Wednesday, September 03, 2008

The Real Economic Scorecard

ROBERT SAMUELSON takes a look at the economy:
"Just last week, the Census Bureau released its annual study of household incomes, poverty and health insurance -- often called the nation's 'economic report card.' Its hard numbers seemed to confirm how many Americans feel. Sure, we're prosperous, but prosperity is fraying. Except for the rich, living standards are stagnant. Poverty is up; health insurance coverage is down. Naturally, both Barack Obama and John McCain seized upon the report to claim that their policies would restore progress.

Hold it.

Though echoed by policy wonks, pundits and politicians -- last week, Bill Clinton -- the conventional wisdom is wrong or, at least, misleading. Here's a more accurate assessment. For most Americans, living standards are increasing, albeit slowly, over any meaningful period. But rising health spending is eroding take-home pay, and immigrants are boosting both poverty and the lack of health insurance. Unless we control health spending and immigration, the economic report card will continue to disappoint. Unfortunately, neither Obama nor McCain seriously addresses these problems."
Samuelson makes sense to me. He specifically suggests three reasons why the "conventional wisdom" of the politicians paints an inaccurate picture. One of these reasons I think we should pay particular attention to:
Low-skilled immigrants, concentrated among Hispanics, outnumber the high-skilled. They drag down median incomes and raise poverty and the number of uninsured. One way to filter out the effect on income is to examine groups with few immigrants or their American-born children. Consider non-Hispanic white families. From 1997 to 2007, their median incomes rose about $6,000, to $69,937, a gain of about 9 percent. For black families, the increase was also about 9 percent, though only to $40,222. Again, not stagnation.

Immigration's effects on poverty and health insurance coverage are greater. Since 1990, Hispanics numerically account for all the increase in the number of officially poor. Similarly, immigrants represented 55 percent of the increase of the uninsured from 1994 to 2006, says the Employee Benefit Research Institute. Many unskilled workers can't get well-paid jobs with insurance.
Perhaps another way of putting his point is that the country is effectively importing poverty. It strikes me as a bit odd for public policy to be to import poverty while at the same time our politicians get on the stump and say they will create new government programs to end poverty. It seems that much of the recent "measured" increase in poverty could be "cured" by changing immigration policy.

But perhaps there is another, more ironic, point to consider. The conventional "wisdom" is that the economy is struggling through a bad time. Perhaps. But, the idea that the country is importing poverty suggests there is a bigger picture and a larger truth. Those who come to this country, whether legally or illegally, do so because they expect to be able to become better off here than they can be if they stay where they come from. Not only is the country importing poverty, but in doing so the country's economy provides the means by which many people are escaping even worse poverty. The economy of this country is not only able to import poverty but it is able to improve the lives of those our census bureau "measures" to be in poverty. Isn't it ironic that even in times of a struggling economy in this country, the country as a whole is still an "engine" and the means by which so many do better for themselves.

While it seems ironic, perhaps there is a serious danger lurking in our politics these days. If we misunderstand the economic picture, especially the larger truth of our economy, then it becomes more likely that the public policies that will follow this election cycle will impede and diminish the ability of our economy to continue to be the engine by which so many prosper.

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