

Born Poor?  Santa Fe economist Samuel Bowles says you better get used to it - nkurz
http://sfreporter.com/stories/born_poor/5339/all

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isleyaardvark
The article makes some interesting points but there seems to be a flawed use
of statistics. Particularly the part about "the percentage likelihood that a
bottom 10 percenter will ever make it to the top 10 percent. For 99 out of 100
people, rags never lead to riches." Well, what would you expect? There's going
to be a pure mathematical limit to that sort of movement, nevermind issues of
income mobility.

To take an absurd example, say there's a 50/50 chance of going from rags to
riches. That would mean half of the bottom 10%, 5% of the population would
move up to the top 10% of the population. And somehow the middle 80% don't
manage that feat. You would expect the probability of going from the bottom to
the very top would be low. Instead, the article tries to paint a negative
picture. It points out there's a 32% chance a child born in the bottom 10%
will stay in the bottom 10%, when you could just as well point out that child
has a 68% chance of moving out of the bottom 10%. Bringing in statistics about
how many of them move from that percentile to the highest percentile obscures
rather than clarifies the issue of income mobility.

Then there's his universal welfare idea, which at $250,000 per person and a
quick back-of-the-envelope calculation would only cost about 56 _trillion_
dollars. Plus another 2 trillion or so per year with population growth.

That said it's worth reading, the “individual development accounts” idea is
definitely interesting.

~~~
gjm11
I think your comment on the $250k proposal is wrong.

The US has a population of, let's say, 300M. In any year, let's say 1/60 of
that many -- 5M -- are just turning 18, which is when Bowles proposes handing
out the money. (He's not proposing to give that much to everyone all at once.)
So the annual cost is $250k times 5M, or about $1T. There's no $56T up-front
cost.

Now, $1T/year is an awful lot: it's about 1/4 of what the US government
currently spends in a typical year. It's about what the US government
currently spends on "defense". It's hard to see where the money could come
from. On the other hand, it would completely obliterate poverty in the US. On
the other other hand, it's very convenient for a lot of people that there _is_
poverty in the US; without poverty, no one would work for very low salaries,
which means a lot of things that are currently cheap would become more
expensive. (You can generally recognize countries with less income inequality
because low-end goods and services cost more.) On the other other other hand,
it does seem like it would make entrepreneurship much more widely accessible.

Bowles is a very smart guy. The idea may be crazy, but it's unlikely to be
stupid.

~~~
timwiseman
No, the idea is not stupid, but I think you are making some unfounded
assumptions.

 _it would completely obliterate poverty in the US._

Not really, it would do little to help people in poverty already past 18
(unless they had children who were both just about to turn 18 and those
children were generous...). Even for those that benefitted from this, to
assume they would not go back to poverty you have to assume they will use it
wisely (and possibly have some luck too.) If they go to college or start a
business with that money, then they probably will move up and sustain
themselves at least in the middle class. Probably. On the other hand, I bet a
large percentage would spend it quickly and have relatively little to show for
it at the end.

Even those who start a business/go to college are not gaurunteed to stay in
the middle class, they just have a good shot. Many businesses fail, and then
those founders would be left with little but that experience. Many people with
degrees are unemployed right now.

I am not saying it is a bad idea necessarily, and I am certainly not about to
dismiss it as stupid, but I do not think it will come close to wiping out
poverty.

~~~
isleyaardvark
_On the other hand, I bet a large percentage would spend it quickly and have
relatively little to show for it at the end._

Professional football players make a ton of money, and guess how many end up
filing for bankruptcy within 2 years of retirement: 78%.

[http://sportsillustrated.cnn.com/vault/article/magazine/MAG1...](http://sportsillustrated.cnn.com/vault/article/magazine/MAG1153364/index.htm)

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chipsy
"Basic income" has been pilot-studied in Africa to great success.

The reasoning is very simple: If you are living hand-to-mouth with unreliable
income - so unreliable that you can essentially expect "the end of the world"
to come at any time - then you cannot make any future plans around earning and
saving; consuming as much as possible immediately holds more value.

But if you have a government-guaranteed income, you can build plans around
that - you can pursue the risky project, you can start the startup, you can go
to school, etc. One anecdote I read(this was years ago) involved a woman who
built up a flock of chickens from basic income. This lifted her out of
poverty, since the chickens can pay for themselves with eggs in just a few
months.

