Janet Yellen: ‘Growing up poor makes it harder to succeed as an adult’

If you grew up poor then you’ll have a hard time in adulthood, says Federal Reserve Chair Janet Yellen. It is time to start a new government program!

Yellen delivered a speech on Wednesday to the 10th Biennial Federal Reserve System Community Development Research Conference in Washington, D.C. During her speech, she alluded to research that found living an impecunious lifestyle when you’re young can make it harder to succeed when you’re an adult.

“Considerable evidence shows that growing up poor makes it harder to succeed as an adult, and new research by the Fed likewise shows the strong connection between the typical experiences of poverty in childhood and economic challenges later as an adult,” she said.

“Broadly speaking, children who grow up in insecure circumstances, those often experienced in poverty, seem disproportionately likely to experience financial insecurity as adults.”

What is the solution? Perhaps ZeroHedge had the best (in jest) solution:

“So maybe to assure an equal start, it’s time to give every baby a million dollars then, just to put them on the right course? Also, think of the hyperinflationary fringe benefits.”

Is this true, though? Is it correct to assert that the bottom quintile will remain impoverished throughout their entire lives? Nope. The data suggest that tracking the same households over long periods of time shows immense income mobility. This was the basis of a Free to Choose episode back in the day, which you can view in the video embedded below:

Indeed, this is just another economic fallacy, says legendary free market economist Thomas Sowell.

“Only by focusing on the income brackets, instead of the actual people moving between those brackets, have the intelligentsia been able to verbally create a “problem” for which a “solution” is necessary. They have created a powerful vision of “classes” with “disparities” and “inequities” in income, caused by “barriers” created by “society.” But the routine rise of millions of people out of the lowest quintile over time makes a mockery of the “barriers” assumed by many, if not most, of the intelligentsia.”

He also wrote this delightful commentary in 2000:

“An absolute majority of the people who were in the bottom 20 percent in 1975 have also been in the top 20 percent at some time since then. Most Americans don’t stay put in any income bracket. At different times, they are both “rich” and “poor” — as these terms are recklessly thrown around in the media. Most of those who are called “the rich” are just middle-class people whose taxes the politicians avoid cutting by giving them that name.”

It is incorrect and downright insulting to the human spirit to argue that the poor will always be poor or face economic challenges in their adult years. If Yellen cared about the poor then she should provide them with sound money and a free market economy without interventions.

Or perhaps if you are poor your entire life then you are just incredibly terrible with money. Another possibility is that the government education system and the welfare state have been failures for millions of children across North America that have led to unintended consequences.

As Sowell also noted in the aforementioned video:

“What the welfare system and other kinds of governmental programs are doing is paying people to fail. In so far as they fail, they receive the money; in so far as they succeed, even to a moderate extent, the money is taken away.”