The Persistence of Poverty: Why the Economics of the Well-Off Can't Help the Poor [Hardcover]

Prof. Charles H. Karelis (Author)

Book Description

Publication Date: June 26, 2007

In this important book, one of our boldest and most original thinkers charges that conventional explanations of poverty are mistaken, and that the anti-poverty policies built upon them are doomed to fail. Using science, history, fables, philosophical analysis, and common observation, Charles Karelis engages us and takes us to a deeper grasp of the link between consumption and satisfaction—and from there to a new and persuasive explanation of what keeps poor people poor. Above all, he shows how this fresh perspective can reinspire the long-stalled campaign against poverty.

Editorial Reviews

From Publishers Weekly

Starred Review. This slim volume presents a radical analysis of poverty that turns conventional understandings of the subject upside-down. Karelis, a philosophy professor at The George Washington University and former president of Colgate, begins with a brief overview of the received wisdom on and conventional arguments regarding poverty, which he argues have been shaped in large part by middle- and upper-class sensibilities of thrift, discipline and long-term thinking; as a result, public policy initiatives have proven largely ineffective. With rigor and passion, Karelis offers a radical reconsideration of the problem, resting on twin premises: the importance of distinguishing between enjoyment and relief (e.g., eating ice cream vs. taking aspirin for a headache), and acknowledging that these motivators/rewards have a different effect on the poor than they do the well-off. Karelis argues that while the middle and upper classes seek an even distribution of "pleasers" to increase "positive satisfaction" over the long-run, those acting from a position of insufficiency work for "relievers... goods that reduce pain, unhappiness, or misery" in the moment. As such, what is rational or efficient behavior for the poor is not so for the well-off, and vice-versa. Though rich with insight on a subject with broad appeal, Karelis's treatise is not an easy read, particularly for those unfamiliar with economic theory; readers unafraid of technical forays into the Law of Diminishing Marginal Utility and the Epicurean Fallacy will find this important work quite rewarding.
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Review

“I am very enthusiastic about Charles Karelis''s book. It is powerful and important. After a number of years as a senior official dealing with social policy in Washington, this thoughtful philosopher argues impressively for a fundamental shift in perspective in economics. He then goes on to trace the consequences for dealing with poverty clearly. The work merits serious attention from economists, who may well resist at first, but who I suspect will in time be persuaded and excited.”—Gordon C. Winston, Orrin Sage Professor of Political Economy, Williams College 

(Gordon C. Winston )

“This book is astonishingly lively. It ranges from the facts of life among the American underclass to deep philosophical puzzles about what does and does not count as ''rational'' behavior, and will make economists, philosophers, and ordinary engaged citizens rethink just about everything they took for granted about the causes and cures of poverty.”—Alan Ryan, Professor of Politics, Oxford University 
 

(Alan Ryan )

"The Persistence of Poverty is an original and enlightening book with a startling thesis. Written with verve and inviting clarity, it will be of interest to philosophers, economists, and public policy planners alike. Its theoretical arguments and practical proposals are sure to be the subject of debate for years to come."—Anthony Kronman, Sterling Professor of Law, Yale Law School

(Anthony Kronman )

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Product Details

• Hardcover: 208 pages
• Publisher: Yale University Press; First Edition 1st Printing edition (June 26, 2007)
• Language: English
• ISBN-10: 0300120907
• ISBN-13: 978-0300120905
• Product Dimensions: 8.4 x 5.6 x 0.7 inches
• Shipping Weight: 12.8 ounces
• Average Customer Review: 3.2 out of 5 stars  See all reviews (4 customer reviews)
• Amazon Best Sellers Rank: #1,248,403 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

20 of 23 people found the following review helpful:

5.0 out of 5 stars Economics of poverty: Redefined, August 30, 2007

By 

Guido Deboeck "author "Flemish DNA & Ance... (Arlington, VA USA) - See all my reviews
(REAL NAME)   

This review is from: The Persistence of Poverty: Why the Economics of the Well-Off Can't Help the Poor (Hardcover)

