Miguel Afonso CaetanoAug 31

"When I started this piece, I claimed that poverty occurs when the following four conditions are present:

1. The national income is distributed using payments to laborers and capital owners.
2. Capital ownership is very unevenly distributed across families.
3. A large share of the population is not working at any given time.
4. Nonworkers are unevenly distributed across families.

One could do more, but I think I have demonstrated this all pretty well using the most recent census income microdata. If this is a correct diagnosis of the problem, then the solution involves flipping one or more of these four conditions.
(...)
So what we are left with is flipping the first condition and using mechanisms other than payments to laborers and capital owners to distribute the national income. This is called the “welfare state” and it is, as a factual matter, how low-poverty countries come to be that way.

Indeed, if you look at the categories of nonworkers in the graphs above, you might notice that they map perfectly onto the populations that welfare states are designed to serve. In good welfare states:

- Children receive a monthly child benefit check, child care, pre-k, K–12 education, among other things.
- Elderly receive an old-age pension.
- Disabled receive disability benefits.
- Students receive tuition subsidies, living stipends, and subsidized loans.
- Carers receive paid leave and home care allowances.
- Unemployed receive unemployment benefits.

Even the United States has some of these benefits and they work in proportion to their coverage and generosity. We can see this in the below graph where I introduce a bar for disposable income poverty, which counts government benefits."

https://jacobin.com/2025/08/welfare-state-poverty-aging-disability-unemployment/

#Poverty #Inequality #WelfareState #Capitalism

To Reduce Poverty, Expand the Welfare State

The policy solutions to poverty are simple: redistribute capital ownership and expand the welfare state.

Show threadMiguel Afonso Caetano

"Poverty hits people as they move in and out of different life stages and events. Job loss, disability, divorce, having children, family deaths are things that can and do happen to anyone. And when they do, if the welfare state is not there for them, they will often dip into poverty, at least for a bit.

The other mistake in Yglesias-style thinking is mixing up thrift and diligence with economic success. As with anything else, these traits are distributed throughout all populations, including poor and nonpoor populations, which are, in fact, mostly the same people in different years. There are plenty of people who currently have high incomes who nonetheless are not thrifty, not particularly diligent, and have any number of other problems, including addictions to vices, mental health problems, domestic violence, and so on, just as there are plenty of people who currently have low incomes who have none of these problems. It’s just that when we find it in a poor person, we blame their income situation on it, not because one actually follows from the other, but because it makes us feel better about things.

I’ve been doing this long enough to know that, with the exception of certain autistic people, nobody finds the realities of poverty in America as described above very exciting. They really want it to be something more than that, something that you can really sink your teeth into about the fallenness of man or the viciousness of big corporations or whatever. But it really is basically a technical problem in the way that factor payments are misaligned with the distribution of people across households that you can pass a few laws to fix. It is unclear how exactly to get people in the United States to go ahead and do that, but it is not unclear what needs to be done."

Aug 31 at 2:42pmWeb