Poverty does not cause social problems (and the cream rises to the top)
Pity poor New Hampshire:
Manchester is at the heart of New Hampshire‘s opioid epidemic, which has first responders, lawmakers and health care administrators scrambling for solutions before the situation spirals further out of control.
Though other New England states such as Vermont and Maine have seen spikes in opioid-related deaths, the granite state ranks No. 2 in the nation, behind West Virginia, for the number of opioid-related deaths relative to its population. It ranks No. 1, though, for fentanyl-related deaths per capita.
So what makes New Hampshire so special? Why so many deaths of despair? Perhaps because it has arguably the most successful economy in the entire world, with extremely high income, high education and extremely low rates of poverty:
Pop quiz:
Which U.S. state had the highest median income in 2016? . . .
New Hampshire.
The Granite State’s median household income last year was a whopping $76,260, nearly 30 percent higher than the national median of $59,039, according to the Census. . . .
One of the chief drivers of New Hampshire’s high median income is its poverty rate, which is the lowest in the nation. Only 6.9 percent of the state’s residents live below the poverty line, compared with a national average of 13.7 percent (in Mississippi nearly 21 percent of people live in poverty).
New Hampshire’s workforce is also among the best-educated in the country, according to previously released census data. Better-educated workers tend to make more money.
New Hampshire also has a very low level of inequality.
Of course it’s silly to argue that affluence causes addiction—correlation doesn’t prove causation. But it’s equally silly to suggest that people in West Virginia become drug addicts because they are poor. There are a billion poor people (by American standards) in China, and very few are heroin addicts.
Liu Qiangdong is one example of a Chinese poor person who did not become a heroin addict:
Liu Qiangdong is making up for lost time — and with vertiginous speed.
Again, like so many of China’s new titans, Liu’s family was so poor that until he went to university aged 18 he only tasted meat once or twice a year. His family, peasant farmers in arid coal country, 700km south of Beijing, had a few rice fields but they also had to hand over the crop to the government; these were the dire days after the Cultural Revolution. “From June until September we were able to eat corn — cornmeal porridge for breakfast, corn pancakes for lunch and dry cornbread for dinner; cornbread so tough it made your throat bleed,” he tells me. “The other eight months we ate boiled sweet potato for breakfast, sweet potato pancake for lunch and dried sweet potato for dinner.”
Now he is 43 and worth nearly $11bn.
Yes, that’s anecdotal, but consider this:
Virtually every Chinese millionaire or billionaire is self-made because capitalist reforms to the centrally planned communist economy only began in the early 1980s and did not really take off until the 1990s. But the modern super-wealthy often turn out to be descended from an earlier capitalist class. Richard [Liu] is no exception. Before the 1949 revolution his family were wealthy shipowners who transported goods along the Yangtze river and the ancient imperial canal from Beijing in the north to Hangzhou in the south. They lost everything when the communists took over and were forcibly resettled at least twice. One academic survey found more than 80 per cent of Chinese “elites” (those with income at least 12 times higher than the average in their area) are descended from the pre-1949 elite. Richard puts this down to “family culture”.
“My parents and grandparents taught us a lot — not Chinese or maths but a sense of values, of how you should be and how you should treat others,” he says. They also drilled into him the knowledge they had once been very rich but everything had been taken away — a lesson all too relevant even now.
You often hear a debate about what would happen if everyone suddenly lost everything, and the entire population was equally poor. Liberals claim that people like Bill Gates become rich because they come from upper class families, with all sorts of advantages. Conservatives claim that even if income were made 100% equal, within a few years the rich would regain their position and the poor would fall back. Mao’s China provided a near perfect test of this theory, and we now know that the conservatives are right about this issue. The cream does rise to the top.
Of course this is not true in every single case. Sometimes highly talented people have bad luck and end up homeless. Occasionally an idiot will win $100 million in a lottery, or maybe even get elected President. But on average the more talented, more ambitious and harder working people will tend to succeed. Being born white in America does give a person some advantages, but that doesn’t really explain very much. Certainly not income gaps between American whites and Asians, or between Christians and Jews, or between immigrant blacks and American born blacks, or between Korean-Americans and Laotian-Americans, etc., etc.
