Not news - nor a surprise: The Government Lost the War on Poverty

Recently the Supreme Court put an end to Joe Biden’s efforts to gift erstwhile college students almost a trillion dollars in “debt relief”.  That’s a lot of money… but in reality that’s a tiny fraction of the money the government has wasted on redistribution, AKA social programs over the last six decades.

Next year the United States will commemorate the 60th anniversary of the War on Poverty, initiated by President Lyndon B. Johnson in 1964. The War’s programs initially started on a modest scale but have expanded almost parabolically since. At the 50^th anniversary of the launch the government had spent more than $22 trillion on various welfare and redistribution programs and today spends $1 trillion a year on said programs… not including various “targeted” expenditures under Social Security or Medicare, which make the true total simply unknowable.  To put that in perspective, $1 trillion is greater than the GDP of 194 of the world’s 213 countries. 

Is this massive expenditure justified by the results of the War on Poverty? Initially one might suggest the results say yes. As of 2021, poverty in the United States hovered at approximately 11.6%, down from the approximately 18% rate in 1964 when the War on Poverty began. That’s a reduction of 6.6%, or almost one third. 

A closer look however reveals that that 6.6% reduction after an expenditure of $30 trillion seems underwhelming to say the least.  To see the full picture of the failed War on Poverty one need only look at the poverty rate over the 15 years prior to its beginning.  In 1949 the poverty rate in the United States stood at 34%, fully one third of the nation’s population.  Over the next 15 years, without significant government redistribution programs, indeed, without the War on Poverty, the poverty rate fell almost by half, falling from 34% to 18%, a reduction of a full 16 percentage points.  So, without government spending significant money poverty fell 16% in a period of 15 years, or 1.08% per year.  But with government spending more than $30 trillion over the next 55 years it fell by a total of just 6.4%, or .12% per year! That essentially means that without government intervention the poverty rate was falling 10 times faster than it did once government programs kicked in.       

And that 11.6% itself deserves a closer look.  In 2014, when the War on Poverty turned 50, the American poverty rate was still at 15%. That means that after spending $20 trillion over the previous half century the government had successfully reduced poverty by a mere 3%. When Barack Obama he entered the White House in 2008 the poverty rate stood at 12.5%.  It jumped up to 15% for four years before dropping back to 12.5% by the end of his presidency and where it was when Donald Trump took the White House. A mere three years later Trump’s economic renaissance had reduced poverty by 2%, bringing it to its lowest level in history, 10.5%, before the Covid scam derailed the prosperity engine. To put that in perspective, Donald Trump’s economy brought poverty down by 2% in 3 years, fully half as much as government spending did in the 53 years between 1964 and 2016.   

And of course the income numbers only tell part of the story.  Sadly, there is much more to it. 

An unintended consequence of the War on Poverty appears to have been a skyrocketing of single-parent households, which is a significant driver of poverty.  In 1964, around 4% of American children were born to unwed mothers. By 2021, this percentage increased a full ten times to 40%. Under the heading of Unintended Consequences one could observe that the welfare programs intended to save children from poverty, have, by making it economically and socially viable for single-parent households to exist, in fact stranded many children in poverty and worse, inflicting on them the coincident pathologies of poor education and crime, not coincidentally, both also being consequences of government failure.

From another perspective, let’s draw a comparison between the effects of government spending and the impact of private-sector investments. Let’s take just three companies, Apple, Amazon, and UPS who together had about $1 trillion in revenue in 2022, approximately the same amount the government spent on welfare that same year. These companies – and many others like them – revolutionized industries, drove many trillions of dollars of business for customers and vendors and affiliates; directly and indirectly employ millions of Americans who are breadwinners for their families, and at the same time generated trillions of dollars of wealth for investors.    

One can only wonder what might have happened if the more than $30 trillion the government wasted on its failed War on Poverty had instead been invested in startups similar to Apple and Amazon.  Not that we want the government taking our money and investing it – WE DON’T – but imagine the impact that money might have had had it somehow been targeted towards entrepreneurship and economic development. The 2% reduction in poverty during Trump’s first three years demonstrated with crystal clarity that market driven prosperity is a far more efficient vehicle for reducing poverty than government spending of any form. At a minimum, a market driven solution would likely have fostered a far more empowered, economically vibrant and dramatically more prosperous population than the generational dependency created by the government with its alphabet of aid programs. 