In the late seventies serious attempts were made to distinguish "absolute" from "relative" poverty. In 1972 the annual speech of the President of the World Bank, then Mr Robert McNamarra, a speech delivered in Nairobi, was entirely focused on the fight on poverty.
Twenty five years later there are tons of WB reports written about world poverty as well as progress reports how poverty has been reduced in a at least a few countries. Nevertheless a vast number of people in the world keep living with $2 (or less) per day.
Charles Karelis' book does not concentrate on world poverty (although what he wrote could very well be applied), but on poverty in the US. He comes up with some revolutionary new ideas that economists as well as politicians should take seriously.
His main argument is that at levels below the meeting of basic needs, the marginal utility of extra dollars or resources is not decreasing, but increasing. Hence, the tendency of poor people not to work, not to stay in school, to over consume drugs or alcohol and/or get in trouble with the law.
This relatively short book, contains a wealth of interesting insights and examples that explain why traditional economic thinking about decreasing marginal utility of transfers to the poor is just wrong.
In the last chapter of his book Professor Karelis discusses economic justice and the challenge of balancing between market driven, free market forces and a society based on transfers to the needy. How much should the rich really be taxed to help the poor, without shrinking the incentives to work or the overall economic "pie"? Without explicitly talking about the US and Europe, Karelis clearly demonstrates the different choices made between the more free-market oriented US and the European zeal for more leisure, fixed working hours per week (e.g. France), higher taxes and more welfare programs for the poor in Europe. Karelis provides some specific policy advice at least for the US as to how to keep more poor people on the job, in school, away from crime or drugs. A lot of what he wrote would however also be applicable to Europe or the rest of the world. This book provides very refreshing thinking about poverty and the reasons why old economic thinking and policies have not worked in the past.

7 of 9 people found the following review helpful:

2.0 out of 5 stars One single idea, not well supported, March 22, 2009

By 

Vancouver Breton - See all my reviews

This review is from: The Persistence of Poverty: Why the Economics of the Well-Off Can't Help the Poor (Hardcover)

Karelis has exactly one idea to contribute in this book---the idea that perhaps marginal utility increases rather than decreases with income down at the low end of the income vs utility curve. This may be true, but could have been presented in 20 pages just as easily. Frustratingly little quantitative data is presented to support this argument, which instead relies mostly on introspection (aka anecdotes). While Karelis presents an interesting idea, he fails to support it adequately, then perversely creates a strawman argument that blames Epicurus of all people for misleading economists on the shape of the marginal utility function. This strawman is based on a complete misunderstanding of what Epicurus actually taught, and borders on slander. The basic idea of this book is important and should be followed up with actual research, but this book offers no more insight than you'd hear in a short comment at a conference.

0 of 1 people found the following review helpful:

3.0 out of 5 stars A Critique of 100-Year-Old Economics, August 23, 2011

By 

Robert Szarka (Norwich, CT USA) - See all my reviews
(VINE VOICE)    (REAL NAME)   

This review is from: The Persistence of Poverty: Why the Economics of the Well-Off Can't Help the Poor (Hardcover)

As intriguing as the premise is, I gave up reading this book halfway through and only skimmed the rest after discovering that the author is a philosophy professor who seems to base his conception of economic theory on a combination of freshman economics textbooks and the great economists of 100 years ago (e.g. Edgeworth and Marshall). While there is much to be appreciated in the work of the classical economists, economic theory has come a long way since then!

Thus, Karelis repeatedly, but erroneously, claims that the kind of "indifference curve" analysis taught in a standard intermediate microeconomics course rests on the assumption that the marginal utility of a good declines as more is consumed. Not only is such an assumption unnecessary, it is insufficient--as he would have discovered had he consulted even such a "classic" text as George Stigler's Theory of Price (c. 1960s).

His presentation of economic theory is also wrong, or at best muddled, in other respects. He seems to conflate issues of consumption smoothing that would apply under certainty with decision-making under uncertainty. He also seems to assume that diminishing marginal utility of income implies that those with less income will be more risk averse than those with more income. Leaving aside the issues of interpersonal utility comparisons, this is not even true for the same individual at different levels of income: whether risk aversion increases or decreases with wealth will depend on the particular utility function assumed. In general, it's not even clear to me whether Karelis understands that, though economists still use the word "utility", this term now refers to a somewhat different concept than when folks like Bentham used it.

It's a shame that his presentation of economic theory is such a mess, because he does seem to have interesting intuitions about poverty and some original ideas about policy. I would respectfully suggest that he team up with an actual economist and work out his ideas in a way that is informed by modern economics, rather than classical writers or conventional wisdom.