"Poverty, by America", Matthew Desmond, 2023

Poverty, by America seeks to both wholly describe contemporary poverty in America and propose solutions to abolish it. Desmond spends the first several chapters characterizing contemporary poverty across several dimensions in terms of its features and causes. He questions why there hadn’t been enough progress in fighting poverty over the past 50 years. Afterwards, there are several chapters that propose a program to fight and abolish poverty.

For this review, I’ll focus on the proposals. There’s widespread cynicism about whether society can be changed for the better and whether government can be effective at all. There are periods like the New Deal and Great Society eras when the answers are a more clearly resounding ‘yes,’ but many would contrast that with the present era. However, as Desmond points out in his book, during the pandemic response in 202-2021, the federal government took extraordinary actions like increasing unemployment benefits, expanding the child tax credit, and sending stimulus checks. Poverty metrics fell dramatically during that time, especially for children. There can be debate about whether those methods are sustainable or if they caused later negative symptoms like increased inflation, but at their core, the actions demonstrate that ambitious government action can be transformative. Moreover, taking ambitious action is achievable - we’ve just seen it happen. It’s therefore worth our time to consider what additional actions can be taken to abolish poverty.

The proposals fall in three buckets - (1) reforming the welfare system to send more capital to the poor and less to the wealthy; (2) reform and expand organized labor to gain workers a stronger position vis-a-vis employers and corporations; and (3) remove class barriers in society through changes to policies like exclusionary zoning. With his background in investigating housing, many of the proposals and issues are explained through that lens. Let’s briefly describe each. 

Reforming the Welfare System

First, Desmond does a great job pointing out something I think most Americans aren’t aware of, the largely invisible government handouts to the wealthy and to corporations embedded in our vast and complex tax system. I’ve learned about a few government subsidies from my work in housing finance. They are sometimes created in a crisis or to help a special interest or to achieve a social objective. But once enacted, the beneficiaries lock in the benefit and the program becomes American bedrock. However, this can keep programs around long after their general social benefit deteriorates or disappears.

Desmond points out that these programs are not typically described as “welfare” but are in essence just that. The government spends hundreds of billions on these programs. If we reevaluate how welfare money is allocated, including both handouts to the poor and the wealthy, we could send enormous new benefits to the poor without increasing government spending. Using very rough math, Desmond suggests that spending about $177 billion annually could abolish poverty by definition. This is the total difference between the federal poverty line (e.g. $15,000 for an individual) and the actual income of the poor. He points to a few tax breaks that could fund this - removing the mortgage interest deduction for $25 billion, lifting the taxable income cap for Social Security for $65 billion, and taxing capital gains as ordinary income for $37 billion. 

The mortgage interest deduction is an interesting example - it’s existed since the initial implementation of the income tax in 1913. Originally unlimited, the benefit was capped in 1986 and further reduced in 2017. In recent years, the deduction costs the government an estimated $25 billion annually, about half of the cost of the SNAP food stamp program. The mortgage interest deduction exists for two reasons - first, deducting interest is a traditional part of business accounting, and in 1913 there wasn’t much of a personal credit market (as opposed to business credit) and second, to subsidize and incentivize home ownership. Home ownership has been incentivized by the government through a whole suite of subsidies to promote saving through home equity and to promote “skin in the game” in neighborhoods - the theory being that people will care more and be more active in improving their community. 

At a certain point however, the subsidy goes beyond its original motivation and is abused. It then strengthens incumbency and wrings more and more money from the government. Many if not most of the beneficiaries of the subsidy take it for granted or are even unaware of it, which is quite different from the way welfare programs for the poor are perceived - expensive and onerous. The support of the deduction does nothing for renters and widens the gap between owners and renters. 

My response to Desmond’s first point is that it is overall correct. I believe many government subsidies should be reconsidered, such as those for the oil and agricultural industries, among others. However, I would caution that any large government intervention creates enormous distortions in the economy. That is after all part of the problem with the mortgage interest deduction - it  further distorts and bifurcates the housing market into haves and have-nots. Making these re-allocations may cause their own distortions which could be very disruptive and not simply abolish poverty. 

