Wednesday, June 09, 2004

Ski Bums and immigrants: more quintile analysis

Various comments in Brad Delong's Journal didn't really get my point, so I'm trying again...

The yacht article writer assumes it is a bad thing that America has a higher variance - the difference between the top and the bottom of the distribution at any given time - than do many European countries. My chief point is that this is not a self-evident claim. You'd need to look deeper into the stats to give meaning to them than this writer has done in order to convince a skeptic like me that there's something fundamentally wrong here.

I'm not claiming there aren't any poor people in the US or that they all have secret trust funds and never suffer or anything like that.

What I am claiming is that some percentage of the poverty that makes us look "worse" than Europe is highly beneficial to the poor people in question. Without establishing how much of it fits into that category, you can't make a straight comparison and say whether our society is better or worse or in need of change in any particular direction.

There are two categories of "beneficial poverty" that leap to mind. First off, there's the "ski bum" category of poverty I hinted at before. Second, there's recent immigrants for whom poverty in america is wealth by their former standard of living.

More on ski bums: America is so rich that middle-class-or-better americans have the luxury of being able to take a year or more off to write a novel, get a degree, travel around the world, "find themselves", start a business or what have you, living off savings for a while, relying on family, friends, loans and perhaps the possibility of an emergency backup job for support. Followup point: The richer we get, the more Americans will be financially secure enough to do this. If you know you're employable at a job with salary to spare or have sufficient savings, there's less downside in taking time off to do something fun or experimental. The ideal american economy as far as I'm concerned would be one where nobody is poor involuntarily but many are poor by choice for a while because they like being a ski bum or pursuing a phd or whatever. But that society would show up as "bad" to the sort of person who does quintile comparisons.

More on immigrants: Every immigrant who comes here from central america to work in our fields and restaurants and dry cleaning establishments, starts out with a miserable standard of living but one that is vastly better than what they had in, say, Mexico. They are experiencing upward mobility moving from "poor in Mexico" to "poor in the US", and that's only the beginning. Any effort to prevent such people from showing up in our poverty statistics via redistribution would probably generate a huge political backlash against immigration in general. We'd close the borders tighter than they already are, making all the new immigrants WORSE off than they are by denying them the option of coming here and improving their life. Far better to allow open immigration, and allow them to be "poor" by our standards for a while, even if it does makes our numbers look worse than those of Finland for a while. It's worth it.

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