June 21, 2021

June 21, 2021

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The War on Ending Poverty

by | May 26, 2021 |

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There are two basic methodologies that can be used to address poverty. One is to give material aid to those who are in poverty, and the other is to give those who are in poverty opportunities to get out of poverty. These two methodologies are not mutually exclusive – a society can give material aid to those in poverty while also helping them to find opportunities to get out of poverty – but when we look at how America’s War on Poverty was designed, and at how Democrats continue to address poverty, we see that providing opportunity is not even on the radar.

There are three basic kinds of programs Democrats support to help those in poverty. One is cash welfare, another is to pay for specific items (like rent), and the third is the minimum wage.

Some forms of cash welfare could help address poverty. Milton Friedman suggested a negative income tax as a replacement for both welfare and the minimum wage, to augment the wages of low-income workers. Such a program would reduce welfare payments by fifty cents for every dollar of income, such that there is always an incentive to earn more.

Unfortunately, the welfare programs created under the War on Poverty prevent those on welfare from working: if someone gets a job, their welfare is taken away. Additionally, welfare is only given to single-parent households, which has incentivized fathers to leave the home.

For African Americans, this effect has been particularly devastating – before the War on Poverty, less than 30% of African American children were raised in single-parent households, and now more than 70% are.

The number one predictor of success is the two-parent household. By separating the African American father from the home, welfare, as designed by the War on Poverty and as continued to this day, denies many Americans the single most important factor in determining success. It is absolutely galling that Democrats can sit back, claiming the moral high ground, as they protest ‘systemic racism,’ when the systems that have systematically held African Americans back, are systems Democrats created, and that Democrats continue to support.

The second form of Democrat poverty assistance is the direct payment of certain things, such as food stamps, subsidized (or free) housing, Medicaid, and the like. I was very poor when I was younger, and though I never turned to the government for help, I know many people who did. Since most of these kinds of programs are not immediately taken away as someone begins to earn a living, these kinds of programs can be helpful.

My problem with things like rent subsidies, food stamps, and the like, is that these programs treat those who use them like children. I go back to Milton Friedman’s negative income tax, which would simply give those below a certain level of income money, such that they could afford rent, food, healthcare, and other necessities.

I often hear Democrats complain that if we give poor people money, they may spend it on drugs or alcohol, rather than on food, rent, healthcare, and other necessities. When I was in the Marine Corps, if we were in a training area that was more than a certain distance from an enlisted club, the unit had to supply a beer mess, and we would drink canteen cups of beer – while deployed – in the evenings. When deployed in the Army (I served four years in both), we were prohibited from drinking when deployed. Marines were treated like adults, and alcohol-related incidents were much less common than in the Army. The moral of the story is that ‘if you treat a boy like a man, he will act like a man, whereas if you treat a man like a boy, he will act like a boy.’

Programs that treat people like children encourage people to act like children. If we simply gave poor people money, as per Milton Friedman’s negative income tax, the vast majority of people would act like adults, and would take care of their basic needs.

Minimum wages are the preferred Democrat method to help the working poor, but forcing employers to pay more than the economic value of work (which is exactly what the minimum wage does) also discourages employers from hiring low-skill workers.

We all know that in a free market, supply and demand work together to create a price. When the government mandates a price other than what supply and demand would create, it causes either a shortage (if the price is too low), or a surplus (if the price is too high). Minimum wages cause surpluses of labor, pricing people who could otherwise work, out of the workforce. Minimum wages also price whomever would be the last people employed in a free market, out of the workforce first, so the impact of a minimum wage will always be felt first and foremost by whomever is the most disadvantaged group.

We can contrast the impact of the minimum wage with Milton Friedman’s negative income tax, where employers never have to pay workers more than their economic worth (as determined by the free market), but where the government augments the wages of low-income earners to afford them whatever standard of living society demands. Government could even tax businesses to cover the cost of these cash payments – it would still separate the money from hiring decisions, and would not have the negative effect on employment that minimum wages are known to have.

The difference between Milton Friedman, and Lyndon B. Johnson, was that whereas Lyndon B. Johnson was trying to make poverty easier to live in, Milton Friedman was primarily concerned with eliminating poverty altogether. Milton Friedman understood that in a true free market, lifestyles improve across the board. Democrats like to compare earlier times in American history to today, and will point out that we have better lifestyles today than we had in, for example, 1900. Democrats will then say that we have better lifestyles because our big-government programs work better than did the free market.

What Democrats are forgetting is that progress is generally a one-way street. We are better off today than we were in 1900, not because the government is doing a better job now than it was then, but because 2021 comes 121 years after 1900, and progress being a one-way street; we are standing on the shoulders of that earlier time.

1900 looked a whole lot better than 1800, and in fact, the rate of growth in living and working conditions for low-skill workers grew at the fastest rate in human history during that period (where slavery had been eliminated). The rate of growth in living and working conditions, for low-skill workers, has only slowed, as government has grown.

