The Economy, Public Policies and Poverty in the United States: Implications for Hong Kong

Abstract

The poverty rate in the US today is about the same as it was in the late 1960s and is much higher than in many European countries because the 21st century economy does not deliver the benefits of prosperity and productivity to all workers. For most of the last 35 years, the gains from economic growth have not “trickled down” to the poor, and government policies have not done enough to help less-educated workers and their children escape from poverty.

The “Great Recession,” which began in the US in December 2007, has both raised poverty and made reducing poverty in the future more difficult. I show that American attitudes toward labor market policies and toward social welfare policies and tolerance of large inequalities differ from those in most European countries and help explain why US poverty and inequality are higher than in many European countries.

I conclude that US antipoverty policies have the potential to reduce poverty and promote opportunities in today’s globalized economies, and thus are relevant to Hong Kong. For example, US experiences influenced the very successful “war on child poverty” that was launched in the United Kingdom by Prime Minister Tony Blair in the late 1990’s. Policies like the ones implemented in the UK that focus on two issues deserve consideration by policymakers interested in reducing poverty—(1) making work pay for workers adversely affected by today’s globalized economy and (2) promoting educational opportunities for low income children to reduce the intergenerational transmission of poverty.

About the speaker

Prof. Sheldon Danziger is the Henry J. Meyer Distinguished University Professor of Public Policy, Director of the National Poverty Center, and Director of the Ford Foundation Program on Poverty and Public Policy at the Gerald R. Ford School of Public Policy, University of Michigan. Prof. Danziger received his PhD in Economics from the Massachusetts Institute of Technology. Prior to his joining the faculty at the University of Michigan in 1998, he was on the faculty at the University of Wisconsin-Madison, where he was Director of the Institute for Research on Poverty from 1983-1988.

Prof. Danziger is a Fellow of the American Academy of Arts and Sciences, a 2008 John Simon Guggenheim Foundation Fellow, and the 2010 John Kenneth Galbraith Fellow of the American Academy of Political and Social Science. He has been a visiting scholar at the Russell Sage Foundation (2002-2003) and a scholar in residence at the Rockefeller Foundation’s Bellagio Center (2009).

He is the co-author of America Unequal (1995) and Detroit Divided (2000), author of numerous journal articles and co-editor of numerous books including, Understanding Poverty (2001), Working and Poor: How Economic and Public Policy Changes are Affecting Low-Wage Workers (2006), The Price of Independence: The Economics of Early Adulthood (2007) and Changing Poverty, Changing Policies (2009). He is currently studying the effects of the economic crisis and the economic recovery program on workers and families.