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More working Americans are struggling to make rent than at any time since the Great Depression. FRONTLINE and NPR join forces to investigate the crisis in affordable housing and why so few are getting the help they need. In a nine-month investigation that takes them from Dallas to Miami, to an upscale resort in Costa Rica, NPR’s Laura Sullivan and FRONTLINE’s Rick Young find that just one in four households eligible for Section 8 assistance are getting it, and the nation’s signature low-income housing construction program is costing more and producing less. The team follows a money trail that raises questions about the oversight of a program meant to house low-income people. Poverty, Politics and Profit also explores the inseparability of race and housing programs in America, tracing a legacy of segregation and discrimination that began more than 80 years ago.

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FRONTLINE: Poverty, Politics And Profit

Airs Tuesday, May 9, 2017 at 10 p.m. on KPBS TV

More working Americans are struggling to make rent than at any time since the Great Depression. FRONTLINE and NPR join forces to investigate the crisis in affordable housing and why so few are getting the help they need.

In a nine-month investigation that takes them from Dallas to Miami, to an upscale resort in Costa Rica, NPR’s Laura Sullivan and FRONTLINE’s Rick Young (who previously collaborated on an investigation of the Hurricane Sandy relief effort, "Business Of Disaster" ) find that just one in four households eligible for Section 8 assistance are getting it, and the nation’s signature low-income housing construction program is costing more and producing less.

The team follows a money trail that raises questions about the oversight of a program meant to house low-income people. "Poverty, Politics And Profit" also explores the inseparability of race and housing programs in America, tracing a legacy of segregation that began more than 80 years ago.

From exploring why even those who receive Section 8 vouchers often struggle to find housing, to examining charges that developers have stolen money meant to house low-income people, "Poverty, Politics And Profit" is a timely and probing exploration of a system in crisis — and who’s being left behind.

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Poverty, Politics and Profit: The Housing Crisis

More working americans are struggling to make rent than at any time since the great depression. frontline and npr investigate the growing crisis in affordable housing nationwide..

This program is a co-production from NPR, IRW and FRONTLINE. Poverty, Politics and Profit: The Housing Crisis investigates the lack of affordable housing and whether government programs are working as they should.

The full program can also be watched on FRONTLINE’s site.

More working Americans are struggling to make rent than at any time since the Great Depression. In “Poverty, Politics and Profit: The Housing Crisis,” FRONTLINE and NPR investigate the crisis in affordable housing and why so few are getting the help they need. The program was produced in association with the Investigative Reporting Workshop.

The nine-month investigation took the team from Dallas to Miami, to an upscale resort in Costa Rica. NPR’s Laura Sullivan and FRONTLINE’s Rick Young (who previously collaborated on an investigation of the Superstorm Sandy relief effort, “Business of Disaster”) found just one in four households eligible for Section 8 assistance is getting it.

The money trail raised questions about the oversight of a program meant to aid low-income people. “Poverty, Politics and Profit” also explores the inseparability of race and housing programs in America, tracing a legacy of segregation that began more than 80 years ago.

The program is co-produced by the Investigative Reporting Workshop, which paired graduate researchers/reporters Kate McCormick, Jerrel Floyd and Josephine Peterson alongside Young and co-producers Emma Schwartz and Fritz Kramer. Floyd also worked as a production assistant in Washington.

MORE IN THIS SERIES:

• Patrice Taddonio’s overview on  FRONTLINE ‘s site.
• Learn more about how the low-income housing program works today —with fewer units being built and four-year waitlists — by Laura Sullivan and Meg Anderson, on NPR’s site.
• See how we determined that the federal housing program has led to fewer units being built by reading our methodology .

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Poverty, Politics and Profit

An investigation with NPR into the billions spent on housing low-income people, and why so few get the help they need. The film examines the politics, profits and problems of an affordable housing system in crisis.

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6 How Politics and Institutions Shape Poverty and Inequality

David Brady, Professor of Public Policy and Director of the Blum Initiative on Global and Regional Poverty, University of California-Riverside; and Fellow at the WZB Berlin Social Science Center.

Agnes Blome, Research Fellow in the Inequality and Social Policy Department, WZB Berlin Social Science Center.

Hanna Kleider, Assistant Professor of Political Science, University of Georgia.

• Published: 05 April 2017
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This article explores the influence of politics and institutions on poverty and inequality. It first considers the general contention that poverty is shaped by the combination of power resources and institutions. On one hand, scholars in the power resources tradition have emphasized the role of class-based collective political actors for mobilizing “power resources” in the state and economy. On the other hand, institutionalists have highlighted the role of formal rules and regulations. The article goes on to discuss the theoretical arguments of power resources theory and the evidence for key power resources (that is, collective political actors like labor unions and parties). It also reviews institutional explanations, focusing on the key concepts and theories and as well as the evidence linking the most salient institutions to poverty. Finally, it examines how state policy influences poverty and presents several challenges for future research.

In the past 15 to 20 years, considerable progress has been made in understanding how politics and institutions shape poverty. Traditionally, studies of poverty, especially in the United States, neglected institutions and politics. Instead, studies predominantly focused on the demographic risks of poverty or how economic performance shaped poverty in the United States. For example, many poverty researchers demonstrated that single mothers were more likely to be poor, and economists often documented how poverty rose and fell with the business cycle. However, scholars have recently devoted increasing attention to how politics and institutions shape the distribution of economic resources and how this ultimately drives poverty ( Brady 2009 ; Brady and Sosnaud 2010 ; Rank this volume). At the risk of hyperbole, there has been a marked transition in the social science of poverty such that it is now widely understood that much of the variation in poverty across rich democracies is due to politics and institutions. While previously poverty scholars concentrated on demographics and economic performance, scholars are beginning to emphasize, for example, social policy and labor unions. More scholars are drawing attention to how politics and institutions shape poverty in developing countries as well. Scholars have even shown that the effects of demographic risk factors, like single motherhood, are themselves conditioned by politics and institutions. Indeed, political and institutional explanations of poverty and inequality have never been as prominent as today.

At least two factors have contributed to this progress. First, there have been significant improvements in cross-national survey and administrative data on individual and household income. Perhaps the best example is the Luxembourg Income Study, which has greatly facilitated more rigorous cross-national comparisons of poverty and inequality. This, in turn, has allowed scholars to explore the role of country-level factors like social policies. Such comparisons have also included fine-grained scrutiny of taxes and transfers, which has highlighted how essential taxes and transfers are to household income ( Rainwater and Smeeding 2004 ). Because taxes and transfers are largely determined by governments, the nation-state (henceforth “state”) and the politics of the state have risen in importance in poverty and inequality research. The rising prominence of the state in inequality research is well-captured by the enthusiastic debates sparked by Thomas Piketty’s (2014)   Capital in the Twenty-First Century , which called for a global tax on capital as a means to moderate inequality.

Second, though initially slow, there has been a genuine scholarly response to rising inequality. Through the early 2000s, scholars often lamented that sociology and political science had failed to study the increasing inequality occurring in rich democracies (e.g., Morris and Western 1999 ). Yet, over the past 10 to 15 years, there has been growing interest in the sources of rising inequality, and within this literature, political and institutional explanations have grown in prominence. This is partly because the prevailing economic and demographic explanations have proven limited for explaining many of the prominent trends ( Brady and Leicht 2008 ). Therefore, as such explanations have been unable to account for the most important trends in poverty and inequality, political scientists, sociologists and others have stepped in with political and institutional explanations (see Brady and Sosnaud 2010 ).

This essay reviews theories and literatures on how politics and institutions shape poverty. In the process, we draw a clearer connection between the poverty literature and the broader conceptual and theoretical literatures on how politics and institutions shape inequality. Animating this essay is the general contention that poverty is shaped by the combination of power resources and institutions. On one hand, scholars in the power resources tradition have emphasized the role of class-based collective political actors for mobilizing “power resources” in the state and economy. On the other hand, institutionalists have highlighted the role of formal rules and regulations. 1 Altogether, political explanations of poverty vary across a continuum from those highlighting the active struggle between collective actors to those highlighting the stable arrangements of rules and regulations. 2 At the same time, contemporary political explanations of poverty often draw on insights across this continuum and eclectically blend power resources and institutions into comprehensive accounts. We also posit state policy as a key mediator between politics/institutions and poverty and explain how this means politics/institutions can have both direct and indirect effects on poverty.

The first section reviews power resources theory. We first explain its theoretical arguments and then discuss the evidence for key power resources (i.e., collective political actors like labor unions and parties). The second section covers institutional explanations. Again, we first explain the key concepts and theories and then review the evidence linking the most salient institutions to poverty. The third section explains the pivotal role of state policy by cataloguing the generic mechanisms of how state policy influences poverty. Finally, we conclude by presenting several challenges for future research. Throughout, we draw on literatures from several disciplines and across several world regions.

Power Resources Theory

Concepts and core arguments.

Power resources theory contends that collective actors bond together and mobilize less advantaged classes of citizens around shared interests. Such groups gain electoral power by forming unions and Left parties, and when in office, these parties expand the welfare state ( Brady 2009 ; Brady, Fullerton, and Cross 2009 ; Hicks 1999 ; Huber and Stephens 2001 ; Korpi 1983 ; Moller et al. 2003 ). 3 Power resources theory claims that the mobilization of such groups of less advantaged citizens is pivotal because the default distribution of political power in a capitalist democracy favors elites and business. This default favoring business and elites leads to a default unequal distribution of income. Hence, it is essential for the working class, poor, and others to bond together and attract some of the middle class to gain any real political power.

Beyond simply expanding the welfare state, power resources theory offers a more general model of income distribution ( Brady et al. 2009 ; Korpi 1983 ). In contrast to Left parties mobilizing in elections, business and elites can mobilize in the labor market and corporate boardrooms to funnel more economic resources in their own direction. Because power resources can be mobilized in both workplaces and polities, power resources’ effects might manifest in the distribution of earnings and employment—complementary to but potentially separate from the welfare state. Generalizing even further, it is reasonable to think of power resources as a theory about how collective actors accomplish economic egalitarianism by gaining power, and controlling offices and positions with authority over markets, taxation, social policies, and other distribution processes. Therefore, we suggest power resources theory at least partly informs all research on how collective political actors shape equality.

Traditionally, power resources theory anchored its microlevel mechanisms in the rational self-interest of the poor and working class to expand the welfare state. Korpi (1983) built his explanation by deriving the mobilization of classes from their material interests. Many scholars still attribute a considerable role for material interest, especially among political economists ( Mahler 2008 ). This makes sense as it is in the material interests of the poor and working class to have a larger welfare state and more redistribution. 4 Constituencies of beneficiaries, even among the middle class or affluent, have a rational interest in forming coalitions with the working class and poor to maintain existing social policies ( Korpi and Palme 1998 ). At the same time, others have sought to broaden the reasons why the working class and poor will mobilize. Building on power resources theory, but integrating it with public opinion and path dependency literatures, Brooks and Manza (2007) argue that existing social policies cultivate widely held beliefs and normative expectations that feed back into the politics of welfare state ( Brady and Bostic 2015 ). The powerful cultural expectations that result from social policies then greatly influence how people vote and constrain politicians seeking to retrench welfare states. Hence, power resources could be effectively mobilized for the welfare state because citizens have either or both material interests and cultural values favoring egalitarianism.

Unions and Leftist Parties

Influenced by power resources theory, a rich tradition of scholarship demonstrates the effects of labor unions on economic inequality. Considerable research has shown that unionization is associated with higher earnings for the average worker ( Kalleberg et al. 1981 ), lower compensation for elites ( Volscho and Kelley 2012 ), and less earnings inequality ( Kristal 2010 ; Wallace et al. 1999 ; Western and Rosenfeld 2011 ). Particularly relevant to poverty, scholars have shown that unionization reduces the presence of low-paid jobs ( Gautie and Schmidt 2009 ; Zuberi 2006 ) and boosts the earnings of the less skilled, younger, and contingently employed workers that are vulnerable to poverty ( Eren 2009 ; Maxwell 2007 ). Unions accomplish greater security and better compensation for workers because they pressure management to raise wages, encourage rules against the use of contingent workers (whose presence would reduce wages), and regulate working conditions. Unions also disseminate egalitarian discourses, influence policy, and shape the regulation and governance of labor markets ( Western and Rosenfeld 2011 ). Regardless of how or why, there is clear and convincing evidence of a strong relationship between unionization and higher earnings, and lower inequality and poverty ( Brady et al. 2013 ; Rosenfeld and Laird this volume).

This research has been particularly influential to the emerging study of working poverty ( Gautie and Ponthieux this volume; Lohmann 2009 ). Compared to joblessness, working poverty has been relatively neglected even though the majority of poor people in most rich democracies reside in households with employed people. However, in the past few years, scholars have devoted increasing attention to working poverty, and this nascent literature has highlighted the role of unions ( Brady et al. 2010 ; Zuberi 2006 ). In an analysis of the United States 1991–2010, Brady and colleagues (2013) show that state-level unionization reduces the odds of individual-level working poverty. Indeed, they find that a state’s level of unionization is more important than the economic performance or social policies of that state. What is more, their multilevel approach allows them to control for a wide variety of individual characteristics predicting poverty and to show that unionization benefits both unionized and nonunionized workers.

Unions also matter to poverty because they are key players in electoral politics. Unions mobilize voters, align and form coalitions with political parties, and influence government administrators. Indeed, unionization has often been utilized to show how the power resources of the working class trigger welfare state development ( Hicks 1999 ; Huber and Stephens 2001 ; Korpi 1983 ). Influenced by this research, many show that unionization explains cross-national differences in poverty and inequality ( Bradley et al. 2003 ; Moller et al. 2003 ). This literature often demonstrates that in addition to directly affecting the workplace and earnings (or household income before taxes and transfers), unions indirectly influence poverty by encouraging more generous social policies ( Brady 2009 ; Brady et al. 2009 ). Indeed, Brady and colleagues (2010) show that unionization mostly explains cross-national differences in working poverty through its indirect effects through welfare state generosity.

