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Home Publications Blogs Beat the Press Robert Samuelson's Cellphone Standard of Living

Robert Samuelson's Cellphone Standard of Living

Monday, 31 May 2010 05:57

Robert Samuelson invokes the cellphone standard of living in his column today which complains about the Obama administration's adoption of a new measure of poverty as an alternative to the official standard. The administration will use both.

Samuelson argues that we have failed to pick up all the gains for the poor over the last four decades noting, among other things, that 48 percent of poor households own cellphones. Needless to say, the reduction in price of many products in recent decades has made them accessible in ways that would not have been possible in the recent past, but it is not clear how much this tells us about living standards.

In China, there are more than 600 million cell phones in use. This means that roughly the same percentage of people in China have cell phones as do poor people in the United States. China's per capita income on a purchasing power parity basis is less than one-sixth as high as per capita income in the United States. By Samuelson's cell phone standard of living the average person in China has the same standard of living as do poor people in the United States.

There are a couple of other points worth noting about Samuleson's diatribe. The Obama administration did not just invent the measure that Samuelson denounces as a "propaganda device." This is a measure developed by the National Academies of Science based on research by many of the country's leading poverty experts. It is fine to criticize the measure, but Samuelson should have at least noted its origins.

Finally, Samuelson reports on research from the American Enterprise Institute (AEI) that shows that spending on the poor from all sources may be as much as double their reported income. It is worth noting that much of this spending involves Medicaid expenditures, many of which may provide little benefit to the patient. For example, if a lab bills (or overbills) Medicaid for an expensive test that was not really needed, this would count as spending on the poor. For this reason, the AEI measure may not provide much insight into their well-being.

Comments (15)Add Comment
written by skeptonomist, May 31, 2010 9:01
The failure of the U.S. system since about 1970 with respect to the poor has been in private enterprise. Up till then there had been a fairly continuous growth of real income during the 20th century and had this course continued the poor would not exist as a major group in the U.S. Conservatives would claim that this is a result of socialism; but their remedy of cutting taxes and other favorable treatment of the rich has been tried for 30 years and has obviously not worked.
..., Low-rated comment [Show]
written by econosaurus, May 31, 2010 9:39
One would think that items like access to education, access to health care, housing, and affordability of nutritious food (not to mention infant mortality, disease rate, average lifespan) would indicate standard of living. But heck, maybe it's a cell phone, what do I know? I mean, you can die because you can't get access to adequate health care, but at least you can chat about it on the phone while you do.

I love comments that have the word "liberal" in them because it indicates the writer hasn't a clue as to what the real problems are, but just like to feel as though they are better than someone else. And, you know, that IS exactly the problem.
written by purple, May 31, 2010 10:08
The cell phone phenomena is pretty interesting. I know plenty of people in the Philippines without potable water who have cell phones, and I'm sure it's true throughout developing Asia and Latin America. Many of those areas may never get landlines, either.
cellphone sometimes the only phone you can get
written by Murray Stone, May 31, 2010 10:42
A lot of unemployed and underemployed people who are poor by anybody's definition need a phone number where users of casual labour can reach them. So in order to clamber out of poverty they need a phone. But the landline phone companies frequently require a huge deposit before issuing a number to a subscriber who has past credit problems. This leaves a lot of poor people with pay-as-you-go cellphones as the only way they can stay employable. Samuelson has no understanding of how poor people actually live. And a $50 microwave is the 21st century equivalent of the hot-plate poor folks formerly used to cook on as their only appliance.
written by Nylund, May 31, 2010 10:45
Can we all agree that one needs a phone to get by? Try sending out resumes without a phone number. Every company will give you a cell phone for free when you sign up (it may even have a camera and play MP3's). Monthly fees can be as low as $1.00 a day. Are we really arguing that the poor in US are perfectly fine (if not wasteful!) because they spend $1.00 a day on something that is basically a necessity like a phone in modern America? Maybe the poor will deign to wear shoes next!