Strengthening Organized Labor

Second, Desmond details the long decline of unionized labor in the United States both due to long term trends like globalization and targeted campaigns by government and corporations. He doesn’t refrain from criticizing the union’s bad practices, notably their segregation, and proposes a new kind of labor organization rather than a return to the methods of the New Deal. He described “sectoral collective bargaining” as opposed to “enterprise collective bargaining”, where workers unionize at the level of an entire industry - such as fast food - rather than at that of a company - such as McDonalds. This is widespread in Europe but is limited to a few examples in the United States like screenwriting. Notably, the Screenwriters Guild scored a resounding victory in their new 2023 agreement. The United Auto Workers union also adopted a more sectoral strategy in their 2023 strike, walking out of multiple firms’ plants at once rather than targeting a single firm. They too earned strong gains in their new agreement. There are other proposals like including worker representation on corporate boards of directors. 

Desmond’s arguments about organized labor face the greatest uncertainty in terms of their foundational economic facts. At stake is whether labor’s gains would improve the overall economy or would require sacrifice in other quarters. The social sciences, especially economics, are woefully inadequate to explain the complex dynamic system that is the economy. Desmond highlights this himself when discussing how conventional economic wisdom about the impacts of increasing the minimum wage was shown to be wrong in the famous New Jersey/Pennsylvania fast food study. Without sufficient scientific discipline to explain what would happen to the system if its constraints are changed, we are reduced to anecdotes and emotional reasoning. It isn’t clear what would be the impact to economic growth of widespread labor organization. Europe certainly has slower growth than the United States. At the same time, many social circumstances are better in Europe. At a few points, Desmond is willing to suggest that there may be a price to pay to improve the lives of the poor, rather than there being a free lunch or a “have your cake and eat it too” dynamic. 

Removing Class Barriers

Third, Desmond explains that poverty is rarely a solitary experience. More often, and with much worse implications, poor people live in neighborhoods of highly concentrated poverty. The environment becomes a powerful suppressant for any ability to improve one’s situation. Crime, violence, crumbling housing, bad schools, pollution, and so on - these things pile up and go beyond a low income and form a vicious cycle. At the same time, prosperous neighborhoods provide a virtuous cycle of all the opposite factors that facilitate more prosperity and flourishing. Desmond draws a strong link between contemporary class segregation and the legacy of racial segregation. A primary means of reducing this segregation is to make exclusionary zoning - local laws that limit the types and amounts of housing construction in an area - illegal and to moreover require inclusionary zoning - incentivizing or facilitating housing that can bring more kinds of people into an area. 

The most commonly cited forms of exclusionary zoning are suburban housing codes that require detached single family houses, large lawns, and the like. Single family housing is very inefficient in so many ways, and creates an artificially small housing stock in many desirable suburbs and neighborhoods in metropolitan areas. Historically during red-lining, White families tended to live in single family homes, and Black families in multi-family homes. Red-lining reinforced this segregation by separating these housing types into different neighborhoods. During and after red-lining, exclusionary zoning propped up home values and reinforces wealth accumulation for those who own homes there. Simply abolishing single family zoning isn’t a panacea, but coupled with a reasonable successor code that prevents anarchy, its abandonment would go a long way to bringing back the “missing middle” housing types that define the country’s most desirable and dense suburbs, such as Brookline, MA.

Progress in Last 50 Years

Desmond’s most uncomfortable point is his answer to his earlier question about why there hasn’t been adequate progress over the last 50 years. The answer is somewhat accusatory, directed at his likely readers - the system of poverty exists because many benefit from it. Evicted drew a similar lesson - there’s a lot of money to be made in slums. Almost all Americans would agree or at least be sympathetic to the idea that the wealthiest Americans and corporations are getting wealthier by taking a bigger slice of the pie, leaving the rest with slow income growth and dimmer prospects. What is not as commonly acknowledged is that the large middle classes also benefit and rely on the poor underclasses for their share of prosperity. The cheap and convenient services that we enjoy - food prices at grocery stories, rides from Uber or grocery deliveries from DoorDash, Amazon deliveries, returns on 401k investments - come from cheap labor. He makes the Marxist claim that any economic gain is the flip side of economic loss, that the economy is a zero-sum game where capital exploits labor and its output. For widespread consumer surplus in America to continue, so too must poverty continue. 

