Economic Problems:Economic Problems:Poverty & Wealth

Economic Problems Facing Economic Problems Facing the United Statesthe 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 Economic Problems Facing the United Statesthe United States

Economic Problems Facing Economic Problems Facing the United Statesthe United States

The Nature of PovertyThe Nature of Poverty

Biological (Absolute) poverty

◦ starvation and malnutrition

Relative poverty◦ people living below the standard of living for their society

The Nature of PovertyThe Nature of Poverty

Official poverty income level at which people are eligible for

welfare

Problems with the poverty line

Not adjusted for different costs of living

The Significance of PovertyThe 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.

Social InequalitySocial Inequality

Existence of poverty contradicts the ideal American vision of success

Structural inequality the inequality built into our economic and social

institutions

Social InequalitySocial Inequality

Distribution of income and wealth◦Inequality of income◦Inequality of wealth

Wealth: how much property, savings, investments, and economic assets people own

Social InequalitySocial Inequality

Wealth and power◦Vast wealth brings vast power.

◦Because the rich can hire top financial advisors, attorneys, and lobbyists, they perpetuate their advantages.

Social InequalitySocial 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

Symbolic InteractionismSymbolic 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

Conflict TheoryConflict 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

FunctionalismFunctionalism

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.

What We Know about PovertyWhat 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 PovertyWhat 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 PovertyWhat 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.

Who Rules America?Who Rules America?

The power elite◦ 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

Social PolicySocial Policy

Shifting views of cause and policy◦inside people◦outside of people

Progressive taxation◦tax rates that progress (increase) with income

Public Assistance ProgramsPublic Assistance Programs

Social insurance

Teaching job skills

Welfare

Workfare

Continuing IssueContinuing Issue

Welfare wall◦disincentive to work that comes when the

amount that people earn from working is not much more than what they get on welfare

Continuing IssueContinuing Issue

Feminization of Poverty

◦likelihood that those living in single-mother households are likely to live beneath the poverty line

Possible SolutionsPossible Solutions

Provide jobs

Education accounts

Giving the poor more money◦The Income Maintenance Experiments