The New Poverty

By J.D. ALT

We define poverty, I suppose, as that living condition which is unable to acquire enough dollars to purchase some, or most, of the basic necessities of life. It also seems to be an accepted notion that a certain amount of “poverty” is a necessary condition of our modern market economy—that a certain segment of the population will always be “unemployable” by the profit-oriented business community, either because they lack skills or because the business community simply does not need their services in order to generate its profits. Nobody really knows what to do with these “unneeded” people. We talk about “retraining” them—but there is no guarantee the profit-seeking business community will need them even with their newly acquired skills. In the meantime, these “unneeded” people don’t know what do with themselves either. This is, perhaps, the biggest problem of all—though I will not, in this short essay, go into the details of that (except to say that it is contributing to a tragedy that is now disrupting the lives of too many of us). The point is this: It is time to begin imagining specific, concrete solutions to what is becoming a fundamental dilemma of our time.

Imagine, for example, that every American citizen over the age of 16 can choose to earn a living-wage in exchange for providing a useful service to their local or regional community. Imagine that every local community has a free health and pharmacy clinic (in conjunction with a free methadone and counseling center)—where some of the employees are the living-wage earners. Imagine further that every local community has a housing co-op system (built in part by some of the living-wage earners) that makes available—to every family that needs it—a basic dwelling unit that is warm, dry, well-ventilated, and which provides for cooking, bathing, sleeping, and family gathering. Imagine that every local community has at least one community garden and rookery (managed by some of the living-wage earners) which grows, harvests, and processes vegetables, fruits, eggs, cheese—and perhaps fish—for local consumption. Imagine that every local community has at least one pre-school day-care (manned at least in part by some of the living-wage earners) which provides, free of charge, a safe, early child-hood learning environment between the hours of 6 A.M. and 6 P.M. Imagine that every local community has a system of retirement co-housing villages (built and staffed, in part, by the living-wage earners).

Imagine, in other words, replacing what we now define as “poverty” with another kind of living condition—we might call it “community subsistence.” No one, of course, is required to participate in any of its services. Everyone has the option of providing their skills and talents, instead, to the profit-oriented markets—to earn income far exceeding a living-wage, to collect profits from entrepreneurial ventures and financial stratagems, to build and own grand houses filled with exquisite furnishings and art, to eat imported foods prepared by celebrity chefs, to seek medical care from the most renowned clinics, to spend retirement jetting between a New York City penthouse and a Bahamian mega-yacht. Everyone has the option, in other words, to pursue a living condition defined by some level of wealth and opulence, but no-one need fall below the living condition of “community subsistence.” The market economy, in other words, is not replaced with “communism” or “socialism” (a seriously bad idea no one here is advocating) but operates on a level that floats above them.

Or, perhaps, the market economy does not “float” above the “community subsistence,” but grows from it like a plant grows from the soil.  This would be a more accurate—and useful—framing for the simple reason that all of the living-wage earners living in the condition of “community subsistence” (perhaps a significant portion of the national population?) would also be consumers of many of the products and services provided by the profit-oriented economy. They would buy shoes and clothes, hamburgers and i-tunes. They would be, in other words, an important segment of the market economy’s market. When you think about it, such a relationship—between a “community subsistence” population of living-wage earners and a profit-oriented market economy—such a relationship may well prove to be the only way to maintain a functioning economy as we move forward into the paradox of the age of robotics and artificial intelligence: The population of “unneeded” and “unemployed” people grows ever larger while AI robots insist on their annoying habit of never wanting to go shopping.

The good news is that this relationship, and the “solution” it provides, is easily attainable in our brave new age of modern fiat-money—if we would simply grasp the reality of how it works. Let’s hope 2018 is the year our political system begins to figure that out.

15 Responses to The New Poverty

  1. This is an extremely important issue you have raised JD, and as you point out, it is only going to increase in the future as robots and AI have greater impact in the work place. The late John Iggulden raised the question some years ago about defining what should be a national policy goal for a responsible Government. He suggested the elimination of poverty would fit that bill. But, as he said, it becomes necessary to decide how we define “poverty” – do we do it money terms, or do we do it in relation to the sort of physical conditions you have so ably described. However, there is another problem that has a very significant impact on the issue of povety, and that is the world’s population increase. According to the UN statistics, the world’s population is currently increasing at the rate of 80 million people a year, despite the fact some nation’s have a declining population. With the world’s population around 7 billion at the moment, it has the potential to double that by 2100. Is our planet capable of sustaining that sort of population level, and how, or when, will we ever be able to say, “enough is enough”.

