Please, do me a favor and add Megan Mcardle, deputy countries editor of Economist.com, to your blogroll. We know her in the blog community as Jane Galt of Asymmetrical Information. She is a University Of Chicago economist that writes well and has many great posts like this one.
The post is worth quoting in full:
The poor really are different
The post below is complicated, for some conservatives, by the fact that if the poor acted like the middle class, they wouldn’t have problems like no credit or savings.
If poor people did just four things, the poverty rate would be a fraction of what it currently is. Those four things are:
1) Finish high school
2) Get married before having children
3) Have no more than two children
4) Work full time
These are things that 99% of middle class people take as due course. In addition, there’s some pretty good evidence that many people who are poor have personality problems that substantially contribute to their poverty.
For example, people with a GED do not experience significant earnings improvement over people who have not graduated from high school. In this credential-mad world, this simply should not be. And it is true even though people with a GED are apparently substantially more intelligent than people without a GED.
How can this be? Even if the GED were totally worthless, available evidence seems to indicate that intelligence carries a premium in the labour market.
The best explanation seems to be that people with a GED (as a group) are smart people with poor impulse control. What intelligence giveth, a tendency to make bad decisions taketh away. Anyone who has spent any time mentoring or working with poor families is familar with the maddening sensation of watching someone you care about make a devastating decision that no middle class person in their right mind would ever assent to.
So I think that conservatives are right that many of the poor dig themselves in deeper. But conservatives tend to take a moralistic stance towards poverty that radically underestimates how much cultural context determines our ability to make good decisions.
Sure, I go to work every day, pay my bills on time, don’t run a credit card balance and don’t have kids out of wedlock because I am planning for my future. But I also do these things because my parents spent twenty or so years drumming a fear of debt, unemployment, and illegitimacy into my head. And if I announce to my friends that I’ve just decided not to go to work because it’s a drag, they will look at me funny–and if I do it repeatedly, they may well shun me as a loser. If I can’t get a house because I’ve screwed up my credit, middle class society will look upon me with pity, which is painful to endure. If I have a baby with no father in sight, my grandmother will cry, my mother will yell, and my colleagues will act a little odd at the sight of my swelling belly.
In other words, middle class culture is such that bad long-term decision making also has painful short-term consequences. This does not, obviously, stop many middle class people from becoming addicted to drugs, flagrantly screwing up at work, having children they can’t take care of, and so forth. But on the margin, it prevents a lot of people from taking steps that might lead to bankruptcy and deprivation. We like to think that it’s just us being the intrinsically worthy humans that we are, but honestly, how many of my nice middle class readers had the courage to drop out of high school and steal cars for a living?
I’m not really kidding. I mean, I don’t know about the rest of you, but when I was eighteen, if my peer group had taken up swallowing razor blades I would have been happily killed myself trying to set a world record. And if they had thought school was for losers and the cool thing to do was to hang out all day listening to music and running dime bags for the local narcotics emporium, I would have been right there with them. Lucky for me, my peer group thought that the most important thing in the entire world was to get an ivy league diploma, so I went to Penn and ended up shilling for drug companies on my blog.
Maybe you were different. But think back to the times–and you know there were times–when trying to win the approval of your peers convinced you to do things that were stupid, wrong, or both. Remember what it felt like to be sixteen and skinny and maybe not as charming and self confident as others around you, and ask yourself if you’d really be able to withstand their derision in order to go to college–especially if you didn’t even know anyone who’d ever been to college, or have any but the haziest idea of what one might do when one got out. Try to imagine deciding to get a BA when doing so means cutting yourself off from the only world you know and launching yourself into a scary new place where everyone’s wealthier, better educated, and more assured than you are.
Or take a minute right now and try to imagine how your friends would react if you announced that you’d decided to quit work, have a baby, and go on welfare. They’d make you feel like an outsider, wouldn’t they? And isn’t that at least part of the reason that you don’t step outside of any of the behavioural boundaries that the middle class has set for itself?
Bad peer groups, like good ones, create their own equilibrium. Doing things that prevent you from attaining material success outside the group can become an important sign off loyalty to the group, which of course just makes it harder to break out of a group, even if it is destined for prison and/or poverty. I think it is fine, even necessary, to recognize that these groups have value systems which make it very difficult for individual members to get a foothold on the economic ladder. But I think conservatives need to be a lot more humble about how easily they would break out of such groups if that is where they had happened to be born.
That leaves us in a rather awkward place, because while I don’t agree with conservatives that the poor are somehow worse people than we are, I also don’t agree with liberals that money is the answer. Money buys material goods, which are not really the biggest problem that most poor people in America have. And I don’t know how you go about providing the things they’re missing: the robust social networks, the educational and occupational opportunity, the ability to construct a long-term life instead of one that is lived day-to-day. I think that we should remove the barriers, like poor schools, that block achievement from without, but I don’t know what to do about the equally powerful barriers that block it from within.
But I also don’t think that the answer is to use those barriers as an excuse to wash our hands of the matter.
As someone who grew up in Compton, California, I have a hard time accepting the extremes on both sides of the political aisle. On one hand, I cannot accept the lefts philosophy that the primary problems affecting the poor are racism and materialistic needs, however, on the other hand, I can’t accept the rights philosophy that the poor ‘have only themselves to blame’, as if anybody else would have been drastically different had they grown up in the same neighborhood under the same circumstances.
In other words, yes the problem is not primarily racial, it is not primarily financially related, but at the same time nobody intentionally wants to be poor, cultural surroundings, parental upbringing, peer groups, and yes, economic circumstances all mixed in together create environments where even the best of people can get sucked into the circle of poverty.
Jane Galt is a rarity; she understands both, the economic tools necessary to create change, and the proper outlook that addresses the problem at its core (You can’t fix the problem if you don’t know what the problem is). A combination I rarely see in others, economists Thomas Sowell (here and here), Roland G. Fryer Jr. (here and here) and Walter Williams (here and here), are other examples of those who also exhibit this rare combination.
Now, if only I could get her to write more on poverty, and how to address it…
Update: Jane Galt has more, she recommends mentoring over money.