Rising poverty is an interesting indicator of the depth of the Great recession . We have a two-speed process which hits most severely the poor whilst the richest seem to have escaped the worst of the recession's impact. Let's take the US situation for which data were published yesterday.
Over the past two decades, poverty has risen dramatically as a result of the financial crisis. More Americans are living in poverty than at any time in US history. According to the US census bureau, in 2010, 46,2 m people fell below the poverty line, calculated as an annual income of $ 22,134 for a family of four and $11,139 for an individual. So, nearly a quarter of Americans !
FT (14/09) has reported on the data published by the Census Bureau :
In policy terms, poverty is considered by policy makers as a 'light' issue as opposed to the 'hard' issue of debt and deficits. Neo-liberals will claim that poor always existed and that economic recovery will help them get out from that situation. But for this, they reckon austerity measures are an absolute necessity. At the same time, the growing income gap is an issue for the US government which is concerned about the effects on aggregate demand if wages continue to stagnate. Obama is right to launch a recovery plan, which will be funded in large part through the elimination of tax cuts for the richest Americans.
In Europe, the austerity measures have left aside the poverty issue, due to the shortsightedness of its political leaders. Ethically, poverty is unbearable for rich societies; economically, it is not sustainable as it further depresses demand and has a negative impact on median wages. We need 'hard' measures to combat poverty, not "light" or constrained policies.
Over the past two decades, poverty has risen dramatically as a result of the financial crisis. More Americans are living in poverty than at any time in US history. According to the US census bureau, in 2010, 46,2 m people fell below the poverty line, calculated as an annual income of $ 22,134 for a family of four and $11,139 for an individual. So, nearly a quarter of Americans !
FT (14/09) has reported on the data published by the Census Bureau :
In policy terms, poverty is considered by policy makers as a 'light' issue as opposed to the 'hard' issue of debt and deficits. Neo-liberals will claim that poor always existed and that economic recovery will help them get out from that situation. But for this, they reckon austerity measures are an absolute necessity. At the same time, the growing income gap is an issue for the US government which is concerned about the effects on aggregate demand if wages continue to stagnate. Obama is right to launch a recovery plan, which will be funded in large part through the elimination of tax cuts for the richest Americans.
In Europe, the austerity measures have left aside the poverty issue, due to the shortsightedness of its political leaders. Ethically, poverty is unbearable for rich societies; economically, it is not sustainable as it further depresses demand and has a negative impact on median wages. We need 'hard' measures to combat poverty, not "light" or constrained policies.
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