  2. I’d like to read JD Alt’s reaction to this similar article I coincidentally read today, https://jacobinmag.com/2017/12/universal-basic-income-inequality-work

    • gordonite, thanks for the link. Very interesting and useful article. It highlights exactly why MMT is such a crucial perspective to have going into these conversations: The Universal Basic Income (UBI) concept has been kicking around for a long time without making any progress toward the goal-posts because–as the article points out–it is based on the premise that the paychecks come from tax dollars. Measuring the “cost” of UBI payments as a percentage of GDP implies that what a society can achieve is limited by the number of dollars that exist in its monetary system–rather than by the real resources that are available to its members. Also, I do not advocate for paying people to do nothing, which is basically the UBI concept. Everything I’m imagining can be implemented through a Job Guarantee program which pays people to do useful things. When we run out useful (as distinct from “profitable”) things to do, I suppose life, itself, will have ceased to be a challenge.

  3. While much of this is sensible it seems to ignore the fact that we all exist on a finite planet. It may make such ideas easier to accept if it is argued that one can go on living in and consuming luxuries if they desire but this is a lie.

    We cannot continue with such excessive consumption, not only is it immoral but it is completely unsustainable. We either initiate degrowth voluntarily in a controlled, equitable fashion or we will have it forced upon us by forces greater than ourselves.

    • Harriet, your point is well taken and, of course, crucial to the whole set of issues. I plead guilty to having overstated the notion that using modern fiat-money to establish a Job Guarantee program is NOT a “socialist” threat to a market economy or private aspirations.

  4. Clonal Antibody

    Quote:
    Imagine, for example, that every American citizen over the age of 16 can choose to earn a living-wage in exchange for providing a useful service to their local or regional community. Imagine that every local community has a free health and pharmacy clinic (in conjunction with a free methadone and counseling center)—where some of the employees are the living-wage earners. Imagine further that every local community has a housing co-op system (built in part by some of the living-wage earners) that makes available—to every family that needs it—a basic dwelling unit that is warm, dry, well-ventilated, and which provides for cooking, bathing, sleeping, and family gathering.
    End Quote:

    Why is this not socialism?

    • Clonal, I’m pleased this question is being asked because it goes to the heart of what I am imagining, and what I tried to suggest in the essay. American’s have an almost reflexive fear of and revulsion to “socialism” because they imagine it prescribes the destruction of American entrepreneurship and the private incentives for creative risk and reward. But if we preserve these cherished American values and freedoms of the market economy and layer them over a sovereign funded, community based, “subsistence structure”—which guarantees that every citizen can choose to earn a living-wage providing useful services—what harm has this “socialism” done to the American dream? In fact, it seems to me to greatly facilitate it! Without that “subsistence structure,” the “unneeded” and “unemployable” (from the perspective of profit-oriented enterprise) are a burden not only to themselves but to the market economy itself. With the “subsistence structure,” they are not a burden at all, but quite the opposite: they can provide an educated, healthy workforce that private enterprise can access as needed, they can provide beneficial services to local communities, and they can provide a consumer market which otherwise would not exist. Furthermore, any individual within the “subsistence structure” can aspire to any kind of creative, free-market entrepreneurial venture they are interested in—and they are more likely to succeed by virtue of the basic support systems they are springing from. The fact that our modern fiat-money system makes this synergy possible means, from my perspective, that “socialism”—targeted and applied in a strategic fashion—is not something for America to fear, but something that it should (and, ultimately, will have to) embrace.

      • Jennifer Nazak

        Excellent stuff, really good ideas you have here J.D., particularly the concept of having the community economy be in addition to the market, not replacing it. Really fresh concept, thanks for sharing!

    • and why would it matter if you put that label on it?

  5. As others mention, sustainability is the elephant in the room that few care to acknowledge; else we share the fate of any other species whose population exceeds the resources of its environment and experience major population crashes (along with collateral damage throughout the ecosphere) possibly capped by human extinction. There are alternative choices however, as the author above indicates, so long as we a willing to engage in adult planning.

    Also in the MSM the potential impacts of AI are being treated as a sideshow when they are becoming the main act. Self-piloting vehicles that can negotiate real world traffic (presumably better than humans do) is not your father’s automation. The pace of innovation in that sector seems to be steadily intensifying. How many categories of employment might “smart” machinery potentially impact? Do we just trust that it will all sort itself out? And what might be the impact of AI in the “wrong hands”. Orwell appears to have keenly understood enduring aspects of human nature, but he was only aware of the relatively primitive high-tech of the late 1940s. I imagine he might have written an even scarier tale today. Methinks if we snooze we lose.