Unions’ relevance to electoral politics and social policy complements the role of political parties. In many accounts, Leftist parties are the actors that actually establish egalitarianism by enacting laws and policies favoring the poor ( Allan and Scruggs 2004 ; Kelly and Witko 2012 ; Korpi and Palme 2003 ) and reducing inequality ( Bradley et al. 2003 ; Mahler 2004 ; Sassoon 1996 ). As Huber and Stephens (2001) argue, parties serve the “crucial mediating role” in implementing policy. As a result, many show a relationship between Leftist party power and lower poverty ( Bradley et al. 2003 ; Moller et al. 2003 ). The bulk of the evidence suggests it is actually the cumulative and long-term, rather than the current, power of Left parties that matters ( Huber and Stephens 2001 ; Jensen 2010 ). For instance, Brady (2009) shows that rich democracies with a cumulative history of Left party power tend to have lower poverty than those traditionally governed by centrist and Right parties. Pribble and colleagues (2009) show that poverty tends to be lower in Latin American countries with a greater cumulative presence of Left parties in the legislature—such as Costa Rica or Uruguay.

Business, Elites, and the Right

Power resources theory traditionally presented the political advantages of business and elites as the default and tended to focus on collective actors representing the poor and the working class. As a result, less research examines how the power and mobilization of elites and business affects poverty specifically. This is unfortunate as it is plausible that the power and mobilization of elites and business is quite relevant. On one hand, some literature illustrates how business sometimes acts in favor of egalitarian social policies. This research has often come out of the varieties of capitalism research program, which sought to identify the institutional differences between coordinated market economies like Germany and liberal market economies like the United States. Such scholars show that business has an interest in welfare state expansion in a coordinated market economy environment featuring wage coordination, vocational education systems, and corporatism ( Hall and Soskice 2001 ; Mares 2003 ; Martin and Swank 2012 ; Thelen 2012 ). On the other hand, others argue Right parties mostly operate as a counterweight to Left parties and unions ( Allan and Scruggs 2004 ; Brady and Leicht 2008 ; Castles 2004 ). When in power, Right parties tend to retrench the welfare state and alter the tax distribution such that inequality increases ( Allan and Scruggs 2004 ; Brady and Leicht 2008 ; Hacker and Pierson 2010 ). Both literatures view the mobilization of business and elites as variable rather than constant and highlight how business and elites have mobilized in response to the growth of the state and the welfare state that occurred in many countries after World War II and until the 1970s ( Harvey 2005 ). Right power resources also need to be mobilized and, indeed, some demonstrate Right power resources have been more consequential than the Left in recent decades ( Brady and Leicht 2008 ; Allan and Scruggs 2004 ). Thus, modern power resources theory encompasses a range of class-based organized groups and collective actors acting through and outside parties to influence welfare states.

Broadening Power Resources

Finally, beyond class-based actors like business, labor, and parties, scholars have broadened power resources theory to include the mobilization of other disadvantaged groups. Most prominent in this literature, women’s electoral mobilization and presence in government influences the development of the welfare state, which ultimately bears on poverty and inequality ( Bolzendahl and Brooks 2007 ; Huber and Stephens 2001 ). For power resources research to advance, a better understanding of the entire spectrum of political actors would be valuable ( Hacker and Pierson 2010 ; Volscho and Kelly 2012 ). In that vein, Thelen (2012) proposes a “coalitional approach” to capture how a variety of actors—parties, organized labor, business—come together (or not) to shape inequality. Perhaps such a theoretical direction has potential for research specifically focused on poverty as well.

Institutional Explanations

Concepts and theories.

Institutions can be thought of as stable agreements and historical settlements that channel, constrain, and regulate the behavior of firms, workers, and other actors and hence contribute to inequalities in nation-states ( Campbell 2004 ; Fligstein 2001 ; Pierson 2004 ). Institutions include formal and informal rules, laws, and policies that define the range of legitimate actions of market actors. There is no one institutional explanation of poverty, and arguably there is less coherence among institutional explanations than among power resources scholarship. 5 Still, institutional explanations are a family of explanations that stress the salience of institutions for poverty and inequality—above and beyond collective political actors.

Proponents of institutional explanations emphasize the role of established and stable macrolevel contexts to explain differences in poverty and inequality across places ( Jepperson 1991 ). Thus, like power resources scholars, institutionalists contend that the environment determines the odds of poverty. Somewhat unlike power resources theory however, institutional explanations stress that the processes driving inequality are less amenable to manipulation by collective political actors. That is, institutions reproduce and structure potential inequalities. They are not active players like collective actors but are better understood as rules of the game and contours of the arena in which the game is played ( Thelen 2012 ).

Partly for such reasons, the self-sustaining quality of institutions is particularly important in institutional explanations. Institutions tend to continue to affect poverty and inequality without active maintenance. As Jepperson (1991 :148) explains in his classic essay on “institutional effects”: “Institutions are those social patterns that, when chronically reproduced, owe their survival to relatively self-activating social processes. Their persistence is not dependent, notably, upon recurrent collective mobilization, mobilization repetitively reengineered and reactivated in order to secure the reproduction of a pattern.” Thus, institutions are “taken for granted,” “naturalized as a stable feature of constraining environment,” “routine-reproduced,” and “relative fixtures of constraining environments” ( Jepperson 1991 :148–49).

Institutions reflect the “congealed power” or residue of the power of collective actors ( Western 1997 ). Previous established rules, policies, and practices do not disappear overnight and often only slowly evolve over time. Also, contemporary poverty reflects the political settlements of the past as much as the present power of today’s political actors. Conversely, long-ago established institutions with little egalitarian content or intention, often end up, after the evolution of time, having egalitarian consequences. For example, Thelen (2004) shows how the German apprenticeship system began as an exclusive inegalitarian institution but evolved into an institution that enhanced social equality and working-class economic security. Institutions put in place decades ago may still matter to poverty today, and institutions put in place today might not matter until significant time has passed. For instance, even if the Democratic Party controlled the U.S. presidency, both houses of Congress, and most state legislatures, their effects on poverty would still be constrained. It takes a long time to change labor laws that undermine unions, to expand or create new social policies, to implement those policies, and to change normative expectations about egalitarianism. Thus, institutionalists often critique power resources explanations for implying that each election represents an active struggle and pivotal event, and instead stress the noticeable stability of poverty and inequality.

In these ways, institutional effects on poverty and inequality often reflect “path dependency” ( Pierson 2004 ). Path dependency is the idea that previous institutions set states on a trajectory whereby only certain subsequent choices are possible or efficient. That is, current politics and institutions depend on the path a state has taken previously. To understand how institutions shape poverty, scholars therefore need a long-time horizon of cause and a long-time horizon of outcomes ( Pierson 2004 ). As a result, scholars tend to focus on cumulative and long-term effects that steadily build and gradually evolve over time and may only have impacts once a certain threshold has been met ( Huber and Stephens 2012 ).

A strong institutionalism would claim that previously established rules and arrangements dominate over contemporary politics as those rules and arrangements “lock in place” a level of egalitarianism. This lock-in is then difficult to overturn or undermine, and therefore poverty and inequality are almost predetermined by these institutions. A weaker institutionalism proposes that previously established arrangements guide how, when, and why political actors can and do shape poverty ( Huber and Stephens 2001 ; Jensen 2010 ). Previously established rules and regulations constrain the choices available to actors, the subsequent political behavior of actors, and even the cultural interpretation of inequalities in society. Because institutions shape the expectations guiding and resources available to actors, they also have long and complicated causal chains that ultimately shape poverty ( Pierson 2004 ).

Compared to research on power resources and collective actors, there is perhaps less research on how institutions affect poverty. Therefore, even though institutional theories are highly relevant to and often lurk under the surface in poverty research, it is less common for scholars to explicitly highlight institutions. Still, salient research has been done on democracy, and electoral, labor market and educational institutions.

Democracy and Electoral Institutions

Refining the power resources literature, scholars have shown that the effects of parties on poverty are more pronounced once democracy has become firmly established ( Huber and Stephens 2012 ). This is partly because stable democracies are more responsive and effective at channeling state resources toward reducing income inequality ( Jenkins and Scanlan 2001 ; Lee 2005 ), partly because parties require significant time to maturely crystallize their positions on economic and social policies ( Huber and Stephens 2012 ; Resnick 2012 ), and partly because weak or new democracies present few opportunities and channels for the political mobilization of the poor ( Heller 2009 ). Whereas authoritarian regimes can more easily repress the poor and workers, parties need to attract the poor and working class as constituencies in democracies ( Rueschemeyer et al. 1992 ). The result of this is that while democracy might not have a simple and direct effect on poverty ( Ross 2006 ), there is a complicated and historically cumulative influence of democracy through parties, other collective political actors, and mature states ( Huber and Stephens 2012 ). Therefore, democratic regimes ultimately matter to poverty by creating an environment in which power resources are likely to be more consequential.

Beyond the stability of electoral democracy, scholars in the past decade have stressed how particular institutions of electoral democracy matter to poverty and inequality ( Malesky et al. 2011 ). Especially central to the literature, Iversen and Soskice (2006) demonstrate with both a formal model and empirical evidence that proportional representation (PR) systems redistribute more than single-member district systems (see also Persson and Tabellini 2004 ). They show that electoral systems influence the nature of political parties and the composition of governing coalitions, which then shape how much economic resources are redistributed from rich to poor. They demonstrate that PR systems advantage center-Left governments, while majoritarian systems favor center-Right governments. Based on analyses of rich democracies, they show that electoral systems thus indirectly explain why PR countries in Europe have so much less poverty and inequality than majoritarian countries like the United States (also Brady 2009 ). More generally, the opposite of PR systems—single-member district plurality systems—are one of many veto points (sometimes called “veto players”). Scholars have shown that such veto points (including e.g., presidential systems, federalism, judicial review, bicameralism, and the frequency of referendums) constrain the expansion of social policy ( Immergut 1992 ) and are positively associated with poverty and inequality ( Beramendi 2012 ; Huber and Stephens 2001 ).

There has also been research on how electoral institutions shape the political behavior of the poor. For instance, in a study of rich democracies, Anderson and Beramendi (2012) show that higher levels of partisan competition on the Left shape the tendencies of dominant Left parties to mobilize poor voters in response to inequality. They demonstrate that without the presence of several contending Left parties, dominant Left parties have little incentive to encourage poor people to vote. This is relevant because the political behavior of the poor has some bearing on the collective actors shaping poverty, as discussed above. Therefore, electoral institutions like the presence of multiparty competition, which is more likely in a proportional representation system, are likely to indirectly affect poverty through the political behavior of the poor.

Labor Market and Educational Institutions

In terms of labor market institutions, an extensive literature investigates how corporatism and wage coordination affect inequality. This literature has shown that earnings inequality is lower in corporatist labor markets that feature stricter employment protection (e.g., rules constraining the firing of workers), power sharing between management and labor (e.g., works councils), and wage coordination (e.g., centrally negotiated national pay scales) ( Blau and Kahn 2002 ; Carbonaro 2006 ; Koeniger et al. 2007 ). As noted above varieties of capitalism scholars refer to such corporatist labor markets as coordinated market economies ( Hall and Soskice 2001 ), as countries typically bundle several labor market institutions into a more or less coherent system. According to this literature, corporatism brings together business and labor into cooperative and long-term-oriented relationships that bring about greater equality ( Hicks 1999 ). This literature has influenced the aforementioned literature on working poverty. Indeed, low-wage work and working poverty appear to be less common in labor markets featuring such institutions ( Brady et al. 2010 ; Gautie and Ponthieux this volume; Gautie and Schmidt 2009 ). Because low-wage work is so salient to working poverty and therefore poverty overall, it follows that this literature on labor market institutions is relevant to poverty research.

Another feature of coordinated market economies, and often coupled with labor market institutions, are the educational systems that feed individuals into labor markets ( Allmendinger 1989 ). Kerckhoff (1995) calls these institutions “the sorting machines” of stratification because they structure the connections between one’s class origin, educational attainment, early labor force placements, and labor market trajectories. One of the pronounced differences in education systems is whether countries have well-developed vocational education/training and apprenticeship programs ( Kerckhoff 1995 ; Thelen 2004 ). Many of the countries that have extensive labor market institutions like corporatism also tend to have vocational education systems, and scholars have pointed out the strong complementarities between the two ( Hall and Soskice 2001 ). Germany is often held up as the model because it has historically had well-developed bridges between schools, vocational training, and apprenticeships. Such vocational systems have been linked to lower poverty and inequality ( Allmendinger and Leibfried 2003 ; Moller et al. 2003 ). The reason is that vocational education represents a better pathway to work for those who do not get a college degree. So, while workers with college degrees are advantaged almost everywhere, the penalty for lacking a college degree is lessened if one has vocational training. This is because vocational training enhances one’s human capital and because these education systems encourage tighter links between education, apprenticeships, and early labor market placement. As a pathway for young people who do not go to college, scholars in the United Kingdom and the United States have proposed the establishment of such vocational education systems to reduce unemployment, labor market precariousness, and even poverty ( Rosenbaum 2001 ). By contrast, others argue it is more important to reduce educational inequalities in general and to raise education overall rather than develop tracks for different groups of students in order to alleviate poverty ( Solga 2014 ).

International Institutions

Finally, one promising direction for poverty research on institutions is the study of international institutions. International institutions, like the European Union, have been linked with government spending and the welfare state ( Brady and Lee 2014 ; Ferrera 2011 ) and with income inequality ( Beckfield 2006 ). A few have connected international institutions to poverty (e.g., Bradshaw et al. 1993 ; Kentikelenis, Stubbs, and King 2015 ). For example, Easterly (2001) shows that International Monetary Fund and World Bank structural adjustment programs aimed at developing countries reduced the effectiveness of economic growth in reducing poverty. Moreover, international institutions have arguably become more salient in recent decades and may become even more so in the future. Thus, it is plausible that international institutions will be increasingly relevant to poverty.

The Pivotal Role of State Policy

Regardless of where scholars sit on the continuum of power resources and institutions, most agree the state plays a pivotal role in shaping poverty. The conventional approach views the state as a mediating variable, such that power resources and institutions often have indirect effects on poverty through the state. According to this approach, power resources and institutions influence the size, practices, and policies of the state, and the state implements egalitarianism. As we discuss later, much research demonstrates how social policy benefits the poor and reduces poverty ( Brady 2009 ; Brady et al. 2009 ; Lee and Koo this volume; Lein et al. this volume). Relatively less scholarship highlights how state policies can also be harmful to the poor. However, we propose state policy’s relevance to poverty is best understood as a combination of social policy and regulatory activities that shape the distribution of economic resources and life chances ( Wilensky 2002 ).

On some level, one could include the entire fields of public and social policy research as relevant to this essay. Rather than summarizing all scholarship on state policy, we distill the literature into a parsimonious typology of how states matter. We identify a set of generic mechanisms for how state policies matter to poverty. Enumerating these mechanisms should facilitate and guide scholarship on the range of roles that states play, and comprehensively evaluating those roles allows us to better understand how states shape poverty.

