War on Poverty: Fail

Interesting chart from Dan Mitchell showing that poverty was already decreasing before the "War on Poverty" was declared by LBJ.

Death of Arcades

In my younger days I was much more interested in video games than I am today. Most people who are now in college or just recently graduated from college can remember an era where kids pumped arcade games full of coins, played games like Teenage Mutant Ninja Turtles, X-Men, and Street Fighter. Today, very few arcades exist. My question is why have arcades seemed to have vanished?

To this day I can remember in virtually every mall in Houston there was some form of an arcade. I can even remember Sam Houston Racetrack having a mini arcade. I would imagine it allowed parents to drop their kid off somewhere while parents did their shopping. The main arcade I remember was a place called Exhilarama which was located in Memorial City Mall. Exilarama was not only an arcade but had food, a playground, and go carts. I remember in the 1990s this place on the weekend would be packed full of kids. By 2000 the company was defunct and a new arcade came in called Tilt. Tilt was only around for a few years and then went out of business. Discovery Zone which was a place people usually had their birthdays also went out of business in 1996 due to filing for bankruptcy. The bankrupt stores where bought by Chuck E. Cheese which is still in business today. The only other large chain arcade I can think of is Dave and Buster’s which is targeted to adults. According to Play Meter a magazine that covers the arcade industry in 2010 there were only 2,700 arcades which decreased from 4,000 in 2006. As of 2004, Konami stopped making arcade games however Sega and Namco still do. In the 1980’s the amount of video game arcades peaked at 13,000. I remember arcades in places like Cici’s Pizza and Mr. Gatti’s.

So the question is what caused the decline of arcades? The main reason is that video games that consumers could play at home over time became more powerful and allowed people to play some of the exact same games as they were in the arcade. Street Fighter 2 was one of these games. Mortal Kombat was another game that many people played on arcade in the 1990s then became widely available on video consoles. Also the internet had a large effect on how people played games. Today, people can play games online with others from around the world. Back in the day you could only usually play against whoever showed up to the arcade. During the 1990’s we had the introduction of Playstation 1 and 2, NES, SNES, Sega Genesis, Sega Dreamcast there was little reason to go the arcades. Instead of spending an afternoon pushing quarters into a machine people could have unlimited play at home. Also computers also became much cheaper during the 1990s. There was always demand for playing games on the PC however, during the 1990s the graphics, computing power, and hard drive space for computers increased dramatically.

Technology over time improves and becomes cheaper for the masses. The arcade/video game industry is one example of this. Creative destruction is the process of letting bad ideas fail and only the best ideas stick around in the market place. I would argue that today more people have access to video games than ever before at a cheaper than any other time in history.

Poor Getting Richer

Poliliticans often say how the rich have been getting richer but the poor have remained poor. Although, this makes for great rhetoric if politicians cared to look at some data they might change their minds. According to the U.S. Census more than 40 million people are in “poverty”. However, the term poverty is somewhat misleading. Most of us when we think of the word poverty think of people who are homeless, struggling to get by, and maybe even malnourished. Robert Rector in a paper from the Heritage Foundation using data from 2005 shows that the poor nearly all have refrigerators, televisions, stoves and ovens, air conditioners, and DVD players. With summer time here there are always stories about how poor people don’t have air conditioning. In 1980, only 41.2% of poor households had air conditioning. By 2005, 78.3% of households had air conditioning. Also 46% of poor households live in their own homes. 75% of poor people own one car and 30% own two cars. Clearly, the poor are not living on the streets starving to death but have things that even middle class people in other countries wished they could have.

The poor people in America have it better than in most countries around the world. People at the bottom of the United States socioeconomic ladder are still higher than some of people in the top 10% of other countries.

Another myth is that the people at the bottom of the socioeconomic ladder never move up. This type of nonsense should be forbidden. Panel data (meaning tracking people over years and decades) from University of Michigan Panel Study of Income Dynamics shows that only 5% of families that were in the lowest 20% of income earners in 1979 were still there in 1991. However, 52.7% of the income earners in the top 1% in 1979 were gone by 1988. Real incomes have not also stagnated as some people claim. Real incomes for households have increased 29% despite household size getting smaller. Also if we look at wealth in generations more than 66% of Americans born a generation ago have greater income than their parents. So if we look at income groups and people over time and we see the poor have gotten richer not poorer as some like to say. Also the standard of living of everyone has increased through those greedy entrepreneurs. Twenty years ago hardly anyone had a cell phone or internet connection. Today these things are abundant with quality improving while prices keep dropping. People in every income class are benefitting from this. Truly the poor aren’t as poor as some people would make you believe.