Ending the Cycle of Poverty

Breaking the Cycle of Poverty

Some reformers like to talk about breaking the cycle of poverty as if that is even possible.

Here is an analogy. Breaking the cycle of poverty is like breaking the cycle of dwarfism (note: I do not consider dwarfism a problem). While it is possible for two dwarves to have a child that grows into a 7ft giant, odds are very much against it. It is not very likely that all dwarves will have a 7ft giant and as such end dwarfism.  While it is possible for an individual to break out of poverty it not likely that everyone in poverty will break out, in our current economic system. The economic system is setup for rich to prosper and become richer. They have had the laws changed to favor themselves, using lobbyists.

While the dwarf analogy is question of genetics, one could say that the cycle of poverty is a question of the genetics or chemical makeup of economics. As I have said before in other essays, in a society that allows a small percentage of people to become super wealthy, in other words, it allows people to take significantly more than their fair share of the money pie, you will have people in poverty. This size of the pie is finite, although the Fed can change the size. We have about 8 million millionaires in the United States. That is about 2% of the population of the United States. This causes about 20% to be in poverty. At the very least it results in poverty for these people. Most of the population of the United States makes less than $35k annually. This is near poverty. At least you cannot save or invest much of your earnings, nor give more to charity. You are living paycheck to paycheck. More and more people are falling out of the middle class into poverty every day. These things are reported by numerous news sources.

The United States has the most millionaires and the among the highest poverty rates, if not the highest, of any industrialized nation on Earth. How is this fair?

The economic factors of poverty are numerous. Education in the macro is generally NOT one of them. We have a competitive society and a competitive world for that matter. Even the POTUS Obama has said we need to be number one in the percentage of college graduates as if it were some kind of a race.

If you educate everyone to one level then you’ll just need to go to the next educational level to stand out from the crowd. This is what I call the nuclear arms race of education or the education race, if you will. This is why more people with college degrees have jobs. They have them because they take the jobs that high school dropouts should and could have. But is a bachelor’s degree the new 3rd grade as compared to about 100 years ago? Salesclerks of 100 years ago were doing the job manually with a 3rd grade education or less. Computers just make that job easier. So, if college is the new 3rd grade, I do not call that progress!

But too many do call it progress. From the standpoint of being more knowledgeable citizens, yes perhaps, but that does not translate into economic progress. It is actually regression and not progression.

Our founding fathers wanted only educated or knowledgeable people to vote. This was meant to control the government. The Enlightenment Era believed that we could govern ourselves and this was the world in which our Founding Fathers found themselves. This is why not many had a vote. Only white male landowners could vote and generally these constituted the Congress. We did not have popular elections. Two side notes: number one is George Washington was ‘elected’ by the Congress, not the people of the United States; number two is the need for education is why we have the Electoral College. Ironically, since we now have almost ½ of all adults in this country with a college degree we no longer need the Electoral College. In fact 90% of all adults have either a high school diploma or GED. So, why do we still have it?

Education for general knowledge and hopefully wisdom is what education was back then and what it should be now. This is the classical definition of education, from at least as far back as the Ancient Greeks. To that end education should have increased or at least maintained our liberty. But to the contrary we have had our liberty taken from us, slowly over time, even though we are now the most educated people in our history. So, not only does education in the macro not increase our freedom, but it also does not translate into economic wealth. Most freedom and rights exist only if you have the money. It should not be that way but it is. You have to have money in order to relocate to where the jobs are or to retire to where you want to live, assuming you are not already there, for example.

As I have written in previous essays the United States did not become the largest economy on Earth due to education. We became the largest economy of Earth in circa 1880, when almost nobody was graduating high school, let alone college. I will not reproduce my full case here.

What the United States did do was to mistreat immigrants of the late 1880s and into the 1900s. For example a mass influx of the Irish in the late mid to late 1800s meant a source of cheap labor for the rich. Illegal immigration today is largely a result of business wanting a cheap source of labor. This also why today big business say we need more H-1B Visas for temporary employment of foreign workers, they can pay less than US citizens, thus increase their profits.

One other reason for H-1B visas is that in the countries that these immigrants come from the companies train their people. This is something that American businesses do not want to do, train. They have said, ’I am not in the business of training.’

The big business problem is at least two fold. Many big businesses do not want American workers in good paying jobs. That would eat into their profits by having an increase in costs to their business and thus reducing dividends paid to the rich. It would also reduce stock prices.

Secondly, they want as many people in this country as educated as possible so that the supply of ‘qualified’ people surpasses the demand. This means that they can pay less in wages for their workers, who are legal US citizens. Again, to maximize their profits and stock prices and ROI (Return On Investment). This again, has the effect of adding wealth to the already rich, in this country and perhaps other countries as well. I assume that the rich in other countries have some stock in US companies.

So big business, the truly powerful, has its reasons to want immigration legal and especially illegal.

According to the Migration Policy Institute at  <<http://www.migrationpolicy.org/article/frequently-requested-statistics-immigrants-and-immigration-united-states/#Current%20and%20Historical>&gt; we have had the following immigration patterns over the last 43 years. “In 1970 the US had an immigrant population of 9.6 million and a 4.7% of the US population. In 1980 the US had an immigrant population of 14.1 million and a 6.2% of the US population. In 1990 the US had an immigrant  population of 19.8 million and a 7.9% of the US population. In 2000 the US had an immigrant population of 31.1 million and a 11.1% of the US population. In 2010 the US had an immigrant population of 40 million and a 12.9% of the US population. In 2013 the US had an immigrant population of 31.3 million and a 13.1% of the US population.”

From this we can conclude that immigration over the past nearly ½ of a century is increased dramatically. It went from less than 5% of our population to over 13% of our population. That means it has almost tripled as a percentage in about 50 years. It has also grown from 9.6 million to over 30 million of immigrants made up our population. This means that the numbers have more than tripled in that same time frame.

With the increase in immigration the past 50 years and especially the past 15-25 years. This tends to bring down our PISA and other test scores. It generally takes a generation or two to speak English and not speak the native tongue, when English is not your native tongue. Many immigrants, historically, have not had much education even in their native language.

All of this can lead to poverty and may be why poverty in the US has not improved much in the past 60 years.

According to the Center for Immigration Studies at << http://www.cis.org/node/4573 >>:

“. . . immigration makes the U.S. economy (GDP) larger. However, by itself a larger economy is not a benefit to native-born Americans. Though the immigrants themselves benefit, there is no body of research indicating that immigration substantially increases the per-capita GDP or income of natives.  . . . [T]he least educated and poorest Americans are the most likely to be in competition with immigrants, they tend to be the biggest losers from immigration.”

Since the poor are the ones trying to get out of poverty maybe we should greatly curtail immigration. Ending poverty of the native-born Americans is for more important and ethical than allowing immigrants to come here. I believe that we should take of the people already here before we allow more to come.

So immigration helps make the rich richer and the poor poorer. I think that we should take care of our own people first instead of people from other countries. This would be a step in the right direction toward ending the cycle of poverty.

The ultimate wisdom here is to realize that education of masses has very little to do with the economy. Ending the cycle of poverty would be a good and ethical thing but education is not the answer.

But we would need to change the economic system we currently have to not to allow for millionaires and have jobs that paid better than a livable wage. Maybe get rid of the stock market. Make companies go to the bank like everyone else when they want to borrow money, which is what the stock market is all about. Then banks could pay more for the money people deposit and that way we all could share in the profits of companies. The banks would become the new stock market as it were. I am not saying that we should become communists. The last thing I want is for the government to control anything, let alone everything.

In order to end poverty we need to able to spread the wealth, which we cannot in our current system.


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