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Why Do People Stay Poor? [pdf]

sticerd.lse.ac.uk

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Re: Why Do People Stay Poor? [pdf]

#241

Post by quercusgrisea »

missedthecue wrote: post #225
quercusgrisea wrote: post #213

Earlier quoted context omitted.

>"Food insecurity" is nowhere near the same thing as going to another city to stand in line for potatoes and onions. What's the difference? Millions of people in the US have to line up at soup kitchens and food banks in order to avoid starvation. >On the whole, decentralized distribution is always better than when centrally controlled That's a strong claim; I'd be interested to look at evidence for it if you have any…

What? China is not a command economy. It used to be, pre-1970s, but no longer is. Companies adjust production in accordance to price signals, not instructions from Beijing. This is not an appropriate counter-example in any sense.

Compared to most countries in the world today, would you say the Chinese government exercises relatively more or less control over their economy?

Re: Why Do People Stay Poor? [pdf]

#242

Post by dublinben »

CarbyAu wrote: post #221
redorb wrote: post #165

Earlier quoted context omitted.

This is a great definition of what I consider to be the 'poor tax'.. Not to mention if they ever get un-poor they don't have the knowledge to 'build wealth' until they start slowly learning it or from a mentor. We would better off teaching 'home finances, interest and banking' classes instead of Algebra 3 or geometry 2 (for 99% of people)

Agreed. It is crazy that for a standard "Savings" account: - interest earned is less than inflation. - I pay tax on that interest earned. "Saving" money in a common savings bank account pisses away value. Many people are not capable of more financial management capability. The middle class is often locked into a mortgage - I am too! - and is barely one step up. But it is one step up. Ultimately, poor people don't own…

>interest earned is less than inflation. - I pay tax on that interest earned.

Interestingly, the current administration proposed to index capital gains taxes to inflation to address that very paradox. Unsurprisingly, their proposal would have just been a giveaway to the wealthy.[0]

[0] https://itep.org/why-trump-administrations-plan-to-index-cap...

Re: Why Do People Stay Poor? [pdf]

#243

Post by noch »

drbojingle wrote: post #226
noch wrote: post #123

The paper says: > The question is whether the bimodality is symptomatic of a poverty trap, namely whether poor people do casual jobs and hold nearly no productive assets because they do not have the talent to do anything else or whether the fact that they are poor prevents them from acquiring the assets needed to climb the occupational ladder. The cause/effect inversion, of talent/ability => asset acquisition, is alw…

Being intelligent certainly sounds helpful. I think that falls under my first point if intelligence is primarily situation (as the life you're born into is a situation and thus so is your genetics). It certainly does make sense that intelligence has an effect on social-economic status, since intelligence is valuable. How do you suppose we confront "the IQ problem"?

> How do you suppose we confront "the IQ problem"?

- A "Manhattan project" to discover protocols, tools, medications, cybernetics, new modes of education, anything really, that can enhance general human intelligence.[0]

- A rethinking of social welfare policies to take into account what we're learning about evolutionary biology and genetics. If certain heritable/genetic factors have a disproportionate impact on outcomes, we need to consider the hypothesis that certain well-meaning policies might not have a significant impact on permanently liberating people from poverty, given game theoretic constraints. We would need to find a way to make our economies positive sum, rather than zero sum games.

[0]: https://www.gwern.net/Embryo-selection

[1]: Converting Moloch from Sith to Jedi https://youtu.be/hKvVdGNzCQk

Re: Why Do People Stay Poor? [pdf]

#244

Post by arcticbull »

quercusgrisea wrote: post #241
missedthecue wrote: post #225

Earlier quoted context omitted.

What? China is not a command economy. It used to be, pre-1970s, but no longer is. Companies adjust production in accordance to price signals, not instructions from Beijing. This is not an appropriate counter-example in any sense.

Compared to most countries in the world today, would you say the Chinese government exercises relatively more or less control over their economy?

I mean America isn't in a place to talk these days, or as the Fed would say "brrrrrrrrrrr"

Re: Why Do People Stay Poor? [pdf]

#245

Post by arcticbull »

missedthecue wrote: post #227
arcticbull wrote: post #219

Earlier quoted context omitted.

