Many thanks to A2 student Jay Kim for this article in the Huffington Post. It shows that 42.6 million Americans (15.1%) are now below the poverty line. The official definition of poverty in the country is when a family of 4 earns less than $22,314 a year. An interesting point from the article was the difference between races. The median white household income was cited as $113,000; black household income $5700; while Latinos were recorded $6300. The article states that the wealth gap exists mainly because much of white household wealth is inherited.
Ultimately the economic downturn over since 2008 has caused people of all races and ethnicities to lose wealth because of a loss or reduction in the value of their homes etc. The huge contrast in median household wealth also help explain why black and Latino poverty rates are more than two times higher than that of white families.
Click here for Huffingotn Post article.
On the final stretch with my A2 class and doing some last minute revision before they go on exam leave. Here is something we covered in Developing Economies which might be of interest – there is usually an essay question on this topic.
The solution is shown in the figure below, where foreign help, in the form of official development assistance (ODA), helps to jump-start the process of capital accumulation, economic growth, and rising household incomes. The foreign aid feeds into three channels. A little bit goes directly to households, mainly for humanitarian emergencies such as food aid in the midst of a drought. Much more goes directly to the budget to finance public investments, and some is also directed toward private businesses (for example, farmers) through microfinance programs and other schemes in which external assistance directly finances private small businesses and farm improvements. If the foreign assistance is substantial enough, and lasts long enough, the capital stock rises sufficiently to lift households above subsistence. At that point, the poverty trap is broken, and the figure comes into its own. Growth becomes self-sustaining through household savings and public investments supported by taxation of households. In this sense, foreign assistance is not a welfare handout, but is actually an investment that breaks the poverty trap once and for all. Adapted from Jeff Sachs – The End of Poverty.
The Role of ODA in Breaking the Poverty Trap
From the TED site – Hans Rosling gives his usual passionate presentation using some great statistics on the progress of the MDG’s. Watch out for him ripping out a page from the UN Report on “Levels and Trends in Child Mortality”. For some reason it stated that Singapore, South Korea, Qatar as developing countries. However, there has been great progress in child mortality rates – see his last graphic.
Here is a useful graphic from The Economist on the progress of the Millennium Development Goals (MDG’s). Interesting that the first three have already gone beyond the 2015 target – especially those living on less than $1.25/day. Could be useful for A2 level developing economies.
Just completed 3 enjoyable days of A2 revision at UNITEC. Today we looked at Developing Economies which is major topic in the course. It was very apt that on the Tutor2u blog and in this week’s Economist there was an article on the presumption that poor people live in poor countries. In 1990 over 90% of the world’s poor lived in the poorest countries. However, according to Andy Sumner, 75% of the 1.3 billion people that live below the $1.25 a day poverty line now live in middle-income countries and only 25% live in the poorest nations of which the majority are in Africa. The World Bank produced the following statistics showing the success of developing countries:
1998 – 61 countries out of 203 were classified as low-income*
2009 – 39 countries out of 220 were classified as low-income
*annual income per head less than $760, in money of that era
Therefore, should aid go to poor people or poor countries? As most countries charities tend to support poorer countries it seems that to neglect aid to middle-income countries is missing the point of reducing poverty. Click here to read the full article.
The number of people in the US who are in poverty is approaching the levels of the 1960’s. The anticipated poverty rate is expected to increase to 15% from 13.2% which means that 45 million people in the US were poor – this is more than 1 in 7.
The most common measure of poverty in the United States is the “poverty threshold” set by the U.S. government. This measure recognizes poverty as a lack of those goods and services commonly taken for granted by members of mainstream society. The official threshold is adjusted for inflation using the consumer price index. In 2008, the poverty level stood at US$22,025 (NZ$30,174) for a family of four, based on an official government calculation that includes only cash income before tax deductions. Wikipedia
Analysts suggest that the upcoming report on poverty will show:
* Child poverty increased from 19 per cent to more than 20 per cent.
* Blacks and Latinos were disproportionately hit, based on their higher rates of unemployment.
* Metropolitan areas that posted the largest gains in poverty included Modesto, California; Detroit; Cape Coral-Fort Myers, Florida; Los Angeles and Las Vegas.
From the graph below:
Highest poverty rate – 1959 = 22.4%
Lowest poverty rate – 1973 = 11.1%*
*this was as a consequence of President Johnson’s war on poverty.