~~~
teej
For those more interested on the results of the pilot program in Nambia, you
can read more about it in their report here:
[http://www.bignam.org/Publications/BIG_Assessment_report_08a...](http://www.bignam.org/Publications/BIG_Assessment_report_08a.pdf)

I read through it and was pretty surprised at the findings. The increases in
education and health are particularly staggering.

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nandemo
_What’s troubling about this research is that poverty tends to persist through
generations, no matter how individuals try to improve their circumstances._

"Poor" young Americans are much wealthier than their grandfathers. The claim
that "the poor stay poor" is largely an artifact of defining "poor" as "bottom
10% income".

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Perceval
This article is pretty embarrassing in its use of numbers/statistics.

 _The second number is how many jobs the state Economic Development Department
claims to have created in Santa Fe last year._

As if the state's economic development department were the main driver of job
creation!

Bowles argues that inequality is holding the United States back, but it's not
clear that that's the case. You can see the chart of states arranged by gini
coefficient, where rich dynamic centers of business like New York and
California score highly. In contrast, Utah is the most equal state in the
U.S., but is anyone flocking there? Does anyone want to reproduce Utah's
social model throughout the rest of the country?

Then the statistics for the top and bottom 10%--both groups have an
approximately 30% chance that their offspring will stay in the same percentile
of income distribution. But this means that 70% of rich kids are going to fall
from grace, whereas 70% of poor kids are going to grow up to do better. And
that's bad?

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mtalantikite
He's an interesting guy, he used to teach econ over at UMass Amherst when I
was studying it there.

One of his colleagues/research partners has a good evolutionary game theory
book available for free on his website for anyone interested:

<http://people.umass.edu/gintis/>

It's called "Game Theory Evolving"

~~~
evgen
Unfortunately, the book is not available but only a few pages from each
chapter. Too bad, it looked interesting...

~~~
mtalantikite
Oh, sorry about that -- he used to have all of it up there last I looked
through it. Or maybe that was because we were students and it was at a course
page rather than his personal page.

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snagage
I think the site might be down at the moment. Here's the link to the google
cached page:
[http://74.125.155.132/search?q=cache:ra7632stXRsJ:sfreporter...](http://74.125.155.132/search?q=cache:ra7632stXRsJ:sfreporter.com/stories/born_poor/5339/all/+sfreporter.com+born+poor)

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MarkPNeyer
The article repeatedly contrasts Bowles with Friedman, but Friedman also
supported a 'Negative Income Tax':

<http://en.wikipedia.org/wiki/Negative_income_tax>

~~~
emilind
A demogrant and a NIT are different ideas.

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viggity
I love how he tells his staffer to buy the printed book and not the version on
the kindle. The author goes on to say that the printed book is marx, the
kindle book is rand. History makes it pretty clear how your economy will wind
up using marx's theories.

Capitalism is the worst kind of economic structure out there, until you look
at all the alternatives.

~~~
tphyahoo
timtoady.

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emilind
Don't everybody gonna get hung up on the $250,000 demogrant. Bowles is a super
interesting thinker (same for his frequent co-author, Herb Gintis). Bowles
(and Gintis) are trying to synthesize agent-based modeling, evolutionary game
theory, behavioral economics, mainstream economics together with the other
social sciences. It's an ambitious project and absolutely necessary.

Come to think of it, ff there's one economist who would appeal to functional
programming eccentrics and polymaths it'd be Bowles. His papers are pretty
readable for non-economists so if you're curious check out his homepage.

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apsec112
Where is his _proof_? He has this whole elaborate theory of economics and
inequality worked out, and not once does he present any _proof_.

~~~
ibsulon
I'd start at <http://tuvalu.santafe.edu/~bowles/> and his actual papers, not
what a reporter writes. :)

~~~
mynameishere
You know damn well that's not useful. "Here, read through every single thing
this guy wrote. The proof's gotta be there somewhere, I figure."

No, of course, there's no proof for anything in any soft science, so there's
the answer. The only good experiment would have to be on a grand scale: give
everyone 15K a year for free and see what happens. My guess: An increase in
the velocity of money, since the whole thing is basically a devaluation.