  6. The Robots Are Coming, and Sweden Is Fine

    In a world full of anxiety about the potential job-destroying rise of automation, Sweden is well placed to embrace technology while limiting human costs.

    https://www.nytimes.com/2017/12/27/business/the-robots-are-coming-and-sweden-is-fine.html?smid=fb-share&_r=0

  7. southern appalachian

    In the place where I live some forms of this could work. It’s wet enough, you can grow food. If you use permaculture or sheet mulch you build up your soil. Keep a few chickens. Outside of the co-op housing and child care we’ll also need help caring for us old people. There are already a couple co-ops that sustainably harvest timber. Always seemed to me this sort of thing could work. The small towns are emptying out anyway, so you could start with energy audits and refitting existing structures for co-op housing. There’s a co-op doing that also. Solar installations – you know, at the end of it, you could have taught basic job skills, and then specific things such as carpentry, vegetable farming, baking, food preservation , basic accounting – slew of practical skills.

    There was a guy named Leopold Kohl and he wrote a book called Development Without Aid, I think published in the 1950’s or 60’s, maybe a little later. I read it not too long ago. He comes to your suggestion that the market economy might grow from the subsistence economy his own way, but all the same, similar. Kind of a exogenous/resource extraction economy versus a endogenous/human development economy. Anyway, thanks. I think there is a path here, I don’t come across mentions of it often.

  8. Is AI really the problem? More cooperative working and living arrangements which would produce what most of us would call a better way of life have been possible for generations and can be organized voluntarily. AI is just the next step in an industrialism which has long existed. But not many people seem to want them. If they did, we’d see a lot more of them now; but apparently they don’t. That’s the problem.

  9. “The market economy, in other words, is not replaced with “communism” or “socialism” (a seriously bad idea no one here is advocating) but operates on a level that floats above them.”

    Mr. Alt,
    could you briefly mention some valid critiques socialist economics so I can look into it?

    Recently, I have been visiting wsws.org for analysis, and they are absolutely convinced that international socialism is the way to go. As far as I can tell, we lefties agree with a lot of with what they say. I don’t see how workers owning some means of production can be bad. Yes, it may be extremist to go full-on nobody-owns-anything, but aren’t social security, free education, or health care rights socialist policies that we endorse as well?

    I am highly skeptical of the mainstream’s analysis on anything because their economics seem to be catered to the 1%. I don’t trust them. There are also plenty of strawman arguments against socialism I see just by doing a google search.

    Certainly, we can’t equate Stalinism to Socialism and make a guilty-by-association verdict on socialism. I have heard that imperialists countries invaded Soviet Russia after its socialist revolution. I still am relatively uneducated in all these -isms The market economy, in other words, is not replaced with “communism” or “socialism” (a seriously bad idea no one here is advocating) but operates on a level that floats above them.I have to admit, so please bare with me.

    Yes, I very much agree with the commenters above on the issue of sustainability.

    Socialists acknowledge that. They also acknowledge problem of racism and imperialism. As a progressive, I find what they say very appealing. That’s not to say, however, that they can do no wrong. To be sure, there are plenty of blunders borne by ignorance.

    I agree largely with what you wrote, Mr. Alt.

  10. Dear J.D. Alt,
    I came to New Perspectives today because I have a question. I clicked on “contact” and I read that contact was only for technical issues and if we have an economics question we should ask it on the blog. Well that means I should read all of the articles and then find the one in which my question would not be off topic. This is the first one that I read and I decided that my first question, the one that I came here with is only partially off topic and the new question that developed as a result of reading your comments is certianly not off topic.
    My first question is based on what I read about MMT, which was quite some time ago, I can not really come up with any reason that an increase in personal savings at the national level from say 1% to 3%, 5% or 10% would have any benifits for a national economy. Is it correct to say that the level of personal savings would be (is) irrelevent to national economic well being?
    My new question is if the programs that you spoke of above are financed through deficit spending, and I am under the assumption that would be the case, as I take it that is what fiat money refers to, some of that money will be used to purchase foreign goods and services. My understanding is that in the short term that means that an American might be able to outbid a Pakistani or Russian for a Chinese computer with money that would have otherwise not existed if the US had a balanced budget. So the American would be richer and the Pakistani or the Russian would have to settle for thier second choice of a computer there by being a bit poorer. Once the American-Chinese transaction is complete the Chinese now have that American currency which they will use to buy goods and services some of which will come from outside of China, including Pakistan and Russia thereby making the Pakistani’s and Russian’s a bit wealthier.
    Funny in writing that out I discovered that I actually have two questions. First do US budget deficits help maintain US standards of living at the expense of non Americans? Second with 200 nations on this planet what would happen if they all tried to prime the pump of their nations economies at the same time? Or perhaps another way to ask the same question is if the American government runs a budget deficit of X amount of dollars per capita or say X% of GDP can other countries get away with doing that too? Is so could they get away with running a budget deficit of say 15% more than what the Americans do?
    I hope that is not to much to many questions.