First, state policies organize the distribution of resources ( Moller et al. 2003 ; Nelson 2004 ). Typically, this mechanism is presented as redistribution. However, state policies more realistically organize the distribution of resources by influencing how resources are distributed in the market and after the market ( Bradley et al. 2003 ). Through taxation, transfers, and services, social policies take resources from one part of the population and distribute to others or to the same population at different stages of life. Yet, state policies also shape how much people earn and how much investments return. The obvious example of state policies that shape earnings are minimum wage laws, but household income is contingent on a range of policies states have for coercing private and public actors in markets. States also tax many transfers ( Ferrarini and Nelson 2003 ), opt to eschew taxes as an indirect way to “transfer” resources ( Wilensky 2002 ), and occasionally even disproportionately tax the poor ( Newman and O’Brien 2011 ). Hence, state policies both redistribute and distribute, and a narrow focus on redistribution underappreciates the full set of consequences of state policy.

Second, state policies insure against risks ( DiPrete 2002 ). Many social policies are insurance programs against unexpected (e.g., illness and accidents), somewhat unexpected (e.g., unemployment), and relatively expected events (e.g., having a child or growing old). Because of their size, large budgets, legitimacy, and capacity to mandate participation, states are uniquely positioned to insure or require insurance ( O’Brien and Robertson 2015 ). Moreover, because the private sector is often unlikely to insure all regardless of risk profiles, states often must step in and be the insurance provider. States often go further than just insuring against risks but also are actively involved in preventing risks through regulation. For instance, states can reduce workplace injuries, and this enhances the earning power of workers. Thus, state policies both reduce the likelihood of poverty-inducing events and mitigate the consequences when such events occur ( DiPrete 2002 ).

Third, states invest in capabilities. States educate, train, care for, and keep healthy their residents. States also often feed and house their residents, though it is probably mostly through education, training, care, and health care that states contribute to the well-being and development of their populations. In recent years, this package of programs has received increasing attention under the title of “the social investment welfare state” ( Morel et al. 2012 ). Similarly, this role has long been studied as part of the literature on aid and assistance to developing countries ( Feeney and McGillivray this volume).

Fourth, and closely related to the third point, state policies allocate opportunities. In addition to preparing people for jobs and caring for people when they cannot work, states actually create jobs and other opportunities. States are often the largest employers in their countries, and public employment is especially relevant to poverty during economic recessions. Though service obviously comes with great potential costs, the military has also been a key state policy that has been a source of social mobility out of poverty and a basis for economic development for relatively impoverished communities ( Sampson and Laub 1996 ). States also allocate these opportunities in more or less equal ways, and this often has consequences for poverty. For example, the aforementioned investments in capabilities such as education and training are often distributed unevenly, and if they were distributed more equally, less poverty would likely result.

Fifth, state policies socialize expectations ( Brady 2009 ). State policies are clearly shaped by the politics of collective actors and widely held beliefs. However, since at least the early 1990s, scholars have stressed how state policies feed back into public opinion and politics ( Brady and Bostic 2015 ; Fernandez and Jaime-Castillo 2013 ; Huber and Stephens 2001 ; Skocpol 1992 ). By explaining how state policies construct interests, ideologies, and coalitions, compelling research has shown how state policies shape norms, beliefs, and the subsequent politics of state policies ( Brooks and Manza 2007 ; Korpi and Palme 1998 ; Pierson 2004 ). If those feedback effects are positive, there will tend to be increasing public support for policies, and when those policies are effective, poverty reduction will be reinforced and social equality becomes more institutionalized. Hence, state policies shape the popular expectations about whether poverty is just or necessary, and these likely shape the amount of poverty in society ( Brady 2009 ).

Sixth, states discipline the poor ( Soss et al. 2011 ; Wacquant 2009 ). The state punishes, warehouses, polices, monitors, stigmatizes, constrains, undermines and limits the freedom of the poor and certain populations. These many processes fit under the broad banner of disciplining the poor ( Soss et al. 2011 ), which may make poverty more likely or persistent. Though many have made such arguments in recent years, the idea was already present in Piven and Cloward’s (1993) classic Regulating the Poor . While Piven and Cloward emphasized how welfare was used to control and force the poor to work, states today may emphasize punishment and warehousing more because there is not enough well-paid work to sustain the poor ( Wacquant 2009 ). Further, in Piven and Cloward and recent work like Soss and colleagues (2011) , the state has often actively sought to paternalistically manage the fertility, partnering, and parenting behavior of the poor. In the past 10 to 15 years, one of the most popular areas of research on state policies and poverty/inequality has been incarceration. This recent research, especially in the United States, has called attention to the state’s criminal justice policies as a key source of racial and class stratification. This literature documents the United States’ unusually high rates of incarceration, and how this contributes to myriad economic inequalities. Incarceration worsens poverty through multiple channels ( DeFina and Hannon 2013 ; Western and Muller 2013 ). Directly, ex-prisoners face substantial disadvantages in the labor market ( Western 2006 ). Indirectly, the families of prisoners face severe strain, and there is evidence that increasing incarceration has concentrated childhood disadvantages ( Wildeman 2009 ) and even increased child homelessness ( Wildeman 2014 ). Though dramatically increasing incarceration has clearly been a significant policy intervention that has worsened inequality, it is important to keep in mind there are many other and less studied ways that states discipline select groups in ways that worsen poverty.

In sum, we have identified at least six generic mechanisms linking state policies and poverty. By creating this typology of mechanisms, we aim to clarify the themes in past research and guide future research on state policy effects on poverty.

Challenges for Future Research and Conclusion

In total, great progress has been made in the study of how politics and institutions shape poverty and inequality. Scholars have advanced sophisticated theoretical arguments, and considerable empirical evidence has been accumulated. More than perhaps at any point in the social science of poverty, political and institutional explanations have proven valuable for understanding poverty. Animated often by power resources and institutional theories, scholars have shown the salient impacts on poverty of labor unions, Left parties, elites and business, democracy, electoral systems, and labor market and educational institutions. Nevertheless, despite the progress in the literature, the literature is presently grappling with several challenges and dilemmas. Some challenges are methodological, others are theoretical, and others are simply the result that the world keeps changing in ways that often defy our accounts.

There are at least two pressing dilemmas for the power resources literature. First, even though the existence of power resources representing the disadvantaged are clearly to the benefit and interests of the disadvantaged, such power resources are struggling to survive. Unions, Left parties, and other Left collective actors face significant challenges of solidarity and mobilization and are experiencing declines in their memberships and affiliations. For instance, even though there continues to be stable differences in unionization across rich democracies, unionization is declining in almost every rich democracy ( Pinto and Beckfield 2011 ). While the United States has had low unionization for decades, it is even more notable that Germany’s unionization was above 35 percent in the 1980s and has now has fallen below 20 percent. Even Sweden’s unionization has fallen from about 85 percent in the mid-1990s to below 70 percent in recent years ( Visser 2013 ). For political parties and voting, there is also evidence of a weakening loyalty of working-class voters to Left parties (e.g., Bornschier and Kriesi 2013 ; Brady et al. 2011 ). Such declines raise the question of why power resources are declining even though they continue to benefit the poor and working class.

One answer is that these power resources face the same coordination and mobilization problems that any group faces. There are always free riders, and perhaps the reality is that successfully mobilizing the poor, working class, or anyone is the exception rather than the rule. In turn, maybe we should consider the sustained effective mobilization of power resources in the post–World War II era as partly the product of a unique historical period. If that era truly was unique, we need to revise power resources theory to better incorporate factors like historical contingency and global political economy. What that would mean for the core ideas of power resources theory remains unclear.

A second answer is that poverty and inequality themselves undermine political mobilization. So, there could be feedback effects whereby rising inequality undermines power resources, and some of the observed relationship between power resources and lower poverty may have been the artifact of reverse causality. Indeed, Solt (2008) shows inequality depresses political interest, the frequency of political discussion, and participation in elections among non-rich citizens (also Schaefer 2012 ). Anderson and Beramendi (2012) find that the poor are less likely to vote where economic inequality is higher. Solt (2008) points out that such evidence challenges arguments that rational self-interest is sufficient to explain the poor’s support for power resources. After all, rising inequality should greatly increase the material interests of the poor and working class in supporting power resources for welfare states and egalitarianism. In contrast to such political-economic models (cf. Meltzer-Richard 1981 ), scholars have shown that rising inequality is not self-correcting, whereby rising inequality prompts the poor and working class to rise up, push back, and successfully demand redistribution. 6 Instead, rising inequality is self-reinforcing as elites use their greater economic resources to further institutionalize rising inequality ( Barth, Finseraas, and Moene 2015 ; Kelly and Ens 2010 ). The reality is that the poor have always been known to be less politically active ( Rosenstone 1982 ). Partly because political action entails costs and requires resources, it is even more difficult to mobilize disadvantaged populations when they face the pressure and seemingly insurmountable constraint of rising inequality. As Pontusson and Rueda (2010) show, it is essential for the poor to remain politically active and mobilized for there to be any possibility that rising inequality motivates the poor and working class to successfully demand redistribution. The outcome of this dilemma is that there is little reason to be optimistic about the present state of power resources representing the poor.

The second dilemma, which is linked to the first, is that there is considerable evidence that Left collective actors have become less efficacious. Beginning around 2000, scholars began to demonstrate that the relationship between power resources and welfare states weakened in the 1980s ( Hicks 1999 ; Huber and Stephens 2001 ). When decomposing the rich democracies into historical periods of welfare state development and retrenchment (e.g., before/after the 1980s), one finds a clear pattern where power resources significantly increase the welfare state in the earlier period and have little effect in the later period ( Brady and Lee 2014 ). On balance, there is still evidence of party effects on poverty (e.g., Brady 2009 ; Brady et al. 2009 ), and welfare states in recent decades (e.g., Allan and Scruggs 2004 ). However, the prevailing theme in the literature is that power resources have become less effective at least in terms of expanding the welfare state. Unfortunately, the literature has not made great progress in understanding precisely why and how this weakening effectiveness of power resources has occurred. One explanation is that rising inequality, and the ensuing political weakness of the poor, shifts the incentives and platforms of political parties toward middle-class and affluent voters ( Anderson and Beramendi 2012 ; Barth et al. 2015 ; Pontusson and Rueda 2010 ). Thus, power resources might matter less to poverty in recent years because Left parties have shifted Right on economic issues, and this has weakened the commitment of Left parties to economic egalitarianism. Hence, an important question for the literature is what other power resources can serve the interests of the poor if, indeed, Left parties no longer maintain that commitment as consistently as in the past ( Häusermann et al. 2013 ).

Shifting to the institutions literature, the most important dilemma may come from the dualization literature ( Emmenegger et al. 2011 ; Rueda 2005 ). Increasingly, scholars have emphasized that while labor market and educational institutions are generally equality enhancing, there is considerable stratification in the benefits of these institutions. Dualization scholars build on the classic literature on dual labor markets (e.g., Reich et al. 1973 ). Dual labor market scholars argued the U.S. economy was composed of a primary or core labor market located mainly in large manufacturing firms in which workers were well paid and had opportunities for advancement, and a secondary labor market located in the service sector and small enterprises in which pay and opportunities for advancement were limited. The new dualization literature builds on this classic literature to emphasize how labor market and demographic changes present new challenges to previously egalitarian institutions.

Beginning especially in the late 1990s, many institutions and regulations were reformed by, for example, increasing part-time and temporary work and subsidizing low-wage work to create an increasingly large segment of peripheral workers or outsiders in the labor market. Scholars have argued that the result is a dualization of social policies and labor market institutions, with one set of programs for labor market insiders and one for outsiders ( Palier and Thelen 2010 ). So, instead of massive retrenchment of social policies and liberalization of labor market institutions, reform has often been accomplished by dualization ( Thelen 2010 ). The dualization literature highlights that many workers are stuck in a secondary track of social policies, do not benefit from the traditional egalitarian institutions, and may even have blocked or restricted access to the most generous programs. Importantly, such outsiders are more likely to be women, immigrants, the young, and the less skilled or educated. Because these groups were already more likely to be poor, dualization could be very relevant to poverty in rich democracies. If so, the traditional literatures on power resources, welfare states, and institutions will need revision for explaining poverty ( Thelen 2012 ). Particularly interesting is how dualization is emerging at the same time that countries are becoming more egalitarian in other dimensions. For example, Ferragina and colleagues (2012) show how unemployment protection has dualized in many rich democracies at the same time that family policy has become increasingly socialized. Hence, the emergence of dualization is not an isolated trend, but is one of several changes occurring in the policy and institutional context for poverty.

Another dilemma for research on institutions and poverty is the need for studies of the complementarities, constellations, and combinations between various institutions. The literature has long emphasized that a given institution affects poverty and inequality because of the presence of other complementary institutions and the effectiveness of various institutions interdepends on other institutions ( Hall and Soskice 2001 ; Thelen 2012 ). Of course, it is clear that there are strong correlations between the presence of labor market institutions, like corporatism, and the presence of vocational education systems, unionization, proportional representation, and other institutions. Thelen (2010) adds that employer mobilization is closely attuned to the environment in which they operate—and the nature of employer political mobilization depends on the strength of unions and employers’ level of coordination. So, even power resources like labor and business behave differently depending on the combination of institutions in which they operate. Yet, even though the literature has widely stressed both the essential role of complementarities and the correlations between the presence of various institutions, relatively few studies directly incorporate this into the evaluation of institutional effects on poverty and inequality. For the institutional literature to really demonstrate the theoretical arguments about complementarities and constellations, it would be valuable to more explicitly interrogate interactions between and combinations of institutions.

Methodological Challenges

The last challenge we discuss pertains to the majority of the literatures reviewed in this essay. Despite the progress that has been made in studying how politics and institutions shape poverty and inequality, causality deserves greater scrutiny. While the literature often traditionally focuses on stable differences between countries, the methodological literature on causality increasingly scrutinizes counterfactuals and on identifying exogenous effects. The power resources and institutional literatures have only begun to embrace the shift toward counterfactual causality. Indeed, a key challenge for these literatures is the difficulty of reconciling the theoretical interest in big, long-term processes (e.g., Pierson 2004 ) and macrocontextual differences (e.g., Brady et al. 2009 ) with the need to identify causal effects. Indeed, it may be reasonable to perceive a tradeoff between theoretical attention on big, long-term process and macrocomparison and the identification of causal effects.

