguing for work requirements to be attached to social benefits, claimed that, thanks to the American safety net, the war on poverty “is largely over and is a success”. This argument hinges on abandoning traditional metrics, which measure income, and switching to consumption.
Consumption is arguably (but only arguably) superior to income as a welfare measure, but it is unclear how many of the very poor participate in a burdensome and intrusive survey that has a 40% non-response rate.
More worrying still is the essentially arbitrary “correction” to the consumer price index (CPI) that reduces the poverty line so that there are fewer people beneath it.
Perhaps the official CPI does not adequately capture quality improvements in goods and services. The consequences of this have been addressed in the scholarly literature, notably by a National Academy of Sciences panel that argued against a mechanical correction. But debating that issue is very different from abandoning the official CPI in favour of a more politically advantageous one that comes close to eliminating poverty.
A more egregious case of data manipulation concerns a report by the United Nations Special Rapporteur on extreme poverty and human rights. At the invitation of the US government, the Special Rapporteur, Philip Alston, examined extreme poverty in the US. He reported his findings to the UN Human Rights Council in June 2018.
The result makes for dreadful reading. Documenting the extraordinary depths of poverty in parts of the US, the report includes tent camps on the streets of Los Angeles, yards awash in untreated sewage because local authorities refuse to supply services, and the widespread use of fines and confiscations levied on poor people that many towns and cities are using to finance themselves.
Whereas Johnson declared a war on poverty, parts of America are now waging a war on the poor.
Many of us believe that, because the US social safety net is so imperfect, extreme poverty is more prevalent there than elsewhere—and certainly among developed countries.
Welfare reform that encouraged work has been good for some of the poor, but bad for the poorest, expanding inequality within the poor population and hurting the worst off.
Books by Kathryn J. Edin and H. Luke Shaefer, and by Matthew Desmond have documented in detail the miseries of life at the bottom in America, and Shaefer and Edin argue that several million children in the US are living on less than two dollars a day.
In a New York Times commentary published in January 2018, I noted that the World Bank now publishes estimates of global poverty that include the rich countries, and that those estimates show 5.3 million people in the US living on less than the equivalent of the world’s global poverty line.
In my argument, I used $4 per person per day for rich countries as roughly equivalent to the global poverty line of $2 used for poor countries. There are more “globally poor” people in the US than in Sierra Leone or Nepal, and the poverty rates in the US and China are similar, despite the more than threefold difference in per capita income.
The World Bank’s calculations that I reported were widely denounced—by both the right and the left.
The Heritage Foundation argues that if one uses consumption, not income, there are only 250,000 globally poor people in the US. Never mind whether the parents selling their children’s social security numbers to survive, or risking their children’s safety to find a place to live, have time to participate in the consumption survey. Many on the left, meanwhile, refuse to believe that any American is as poor as the poorest in Africa or Asia.
Whereas the right wants to decrease domestic transfers, the left wants to increase foreign transfers.
The story then turns surreal. Alston’s report drew an angry rebuke from the US ambassador to the UN, Nikki Haley, who claimed that “it is patently ridiculous for the United Nations to examine poverty in America”, and an official US response saying that Alston’s numbers were wrong. Yet the only numbers Alston used came from the US Census Bureau, an estimate described in the response as “the exaggerated figure cited by the Special Rapporteur”. The response then approvingly cited the Heritage calculations, which are based on my $4-per-day poverty line.
And then, perhaps only coincidentally, the Trump administration pulled the US out of the Human Rights Council, with the result that Haley did not attend the report’s presentation. She, like the Council of Economic Advisers, noted that the Trump administration knows how to tackle deep poverty, which is to force people to work.
That may or may not be true, but denouncing the Census Bureau’s estimates in favour of those from the Heritage Foundation (there is evidence that agency officials objected) or conveniently tampering with the CPI, and then treating the alternative numbers as superior to the official statistics, is surely well beyond the pale.
Trump’s administration showed in 2018 that it will admit no blemishes, whether extreme poverty or the unconscionable death toll following Hurricane Maria in Puerto Rico.
And, there is no reason to believe that further distortions of the truth, and the threat to democracy that such behaviour implies, will not appear in the coming year. ©2018/Project Syndicate
Angus Deaton is the 2015 Nobel laureate in economics, professor of economics and international affairs emeritus at Princeton University’s Woodrow Wilson School of Public and International Affairs, and author of The Great Escape: Health, Wealth, and the Origins of Inequality.
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