The article linked below is a particularly interesting commentary from Steven Pearlstein at the Washington Post. While we generally agree with his conclusions we would like to hear what you have to say and invite your comments in our comment section. The most salient points of the article are summed up in the final few paragraphs found below.
“…the reason we study, work, save and generally behave ourselves is that these behaviors allow us to earn more money, and more money will improve our lives. And, by logic, that must be particularly true of the poor, for whom each extra dollar to be earned or saved for a rainy day is surely more valuable than it is for, say, Bill Gates.
In economics, this insight — that the fifth ice cream sundae is less valuable than the first one — is enshrined in the law of diminishing marginal utility.
But what if this iron law of economics is wrong? What if it doesn’t apply at every point along the income scale? If you and everyone around you are desperately poor, maybe it’s perfectly rational to think that an extra dollar or two won’t make much of a difference in reducing your misery. Or that you won’t be able to “study” your way out of the ghetto. Or that if you find a $100 bill on the street, maybe it’s logical to blow it on one great night on the town rather than portion it out a dollar a day for 100 days.
On the other hand, maybe the point at which people are most willing to work hard, save and play by the rules isn’t when they are very poor, or very rich, but in the neighborhoods on either side of the point you might call economic sufficiency — a motivational sweet spot that, in statistical terms, might be defined as between 50 percent ($24,000) and 200 percent ($96,000) of median household income. And if that is so, then maybe the best way to break the cycle of poverty is to raise the hopes and expectations of the poor by putting them closer to the goal line.
Admittedly, this is only a theory, supported by logic and anecdote. But if Karelis is right, it could provide a solid economic argument to replace the old moral ones for spending more money on programs like food stamps, subsidized child care and the earned income tax credit.
In recent years, conservatives have dominated the poverty debate with their strategy of breaking the cycle of dependence. But after a decade of welfare reform, budget cuts and calls for individual responsibility, poverty is still very much with us. Maybe it’s time for liberals to regain the upper hand in the debate by arguing that the vicious cycle that needs to be broken isn’t one of dependence but one of declining expectations.”
Find the full article here. Washington Post Commentary on Poverty