There are several reasons it is so difficult to identify causal effects while focusing on macrolevel context and cross-national differences. First, power resources and institutions are typically very slow moving and have cumulative effects, and there are very few discontinuities that allow one to exploit a sharp break/increase/decline. Second, power resources and institutions are often bundled with and complementary to other power resources, institutions, and state policies. As a result, it is difficult to untangle complementary and coevolved power resources and institutions and to sort out what effects are due to which precise power resource or institutions. Third, while scholars need macro and historical variation to find variation in power resources and institutions, such macro and historical variation is vulnerable to omitted variable bias. It is always difficult to say one has controlled for all differences between countries or historical periods, and biases due to omitted variables are usually plausible. Fourth, the literature has a desire to study the more fundamental and basic causes that precede complex causal chains and underlie more proximate predictors of poverty. After all, this literature was originally motivated to challenge poverty research’s concentration on demographic risks and individual-level characteristics ( Brady 2009 ). Pushing against the individualism of poverty, the literature on politics and institutions has sought to understand contextual differences in poverty across time and place ( Brady et al. 2009 ). The problem emerges because identifying precise, concrete, and observable mechanisms often requires narrowing the distance between cause and effect, and such a narrowing tends to exclude fundamental and basic causes from one’s view.

Though these matters have not been fully resolved, scholars are beginning to provide more rigorous causal evidence while maintaining the theoretical foci of power resources and institutional theories. Compared to the past, more studies are analyzing change over time within contexts and controlling for stable differences between contexts. Some have utilized instrumental variables or compared across geographically proximate and similar countries to simulate natural experiments or more carefully compare like with like. The advancing presence of multi-level analyses in this literature has allowed for a consideration of macro-level contexts and micro-level risks in the same models. Even though multi-level approaches also have causality challenges, they have shifted attention away from questions exclusively focused on micro-level individual characteristics and demographic risks, and ensured that power resources and institutions are brought into studies of individual-level poverty ( Brady et al. 2009 ). Finally, scholars are increasingly using research designs that display both variation between places and variation within places over time (e.g., Brady et al. 2013 ; O’Brien and Robertson 2015 ).

In the end, the challenges of advancing causal approaches within this literature present an excellent opportunity for future research. The next wave of progress in studying how politics and institutions shape poverty and inequality will likely utilize innovative research designs and clever estimation strategies to provide new and even more rigorous evidence. In addition to encouraging greater scrutiny of causality, we conclude by proposing that all the dilemmas and challenges in this section present a promising agenda for future research. We argued at the outset that politics and institutions have never been as prominent in the social sciences of poverty as they are today. If we are correct, these challenges and dilemmas suggest an exciting emerging literature, and one that has the potential to make politics and institutions even more central to understanding poverty.

In this chapter, we define institutions as stable agreements and historical settlements that channel, constrain, and regulate the behavior of firms, workers, and other actors and hence contribute to inequalities in nation-states.

This division between power resources and institutions has been prominent in the literature for some time. In Korpi’s (1983) account, he presents power resources in contrast to the institutionalist corporatism theories that were prominent at the time (e.g., Schmitter 1977 ).

To define Left, Right, and other parties, several databases have been built on expert coding of party platforms, transnational connections between national parties, and the historical roots and coalitions underlying parties (see e.g., Brady et al. 2014 ). The Left includes parties linked to social democratic and socialist ideologies and organizations, labor parties and parties with strong connections to labor unions, and parties advocating more generous social policies and egalitarianism ( Sassoon 1996 ).

By “redistribution” we are referring to the broad set of activities (e.g., taxes) that extract economic resources from one group and allocate or transfer those economic resources to another group (or services that require economic resources). In rich democracies, redistribution is typically thought of as transferring money from rich to poor. We acknowledge many societies transfer resources from the poor to the rich, and most societies include redistribution in both directions. Nevertheless, we focus on redistribution from rich to poor.

For example, Thelen (2012 :142) points out that within the political economy of rich democracies literature there are institutional explanations that carry a “Williamsonian” view of institutions as mechanisms for rational and efficient coordination and cooperation, and a “Durkheimian” view as mechanisms for organic and emergent social cohesion.

As is clear, this essay eschews Meltzer and Richard’s (1981) well-known theory that governments expand when the median voter’s income is below the mean income, premised on the median voter’s preference for redistribution. We do so because the overwhelming majority of the evidence contradicts the theory while it continues to receive disproportionate attention. While basically ignored by Meltzer-Richard and much of the political economy literature, there was always convincing evidence against their model. Moreover, the basic trends of rich democracies in the past few decades directly contradict Meltzer-Richard. In most rich democracies, the mean income has grown relative to the median, and the size of government and the amount of redistribution has not grown. Research on politics/institutions and poverty/inequality would probably be better off if Meltzer-Richard (or any theory so impervious to empirical evidence) did not figure so prominently.

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Poverty, Politics and Profit

(2017) 60 min. DVD: $24.99 ($54.99 w/PPR). PBS Video. SDH captioned. ISBN: 978-1-5317-0224-3. Volume 32, Issue 6

November 11, 2017

Rating: 3 of 5

In America, the financial crisis of 2008 suddenly made many people's homes unaffordable. Jobs were lost, savings and income plummeted, and foreclosures mounted, while rents remained high due to increased competition for housing. This PBS-aired Frontline documentary looks at the government's response of low-income tax credits and Section 8 vouchers, the latter being sometimes hard to get, as well as a "use or lose" proposition with expiration dates. The newly poor had to contend with long waits, which resulted in near riots at some sites. And there was pushback when public-private partnerships worked to build low-income housing units in the outer suburbs of cities like Dallas, TX. The film notes that "zip code is destiny," and the issue of race inevitably surfaced when inner-city residents wanted wider access and suburban residents feared a loss in property values. On top of it all, a high stakes political game played out, marked by corruption, bribes, and kickbacks. The documentary explains how Section 8 and tax credits work, and why corruption and the lack of stringent auditing brought about the double whammy of inflated costs and less housing. Although the need is stressed for sound housing policy free from prejudice, the unfortunate fact is that many low-income residents face long periods of renting or even being homeless. As if to illustrate the dilemma, while one renter is being interviewed, her car is repossessed just off camera, depriving her family of even that meager shelter as a possibility. Offering clear explanations and insightful interviews, this compelling treatment of a pressing national problem is recommended. Aud: C, P. ( S. Rees )

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Poverty, Politics, and Profit as US Policy Issue

Problem background, stated policy goal, list and explanation of criteria for analysis, development of alternatives, identification of stakeholders, analyzing the alternatives with criteria, policy recommendations, discussion of public interest.

Poverty remains one of the most intractable problems to deal with, both in the international community and in the United States. Poverty presents both socio-economic and political threats since it can seriously destabilize the domestic and – indirectly – international political situation. Acute problems of social inequalities have the potential to induce a rise in tension levels in society and increase crime and mortality rates, which potentially leads to an increase in social costs and economic instability. Within an integrated approach, poverty is measured and interpreted as the absence or extremely limited access to resources that determine the quality of life of an individual. Nowadays, low incomes and stagnant wages are one of the main reasons millions of American tenants are struggling in the face of rising prices – especially renting prices.

In 2017, Public Broadcasting Service (PBS) and National Public Radio (NPC) released a journalistic investigation regarding the issue of the lack of affordable housing for low-income people. The documentary targeted specifically the Low-Income Housing Tax Credit policy, which is a federal program for investors that provides a reduction in their federal tax liability if they provide the funding for building affordable houses. Moreover, the film also elaborates on the multimillion fraud cases in the public housing development industry. The political issues of corruption and the decrease in the affordable housing industry are crucial to the investigation.

The problems of poverty and social inequality arose at the dawn of the American state, and, throughout history, the government has sought to solve this problem in various ways. In 1964, U.S. President Lyndon Johnson proclaimed the start of an “uncompromising war on poverty”. He presented initiatives for the improvement of education and health care systems and the labor market and provided low-income people with access to the country’s economic resources. Much later, further steps to improve the situation and ensure the economic security of the U.S. to prevent working Americans from falling below the poverty line during the global economic crisis were taken by Obama’s administration. However, the war on poverty turned out to be quite costly for the country.

The goal of the Low-Income Housing Tax Credit (LIHTC) program is to provide subsidies for the construction of houses that will be affordable for low- and moderate-income people. As the government gives tax credits to the local authorities, state housing agencies then distribute them between independent developers who would build affordable housing projects. The developers cooperate with investors to whom they sell these credits in order to obtain the needed funding. When a funded project is ready to be rented, the investors turn to the LIHTC for a dollar-for-dollar reduction in their taxes.

The policymakers state that the program was designed to address the disparities between the amount of affordable housing and the population’s demand for it. This goal is achieved with the help of developers who specifically construct affordable housing projects in areas with low median income.

The first criterion of efficiency is the timely achievement of strategic performance. In the absence of forecast indicators, or in the case of their regular adjustment, the proper measurement of policy’s efficiency is not possible. For example, Sullivan et al. (2017, May 9) explain that “from 1997 through 2014, the number of units produced has fallen to less than 59,000, but the program is costing taxpayers 66 percent more in tax credits” (28:09 – 28:24).

Thus, the next criterion would be the amount of time spent on the implementation of the policy, while also taking into account the vertical hierarchy of government’s levels and the horizontal specialization of its spheres. As the final criterion, it is advisable to single out the targeted spending of budgetary funds. It implies minimizing corruption and shadow practices of the illegal redistribution of state money in the form of rent to officials and businessmen. Such as Sullivan et al. (2017, May 9) state that “investigators discovered the two companies – Florida Housing and Carlisle development – stole $34 million from 14 projects” (34:21 – 34:36). Within these criteria, the analysis of the alternatives would remain objective and provide the needed data.

There are three methods to achieve the LIHTC goal of providing the U.S. population with affordable housing. The first one is to critically review the existing regulations of the program to pinpoint and improve the exact weak spots that make the policy subject to fraud using third parties. The next method would require making crucial changes in the policy after critically reviewing it. For example, in the the case of LIHTC, the government could avoid including state housing agencies and use the local authorities to directly distribute the tax credits to the independent developers. Lastly, the third method would call for changes in the competition system – the government could establish more strict rules for entering the developers’ competition. For example, it could make a full financial and legal audit prior to entering the competition mandatory.

The most important stakeholders of the policy are, of course, the tenants who suffer from the lack of affordable housing. Yu et al. (2021) state that “racial residential segregation and income inequality, of metropolitan areas in the United States, have contributed to health-compromising conditions; moreover, these two features, when combined, may be particularly lethal” (p. 18). In addition to that, the federal government of the U.S. is obviously one of the instances that have a high interest in the increase in the affordable housing industry. The investors also belong to the stakeholders of this policy, as for them, the LIHTC program proves to be quite valuable in terms of tax reduction. Finally, the independent developers, too, belong to the stakeholders of the program, which provides them with both the funding and the projects – they directly represent the special interest of the policy.

Based on the analysis of the alternatives, it can be concluded that the first method – the use of third parties – would be the safest and most prolific way to adjust the policy. Due to this method, a thorough analysis of both the policy and the industry of affordable housing would be conducted by independent, unbiased agencies. McClure (2017) supplies that “the program should exercise greater rigor in market analysis so that new units are added only in tight markets and deteriorated units are rehabilitated elsewhere” (p. 65). Moreover, the third parties would also implement the needed changes, which would allow lowering the potential of corruption.

In High Cost of Inequality, Reshma Kapadia explores the consequences that the income and wealth disparity brought to the U.S. economy. According to the statistics Kapadia (2020) provides, “the top 1% of earners now account for a fifth of total income in the U.S., while the bottom half of earners account for just 13% of total income” (p. 23). The impact such a gap brings is immense: the market mostly ignores the problem with wealth distribution, further widening the gorge. Moreover, the average and low-income families experience severe difficulties surviving during a crisis such as a coronavirus pandemic. Thus, the policy revolves closely around the public interest and wellbeing. Among the experts for the film who has taken an interest in the issue of affordable housing frauds, are Michael Sherwin – a federal prosecutor from Southern Florida – and the Republican Senator from Iowa Charles Grassley. Both had investigated the program for its legal weaknesses.

Kapadia, R. (2020). The High Cost of Inequality. Barron’s , 21–26.

McClure, K. (2018). What should be the future of the low-income housing tax credit program? Housing Policy Debate , 29 (1), 65–81. Web.

Sullivan, L., Young, R., Schwarz, E., & Kramer, F. (2017). Poverty, Politics and Profit . PBS . Public Broadcasting Service. Web.

Yu, Q., Salvador, C. E., Melani, I., Berg, M. K., Neblett, E. W., & Kitayama, S. (2021). Racial residential segregation and economic Disparity Jointly exacerbate COVID‐19 fatality in large American cities. Annals of the New York Academy of Sciences , 1494 (1), 18–30. Web.

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Why Poverty Persists in America

A Pulitzer Prize-winning sociologist offers a new explanation for an intractable problem.

A mother and son living in a Walmart parking lot in North Dakota in 2012. Credit... Eugene Richards

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By Matthew Desmond

• Published March 9, 2023 Updated April 3, 2023

In the past 50 years, scientists have mapped the entire human genome and eradicated smallpox. Here in the United States, infant-mortality rates and deaths from heart disease have fallen by roughly 70 percent, and the average American has gained almost a decade of life. Climate change was recognized as an existential threat. The internet was invented.

On the problem of poverty, though, there has been no real improvement — just a long stasis. As estimated by the federal government’s poverty line, 12.6 percent of the U.S. population was poor in 1970; two decades later, it was 13.5 percent; in 2010, it was 15.1 percent; and in 2019, it was 10.5 percent. To graph the share of Americans living in poverty over the past half-century amounts to drawing a line that resembles gently rolling hills. The line curves slightly up, then slightly down, then back up again over the years, staying steady through Democratic and Republican administrations, rising in recessions and falling in boom years.

What accounts for this lack of progress? It cannot be chalked up to how the poor are counted: Different measures spit out the same embarrassing result. When the government began reporting the Supplemental Poverty Measure in 2011, designed to overcome many of the flaws of the Official Poverty Measure, including not accounting for regional differences in costs of living and government benefits, the United States officially gained three million more poor people. Possible reductions in poverty from counting aid like food stamps and tax benefits were more than offset by recognizing how low-income people were burdened by rising housing and health care costs.

The American poor have access to cheap, mass-produced goods, as every American does. But that doesn’t mean they can access what matters most.