PS. RIP Cassini. This is my all-time favorite NYT article, and it contains almost nothing but pictures and a video. In my view, Saturn (and her moons) is the most beautiful object in the Solar System. This is also worth examining.
PPS. RIP Harry Dean Stanton.
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15. September 2017 at 23:53
Addicts are a small percentage of the population, even in areas ravaged by addiction.
Addiction risk is a left-tail risk; anything that increases the odds of falling through the cracks, also increases the odds of ending up addicted to drugs.
Among these factors:
-physical pain
-pill mills (too much access to poor quality medicine)
-economic dislocation (job loss, but also going to school far from support networks)
-small families (lack of support networks)
-secularism (lack of community support networks)
-secularism again (looking for answers at the bottom of a bottle)
-New England aloofness
16. September 2017 at 04:58
A couple decades back I had a long conversation with a Russian intellectual, and he said a similar thing. The people in charge of the arts in Russia pre-Stalin somehow regained their status by the 1970 and 80s, and then reasserted themselves again in post-Gorbachev, or so this fellow said.
Of course, this observation suggests that many people in the middle class are doing the best they can; they are destined to be middle-class by their gene pool.
For sure, many people think about getting a job and getting to work on time, and being useful to employers. They hope to collect some funds, perhaps a house for retirement and add it to Social Security. They are the middle-class.
Still, without an incentivized middle- and employee-class and a level playing field, I suspect a nation will vote for a lot of socialism. That could be the path for the USA.
I wonder why people are taking opioids. Of course, a lot more are alcoholics.
When I read the Fed is going to raise rates, I wonder if opioids would be all that bad.
16. September 2017 at 05:01
‘One of the chief drivers of New Hampshire’s high median income is its poverty rate, which is the lowest in the nation.’
The Denver Post writer apparently isn’t well educated enough to know the difference between ‘mean’ and ‘median’.
16. September 2017 at 08:52
Steve, You left out the number one problem—the war on drugs.
BTW, it probably makes more sense to view both poverty and drug addiction as having the same cause — difficulty in coping with the world around you.
The key point is that fixing the economy won’t fix the drug problem, as we can see from New Hampshire.
Also note that “community support” is much stronger in small towns than big cities. And NH has no big cities.
Patrick, I saw that too, but was too polite to point it out.
16. September 2017 at 09:15
I love the back-handed compliment to NYT. I love that paper, especially their travel, real estate, and food sections, sometimes the editorial slant can be just too much (and don’t even look at the comments section).
Anyway, they had some similarly good photos and articles about Pluto when New Horizons was doing its fly by. I would love to see some missions to Europa, Titan, and Enceladus.
16. September 2017 at 09:45
I agree, but sometimes vaguely wish you wouldn’t write these posts.
Our best chance of getting your ideas implemented is for you to be aligned with the cultural zeitgeist. From a Utilitarian perspective, you should strongly align with whoever has the strongest voice/effect on public and elite opinion. That’s how you have the highest expected benefit to all of us.
Every post like this makes Vox less likely to publish another article about you and your ideas. And to consistently push for a change in the federal reserve. Probability goes down that you will be heard and you’re
Matt Yglesias, I know you read this site. please prove me wrong.
16. September 2017 at 10:18
Scott do you have a citation for the following study?
“””
One academic survey found more than 80 per cent of Chinese “elites” (those with income at least 12 times higher than the average in their area) are descended from the pre-1949 elite.
“””
The conclusion seems anecdotally correct (certainly the case in my own family), but I would like to read the original study itself. Many thanks.
16. September 2017 at 10:35
Don’t forget that when the voices of private industry convince themselves there is little or anything that can be done to include more individuals in our economic reality, that’s when governments see their chance to take the ball and run with it, yet again. Even when governments are no longer in a position to make a touchdown.
16. September 2017 at 10:46
You wrote, “Liberals claim that people like Bill Gates become rich because they come from upper class families, with all sorts of advantages. Conservatives claim that even if income were made 100% equal, within a few years the rich would regain their position and the poor would fall back. Mao’s China provided a near perfect test of this theory, and we now know that the conservatives are right about this issue.”