The question we should be asking isn’t whether or not today is better than yesterday, but rather, how good might today look had the high rates of growth in living and working conditions never stalled? How might conditions for low-skill workers look, had the rate of growth in their living and working conditions from 1900-2021 been as fast as it was from 1800-1900?

You might notice that Democrat ‘pro-poverty’ programs grow, rather than reduce, poverty rates. These programs do the exact opposite of what their proponents claim they are ‘for’. This is because Democrats have a tendency to combine political questions with economic questions.

‘Should there be a minimum standard of living in the United States?’ is an example of a political question. I cannot answer this question using economics, as the question is based on morality rather than reason.

If we assume that the answer to the above question is ‘yes,’ we can move on to the economic question of ‘how can we best achieve that goal?’

Democrats like to combine both questions, and like to do so in the form of statements that beg not only the questions, but also the answers. Bernie Sanders, for example, does not ask whether or not there should be a minimum standard of living, but rather tells us that we ‘need’ to use his chosen solutions: we need a fifteen dollar minimum wage, we need to give more to disadvantaged groups, we need to provide all Americans with free healthcare, etc. Bernie Sanders has no time for questions such as how best to achieve better lives – he already believes he has the answers, even though he has never taken the time to ask any of the relevant questions.

One might also notice that whereas Republican answers to economic questions tend to be minimally intrusive, Democrat answers generally involve government takeovers. Republicans might note, for example, that the United States has far and away the best medical outcomes in the world. If you have cancer, you are far better off being treated in the United States than you are being treated anywhere else. The same is true of those who need heart surgery, or any other medical treatments. The cost in the United States is high, but so too is the quality. Republicans might ask questions such as ‘what is driving the costs of providing medical care?’ Democrats don’t have time for that – they simply suggest having the government take medical care over.

This one-size-fits-all approach of having the government take over anything that is not optimal is suggested in spite of the fact that there is absolutely nothing we can all agree that the government does well, much less that the government does optimally.

The War on Poverty was supposedly designed to eliminate poverty. If we look at poverty statistics, we can see that poverty rates in the United States were dropping rapidly right up until the War on Poverty became law, at which time poverty stopped dropping. We have spent tens of trillions of dollars on ‘poverty.’ In fact, Thomas Sowell showed how if we took all of the money we spend on programs ‘for the poor’ (including at the state and local levels), and simply gave that money to the poor, we would be able to move everyone in the lowest 20% of income-earning households, into the highest 20% of income-earning households. We spend, quite literally, enough money on programs ‘for the poor,’ that if we simply gave that money to the poor, they would be rich, and yet we still have the poor.

The War on Poverty has been an abject failure, and yet the Democratic Party continues to push for more of the same.

I believe most Democratic voters are morally good people who really do just want to help their fellow Americans. I really do believe that. But I do not believe the leadership of that party is as ignorant of economics as is the typical Democratic voter. Alexandria Ocasio-Cortez might be (in spite of the fact that her degree is in economics), but Nancy Pelosi is not stupid, and nor is Elizabeth Warren, Hillary Clinton, or Barack Obama. I don’t believe that the leadership of the Biden Administration is stupid (nor do I believe Joe Biden is a part of that leadership).

Some of these people have to know that their policies are failing the American people – growing rather than reducing poverty.

I’m going to suggest that the Democratic leadership understands that prosperous people tend to vote Republican, whereas impoverished people tend to vote Democrat. Republicans can only grow their base by making people better off, whereas Democrats can only grow their base by impoverishing more people.

The Democratic Party (not all Democratic voters) are trying to grow their base of power, and are doing so by making the American people worse off. Once you realize that, all of a sudden, everything else starts to make sense, such as the focus on moral arguments and the refusal to discuss cause-and-effect relationships. By combining political and economic questions into simple statements of morality, the Democratic Party is able to simplify all matters of policy into debates of ‘us’ against ‘them.’ With the help of a left-leaning media, the Democrats then use these moral platitudes to shout-down any opposition.

And at least at the leadership level, they are doing that on purpose.

The War on Poverty was not a war on poverty, but a war on ending it.

Wallace Garneau

Wallace Garneau is a two-service military veteran, with four years in the United States Marine Corps Reserve, and four years in the US Army. He has twenty-three years of experience in process improvement roles, having served as the E-Commerce Manager, IT Manager, and Director of Business Systems for a variety of medium to large manufacturing companies. Wallace holds a Bachelors of Science from the University of Phoenix, and an MBA in Lean Manufacturing from the University of Michigan. Wallace is currently finishing a Masters of Science in Lean Manufacturing, at Kettering University.

Wallace is a published poet and essayist, and recently finished his first book - The Way Forward: Lean Leadership and Systems Thinking for Large and Small Businesses.

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