Yeah, no, they don't, and it isn't. Estate tax being practically zero means huge quantities of un-earned wealth are transmitted from generation to generation. This isn't true in most first-world countries. The top tax rate in the US isn't nearly as high as many European countries. The specific quantity of money that is collected as tax revenue has much more to do with just how successful the higher classes are in the…

>The top tax rate in the US isn't nearly as high as many European countries. And the bottom tax rate is much much lower than in other countries. The top 3% of earners pay 50% of income taxes in the US. Nowhere in Europe will you find this. Remember, in addition to their flatter income tax rates, Europe also has 20% VATs which is extremely regressive.

I guess what I would say is that "best in class" clearly isn't good enough given the results and the environment in which these decisions are made. Looking at the results, I'd say it's not working. Either we need to turn up the dials, regardless of what everyone else is doing, or find some new dials, but the status quo won't do.

Re: Why Do People Stay Poor? [pdf]

#246

Post by JamesBarney »

marcosdumay wrote: post #110
paulpauper wrote: post #98

Why does every econ paper these days read like a high-energy physics paper? I feel like I am reading about field theory, not econ.

Hum... What exactly did you expect? It has a simple stochastic model and some statistics for verifying if the real world agrees with it. You are deluding yourself if you think one can study economics without advanced statistics.

Are these study's preregistered? It seems like there is so many degrees of freedom the researcher could easily take a stroll through the garden of forking paths.

Re: Why Do People Stay Poor? [pdf]

#247

Post by tptacek »

rayiner wrote: post #203
jeffbee wrote: post #111

Earlier quoted context omitted.

No, I'm asking why it would be structured like that. It seems like an open invitation to just raid and squander it. If you took the same amount of money you could, just as an example, permanently endow a professional educator for every 20 births, which begins paying off right away, instead of decades later.

I think spending the money on a “professional educator” would be squandering it. This country has huge inequities, and I don’t think you can solve it by throwing money at college educated (disproportionately white) people.

Especially in postsecondary education, which is artificially limited and will absorb some factor of all the additional subsidies it's given.

Re: Why Do People Stay Poor? [pdf]

#248

Post by tptacek »

twblalock wrote: post #156
rayiner wrote: post #88

This is why Booker/West-style baby bonds could have a significant chance to alleviate structural poverty. Beyond a certain threshold (and I think we’re past that in the US) equality of opportunity (better education, etc.) won’t make up for starting out poor. What people need is seed capital. For a fraction of the cost of universal healthcare, we could endow each child born in the US with a $250,000 trust fund at birt…

I'd bet a significant number of people, upon turning 18, would learn that their trust fund had been emptied out by their parents.

Assume that happens, and that no effective countermeasures are derived. How are poor families worse off for having the option in the first place? It's not like Booker is proposing to take the money from some other service offered to the poor: Booker proposed paying for it by increasing taxes on capital gains, which poor people weren't paying to begin with.

Re: Why Do People Stay Poor? [pdf]

#249

Post by econcon »

CarbyAu wrote: post #234
ip26 wrote: post #228

Earlier quoted context omitted.

I'm not a finance guy but I suspect it's axiomatic that you can't keep up with inflation without taking any risk. Like a law of economics.

I will admit I have little financial management knowledge myself. I am inclined to agree with you, but what is the bank doing with the money you keep there? Isn't the bank meant to be using your money in a "managed fund" like manner? IE leverage it to make profits. Here in Australia the banks make quite decent profits, and yet a savings account can't break even, before tax?!? I haven't done the sums but I am curious…

Bank also makes money on transaction fees (both merchant and account holder side) which is something bank account owners don't make.

Re: Why Do People Stay Poor? [pdf]

#250

Post by econcon »

schrodinger wrote: post #238
ip26 wrote: post #228

Earlier quoted context omitted.

I'm not a finance guy but I suspect it's axiomatic that you can't keep up with inflation without taking any risk. Like a law of economics.

Isn't a government bond basically equivalent to inflation? That would mean you have a risk-free way to get "inflation" returns, with the caveat that you can't access the money for a period of time. Although I guess you can argue that "tying up" the money is a form a risk, and almost certainly a luxury some poor people cannot afford.

>Isn't a government bond basically equivalent to inflation? That would mean you have a risk-free way to get "inflation" returns, with the caveat that you can't access the money for a period of time

It's not risk free, there is nothing that stops government from creating inflation so they can pay off the debt for in inflated dollars.

Today, central bank alone doesn't have power to make create money out of thin air. Government guaranteeing loans from banks to corporate players and projects is creating inflation. It's good for politicians as they can pay off their expensive mistakes in cheap money.

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