I’ve been processing this idea throughout my time reading the book, going back and forth in internal dialogue to prove or disprove it. I will look into the question separately and probably write a reflection or analysis later. My gut reaction, however, is to point out that there have been historical cases of productivity and wealth gains that seem to have come from means other than exploitation. Platforms like the computer, oil, and others.

General Thoughts

The work is very ambitious in its scope and therefore quite general, which is different from Evicted, which was very piercing in its detail and specificity. There is a recommendation - even rule - in art, that the universal human condition is best accessed and shared by offering great specificity and closeness in human experience. By not doing this, Desmond’s Poverty work is far less impactful to me than was Evicted. The New York Times Daily podcast gave a great example of this in its recent podcast about Taylor Swift’s song about her mother. In a song she describes the specific experience of not being invited to join her friends at the mall as a teen - moreover being lied to about the gathering happening at all - thereby tapping into the universal human themes of rejection, betrayal, and sadness. Maybe we haven’t had that exact thing happen to us, but we’ve felt that exact way. 

Desmond compares poverty abolitionism to slavery abolitionism. There are at least two reasons for this. First, race and wealth are inexorably linked in the United States and solutions to improve our society must consider the interaction between racism and poverty, as Desmond characterizes in his book. Second, Desmond’s book is part manifesto - a  call to arms for this poverty abolition project. The slavery abolitionist movement is a great model to follow for poverty abolitionists and a way to call out the moral dimensions of poverty. I believe Desmond wants us to make a direct moral connection between the evils of slavery and the evils of poverty and to ask ourselves, why do we allow poverty to exist when we don’t allow slavery to exist?

While reading, I was reminded of the “Matthew effect” (coincidentally bearing the same name as the author) which comes from the New Testament of the Bible. The “Matthew effect” notes how the rich get richer and the poor get poorer. The quote is “for to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away” (Matthew 25:29). Is this a social criticism and call for reform, or instead an observation of just the ways things are? Desmond advocates for the abolition of poverty and wholeheartedly believes that this is achievable using policy and political organizing. It isn’t a question for him whether poverty may be impossible to abolish. It might be impossible if economics is governed by physics-like dynamical rules, which is the premise and goal of the social sciences. Or it may be due to systemic human psychological drivers that need to be studied or medically corrected via neuroscience. 

I don’t want to suggest with the above point that I disagree with Desmond about the need and feasibility of abolishing poverty, at least to a large extent. As mentioned, Desmond compares the fight against poverty to that against slavery. To sit here and suggest something along the lines that poverty is “natural” or even “scientific” or “part of human nature as shown in the Bible'' is ludicrous and wrong. People made these same arguments about slavery. I instead want to point out that to abolish poverty we may need to take advantage of psychiatric and social-science methods to change the system and the people that make it up, rather than through regulations on top of the system,. After all, for a long time the abolition of slavery was de jure but certainly not de facto. Even 150 years after the 13th Amendment, we are still dealing with the ramifications of the psychological drivers of slavery - apathy, selfishness, discrimination, racism, hatred, and more. The root of the problem is likely within the human mind, and luckily advances in technology allow us to better understand and perhaps change the human mind. I also want to be clear that I am not suggesting that psychological explanations can be used to blame poor people themselves for their own situation. Instead, I am claiming that other people in society act wrongly towards the poor often thinking they are doing nothing wrong or without thinking about it at all due to the psychological failings of human nature. Furthermore, there are people who have psychiatric problems like psychopathy and harm others for their own personal gain. I am raising the question about whether to really be able to stop poverty and oppression, we may need to go as deep as to change the overall psychology of the population - in essence to increase human capacity for empathy. As utopic or bizarre as this may sound, with technological changes ahead of us in bio-engineering and artificial intelligence, it may be ever more feasible - and frightening. No doubt, there are numerous unanswered ethical questions at play here.  

Overall, I am a bit disappointed with the book, largely due to its unfavorable comparison with Evicted. There’s a thick notes section which shows that the claims are backed up with numbers and studies, but that detail didn’t carry into the main body for me. I think by trying to generalize, simplify, and be approachable for a mass market reader, the book appears as if it were written out of conviction and impression rather than concrete details and data. It is more of a manifesto to take all actions in all areas against poverty. It is a starting point, more than anything.