Month: January 2020

Perceived Poverty and Keeping up with the Joneses

Some time ago a man in his early 60s came looking for a cash handout from the Church. As I generally do in such cases, I sat down to talk about his living and financial situation. According to the information he gave, he was receiving 900 euros a month from the state (about 1000 dollars — this is the minimum that austrian citizens and permanent residents who have lived at least five years in Austrian receive, in the event that have no substantial savings or higher income), of which he spent 200 euros a month on rent for a room in an apartment with a former colleague.

Other than half a pack of cigarettes a day (in his opinion his only vice), he claimed to need the rest of the money for food and drink. On further inquiry, several times a week he would buy coffee in a coffee shop, not as a way of meeting up with other people, but just because he liked coffee. And he would several times a year take trips that would cost several hundred euros, sometimes need to buy new clothing instead.

In his estimation, his income was enough, but just barely, so that when unexpected and unplanned expenses came, such as some medical expenses not covered by insurance, he needed more money. This did not, he said, commonly happen (and indeed the last time he had received money from the parish where I now am was something like a year ago).

As he claimed to have a background in business, I tried getting into detail how he could better manage his money, noting that, if he smoked just one cigarette less per day, bought coffee in a coffee shop one less time per week, or even better, bought a coffee pot and made his own, he could set aside the money, and have more than enough for such unexpected expenses.

He reacted rather indignantly to the suggestion, as well as to other suggestions to save him money, and to make a kind of a game out of it, e.g., to take delight in seeing out independent he could be, not to see it, e.g., as a deprivation to make coffee himself rather than pay someone to do it, but as an exercise of self-reliance.

I gathered that he had the feeling, that's just what normal people do, and he felt it unworthy of his dignity to expect such things from himself. Such a feeling is formed of course by the society in which one lives, hence the title of this post, "keeping up with the Joneses".

Poverty comes in many forms. In first world countries with a weaker social system, such as the USA, absolute poverty can be quite great.
In first world countries with a strong social system, pretty much everyone can live in luxury in comparison with life throughout most of human history. Poverty is then mostly either a matter of perspective: relative deprivation in comparison with those living in still greater luxury. Or is the result of poor management of one's life and material means. This doesn't necessarily imply a moral fault, but a lack of domestic virtue in the Aristotelian sense.

This and similar cases suggest that the provision of a bare financial minimum for all by a means such as a universal basic income and healthcare might do away with extreme poverty, but by a long shot wouldn't eliminate all perceived poverty.

Universal Basic Income and the Universal Destination of Goods

In an increasing number of countries the idea of a universal basic income is being discussed and is gaining momentum. In contrast to a minimal guaranteed income that is only given to those who have less than this amount in wages or other sources of income, the universal income is given to all citizens regardless of their wages or other income. 
Andrew Yang has proposed such a scheme with the name of freedom dividend. The proposal could also be described as a flat tax reduction of $12,000 with the possibly that the resulting tax would be negative. For some, this way of describing the proposal, as an income tax reduction, coupled with the possibility of negative tax, or a tax payment made by the government to the citizen, might make it seem more agreeable.
The name freedom dividend, on the other hand, suggests a partial common sharing of the fruits of the earth and the economy, regardless of direct ownership of an individual of the specific means of production. The catholic teaching of the universal destination of good gives a perspective to see this proposal as realizing a form of justice in relation to the common good.
The responsibility of seeing that the goods of the earth can be enjoyed by those that need them is as such the state or mankind's responsibility, not that of an individual employee or businessman on his own. But because, for the most part of human history and in most cases, it was necessary for most persons to work in order to ensure that through man's labor and use of technology together the fruits would be enough for all, this requirement of justice became closely linked to the justice between employer and employee, under the title "living wage".
For an employer to be required, for the sake of justice, to consider more the wealth or neediness of the employee than the value of the work the employee should do is a major impediment to efficient exchange and valuation of labor. Such a system consequently significantly increases the cost of labor without a corresponding increase in productivity of labor.

Arguably, for all employers across the board to contribute 10-20% of labor costs to a pool that would be distributed to all independently of the work they performed, while likely increasing the price of labor in comparison to the present price, would end up being a more efficient way to ensure that the fruits of the earth and fruits of labor benefit all men, for whom the earth was created.