The Practical Problems of Poverty

What do we do with "excess population"?

E. J. Dionne raises an issue in the Wapo ( In Search of a New New Deal ) that I have long worried about and wondered why more people weren’t seriously concerned. That is the disappearance of jobs at all levels. His major focus is off- shoring, but the issue is larger than that to me. Technological change and the increasing concentration of wealth also play a role.

Much to our spouses’ dismay, my brother and I had an hour and a half phone conversation about these issues last week. He noted that, as long as labor is cheaper overseas, it makes economic sense to ship the jobs to China. I replied, "But they can’t buy cars or computers." A recent trip to China has shown me the exceedingly low standard of living for most Chinese. Is the answer to bring all labor down to their standards? If so, who will be left to be consumers?

Capitalistic competition assures that business leaders will seek to increase production to get an advantage. What exactly is "increased production?" It simply means lower labor costs. Much of current increased production results from technology. Machines are replacing men and women in many areas. Take this development to its logical conclusion and eventually it may be possible to have machines capable of doing all the work in most industries. The ignored question that torments me is what then will we do with the "excess population." Service industry jobs would also disappear if no one is able to earn money to pay for services. It will never come to this extreme probably, but the question of what to do with excess population is already growing.

I am certainly a capitalist–any system that does not depend on people following their own self-interest is doomed for failure. However, unrestrained capitalism sows the seeds of its own destruction. The free market system depends upon competition to regulate supply and demand. We already have tried unrestrained capitalism a hundred years ago–it resulted not only in monopolies and corruption, but also an unstable economy with numerous serious depressions until the big one in 1929 brought about the New Deal to reign in the excesses and to redistribute income.

The concentration of wealth here and abroad decreases the number of consumers. Bill Gates can only buy so many cars, TVs, etc. If the current trends continue and the estate tax is abolished, too much money will end up in too few hands for the health of the economy. The argument that more money in the hands of the rich will lead to more investment and thus more jobs is slowly proving to be untrue. If those investments are in companies with the most increased production, more and more jobs will go overseas or receive lower wages here. The Consumer Confidence Index presumes the presence of consumers. Where will they come from?

To me poverty is a moral issue. As a Christian, I take seriously Jesus’ repeated emphasis on the need to aid the poor. Poverty is also, however, a practical problem that has both economic and social implications for everyone. When will more people start to realize that?