Mao’s China, or at least the story of Liu Qiangdong, illustrates how both can be right. Liu Qiangdong had the advantage of parents and grandparents who experienced and were able to pass on the experience and importance of working hard and achieving goals. That’s an advantage many poorer people don’t have. It’s also an advantage that doesn’t depend on a family’s income.
16. September 2017 at 13:20
> Of course, this observation suggests that many people in the middle class are doing the best they can; they are destined to be middle-class by their gene pool
While I’m sure that genetics is part of it, one shouldn’t underestimate the cultural part. Just being brought up to believe that significant are possible and achievable, and in contact with other smart/ambitious people, can certainly have significant impact on outcomes.
16. September 2017 at 16:30
Got a new idea for the blog’s banner
https://i.imgur.com/giB6dno.jpg
16. September 2017 at 16:35
https://i.imgur.com/gZe04Gh.png
16. September 2017 at 18:40
Jumping on the HBD train Scott? What would your mother think? What would your employer’s think?
It’s obviously very -ist and you are showing your -isms with this post.
Next you’ll be arguing that perhaps the families that always end up poor should perhaps consider having less children, and the families that always end up rich should have more.
16. September 2017 at 20:00
Thanks JMCSF.
Potato, That’s all way too complicated for me. I just call them as I see them, and let the chips fall where they may. A few months ago people were telling me I needed to suck up to Trump, because the GOP had all the power. I didn’t take that advice either.
John, Sorry, I don’t have the citation.
Russ, The substance of your argument is correct, but that doesn’t make “both sides correct”.
XVO, You said:
“Next you’ll be arguing that perhaps the families that always end up poor should perhaps consider having less children, and the families that always end up rich should have more.”
No, because unlike many people on the right, I don’t regard rich people as better than poor people.
Not sure what your HBD comment refers to.
16. September 2017 at 20:40
This is way too casual of an analysis. There are studies linking job loss with opioid use. New Hampshire, for one thing, wasn’t completely immune from job loss. NH also has localized issues, such as lower public health funding per capita.
I’m reminded of a post you made about Chinese pollution. That post pointed out that China has a high life expectancy despite the high pollution. The post said something like “well, gee, how harmful can the pollution be?” I pointed out that the fact Japan and China have a lot of smokers and live long doesn’t mean smoking doesn’t reduce lifespan.
A complete picture of causality is always difficult. The evidence can point in unexpected directions. For example, neither the left nor the right would point to leaded gasoline as the big cause of crack cocaine and crime epidemic.
Now, if somebody with brain damage from lead did crack in the 80’s, do they bear personal responsibility? Sure, it’s part of it. Despite well-domumented brain damage in the inhibitory portion of the brain, you have to ask that people should work through it.
But a non-personal-responsibility based cause shouldn’t be casually dismissed. Individuals should be exhorted to personal responsibility, but also external factors like lead or job loss should be rectified.
16. September 2017 at 21:59
Matt & Scott,
In terms of opioid death rates, New Hampshire is #2, but Rhode Island is #5 and Massachusetts is #7. It’s clearly a regional problem, with little evidence that public health spend helps; the four states with the smallest problem are the Dakotas, Nebraska, and Texas.
In terms of causality, it’s clear that over-prescription, especially with little follow-up or monitoring, is a major factor. I’m sure there are others though, like social isolation, status anxiety, and proximity to major drug trafficking routes (hence why Dakotas get off easy).
I agree that causality is complex; I wish the public health policy professionals would spend time interviewing addicts and families of addicts to identify gateway drugs, triggering life event, health access, family structure, religion and other demographics.
It’s really a shame though. In my experience many public health researchers have been captured by Obamacare and are studying enrollment policies, rather than actual health problems. I got a survey from a prestigious public health school asking about insurance enrollment just a few months ago.
16. September 2017 at 22:12
Matthew, You said:
“I’m reminded of a post you made about Chinese pollution. That post pointed out that China has a high life expectancy despite the high pollution. The post said something like “well, gee, how harmful can the pollution be?””
