'Intelligent discontent is the mainspring of civilization.' -- Eugene V. Debs

Monday, February 26, 2007

Compare and Contrast 

From the McClatchy Washington Bureau:

The percentage of poor Americans who are living in severe poverty has reached a 32-year high, millions of working Americans are falling closer to the poverty line and the gulf between the nation's "haves" and "have-nots" continues to widen.

A McClatchy Newspapers analysis of 2005 census figures, the latest available, found that nearly 16 million Americans are living in deep or severe poverty. A family of four with two children and an annual income of less than $9,903 - half the federal poverty line - was considered severely poor in 2005. So were individuals who made less than $5,080 a year.

The McClatchy analysis found that the number of severely poor Americans grew by 26 percent from 2000 to 2005. That's 56 percent faster than the overall poverty population grew in the same period. McClatchy's review also found statistically significant increases in the percentage of the population in severe poverty in 65 of 215 large U.S. counties, and similar increases in 28 states. The review also suggested that the rise in severely poor residents isn't confined to large urban counties but extends to suburban and rural areas.

The plight of the severely poor is a distressing sidebar to an unusual economic expansion. Worker productivity has increased dramatically since the brief recession of 2001, but wages and job growth have lagged behind. At the same time, the share of national income going to corporate profits has dwarfed the amount going to wages and salaries. That helps explain why the median household income of working-age families, adjusted for inflation, has fallen for five straight years.

These and other factors have helped push 43 percent of the nation's 37 million poor people into deep poverty - the highest rate since at least 1975.

Meanwhile, from Oilwars, in early September 2006 (apologies for the lack of the chart referenced here, but I think it is fully explained in the text, and, if you are still curious, please click on the link):

Readers will recall from previous discussions that Venezuelan social classes are indicated by the letters A through E with those in class A having the highest incomes but being a very small percentage of the population while those in social class E have the lowest incomes but constitute more than half the Venezuelan population.

Now this chart is interesting in several ways. Like the chart from Datos that we recently examined we see monthly average household incomes. Some of the numbers are virtually identical; for example, the average monthly income in 2006 for social class D is given 890,990 Bolivares (about $356) by Datos while Datanalysis pegs it at 892,000 Bolivares. You can’t get much closer than that. Yet there are also some differences. For social class E Datos says their income is 680,419 Bolivares ($272) while Datanalysis puts it significantly lower at 515,000 ($206).

What all of that means is that these numbers need to be taken as approximations, maybe even crude approximations, rather than as something that is exact. I’m not sure how the numbers are compiled. But given that they are put together by polling firms I suspect they simply ask people how much they earn and so these numbers could suffer from all the same types of problems one runs across when doing polling on something like people’s sex lives.

Nevertheless, even recognizing these numbers may not be precise there is still valuable information to be gleaned from them. First, we see even the lower Datanalysis numbers show that income is rising for Venezuela’s poor majority. With a rise in income of 445% versus accumulated inflation of 376% social class E has seen its standard of living rise in real terms 45%. And keep in mind, this is just hard cash. It doesn’t include the numerous in-kind benefits given via discounted food being sold at Mercal or expanded health care benefits through Barrio Adentro. Not to mention, if one uses the Datos income number of 680,419 then the accumulated income rise would be 620% which represents a whopping increase of 92% in real terms.

This means that since Chavez came to power in 1999 the income of Venezuela’s poorest has increased between 45% and 92% depending on whose numbers you believe. Either of those numbers represents a stunning increase and go a long ways towards explaining Chavez’s overwhelming popularity.

Secondly, there is another trend that can’t be missed looking at that chart. In the column on the far right side it gives the percent increase in income for each social class between 1998 and 2006 (in nominal terms). It clearly shows that the poorest people, those in social classes E and D have seen much larger increases than those in the better off classes of A, B, C. In fact straight down the column one sees that the poorer people are the more their income has increased under Chavez. Chavez was elected precisely to help those who had the least and he has done exactly that.

Two different countries, two different directions.

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