Everyone out there, go quit your job, then smash your phone, land line and cell phone. Then go try to find a new job. And if you only had to get just one of the two phone options, you might, like many, decide that the one where the phone is free, small, and portable, and you get free long distance and costs only $1 a day, might be the wiser more practical option!
written by PeonInChief, May 31, 2010 11:13
Samuelson has been making arguments like this for more years than I care to count. I remember in the 1990s he argued that people couldn't afford to buy houses because they were spending all their money on electronic toys. He left out the little part about a 20% down payment being, at that time, about $50K.

The cost of all my electronic toys isn't 10% of my rent.
written by Rachel, May 31, 2010 11:13
Does Samuelson confuse high technology with high quality? A microwave is efficient, and scientifically interesting. But it's no substitute for an oven. And someone may "have" an old air-conditioning unit on the property, but not be able to maintain it or use it.

So cell phones, microwaves and air conditioning apparatus are poor indices of well-being.

Just Say NO! to a luxury if you live in poverty.
written by Tyrone, May 31, 2010 12:30
Why would I pay for a newspaper to read garbage. Add another reason the journalism is suffering to charge us their product.

She isn’t poor but a cellphone luxury is useful when football practice is over and the midwest winters puts her child in the dark.

My nephew, 12, has a cellphone because I have an extra line with 750 minute that I don’t use at no extra cost to me. This allows my sister to spend money on other family expenses and instant access to her child when not at home.
What a terrible last paragraph
written by mikedddd, May 31, 2010 1:21
To say that the poor don't benefit from medicaid because because many of the expenditures don't directly benefit the patient? Why have medicaid at all if that's the case. Of course medicaid is a direct benefit. One that should be expanded, I believe. To say that it is not a benefit because there may be unneeded expensive tests without actually referencing how often this occurs, relative to the total cost of medicaid, is an empty statement.
written by skeptonomist, May 31, 2010 2:41
Many other countries have health care equivalent to or better than that in the US for less than half the cost, because they are "socialized". Medicare and Medicaid are subject to some of the same inflated costs (though not all, since they are partially "socialized"), so it is reasonable to say that a significant part of the expenditure is not getting to the targets as well as it might in a more "socialized" system.
"a dirt floor"
written by nancycadet, May 31, 2010 7:50
I just returned from a vacation in Panama,where I overheard an ex-pat Teabagger pushing this exact same 'analysis' of US poverty criteria: "they're obese, how can they'afford that?/they have cellphones/they have fancy hubcaps on their BMWS..." To him, living in a hut "with a dirt floor" indicates poverty. The BMWs? It seems he conflated the "they" in poverty with the "they" drug-dealer stereotype, but "they" all look the same, don't they? Oh, and btw, "Obama is programmed to fail," says the Teabagger.
Mikeddd: A swing and a miss....
written by Henk, May 31, 2010 9:05
....the degree to which you missed the point of the last paragraph is astounding. It had nothing to do with the relative merits of Medicaid and everything to do with AEI's distorted calculations of spending on the poor. Of course Medicaid benefits the poor, but to add medicaid spending into the calculations and making it appear as if that spending is a direct cash benefit is dishonest.

written by Denise, June 01, 2010 1:37
The one and only time I ever watched Rush Limbaugh, about 10 years ago, he was talking about how there's no poverty in the US. His evidence? TVs per capita. Stupid then, stupid now. What qualifies as poverty has to be relative to the time and place in which one lives. People lived in cities in the US without indoor plumbing 100 years ago. Not only does everyone have to have it now, they also have to pay for it.
Cell phone reveiws
written by Jehnavi , June 15, 2010 5:40

Back in the late 50’s i was riding to school with a “Sturmy Archer” 3speed and dymano powering the front & rear lights. the top of the dynamo rubbed on the rear wheel side wall so as to rotate as it was powering the lights. Bulbs used to pop from time to time causing you to carry spares in the large leather saddlebag attached by straps to the leather saddle.
My current Carbon Selle Marco Saddle is a lot more comfortable, today was 7hrs on the run and occasionally drafting at 45kph with a variety of groups out to enjoy the sunny saturday after a week of snow down to 800m(heavy rain at lower altitudes)here in Tyrol!
Cell phone reviews

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.