Actually it made a much more sophisticated argument, looking at death rates in different parts of China, with higher and lower levels of coal burning. I suggest you reread the post.
You said:
“There are studies linking job loss with opioid use.”
I never denied that the jobless were more likely to use drugs. That doesn’t mean job loss causes drug use.
You said:
“But a non-personal-responsibility based cause shouldn’t be casually dismissed.”
My post did not even mention “personal responsibility”, indeed that concept has no bearing on anything I said here.
Steve, Ending the War on Drugs would be a good place to start.
16. September 2017 at 23:26
Scott,
I think we’re thinking of different posts. You may be referring to this post, which I didn’t comment on and I don’t remember reading.
http://www.themoneyillusion.com/?p=22764
I’m thinking of this post.
http://www.themoneyillusion.com/?p=28653
Both studies have big confounding variable issues. But I think it’s safe to think coal emissions aren’t great for your health in isolation.
On personal responsibility, took this post as having some “marshmallow test” conclusion. Certainly the last paragraph does. I referred to that as personal responsibility instead of merely “harder working.”
FWIW, I agree that “economically” in terms of income levels is probably non-causal wrt to opium addiction. The job in itself is far more important than income.
17. September 2017 at 05:57
Scott,
Apologies for my rant, but this post has really rubbed me the wrong way. The main reason we benefit from a modern civilization with many positive amenities, is that many groups of individuals who once did not have better positions in life to aspire to, gained such positions because other groups improved the organization of economic activity in understandable platforms which gave both incentive and means to improve one’s life. When I see economists give up on new means to make that happen in the present, and instead indulge in useless cultural quicksand arguments about the poor, I lose hope in the ability of anyone to escape the pull of the quicksand. What is any better about these cultural musings, than the victim vs aggressor discussions you dislike?? Discussions such as these are every bit as divisive and hurtful. If economists no longer want the role of encouraging platforms which encourage more people to engage in positive economic outcomes, then maybe the role belongs to a group other than economists. If it seems I have taken too much of my frustration out on you, it is only because I have hoped for years that you could do better than this.
17. September 2017 at 07:45
I’ve always been something of a fan of New Hampshire (and Vermont, actually).
However, that DenverPost article borders on the offensively stupid. Especially this paragraph:
‘It’s also worth noting that the Census’s median household income numbers differ from the per capita income figures published by other federal agencies, such as the Bureau of Economic Analysis. Each data set has its own strengths and weaknesses, but overall their contours are similar. New Hampshire comes out looking pretty good in both, for instance.’
No shit Sherlock, they differ because median household income and per capita income are WILDLY DIFFERENT STATISTICS. I’m suspicious that Christopher Ingraham doesn’t actually understand the difference between medians and means.
Still, at the very least, the statistics cited in the article can be independently verified as true. New Hampshire (and Vermont) really is a wealthy, highly educated state. And, to throw modern socio-political stereotypes for a loop, it (they) is (are) a wealthy, educated state of small town dwellers. ‘Townies’ as a derisive term has no idea what to do with that one.
17. September 2017 at 08:13
Scott,
Apologies. My only point was that I worry about your influence. You’re right, and that should matter. But it does not. And if Nancy Pelosi reads your work she will not side with the truth because you belittle her constituents. You speak against liberal constituents enough to be labeled conservative and wrongthink. And then you’re done. Because liberals are the only ones who look to academia for answers.
I know that’s convoluted. But Sir, it is the truth. I think you should, for utilitarian reqsons, side with BLM, and the Vox side ultraliberalism
17. September 2017 at 09:18
Matthew, I’d suggest that you read that paragraph again, I think you misread the point.
In general, if you think I am offering monocausal explanations for complex social problems, you are misreading the post. Saying that harder working people tend to be richer doesn’t rule out lots of other factors.
And I do not at all equate “personal responsibility” with harder working. A harder worker is not better than a less hard worker. A rich person is not better than a poor person. Those are things you read into what I wrote, they are not what I wrote. Maybe it’s you that is biased against the poor.
