Economic Problems: Poverty & Wealth

Economic Problems Facing the United States Stagnant incomes Real income: income adjusted for inflation Taxes The savings rate A debtor nation National debt: the total amount the U.S. government owes Economic Problems Facing the United States

Economic Problems Facing the United States

Economic Problems Facing the United States

Biological (Absolute) poverty starvation and malnutrition Relative poverty people living below the standard of living for their society The Nature of Poverty

Problems with the poverty line Official poverty income level at which people are eligible for welfare Problems with the poverty line Not adjusted for different costs of living The Nature of Poverty

The Significance of Poverty No matter how we compute poverty, millions of Americans are poor. How we define poverty has serious consequences for people’s lives. Poverty lies at the root of many other social problems. The Significance of Poverty

Existence of poverty contradicts the ideal American vision of success Structural inequality the inequality built into our economic and social institutions Social Inequality

Social Inequality Distribution of income and wealth Inequality of income Inequality of wealth Wealth: how much property, savings, investments, and economic assets people own Social Inequality

Wealth and power Social Inequality Vast wealth brings vast power. Because the rich can hire top financial advisors, attorneys, and lobbyists, they perpetuate their advantages. Social Inequality

Social Inequality The impact of poverty People’s economic circumstances envelop them, affecting profoundly every aspect of their lives Housing and mortgages Education Jobs Criminal justice In short: quality of life Social Inequality

Symbolic Interactionism The relativity of poverty To fully understand poverty we must focus on what poverty means to people. Poverty is relative: what poverty is differs from group to group. Meanings of poverty change as social conditions change Symbolic Interactionism

Conflict Theory The cause of social inequality Basic struggle over limited resources A general theory of social class Karl Marx (1818–1883) Social class revolves around means of production Capitalists (bourgeoisie) or workers (proletariat) False class consciousness: mistaken idea of future prosperity Class consciousness: realization that there will never be a future prosperity Conflict Theory

Functionalism Income inequality helps society. Some tasks in society are more important than others. To attract such talented people, the positions must offer high income and prestige. Poverty is functional for society. We need the poor because their poverty contributes to society’s well-being. Functionalism

What We Know about Poverty Permanence and poverty Most people who fall below the poverty line do not stay there permanently. Region Poor are concentrated in the inner city and rural areas. Race–ethnicity Poverty trends can also be predicted using race– ethnicity. What We Know about Poverty

What We Know about Poverty Children in poverty Poverty can also be predicted using age as a variable. The elderly Their economic situation has improved The feminization of poverty Poverty in the United States has become concentrated among women and children. An underclass People who earn minimum wage are likely to be poor. What We Know about Poverty

What We Know about Poverty Social structure Poverty is structural, built into the social system. Is there a culture of poverty? Blatant poverty in the midst of plenty Culture of Poverty: people who remain poor develop a way of life that traps them in poverty Some people do adopt a culture of poverty that perpetuates poor lifestyles. What We Know about Poverty

Who Rules America? The power elite interest groups Culture of wealth small group makes decisions that direct the country and the world interest groups compete for social, economic, and political power Culture of wealth set of institutions, customs, values, worldviews, family ties, and connections that allow the rich and powerful to perpetuate their privileges Who Rules America?

Social Policy Shifting views of cause and policy Progressive taxation inside people outside of people Progressive taxation tax rates that progress (increase) with income Social Policy

Public Assistance Programs Social insurance Teaching job skills Welfare Workfare Public Assistance Programs

Welfare wall Continuing Issue disincentive to work that comes when the amount that people earn from working is not much more than what they get on welfare Continuing Issue

Continuing Issue Feminization of Poverty likelihood that those living in single-mother households are likely to live beneath the poverty line Continuing Issue

Possible Solutions Provide jobs Education accounts Giving the poor more money The Income Maintenance Experiments Possible Solutions