Any fair assessment of poverty must confront the breathtaking march of material progress. But the fact that standards of living have risen across the board doesn’t mean that poverty itself has fallen. Forty years ago, only the rich could afford cellphones. But cellphones have become more affordable over the past few decades, and now most Americans have one, including many poor people. This has led observers like Ron Haskins and Isabel Sawhill, senior fellows at the Brookings Institution, to assert that “access to certain consumer goods,” like TVs, microwave ovens and cellphones, shows that “the poor are not quite so poor after all.”

No, it doesn’t. You can’t eat a cellphone. A cellphone doesn’t grant you stable housing, affordable medical and dental care or adequate child care. In fact, as things like cellphones have become cheaper, the cost of the most necessary of life’s necessities, like health care and rent, has increased. From 2000 to 2022 in the average American city, the cost of fuel and utilities increased by 115 percent. The American poor, living as they do in the center of global capitalism, have access to cheap, mass-produced goods, as every American does. But that doesn’t mean they can access what matters most. As Michael Harrington put it 60 years ago: “It is much easier in the United States to be decently dressed than it is to be decently housed, fed or doctored.”

Why, then, when it comes to poverty reduction, have we had 50 years of nothing? When I first started looking into this depressing state of affairs, I assumed America’s efforts to reduce poverty had stalled because we stopped trying to solve the problem. I bought into the idea, popular among progressives, that the election of President Ronald Reagan (as well as that of Prime Minister Margaret Thatcher in the United Kingdom) marked the ascendancy of market fundamentalism, or “neoliberalism,” a time when governments cut aid to the poor, lowered taxes and slashed regulations. If American poverty persisted, I thought, it was because we had reduced our spending on the poor. But I was wrong.

Reagan expanded corporate power, deeply cut taxes on the rich and rolled back spending on some antipoverty initiatives, especially in housing. But he was unable to make large-scale, long-term cuts to many of the programs that make up the American welfare state. Throughout Reagan’s eight years as president, antipoverty spending grew, and it continued to grow after he left office. Spending on the nation’s 13 largest means-tested programs — aid reserved for Americans who fall below a certain income level — went from $1,015 a person the year Reagan was elected president to $3,419 a person one year into Donald Trump’s administration, a 237 percent increase.

Most of this increase was due to health care spending, and Medicaid in particular. But even if we exclude Medicaid from the calculation, we find that federal investments in means-tested programs increased by 130 percent from 1980 to 2018, from $630 to $1,448 per person.

“Neoliberalism” is now part of the left’s lexicon, but I looked in vain to find it in the plain print of federal budgets, at least as far as aid to the poor was concerned. There is no evidence that the United States has become stingier over time. The opposite is true.

This makes the country’s stalled progress on poverty even more baffling. Decade after decade, the poverty rate has remained flat even as federal relief has surged.

If we have more than doubled government spending on poverty and achieved so little, one reason is that the American welfare state is a leaky bucket. Take welfare, for example: When it was administered through the Aid to Families With Dependent Children program, almost all of its funds were used to provide single-parent families with cash assistance. But when President Bill Clinton reformed welfare in 1996, replacing the old model with Temporary Assistance for Needy Families (TANF), he transformed the program into a block grant that gives states considerable leeway in deciding how to distribute the money. As a result, states have come up with rather creative ways to spend TANF dollars. Arizona has used welfare money to pay for abstinence-only sex education. Pennsylvania diverted TANF funds to anti-abortion crisis-pregnancy centers. Maine used the money to support a Christian summer camp. Nationwide, for every dollar budgeted for TANF in 2020, poor families directly received just 22 cents.

We’ve approached the poverty question by pointing to poor people themselves, when we should have been focusing on exploitation.

A fair amount of government aid earmarked for the poor never reaches them. But this does not fully solve the puzzle of why poverty has been so stubbornly persistent, because many of the country’s largest social-welfare programs distribute funds directly to people. Roughly 85 percent of the Supplemental Nutrition Assistance Program budget is dedicated to funding food stamps themselves, and almost 93 percent of Medicaid dollars flow directly to beneficiaries.

There are, it would seem, deeper structural forces at play, ones that have to do with the way the American poor are routinely taken advantage of. The primary reason for our stalled progress on poverty reduction has to do with the fact that we have not confronted the unrelenting exploitation of the poor in the labor, housing and financial markets.

As a theory of poverty, “exploitation” elicits a muddled response, causing us to think of course and but, no in the same instant. The word carries a moral charge, but social scientists have a fairly coolheaded way to measure exploitation: When we are underpaid relative to the value of what we produce, we experience labor exploitation; when we are overcharged relative to the value of something we purchase, we experience consumer exploitation. For example, if a family paid $1,000 a month to rent an apartment with a market value of $20,000, that family would experience a higher level of renter exploitation than a family who paid the same amount for an apartment with a market valuation of $100,000. When we don’t own property or can’t access credit, we become dependent on people who do and can, which in turn invites exploitation, because a bad deal for you is a good deal for me.

Our vulnerability to exploitation grows as our liberty shrinks. Because labor laws often fail to protect undocumented workers in practice, more than a third are paid below minimum wage, and nearly 85 percent are not paid overtime. Many of us who are U.S. citizens, or who crossed borders through official checkpoints, would not work for these wages. We don’t have to. If they migrate here as adults, those undocumented workers choose the terms of their arrangement. But just because desperate people accept and even seek out exploitative conditions doesn’t make those conditions any less exploitative. Sometimes exploitation is simply the best bad option.

Consider how many employers now get one over on American workers. The United States offers some of the lowest wages in the industrialized world. A larger share of workers in the United States make “low pay” — earning less than two-thirds of median wages — than in any other country belonging to the Organization for Economic Cooperation and Development. According to the group, nearly 23 percent of American workers labor in low-paying jobs, compared with roughly 17 percent in Britain, 11 percent in Japan and 5 percent in Italy. Poverty wages have swollen the ranks of the American working poor, most of whom are 35 or older.

One popular theory for the loss of good jobs is deindustrialization, which caused the shuttering of factories and the hollowing out of communities that had sprung up around them. Such a passive word, “deindustrialization” — leaving the impression that it just happened somehow, as if the country got deindustrialization the way a forest gets infested by bark beetles. But economic forces framed as inexorable, like deindustrialization and the acceleration of global trade, are often helped along by policy decisions like the 1994 North American Free Trade Agreement, which made it easier for companies to move their factories to Mexico and contributed to the loss of hundreds of thousands of American jobs. The world has changed, but it has changed for other economies as well. Yet Belgium and Canada and many other countries haven’t experienced the kind of wage stagnation and surge in income inequality that the United States has.

Those countries managed to keep their unions. We didn’t. Throughout the 1950s and 1960s, nearly a third of all U.S. workers carried union cards. These were the days of the United Automobile Workers, led by Walter Reuther, once savagely beaten by Ford’s brass-knuckle boys, and of the mighty American Federation of Labor and Congress of Industrial Organizations that together represented around 15 million workers, more than the population of California at the time.

In their heyday, unions put up a fight. In 1970 alone, 2.4 million union members participated in work stoppages, wildcat strikes and tense standoffs with company heads. The labor movement fought for better pay and safer working conditions and supported antipoverty policies. Their efforts paid off for both unionized and nonunionized workers, as companies like Eastman Kodak were compelled to provide generous compensation and benefits to their workers to prevent them from organizing. By one estimate, the wages of nonunionized men without a college degree would be 8 percent higher today if union strength remained what it was in the late 1970s, a time when worker pay climbed, chief-executive compensation was reined in and the country experienced the most economically equitable period in modern history.

It is important to note that Old Labor was often a white man’s refuge. In the 1930s, many unions outwardly discriminated against Black workers or segregated them into Jim Crow local chapters. In the 1960s, unions like the Brotherhood of Railway and Steamship Clerks and the United Brotherhood of Carpenters and Joiners of America enforced segregation within their ranks. Unions harmed themselves through their self-defeating racism and were further weakened by a changing economy. But organized labor was also attacked by political adversaries. As unions flagged, business interests sensed an opportunity. Corporate lobbyists made deep inroads in both political parties, beginning a public-relations campaign that pressured policymakers to roll back worker protections.

A national litmus test arrived in 1981, when 13,000 unionized air traffic controllers left their posts after contract negotiations with the Federal Aviation Administration broke down. When the workers refused to return, Reagan fired all of them. The public’s response was muted, and corporate America learned that it could crush unions with minimal blowback. And so it went, in one industry after another.

Today almost all private-sector employees (94 percent) are without a union, though roughly half of nonunion workers say they would organize if given the chance. They rarely are. Employers have at their disposal an arsenal of tactics designed to prevent collective bargaining, from hiring union-busting firms to telling employees that they could lose their jobs if they vote yes. Those strategies are legal, but companies also make illegal moves to block unions, like disciplining workers for trying to organize or threatening to close facilities. In 2016 and 2017, the National Labor Relations Board charged 42 percent of employers with violating federal law during union campaigns. In nearly a third of cases, this involved illegally firing workers for organizing.

Corporate lobbyists told us that organized labor was a drag on the economy — that once the companies had cleared out all these fusty, lumbering unions, the economy would rev up, raising everyone’s fortunes. But that didn’t come to pass. The negative effects of unions have been wildly overstated, and there is now evidence that unions play a role in increasing company productivity, for example by reducing turnover. The U.S. Bureau of Labor Statistics measures productivity as how efficiently companies turn inputs (like materials and labor) into outputs (like goods and services). Historically, productivity, wages and profits rise and fall in lock step. But the American economy is less productive today than it was in the post-World War II period, when unions were at peak strength. The economies of other rich countries have slowed as well, including those with more highly unionized work forces, but it is clear that diluting labor power in America did not unleash economic growth or deliver prosperity to more people. “We were promised economic dynamism in exchange for inequality,” Eric Posner and Glen Weyl write in their book “Radical Markets.” “We got the inequality, but dynamism is actually declining.”

As workers lost power, their jobs got worse. For several decades after World War II, ordinary workers’ inflation-adjusted wages (known as “real wages”) increased by 2 percent each year. But since 1979, real wages have grown by only 0.3 percent a year. Astonishingly, workers with a high school diploma made 2.7 percent less in 2017 than they would have in 1979, adjusting for inflation. Workers without a diploma made nearly 10 percent less.

Lousy, underpaid work is not an indispensable, if regrettable, byproduct of capitalism, as some business defenders claim today. (This notion would have scandalized capitalism’s earliest defenders. John Stuart Mill, arch advocate of free people and free markets, once said that if widespread scarcity was a hallmark of capitalism, he would become a communist.) But capitalism is inherently about owners trying to give as little, and workers trying to get as much, as possible. With unions largely out of the picture, corporations have chipped away at the conventional midcentury work arrangement, which involved steady employment, opportunities for advancement and raises and decent pay with some benefits.

As the sociologist Gerald Davis has put it: Our grandparents had careers. Our parents had jobs. We complete tasks. Or at least that has been the story of the American working class and working poor.

Poor Americans aren’t just exploited in the labor market. They face consumer exploitation in the housing and financial markets as well.

There is a long history of slum exploitation in America. Money made slums because slums made money. Rent has more than doubled over the past two decades, rising much faster than renters’ incomes. Median rent rose from $483 in 2000 to $1,216 in 2021. Why have rents shot up so fast? Experts tend to offer the same rote answers to this question. There’s not enough housing supply, they say, and too much demand. Landlords must charge more just to earn a decent rate of return. Must they? How do we know?

We need more housing; no one can deny that. But rents have jumped even in cities with plenty of apartments to go around. At the end of 2021, almost 19 percent of rental units in Birmingham, Ala., sat vacant, as did 12 percent of those in Syracuse, N.Y. Yet rent in those areas increased by roughly 14 percent and 8 percent, respectively, over the previous two years. National data also show that rental revenues have far outpaced property owners’ expenses in recent years, especially for multifamily properties in poor neighborhoods. Rising rents are not simply a reflection of rising operating costs. There’s another dynamic at work, one that has to do with the fact that poor people — and particularly poor Black families — don’t have much choice when it comes to where they can live. Because of that, landlords can overcharge them, and they do.

A study I published with Nathan Wilmers found that after accounting for all costs, landlords operating in poor neighborhoods typically take in profits that are double those of landlords operating in affluent communities. If down-market landlords make more, it’s because their regular expenses (especially their mortgages and property-tax bills) are considerably lower than those in upscale neighborhoods. But in many cities with average or below-average housing costs — think Buffalo, not Boston — rents in the poorest neighborhoods are not drastically lower than rents in the middle-class sections of town. From 2015 to 2019, median monthly rent for a two-bedroom apartment in the Indianapolis metropolitan area was $991; it was $816 in neighborhoods with poverty rates above 40 percent, just around 17 percent less. Rents are lower in extremely poor neighborhoods, but not by as much as you would think.

Yet where else can poor families live? They are shut out of homeownership because banks are disinclined to issue small-dollar mortgages, and they are also shut out of public housing, which now has waiting lists that stretch on for years and even decades. Struggling families looking for a safe, affordable place to live in America usually have but one choice: to rent from private landlords and fork over at least half their income to rent and utilities. If millions of poor renters accept this state of affairs, it’s not because they can’t afford better alternatives; it’s because they often aren’t offered any.

You can read injunctions against usury in the Vedic texts of ancient India, in the sutras of Buddhism and in the Torah. Aristotle and Aquinas both rebuked it. Dante sent moneylenders to the seventh circle of hell. None of these efforts did much to stem the practice, but they do reveal that the unprincipled act of trapping the poor in a cycle of debt has existed at least as long as the written word. It might be the oldest form of exploitation after slavery. Many writers have depicted America’s poor as unseen, shadowed and forgotten people: as “other” or “invisible.” But markets have never failed to notice the poor, and this has been particularly true of the market for money itself.

The deregulation of the banking system in the 1980s heightened competition among banks. Many responded by raising fees and requiring customers to carry minimum balances. In 1977, over a third of banks offered accounts with no service charge. By the early 1990s, only 5 percent did. Big banks grew bigger as community banks shuttered, and in 2021, the largest banks in America charged customers almost $11 billion in overdraft fees. Previous research showed that just 9 percent of account holders paid 84 percent of these fees. Who were the unlucky 9 percent? Customers who carried an average balance of less than $350. The poor were made to pay for their poverty.

In 2021, the average fee for overdrawing your account was $33.58. Because banks often issue multiple charges a day, it’s not uncommon to overdraw your account by $20 and end up paying $200 for it. Banks could (and do) deny accounts to people who have a history of overextending their money, but those customers also provide a steady revenue stream for some of the most powerful financial institutions in the world.

Every year: almost $11 billion in overdraft fees, $1.6 billion in check-cashing fees and up to $8.2 billion in payday-loan fees.