BTW, I pointed to a billion poor Chinese. Do you think I was claiming the Chinese are inferior? Why not?
As far as the coal post, I did say coal is not great for your health in isolation, so I’m glad we agree.
Becky. I agree with you, which makes me think you misread what I wrote. Read my response to Matthew.
Can you point to a specific sentence that you disagree with, and perhaps we can discuss that sentence.
Potato, How did I belittle Pelosi’s constituents?
And how are my hundreds of tirades against Trump and my claim than Hillary and even Sanders were better evidence of a “conservative” blog. I’m genuinely curious. Is it conservative to advocate income redistribution? Drug legalization? Attacking global warming? Legalizing illegal immigrants. That’s news to me.
17. September 2017 at 09:26
[…] 1. New Hampshire income and addiction. […]
17. September 2017 at 10:03
May I just take a second to marvel at the fact that there is a political entity as large as New Hampshire that has a median income as high as $75k/year. Imagine this a 100 years ago. Truly we are living in the age of miracles. The free market system is an incredible invention, may we cherish it as long as possible.
17. September 2017 at 12:16
Scott,
Thanks for the clarifications on your position in your most recent post. It is not always easy for readers to understand where you are coming from. After rereading this post, some thoughts, and it turns out I was reacting more to the title than anything. Yes the cream rises to the top when it can. I don’t correlate addiction with either success or poverty because I’ve known addicts who’ve lived both. That said, I believe very much that poverty and social problems go hand in hand, a book I’m presently reading offers a most interesting history about the Scotch-Irish in that regard, which is all the more useful when I think of the differences between Adam Smith and some of his own countrymen, and his interesting relationship with the Presbyterian church.
https://www.uncpress.org/book/9780807842591/the-scotch-irish/
17. September 2017 at 17:11
Scott, HBD is Human Biodiversity, it’s the idea that humans have different traits based on their genetic inheritance. The idea that a Chinese family would rise again after communism is a perfect embodiment of HBD. Though obviously true and capable of explaining multitudes of social problems, you’re now an evil racist.
17. September 2017 at 18:22
You make the case that the descendants of the dominant class reassert themselves and that this is somehow evidence of the hardworking and talented being rewarded. Assuming that pre-revolution Russia and China were not strongly meritocratic and innate intelligence and drive tend, like other heritable attributes, regress to the mean over several generations, I have to question what is really being rewarded here. I tend to think that the success of these new capitalists is more dependant on lessons from their elders on “how you should be” in the business world. Chances are a 10th generation subsistence farmer is missing this foundational training in how to get started.
It brings to mind the story of a Stanford-trained lawyer telling me about how she had tried to help a young former neighbor from New Orleans after Katrina. She had bought him a bus ticket to come to DC to stay with her. In her mind, she’d get him squared away with a job, apartment, etc in no time. She was, however, completely caught off guard by how tasks she took for granted (e.g., asking for assistance in an office) were beyond him and she didn’t have time to escort him around and explicitly teach him “how you should be”.
How many “self made” men are born on 2nd base and don’t know it?
17. September 2017 at 19:41
I’m curious if there are link between demographic collapse and addiction/depression. New Hampshire many small town had “youth flight” to bigger town, and overall New England had very low birth rate. it could be living in “fallen area” triggering unhappiness in people despite prosperous personal condition.
17. September 2017 at 20:07
XVO, I think you have problems with reading comprehension. Or perhaps logic. I didn’t say anything about genetics.
JK, You said:
“I tend to think that the success of these new capitalists is more dependant on lessons from their elders on “how you should be” in the business world. Chances are a 10th generation subsistence farmer is missing this foundational training in how to get started.”
But that’s exactly what I mean by “talent”, so we agree.
18. September 2017 at 05:07
The blogger known as “Spotted Toad” has been arguing recently that states which expanded Medicare in reaction to the ACA had more opioid overdoses, but he acknowledges that this is confounded that the epidemic & expansion are correlated with the geographic northeast:
https://spottedtoad.wordpress.com/2017/08/24/good-and-bad-arguments-against-the-obamacare-opiate-effect/
18. September 2017 at 10:08
Clicked over from Cowen’s blog:
The high level of opiate addiction in New Hampshire doesn’t surprise me at all. Why not – let me offer analysis-by-anecdote to offer that I came to by way of whitewater kayaking.
