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The locus effect: To end poverty, end violence
Another public shooting in the US, in Santa Monica
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nother public shooting in the US, in Santa Monica. The US is a declining nation colored by high unemployment and underemployment, a shaky economy and deteriorating public services. I know so because I live in California, the state where Santa Monica is located.
Despite the well-to-do external image of California as the home of Hollywood in the south and Silicon Valley in the north, it is a state that has been the worst run for the last two years in a row in terms of financial health, standards of living and government services. Compared with the other 49 states, North Dakota is by far the best-run state.
The income inequality in California is also astonishing. While such inequality affects both rich and poor states, the poor states are affected the most. Among the richest states, inequality is the highest in California, Massachusetts and Connecticut.
The US national median household income has declined considerably. The 2011 median income was US$50,502, which was 8 percent below that of pre-recession 2007. Below are recent statistics collated from various sources, including the US Bureau of Economic Analysis, state bureaus of statistics and various think tanks.
The top 10 poorest states in the US are Oklahoma, South Carolina, New Mexico, Louisiana, Tennessee, Alabama, Kentucky, Arkansas, West Virginia and Mississippi. The top 10 richest states are California, Delaware, Hawaii, Virginia, New Hampshire, Massachusetts, Connecticut, New Jersey, Alaska and Maryland.
California is an anomaly. It is the home of the second highest unemployment rate of 11.7 percent. The median income in California is $57,287 and the percentage of people in poverty is 16.6 percent, which is the 18th highest in the 50 states. Mississippi is the poorest state with a 22.6 percent poverty rate, compared with a national rate of 15.9 percent.
Compare this to Maryland with a median household income of $70,004, a low unemployment rate of 7 percent, and only 10.1 percent below the poverty line, which is the second lowest in the country.
It is obvious that California's wealth distribution is questionable. It is also obvious that it is a state with great inequality, where the rich are filthy rich and the poor are everywhere. This is due to the pockets of rich tech hot spots, like Silicon Valley.
Federal government spending has been cut to $85 billion, which has started to kick in after Democrats and Republicans failed to address the national deficit. Currently, nationwide 97.3 million people belong to the low-income category. And 57 percent of children live in impoverished households, some are even going to bed hungry.
Spending cuts will affect the amount and quality of public services available to them.
And there is also 'hidden' poverty. Uncounted individuals.
Those who are not qualified to receive public assistance, such as unemployment benefits and food stamps are hard to quantify and oftentimes aren't included in the statistics.
These individuals 'fell off' the statistics because of the following factors: They are still working but underpaid or not working enough hours, they are still working but have many dependents, they are no longer working but own a property which disqualifies them from public assistance, they have been out of the workforce too long thus used up unemployment benefits or are self-employed individuals who don't have 'unemployment benefit accounts' because they don't pay unemployment taxes.
I know for sure that there are individuals who can't apply for any assistance. I myself am included because in the past few years I have owned a property, have been self-employed thus didn't pay the so-called 'unemployment taxes', and still have some money left in the bank account.
For food stamps, you need to show a maximum cash reserve in a bank account of less than $2,000 despite being unemployed, underemployed or having no significant self-employed income.
One out of four individuals who need public assistance doesn't get it. And they are the 'phantom' poor.
The Jakarta Post published my article on Oct. 17, 2010 titled 'Developed Indonesia and Third World America'. It was an observation of how bad the situation has been in US and it might continue to drag on for years.
I had lost a house that I lived in due to the on-going foreclosure crisis that had reduced the value from $625,000 to $200,000. Due to negative equity (mortgage principal higher than property value), it was not feasible to prolong paying off the mortgage based upon peak value. In addition, my businesses hadn't recovered from the Great Recession, despite investing more than 12 hours of work per day.
Despite a loss of over $400,000 in equity and other non-refundable payments, I don't qualify for any public assistance.
Today, in addition to increased poverty, we can observe the increased level of violence in the US overall. Whether violence is the result of poverty needs further study, but we can safely assume that it is highly correlated. Last year 2012 was the worst year for mass shootings, of which seven incidents occurred. And the vicious circle of poverty breeding violence and vice versa must be broken.
Public assistance would be beneficial if the environment helped alleviate poverty by maintaining peace. Peace itself is an absence of violence. A new book The Locus Effect: Why the End of Poverty Requires the End of Violence by Gary A. Haugen and Victor Boutros (Oxford University Press), discusses how a culture of violence must be stopped so that regaining prosperity is possible.
The author writes for Forbes and is the CEO of a digital venture based in Silicon Valley.