According to the F.D.I.C., one in 19 U.S. households had no bank account in 2019, amounting to more than seven million families. Compared with white families, Black and Hispanic families were nearly five times as likely to lack a bank account. Where there is exclusion, there is exploitation. Unbanked Americans have created a market, and thousands of check-cashing outlets now serve that market. Check-cashing stores generally charge from 1 to 10 percent of the total, depending on the type of check. That means that a worker who is paid $10 an hour and takes a $1,000 check to a check-cashing outlet will pay $10 to $100 just to receive the money he has earned, effectively losing one to 10 hours of work. (For many, this is preferable to the less-predictable exploitation by traditional banks, with their automatic overdraft fees. It’s the devil you know.) In 2020, Americans spent $1.6 billion just to cash checks. If the poor had a costless way to access their own money, over a billion dollars would have remained in their pockets during the pandemic-induced recession.

Poverty can mean missed payments, which can ruin your credit. But just as troublesome as bad credit is having no credit score at all, which is the case for 26 million adults in the United States. Another 19 million possess a credit history too thin or outdated to be scored. Having no credit (or bad credit) can prevent you from securing an apartment, buying insurance and even landing a job, as employers are increasingly relying on credit checks during the hiring process. And when the inevitable happens — when you lose hours at work or when the car refuses to start — the payday-loan industry steps in.

For most of American history, regulators prohibited lending institutions from charging exorbitant interest on loans. Because of these limits, banks kept interest rates between 6 and 12 percent and didn’t do much business with the poor, who in a pinch took their valuables to the pawnbroker or the loan shark. But the deregulation of the banking sector in the 1980s ushered the money changers back into the temple by removing strict usury limits. Interest rates soon reached 300 percent, then 500 percent, then 700 percent. Suddenly, some people were very interested in starting businesses that lent to the poor. In recent years, 17 states have brought back strong usury limits, capping interest rates and effectively prohibiting payday lending. But the trade thrives in most places. The annual percentage rate for a two-week $300 loan can reach 460 percent in California, 516 percent in Wisconsin and 664 percent in Texas.

Roughly a third of all payday loans are now issued online, and almost half of borrowers who have taken out online loans have had lenders overdraw their bank accounts. The average borrower stays indebted for five months, paying $520 in fees to borrow $375. Keeping people indebted is, of course, the ideal outcome for the payday lender. It’s how they turn a $15 profit into a $150 one. Payday lenders do not charge high fees because lending to the poor is risky — even after multiple extensions, most borrowers pay up. Lenders extort because they can.

Every year: almost $11 billion in overdraft fees, $1.6 billion in check-cashing fees and up to $8.2 billion in payday-loan fees. That’s more than $55 million in fees collected predominantly from low-income Americans each day — not even counting the annual revenue collected by pawnshops and title loan services and rent-to-own schemes. When James Baldwin remarked in 1961 how “extremely expensive it is to be poor,” he couldn’t have imagined these receipts.

“Predatory inclusion” is what the historian Keeanga-Yamahtta Taylor calls it in her book “Race for Profit,” describing the longstanding American tradition of incorporating marginalized people into housing and financial schemes through bad deals when they are denied good ones. The exclusion of poor people from traditional banking and credit systems has forced them to find alternative ways to cash checks and secure loans, which has led to a normalization of their exploitation. This is all perfectly legal, after all, and subsidized by the nation’s richest commercial banks. The fringe banking sector would not exist without lines of credit extended by the conventional one. Wells Fargo and JPMorgan Chase bankroll payday lenders like Advance America and Cash America. Everybody gets a cut.

Poverty isn’t simply the condition of not having enough money. It’s the condition of not having enough choice and being taken advantage of because of that. When we ignore the role that exploitation plays in trapping people in poverty, we end up designing policy that is weak at best and ineffective at worst. For example, when legislation lifts incomes at the bottom without addressing the housing crisis, those gains are often realized instead by landlords, not wholly by the families the legislation was intended to help. A 2019 study conducted by the Federal Reserve Bank of Philadelphia found that when states raised minimum wages, families initially found it easier to pay rent. But landlords quickly responded to the wage bumps by increasing rents, which diluted the effect of the policy. This happened after the pandemic rescue packages, too: When wages began to rise in 2021 after worker shortages, rents rose as well, and soon people found themselves back where they started or worse.

Antipoverty programs work. Each year, millions of families are spared the indignities and hardships of severe deprivation because of these government investments. But our current antipoverty programs cannot abolish poverty by themselves. The Johnson administration started the War on Poverty and the Great Society in 1964. These initiatives constituted a bundle of domestic programs that included the Food Stamp Act, which made food aid permanent; the Economic Opportunity Act, which created Job Corps and Head Start; and the Social Security Amendments of 1965, which founded Medicare and Medicaid and expanded Social Security benefits. Nearly 200 pieces of legislation were signed into law in President Lyndon B. Johnson’s first five years in office, a breathtaking level of activity. And the result? Ten years after the first of these programs were rolled out in 1964, the share of Americans living in poverty was half what it was in 1960.

But the War on Poverty and the Great Society were started during a time when organized labor was strong, incomes were climbing, rents were modest and the fringe banking industry as we know it today didn’t exist. Today multiple forms of exploitation have turned antipoverty programs into something like dialysis, a treatment designed to make poverty less lethal, not to make it disappear.

This means we don’t just need deeper antipoverty investments. We need different ones, policies that refuse to partner with poverty, policies that threaten its very survival. We need to ensure that aid directed at poor people stays in their pockets, instead of being captured by companies whose low wages are subsidized by government benefits, or by landlords who raise the rents as their tenants’ wages rise, or by banks and payday-loan outlets who issue exorbitant fines and fees. Unless we confront the many forms of exploitation that poor families face, we risk increasing government spending only to experience another 50 years of sclerosis in the fight against poverty.

The best way to address labor exploitation is to empower workers. A renewed contract with American workers should make organizing easy. As things currently stand, unionizing a workplace is incredibly difficult. Under current labor law, workers who want to organize must do so one Amazon warehouse or one Starbucks location at a time. We have little chance of empowering the nation’s warehouse workers and baristas this way. This is why many new labor movements are trying to organize entire sectors. The Fight for $15 campaign, led by the Service Employees International Union, doesn’t focus on a single franchise (a specific McDonald’s store) or even a single company (McDonald’s) but brings together workers from several fast-food chains. It’s a new kind of labor power, and one that could be expanded: If enough workers in a specific economic sector — retail, hotel services, nursing — voted for the measure, the secretary of labor could establish a bargaining panel made up of representatives elected by the workers. The panel could negotiate with companies to secure the best terms for workers across the industry. This is a way to organize all Amazon warehouses and all Starbucks locations in a single go.

Sectoral bargaining, as it’s called, would affect tens of millions of Americans who have never benefited from a union of their own, just as it has improved the lives of workers in Europe and Latin America. The idea has been criticized by members of the business community, like the U.S. Chamber of Commerce, which has raised concerns about the inflexibility and even the constitutionality of sectoral bargaining, as well as by labor advocates, who fear that industrywide policies could nullify gains that existing unions have made or could be achieved only if workers make other sacrifices. Proponents of the idea counter that sectoral bargaining could even the playing field, not only between workers and bosses, but also between companies in the same sector that would no longer be locked into a race to the bottom, with an incentive to shortchange their work force to gain a competitive edge. Instead, the companies would be forced to compete over the quality of the goods and services they offer. Maybe we would finally reap the benefits of all that economic productivity we were promised.

We must also expand the housing options for low-income families. There isn’t a single right way to do this, but there is clearly a wrong way: the way we’re doing it now. One straightforward approach is to strengthen our commitment to the housing programs we already have. Public housing provides affordable homes to millions of Americans, but it’s drastically underfunded relative to the need. When the wealthy township of Cherry Hill, N.J., opened applications for 29 affordable apartments in 2021, 9,309 people applied. The sky-high demand should tell us something, though: that affordable housing is a life changer, and families are desperate for it.

We could also pave the way for more Americans to become homeowners, an initiative that could benefit poor, working-class and middle-class families alike — as well as scores of young people. Banks generally avoid issuing small-dollar mortgages, not because they’re riskier — these mortgages have the same delinquency rates as larger mortgages — but because they’re less profitable. Over the life of a mortgage, interest on $1 million brings in a lot more money than interest on $75,000. This is where the federal government could step in, providing extra financing to build on-ramps to first-time homeownership. In fact, it already does so in rural America through the 502 Direct Loan Program, which has moved more than two million families into their own homes. These loans, fully guaranteed and serviced by the Department of Agriculture, come with low interest rates and, for very poor families, cover the entire cost of the mortgage, nullifying the need for a down payment. Last year, the average 502 Direct Loan was for $222,300 but cost the government only $10,370 per loan, chump change for such a durable intervention. Expanding a program like this into urban communities would provide even more low- and moderate-income families with homes of their own.

We should also ensure fair access to capital. Banks should stop robbing the poor and near-poor of billions of dollars each year, immediately ending exorbitant overdraft fees. As the legal scholar Mehrsa Baradaran has pointed out, when someone overdraws an account, banks could simply freeze the transaction or could clear a check with insufficient funds, providing customers a kind of short-term loan with a low interest rate of, say, 1 percent a day.

States should rein in payday-lending institutions and insist that lenders make it clear to potential borrowers what a loan is ultimately likely to cost them. Just as fast-food restaurants must now publish calorie counts next to their burgers and shakes, payday-loan stores should publish the average overall cost of different loans. When Texas adopted disclosure rules, residents took out considerably fewer bad loans. If Texas can do this, why not California or Wisconsin? Yet to stop financial exploitation, we need to expand, not limit, low-income Americans’ access to credit. Some have suggested that the government get involved by having the U.S. Postal Service or the Federal Reserve issue small-dollar loans. Others have argued that we should revise government regulations to entice commercial banks to pitch in. Whatever our approach, solutions should offer low-income Americans more choice, a way to end their reliance on predatory lending institutions that can get away with robbery because they are the only option available.

In Tommy Orange’s novel, “There There,” a man trying to describe the problem of suicides on Native American reservations says: “Kids are jumping out the windows of burning buildings, falling to their deaths. And we think the problem is that they’re jumping.” The poverty debate has suffered from a similar kind of myopia. For the past half-century, we’ve approached the poverty question by pointing to poor people themselves — posing questions about their work ethic, say, or their welfare benefits — when we should have been focusing on the fire. The question that should serve as a looping incantation, the one we should ask every time we drive past a tent encampment, those tarped American slums smelling of asphalt and bodies, or every time we see someone asleep on the bus, slumped over in work clothes, is simply: Who benefits? Not: Why don’t you find a better job? Or: Why don’t you move? Or: Why don’t you stop taking out payday loans? But: Who is feeding off this?

Those who have amassed the most power and capital bear the most responsibility for America’s vast poverty: political elites who have utterly failed low-income Americans over the past half-century; corporate bosses who have spent and schemed to prioritize profits over families; lobbyists blocking the will of the American people with their self-serving interests; property owners who have exiled the poor from entire cities and fueled the affordable-housing crisis. Acknowledging this is both crucial and deliciously absolving; it directs our attention upward and distracts us from all the ways (many unintentional) that we — we the secure, the insured, the housed, the college-educated, the protected, the lucky — also contribute to the problem.

Corporations benefit from worker exploitation, sure, but so do consumers, who buy the cheap goods and services the working poor produce, and so do those of us directly or indirectly invested in the stock market. Landlords are not the only ones who benefit from housing exploitation; many homeowners do, too, their property values propped up by the collective effort to make housing scarce and expensive. The banking and payday-lending industries profit from the financial exploitation of the poor, but so do those of us with free checking accounts, as those accounts are subsidized by billions of dollars in overdraft fees.

Living our daily lives in ways that express solidarity with the poor could mean we pay more; anti-exploitative investing could dampen our stock portfolios. By acknowledging those costs, we acknowledge our complicity. Unwinding ourselves from our neighbors’ deprivation and refusing to live as enemies of the poor will require us to pay a price. It’s the price of our restored humanity and renewed country.

Matthew Desmond is a professor of sociology at Princeton University and a contributing writer for the magazine. His latest book, “Poverty, by America,” from which this article is adapted, is being published on March 21 by Crown.

An earlier version of this article referred incorrectly to the legal protections for undocumented workers. They are afforded rights under U.S. labor laws, though in practice those laws often fail to protect them.

An earlier version of this article implied an incorrect date for a statistic about overdraft fees. The research was conducted between 2005 and 2012, not in 2021.

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Analysis of The Crisis of Affordable Housing in The Film 'Poverty, Politics and Profit'

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Politics of Poverty Governance: an Introduction

Zhongyuan wang.

Fudan Institute for Advanced Study in Social Sciences, Shanghai, China

Poverty alleviation and politics are interrelated in complex ways. Poverty governance is essentially a multi-faceted process of using political power, exercising political authority, mobilizing political resources, running political institutions, and gaining political legitimacy. However, the approach of economics has long dominated current discussions in the literature on poverty reduction, resulting in a relative lack of political science research on poverty reduction interventions. This special issue has gathered together carefully selected articles to examine the politics of poverty governance in non-electoral settings, with a specific area focus on China. Despite focusing on China, this special issue adopts a comparative analytical lens and extends beyond China studies by striving to position China’s poverty governance in relation to general theories of political science. This introductory article seeks to expound the motives highlighted in the special issue, identify the literature gap that the special issue aims to fill, summarize the key findings and contributions, and finally suggest some promising new areas of future research.

Introduction

The reason why the editors of the Journal of Chinese Political Science have chosen to devote an entire issue to the “politics of poverty governance” is because poverty remains one of the most enduring and unresolved problems that the world faces today. It appears in various forms, posing ongoing harm to many citizens in low-income countries, and even to many in affluent countries. Narrowly defined, poverty typically refers to a state in which the income level of a household or an individual is so low that essential human needs and a minimum standard of living cannot be met. The term “poverty” often brings to mind images in which impoverished people experience a lack of food, proper housing, clean water and sanitation. Broadly defined, poverty represents “pronounced deprivation in well-being” ([ 24 ], p1), which reflects a revised and increasing understanding that poverty is not simply defined as a low level of income. Instead, it describes a “deprivation of capabilities” that limits people’s freedoms to function fully in society and achieve their potential [ 2 , 47 ]. Regardless of whether one adopts the “thin” perspective of poverty as lacking the essentials for survival, or the “thick” perspective of poverty as the accumulation of multiple disadvantages, modern states are expected to commit and conduct due diligence in the battle against poverty.