I lived in Boston for three years while my wife was completing her medical residency. I’m an agreeable, conflict-averse wuss from Seattle who likes peace, quiet, and polite people. Given the scarcity of all three in Beantown, I instantly hated living in Boston and I got as far away as possible every weekend. When the rivers were running, this meant heading north or west into greater “New England.”
What this revealed is that New England is an economic wasteland, and has been in active decline for decades. You see this clearly from the river – the first couple of rapids are often formed by the river running over the remains of a diversion-dam used to power a water wheel. Further down you pass some sort of late 19th century ruin, and once you get far enough down the system there’s almost invariably the ruins of a factory that appears to have ceased operating in about 1971. Beyond the rivers, it’s virtually all forest engulfing the remains of farms that ceased being viable shortly after the land east of the Appalachians opened up.
Jobs, economic activity, and the type of person that wants or needs a sense of opportunity and a promising future have been fleeing the Northeast like it’s been on fire for decades. Outside of Boston, NYC, and a the entire region is in decline. It’s a diorama for people from those places to drive through or spend summer weekends in.
Spend more than a few minutes zipping through most of the small towns in the New England hinterlands and the overall vibe seems to be one of resignation and despair – at least amongst the people who grew up there and decided to hang around (very different than the idealistic emigres who flee the city and decide to live in a yurt and give the organic-llama-fur-collective thing a go for a few years). If not for an influx of transfer payments, most of these towns would transmute into full-tilt ghost towns and get consumed by the forest within a generation. My personal hypothesis is that since most of the capital in the region was fixed politicians and unions got the idea that they could hold the said capital hostage forever and impose unsustainable operating costs on them for all eternity, and when that turned out not to be the case their backup plan was to tax them more intensely. Probably less true in NH – but there’s only so much you can do to swim against the tides set by NY and MA.
The high median income in New Hampshire is *massively* skewed by the concentration of wealth on the Southern border that’s a consequence of people who want to be able to tap into the economic activity that takes place within the interior boundaries of I-95 while escaping at least some of the tax burden. The rest of the people in the hinterland are the grand-children of people who decided to ride out the stagnation and that set of values, habits, norms, and beliefs, and behaviors that has been distilled into a concentrate that makes them prime candidates for addiction.
The single most effective policy to resolve the opiate crisis would be to estimate the lifetime cost of a herion addict to the public, and pay all young people a stipend slightly greater than that upon successful completion of a move to Texas and the retention of a job for three or more years.
19. September 2017 at 16:55
Ron, I lived in New England for 35 years, and your description of the economy isn’t even close to be accurate. It’s a prosperous region.
You are right about New Englanders being kind of rude, however.
20. September 2017 at 10:20
Scott:
Totally agree that it’s a prosperous region.
Part of my perspective comes from growing up in the PNW where the trajectory, although uneven, has been almost universally upwards since settlement in the mid-19th century. The median income is about the same, but there’s nothing like the sense of stagnation or decline – both in the cultural and physical sense – that permeates the entire region. Youth, energy, vitality, and capital have been migrating to greener pastures for at least the past 75 years and there’s very little to indicate that that’s going to change anytime soon.
The other part comes from driving something like ~40,000 miles all over New England during my time there, at least 10,000 miles of which was on two lane backroads. I saw more of NE than the vast majority of people who have lived there there entire lives. Brookline, Newton, Concord, etc are nice places but once you cross the event horizon and find yourself within the Worcester’s gravitational field, things start to feel very different, and they don’t change much when you are contemplating how, say, North Adams MA arrived in its current condition.
Anyhow – big fan of your work. The dynamics driving the drug epidemic in NE don’t seem terribly different from those at work in Ohio, etc to me, but YMMV.
All the Best and Back to Lurking,
-Ron
21. September 2017 at 12:03
Why isn’t poverty itself considered a social problem rather than a “cause” of social problems? Michael Harrington is giving us the finger from his grave…