Eradicating poverty in its all forms and promoting shared prosperity cannot be achieved without state intervention. Nowadays, many countries around the world attach great importance to solving the problem of acute poverty, adopting a variety of measures to help the poorest and most vulnerable groups within their territories escape the poverty trap. Meanwhile, the international community has also prioritized the eradication of poverty as one of the most urgent global goals, incorporating it into the 2030 UN Agenda for Sustainable Development. Thus, poverty reduction has gained much prominence at both the national and international levels. For nearly 25 years, global extreme poverty was steadily declining, with the share of the extreme poor plunging from 36% in 1990 to less than 10% in 2018. 1 Yet one of the greatest challenges facing many countries is the pursuit of continuous progress in poverty eradication [ 20 , 21 ]. In particular, the ongoing COVID-19 pandemic and its associated economic crisis, which disproportionally impact the world’s poor, are reversing hard-won gains in poverty eradication efforts and exacerbating income inequality [ 10 , 30 , 54 ]. It is the first time in a quarter century that we witness more new poor than the number of people lifted out of poverty, with an estimated 150 million people worldwide being pushed into extreme poverty in recent years. 2 Without a concerted and committed country-level response, growing poverty will potentially precipitate various negative social and political effects. Therefore, there is watershed opportunity present today to reexamine poverty dynamics and investigate the political logic of poverty governance.

The articles in this special issue are generally interested in the political logic of poverty governance in non-electoral settings with an analytic focus on China. Although a majority of the selected works relate to China, this special issue is not a collection of articles purely devoted to China studies. Instead, these articles extend beyond China, with the aim of better positioning China’s poverty governance in relation to general theories of political science, and analyzing it through the comparative lens of cross-case studies. All the contributors were asked to reflect on the politics of poverty governance by respectively uncovering the political motivations, policy processes, and political implications of the Party-led poverty alleviation in China, thus contributing novel insights to institutional and political explanations for poverty alleviation. Ultimately, the overarching goal of the special issue is to bring analytical frameworks of political science into the field of anti-poverty research.

Related literature

Poverty research largely concentrates on four fundamental questions. What is poverty? Why are some people poor? What are the repercussions of poverty? What can be done to reduce poverty? No doubt there is a rich tradition of social science research on poverty which has provided a wide range of answers to these key questions from a myriad of perspectives. However, poverty studies across different academic disciplines have long been very uneven and highly fragmented [ 9 ]. The current literature on poverty is mainly dominated by an economics-centric approach because poverty is of inherent interest to economists who are concerned with how to empirically measure poverty and evaluate its severity. This entails examining the nature and causes of poverty, investigating economic performance, which in turn shapes poverty, comparing macroeconomic and microeconomic tools that can be used to combat poverty, and identifying causal influences of various pro-poor economic experiments [ 5 , 28 , 42 , 44 ]. Economic explanations have already enhanced the theoretical and empirical knowledge on the meaning, origins, and consequences of poverty. Nevertheless, as defined by a more expanded conception of poverty, poverty not only refers to monetary scarcity, but also more broadly refers to marginalization and exclusion in political domains as an outcome of power relations. Therefore, the prevailing economic approach has proven limited in explaining poverty alleviation efforts from non-monetary angles. In addition, poverty and poverty governance are two related but significantly different research themes. The former focuses attention on the problem of poverty itself, while the latter centers on the broader processes of addressing poverty. Analyses of the meaning, drivers and impacts of poverty need to be distinguished from research on the motivations, processes and results of poverty governance. The economics approach might be more effective and fruitful for answering the questions pertaining to poverty, but it is rather limited to offer deeper insights into the more complex set of motivations, dynamic processes and far-reaching effects of poverty governance. For instance, economic investment, skills training, infrastructure construction, and agricultural development certainly play a pivotal role in tackling poverty, but these things do not emerge organically. State policies and political interventions can often be decisive in shaping the origin, process and outcome of poverty alleviation programs. To cite another example, the central government can devise a comprehensive set of policies, transfers, programs, and assistance aimed at reducing poverty and boosting development, but the bureaucracies located at the lower ends of the political hierarchy often vary in their competence in implementing top-level designed policies. This makes it difficult to reduce poverty effectively and consistently, or results in the elite capture of public interests even under democratic conditions.

In this regard, there is a need to borrow from the perspectives of other social science disciplines, especially that of political science, to study poverty governance [ 1 , 56 ]. This is because poverty governance is a multi-faceted process of using political power, exercising political authority, mobilizing political resources, running political institutions, and gaining political legitimacy. Poverty alleviation and politics are interrelated in complex ways. For instance, there are deep-seated political and institutional sources of protracted anti-poverty challenges. Initiatives to end poverty could be politically motivated, and the formulation of poverty reduction programs, as well as the performance of pro-poor policy implementation are greatly influenced by multiple political factors. The evolution of poverty reduction strategies depends largely on the political conditions that structure the policy process. In turn, the results of poverty governance will also generate profound political implications. As an independent variable, politics plays a central role in combating poverty. Good governance requires the state to be capable, responsive and accountable, and in the context of poverty governance, it means making the government work for the poor. As a dependent variable, the effectiveness and flaws of various poverty reduction strategies could also transform politics and affect political behavior, government legitimacy and regime survival. Furthermore, poverty-reduction interventions also encompass various political subjects ranging from state building, institutional adaption, party politics, state-society relations, and central-local government relations, as well as citizen participation, political attitudes and civil society. As the political scientist Harold Lasswell famously highlighted, politics is all about “who gets what, when, how” [ 33 ]. Thus, poverty alleviation which can be considered as a form of distributive politics lies at the heart of politics since it involves the allocation of governmental goods and services. Examining the underlying forces, processes, and political outcomes of poverty alleviation efforts helps to shed light on many critical political science questions. To date, with some notable exceptions ([ 14 , 17 ], relatively few in-depth studies on poverty governance have been conducted from a political science perspective. “Compared to the other social sciences, political scientists simply do not study poverty as much” ([ 9 ], p.2). It is with this gap in mind that this special issue aims to contribute with articles covering different political perspectives of poverty governance.

Traditionally, studies of poverty reduction neglected politics. As political and institutional explanations grow in prominence, the burgeoning literature linking politics, institutions and poverty alleviation can be generally classified into three groups. The first group adopts the approach of new institutionalism to examine the powerful role played by political regimes, bureaucratic systems and sub-national institutions in shaping the processes and outcomes of anti-poverty welfare programs [ 8 ]. Related studies delve into institution-specific variables including electoral systems, political parties, courts, administrative agencies, subnational power structures and social movements, that could largely determine the scale and scope of pro-poor policies [ 3 , 11 , 27 ]. This scholarship has therefore built on the traditional institutional arguments and further explored the salient impacts of left-wing parties, labor unions, and democratic institutions on poverty reduction programs.

The second set of studies concerns distributive politics of poverty-reducing interventions under competitive electoral systems. The scholarship identifies that as part of distributive policy, poverty alleviation is often instrumentalized by political parties and politicians as an electoral tool for staying in office and consolidating power. These studies usually focus on political favoritism and clientelist linkage in allocating anti-poverty resources, and investigate whether and how incumbents strategically allocate poverty-relief goods disproportionately to targeted groups of constituents (e.g. voters versus nonvoters, core voters versus swing voters, voters in electorally critical districts, culturally, regionally and ethnically identifiable subgroups) as well as choosing the timing of the anti-poverty goods delivery (e.g. during the electoral cycle) [ 6 , 18 , 34 ]. Scholars also seek to examine the success of these allocation activities, evaluating the electoral and political returns to government anti-poverty efforts [ 13 , 32 , 39 ]. These studies find that the allocation of poverty-relief resources under electoral democracies is not to fairly catered to the needs of the poor, but has been largely shaped by political calculations such as electoral interests, partisan favoritism and political survival [ 31 ]. This growing body of literature also reveals that such a pattern of anti-poverty resource distribution prevails not only in advanced Western democracies, but also in competitive authoritarian regimes [ 7 , 37 , 50 ]. Autocrats often allocate welfare resources to a targeted population as a means to improve their electoral prospects and prolong their political survival. Overall, these studies again exemplify Lasswell’s definition of politics, that is, politics is concerned with “who gets what, when, how”.

The third set of research highlights the importance of institutional reforms and good governance in improving the outcomes of poverty alleviation. Since the 1990s, international donors and academic researchers have both devoted increasing attention to identifying various political constraints and obstacles for carrying out anti-poverty programs in aid-recipient countries. This area of research discerns how poverty reduction can be most effectively achieved by expanding citizen participation and enhancing government accountability, transparency and responsiveness in under-developed countries [ 15 , 41 , 45 ]. By the same token, the notion of “good governance” has gradually gained widespread currency, underscoring the need to reform political systems and cultivate civil society for the sake of poverty elimination. Consequently, this constitutes a necessary condition for donors to disburse aid to impoverished countries [ 12 , 19 , 29 ]. This scholarship strongly reflects the normative power underlying research that attempts to improve the performance of poverty alleviation in developing countries by transforming their political systems and restructuring governmental institutions through neoliberal pathways, although the actual effects are largely arguable [ 43 ].

Poverty is a topic of lively debate in nearly all regime types. However, as demonstrated above, current scholarship on “the politics of poverty alleviation” focuses on discussing the allocation of public resources under electoral systems. This entails examining either the electoral motives and distributive favoritism underpinning poverty alleviation efforts, or the international community’s anti-poverty assistance to under-developed countries and its political stabilization effects. In short, current political studies on poverty governance maintain a typical neoliberal ideological stance, while paying scant attention to poverty governance models and their political logic, especially in non-liberal countries with weak electoral accountability such as China. Little is known about the political motivations, mechanisms, and effects of poverty governance under authoritarian systems. 3 In addition, both developing and developed countries today are experiencing poverty in different forms and of varying degrees. Much of the research on poverty in developed countries tends to predominantly focus on urban poverty and relative poverty [ 16 ], while studies on poverty in developing countries are mostly restricted to rural poverty and absolute poverty [ 40 ]. These two strands of research hardly intersect and in fact rarely engage with each other.

State actions in the fight against poverty have never been as prominent as today. China is a country that has made major strides in poverty reduction. By prioritizing poverty alleviation in the political agenda of the ruling party, China has become the first developing country in the world to attain the poverty reduction target set by the United Nations ten years ahead of schedule. At the end of 2020, the Chinese government officially declared victory in eradicating extreme poverty, claiming 93.48 million rural people and 832 poverty-stricken counties have been lifted out of poverty. Politics must take center stage if poverty is to be substantially reduced. In this regard, China has made a strong case for using its state capacity and political will, which have had transformative effects on poverty governance. What has driven China’s latest effort in targeted poverty alleviation in a system without electoral accountability? How are poverty identification policies and poverty assistance models crafted by the Chinese government? How can they be implemented locally? Why do local governments vary in their competence to transform their bureaucracy into an effective poverty governance institution? Who are the main bodies involved in China’s anti-poverty scheme, and how do they work together? What brings the unintended political consequences of poverty-reducing interventions? What does poverty alleviation mean for China’s political development and regime consolidation? After addressing extreme poverty, what political risks will growing income inequality generate? The above is a plethora of questions that political scientists are concerned with and need to answer. China is a typical single-party country, where the political logic and process of poverty governance are distinctive from those of electoral democracies. Therefore, we invite papers that consider these topics to contribute to the special issue, which tries to understand the politics of poverty governance in China from a comparative perspective with updated empirical evidence. Of course, the articles included in the special issue cannot fully answer all the above questions, but they represent a fruitful early attempt and effort in this direction, establishing a foundation for a comprehensive political science of poverty governance.

Contributions of the Special Issue

Collectively, the articles in this special issue hope to contribute by filling the scholarly gaps identified in the preceding section, and advancing research on the politics of poverty governance in the following three main areas.

First, the authors introduce various analytical frameworks of political science to advance scholarship on poverty governance. They delve into intricate political elements of poverty alleviation by using the concepts, theories and methods of political research. These efforts not only generate novel institutional and political explanations for the performance and outcomes of poverty eradication, but also unpack the complex linkage between politics and poverty alleviation. The special issue also enriches the existing scholarship on poverty research by expanding its regime focus beyond electoral democracies, and at the same time addresses the uneven development and segregation of poverty research across disciplines. It also enables a better understanding of how statecraft and politics matter to poverty alleviation and inspires further thinking on possible political pathways toward better poverty governance.

Second, the articles investigate China’s poverty alleviation efforts with evidence-based disciplinary analysis and meticulous rigorous cross-case comparisons. The current interpretations of China’s recent anti-poverty achievements lean toward polarization. On the one hand, the Chinese authorities utilize these data as propaganda on government performance and use their achievements to extol the success of the China model. On the other hand, foreign governments and international media tend to ignore, downplay and even question those achievements, assuming that countries without liberal-electoral systems cannot genuinely end poverty. With some notable exceptions [ 4 , 58 ], there has long been a palpable lack of in-depth social science scholarly analysis of China’s anti-poverty efforts, and especially few contributions by political scientists. This special issue represents a conscious attempt to move away from Chinese official propaganda and Western neoliberalism toward examining the politics of poverty alleviation in a non-electoral context through theory-driven and evidence-based empirical studies. As a result, several new promising areas of research can be uncovered.

Third, the articles in this special issue are thematically and methodologically diverse. They encompass topics ranging from policy design for poverty identification, to central-local government relations in poverty relief, state-business relations in poverty alleviation and formal-informal institutions in poverty governance, to outcome and political effects of poverty alleviation in China and beyond, thus speaking to the broader literature [ 23 , 49 , 51 ]. These studies also vary in research methods from case studies, within-case comparative analysis, and cross-case comparative analysis to quantitative regression analysis based on survey data and cutting-edge causal identification based on propensity score matching. The authors emphasize the complexity of relations between politics and poverty, and provide novel insights into the comprehensive picture of poverty governance through engaging with a variety of political science theories and using multiple methods.

Organization and Introduction of the Articles

One salient theme in this issue touches on the critical institutional foundation of poverty alleviation programs, poverty identification. The performance of Targeted Poverty Alleviation (TPA) heavily relies on the ability of grassroots cadres and the methods they use to accurately identify beneficiaries on the ground. Given the inherent difficulties of measuring poverty, the key to determining the success of poverty reduction rests on whether the method of poverty identification is scientific, whether the identification process is standardized, and whether the identification result is accurate. As an essential first step (“the first button” in the narratives of the Chinese government) in poverty alleviation programs, poverty targeting will also affect the overall public evaluation and the long-run political effects of the TPA project. In Who Are Identified as Poor in Rural China’s Targeted Poverty Alleviation Strategy? Li et al. [ 36 ] investigate how poverty identification had been carried out in rural China and show that a multidimensional poverty measure was employed to identify and register poor households in the TPA project. More specifically, the authors argue that instead of focusing only on the monetary dimension (as per previous poverty-reducing programs), those who suffered deprivations in education, health, employment, and living conditions had greater odds of being registered as poor in the new anti-poverty scheme, which resonated more with the capability approach advocated by Amartya Sen. Such an identification strategy compounded with the various forms of targeted assistance helps enhance the effectiveness of the TPA program by targeting and meeting the multidimensional needs of the poor. Based on a recent nationally representative survey dataset, the empirical analysis further reveals that registered households received significantly more government assistance than the non-registered (especially those in well-developed regions). These gaps raise concerns that although the multidimensional approach greatly improved the overall targeting performance, sizable targeting errors (e.g. inclusion errors and exclusion errors) still remain, which necessitates expanded support and more nuanced targeting strategies for both the poor and near-poor households around the country in the post-TPA era [ 53 ]. The findings will have policy implications not only for China’s future poverty monitoring and alleviation strategies, but also for related issue areas encountered by other developing countries and even the developed world.

A second theme highlights the essentially dynamic nature of policy implementation of the TPA program in China with a broader comparative perspective. It covers several key topics such as central-local government relations in poverty relief, state-society relations in poverty alleviation, and formal-informal institutions in poverty governance. First, countries with poverty reduction goals always face a dilemma of choosing decentralized versus centralized approaches to combating poverty. Neo-liberal norms such as representation, inclusiveness, empowerment, and decentralization have long been espoused by international organizations and western media to promote the interests of the poor, given their theoretically assumed advantages in achieving better poverty relief performance. Can this be supported by empirical evidence in the real world? In Integrating Devolution with Centralization, Zuo [ 57 ] rejects the prevailing traditional wisdom and argues that some specific forms of political centralization are of crucial and equal importance to the effective delivery of locally managed welfare distribution, because without strong top-down accountability and close monitoring mechanisms, decentralized institutions will often lead to elite capture and the misconduct of local officials. By adopting a “most-different-similar-outcome” research design, Zuo provides a nuanced comparison of three successful poverty alleviation programs carried out in India (West Bengal), Mexico, and China. The cross-case analysis illustrates that despite large differences in poverty rate, the level of wealth, and the economic and political settings, the three cases share striking common institutional features in their poverty alleviation initiatives. These are the ruling party’s credible commitment to reduce poverty and a set of well-designed institutions that monitor the program implementation and shape the incentives of local politicians. Albeit with varying levels of mixes, organizational arrangements that are both centralized and decentralized contribute to the efficiency of successful welfare programs in all three cases. Therefore, the article makes the argument that to generate pro-poor outcomes, decentralization should be integrated with top-down interventions with specific institutional designs in anti-poverty schemes, signifying a break with traditional ways of explaining anti-poverty success. Given the very fact that many under-developed countries suffer serious institutional deficits in carrying out decentralization, Zuo’s findings throw up more in-depth theoretical reflections on the devolution of decision-making powers and highlight the empirical necessity of developing more pragmatic central-local models in tackling poverty.

Second, governments at various levels are usually posited as the dominant player in implementing poverty alleviation programs, but they never act alone. What roles have non-governmental actors played in state-led poverty relief campaigns? What adaptive strategies were employed by the state and social forces respectively to reconcile their conflicting interests? In addition to central-local relations, we need also to look at the evolving government-business relations (state-society relations) in China’s recent war against poverty. In To Get Rich is Glorious, Huang and Xin [ 26 ] discuss entrepreneurs’ philanthropic participation in the TPA program. Focusing on the Guangcai Program in Shandong, the article first classifies local entrepreneurs into four types depending on the differences in their aim of participation and level of activeness: altruist, speculator, involuntarist and temporizer. These different types of China’s new rich reveal varying patterns in the strategies utilized to interact with the government in the TPA program, which are largely determined by the entrepreneurs’ business size, family backgrounds, and political linkages, and of course generate diverse returns. Accordingly, the Chinese state is also found to be very proactive in adapting its tactics which comprise a combination of carrots and sticks. This allows it to deftly engage with entrepreneurs of different kinds and mobilize their resources to attain the radical goal of poverty eradication. Huang and Xin’s work uses a fresh angle to explain China’s success in eradicating poverty by considering the strategic mutual infiltration of state-society relations, uncovering dynamic patterns of non-governmental participation in state-initiated poverty-reducing projects in China’s context. More generally, targeted poverty alleviation provides an apt case to observe the evolving relationship between government and business under the new leadership, a topic that extends broadly in Chinese political research.

Third, an array of formal institutions has been established by international organizations and national bureaucracies to facilitate poverty reduction endeavors in various parts of the world. The existing literature on China’s TPA program has also focused on state-designed formal institutions and their operations at subnational levels. These include but are not confined to managed campaigns, sent-down work teams, first party secretaries, and paired support networks. However, the swift success of China’s poverty alleviation cannot be adequately explained by rational institutional design and formal institutional arrangements, given the equally important role that informal institutions in multiple forms also play. In Formation of Relational Poverty Governance and Its Impacts, Xu, Xu & Chen [ 55 ] examine how the Chinese government has employed personalized approaches and soft measures, which is identified by the authors as “relational poverty governance”, to implement anti-poverty policies. Unlike networks built on traditional clientelistic ties (which usually lead to distortions of policy implementation), relational governance establishes a new web of “quasi-relative relations” in China’s anti-poverty projects. It is characterized by artificial informal modes like “building parent-like relations by superior cadres”, “signing kinship contracts” with local cadres, and “using pan-kinship relations by village cadres”. As highlighted by the authors, apart from campaign-style bureaucratic mobilization, the Chinese authorities often use combined strategies of emotion, ethics and moral obligations as the “soft weapon of the strong” to incentivize cadres at various levels to realize the goal of poverty reduction. As a result, by embedding personalized linkages into anti-poverty assistance and creating relational interactions, the state can exercise its power more precisely throughout the TPA process and therefore strengthens its authority to penetrate into rural regions. Articulating such a conceptual framework of “relational poverty governance” broadens our understanding of China’s anti-poverty battle in particular, and poverty governance through informal institutions in general.

A third theme pertains to the outcome and political effects of poverty alleviation in China and beyond. Pertinent issues such as the underlying conditions that contribute to the performance of poverty governance, whether and how poverty relief leads to unintended consequences such as corruption, and what will happen if poverty and inequality prevail in modern society, are examined. First, China’s recent campaign against poverty was mainly designed and promoted by the ruling party and the central leadership in Beijing. Top-level design ( dingceng sheji ) has been considered as one of the defining features of the party regime under Xi Jinping [ 46 , 48 ]. Under the unitary system, the Chinese government at various levels and in different localities are held accountable with the common task disseminated from top down. However, it does not mean that all the local governments performed equally well and met the targets at the same pace. How can the variance in the performance of local bureaucracies in accomplishing state anti-poverty tasks be explained? In Power and Poverty in China , Li and Wu [ 35 ] try to explain why some Chinese counties perform better in poverty alleviation (measured by the earlier year of counties being delisted from the poverty list). As such, this work sheds light on the micro-political setting of subnational power structures, which departs from the existing literature that mainly considers the historical, economic or macro-political accounts, by taking the county party secretaries holding a concurrent higher-ranking post as a core explanatory variable. A discrete-time event history analysis drawing on a unique county-level dataset of 832 nationally designated poor counties in China provides empirical evidence for the correlation of leadership concurrency and prominent performance in accomplishing the central task. Related plausible causal mechanisms, as argued by the authors, include the increased bargaining power and privileged political connections engendered by the concurrent upper-level posts, which allow the counties to obtain more assistance and support that are critical to better poverty governance performance. “Power is essential to alleviate poverty”, the authors stress. The findings not only affirm the underlying political logic of regional variance in anti-poverty performance in China, but also chime with the comparative politics literature on how powerful actors create and maintain favoritism in state welfare distribution [ 7 , 25 ], a phenomenon prevailing in different regime types.

Second, poverty relief has often been a political instrument strategically wielded by incumbent administrations to enhance regime legitimacy and consolidate ruling power [ 58 ]. In practice, however, it also results in unintended consequences that could undermine the desirable political effects and even change the course of regime development. One of the undesirable consequences that accompany poverty aid is the increased propensity for corruption [ 17 ], especially under circumstances where transparency and accountability are limited. How, then, can the magnitude and extent of corruption in poverty governance programs be estimated? What are the causal mechanisms that link poverty and corruption? In Does Poverty Relief Breed Corruption, Wang [ 52 ] evaluates the impact of earlier waves of China’s poverty reduction programs on corruption at the subnational level. Leveraging on a unique dataset on 881 low-income counties, Wang’s research uses propensity score weighted regression to address the confounding bias and identifies statistically significant findings on more corruption cases and more convicted officials in counties registered in the national poverty list. In other words, China’s pre-TPA anti-poverty programs (which mainly target counties), while greatly benefitting the poverty-stricken population and local economy, have actually caused more corruption in poor counties. This causal relation remains robust when using different model specifications. It seems that, as documented in many developing countries, China was stuck in the hard-to-escape poverty-corruption trap under the old anti-poverty schemes. Moreover, corrupt misconduct became a major impediment to further poverty reduction efforts in these places. The new targeted poverty alleviation program, which was initiated and enforced after 2014 and primarily focuses on precise poverty identification [ 36 ] and close monitoring [ 57 ], emerged against the backdrop of such a poverty-corruption dilemma in the early 2010s. Wang’s work highlights the risk of unintended political consequences and the importance of anti-corruption institutional design in welfare redistribution process. The lessons of how China, with weak electoral accountability but strong top-down accountability, escaped the poverty-corruption trap can benefit scholarship.

Third, poverty is one of the most acute problems in nearly all countries around the world. Although the aim of this special issue is to examine governance relating to extreme poverty in China and beyond, we take a step further by looking into the political impact of entrenched relative poverty in a global context. Although dramatic progress has been made in global poverty reduction since 2000, the disparity in the distribution of wealth continues to increase. As the Chinese saying goes, “scarcity poses no worry, but uneven distribution does”( bu huangua er huanbujun ). Higher levels of economic inequality could result in various political challenges that assail contemporary society. In Income Inequality and Global Political Polarization, Gu and Wang [ 22 ] investigate whether and how the proliferation of income inequality and rising political polarization in many parts of the world are related to each other. A plausible posited positive linkage between the two variables does not seem counter-intuitive, but there is a relative lack of strong empirical evidence on this interrelation across the globe. Using repeated cross-national data from six waves of the World Values Survey from 1990 up to 2020, this study identifies the potential polarizing effect of income inequality. As the authors illustrated, such a positive and statistically significant association remains very robust to different model specifications. Although not necessarily causal, the results can be viewed as suggestive evidence to the adverse political repercussions of income inequality, which can be further supported by multiple causal mechanisms identified in related qualitative literature. This inquiry attests to the complexity and long-term nature of poverty governance, which should not solely focus on lifting people out of absolute poverty (as China’s targeted poverty alleviation does), but should instead address the more salient problems of relative poverty and distribution inequity. Delays in finding an effective solution to economic inequality are likely to fuel social conflicts and trigger political instability. The political repercussions of income inequality pose a common challenge to regimes of various types all over the world. This also helps us to understand why China has been committed to promoting the goal of “common prosperity” through a grander development plan after its official declaration that extreme poverty had been eradicated by the end of 2020.

Looking Forward

Poverty is essentially a political phenomenon. To enhance poverty governance requires active government interventions and the effective pre-settlement of various political problems. With the prevalence of income inequality, political polarization, armed conflicts, and fragile states, particularly at a time when millions of vulnerable people are considered newly impoverished as a result of the ongoing Covid-19 pandemic, the prominence of politics, institutions and governance in shaping the performance of poverty alleviation cannot be overstated. It is with this goal in mind that the special issue attempts to reformulate the research agenda of poverty governance, bringing the analytical concepts, perspectives and methods of political science into poverty alleviation research, and drawing a clearer connection between politics and poverty governance. The articles in this special issue deepen our understanding of poverty alleviation as a multi-faceted process of using political power, exercising political authority, mobilizing political resources, running political institutions, and gaining political legitimacy. They also collectively highlight the importance and urgency for durable political reforms to be promulgated, both nationally and locally. As political scientists, it is our duty to meaningfully engage in conversation, analysis and reflection on poverty governance. With this special issue, we feel privileged to contribute to this endeavor.

The authors push the intellectual boundaries of the poverty literature forward in at least three ways. First, the disciplinary lens of political science is introduced to enrich the poverty governance literature, placing the focal point on politics and institutions to better understand poverty governance. Second, moving beyond China’s propagandistic discourse and Western neoliberal discourse, the special issue promotes evidence-based empirical research on poverty alleviation in China, and advances political science research of poverty governance in non-electoral regimes with evidence from the Chinese experience. Third, it thematically and methodologically expands the political study of poverty alleviation. We hope that this special issue points readers toward where this scholarship is headed and inspire growing scholarly interest in related topics. Nevertheless, despite the contributions to the literature, this special issue admittedly also grapples with several dilemmas and challenges. Some challenges are theoretical and methodological, while others are related to the research scope, which also pave the way for many more exciting and promising new areas of research in the future.

There are many themes worthy of scholarly attention for future research, including but not limited to: cross-national quantitative research on the politics of poverty governance, comparative research on poverty governance and welfare policies in authoritarian regimes, comparison of international promotion of distinctive anti-poverty models, political attitudes and political agency of the poor, the impact of shock events on poverty governance (e.g. a pandemic, international conflicts), the political influence of poverty governance on specific subgroups (e.g. women, ethnic minorities, the working class), and political strategies to provide universal welfare in the post-poverty era. Methodologically, in addition to descriptive explanations and regression analysis, more causal approaches can be carried out to test theoretical hypotheses by utilizing innovative research designs and cutting-edge estimation strategies. To conclude, this special issue aspires to open up a dialogue with the myriad of issues presented here to stimulate future research on the political science of poverty governance.

1 It is based on the estimate by the World Bank, see https://data.worldbank.org/topic/poverty (accessed November 27, 2021).

2 See https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-extreme-poor-by-2021 (accessed November 27, 2021).

3 For some notable exceptions, see [ 4 , 38 , 58 ].

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