Benjamin Franklin understood this more clearly than virtually any politician in America today, having commented: “I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

Whether it’s student debt or the federal and state welfare perpetuation machines, America would be better off looking to the Founding Fathers for guidance than the grifters at either end of Pennsylvania Avenue…

The War on Poverty - $40 Trillion Funding Failure Rather than Facebook or FUBU or Ford

Last year the United States celebrated the 50th anniversary of the War on Poverty begun by LBJ in 1964. Over that time the country has spent approximately $40 trillion on welfare and redistribution programs of one sort or another – and that number doesn’t include expenditures for Social Security or Medicare. The program started out slow, but has steadily picked up steam so that today the United States spends over a trillion dollars on welfare programs every year. To put that $1 trillion in perspective, that is more than the GDP of every country on the planet except for the 15 largest. It’s bigger than the GDP of Sweden, Saudi Arabia, Indonesia, Turkey, the Netherlands and around 175 others.

That’s a lot of money, but it must be worth it as the War on Poverty must have been a success… right? Not so much. Today poverty in the United States stands at approximately 15% of the population. Fifteen percent sounds relatively low, except when compared to the 18% rate it was $40 trillion dollars ago. After $40 trillion dollars and 50 years, the War on Poverty has reduced poverty by a staggering 3 percentage points!  What's worse, the War on Poverty actually stopped the progress that was already occurring:  During the 15 years prior to the beginning of the War on Poverty, the poverty rate in the United States had dropped from 30% to 15%!

Indeed, the single biggest accomplishment of the War on Poverty seems to have been the proliferation of single parent households… i.e. children born out of wedlock. In 1964 the percentage of American children born to unwed mothers was approximately 4%... so out of every 20 babies born, only 1 was born to an unwed mother. Today 8 out of every 20 babies born in the United States is born to an unwed mother. And according to studies by HHS and others, that’s largely because the welfare state has made such as choice feasible: Holding constant a wide range of variables, including income, education, and urban vs. suburban setting, the study found that a 50 percent increase in the value of AFDC and foodstamp payments led to a 43 percent increase in the number of out-of-wedlock births.

And the proliferation of unwed motherhood has resulted in a dramatic increase in crime, violent crime in particular. According to the Atlantic Magazine: “The relationship [between single-parent families and crime] is so strong that controlling for family configuration erases the relationship between race and crime and between low income and crime. This conclusion shows up time and again in the literature.” In 1965 there were 20 violent crimes for every 1000 Americans. By 2013 that number was 37. That doubling might not sound bad, until you realize that the incarceration rate in the US tripled over that same period, which means that as a percentage of the population there are three times as many Americans incarcerated today as there were when the War on Poverty began, but with many more criminals locked up the violent crime rate has still doubled.

So almost $1 trillion a year of welfare spending for half a century has basically made a small decrease in the poverty rate, pushed unwed motherhood through the stratosphere and dramatically increased the violent crime rate and prison population in the country. That sounds like a typical government success story.

Now let’s compare that to what a trillion dollars in one year might look like were in the private sector. Below are fifteen companies whose combined North American revenue was $1 trillion last year: Amazon, Apple, Coke, Disney, ExxonMobil, Facebook, Ford, General Electric, Google, J&J, JP Morgan, McDonalds, Microsoft, Nike, Walmart. So these companies with a combined $1 billion in revenue, what have they accomplished? Simply put, they have changed the world. Walmart has almost single handedly changed American retailing and driven inflation down everyone. Amazon redefined retail even further. Microsoft and Apple essentially created the computer revolution. McDonalds feeds the entire US population once a month. Facebook has connected a billion people around the world. Disney has entertained generations, ExxonMobil has fueled their journeys and Ford has built their cars and trucks.

Not only do these companies employ millions of people directly, but indirectly via their suppliers they drive the employment of tens of millions of others. So with a trillion dollars in revenue – money that was willingly exchanged for products and services – these companies have directly or indirectly generated an income for tens of millions of Americans who in turn support millions more family members. And they accomplished all of that while providing material benefits to the country as a whole.

One has to wonder what might have become of poverty had the $40 trillion the government siphoned out of the pockets of hard working Americans over the last half century had been left in their pockets. How many more of those children born to a single mother might have been born into a two parent household, gotten an education and gone on to start the next Disney or FUBU or UBER? How many more Spanx or Harpo Productions or Mary Kay Cosmetics were never founded because single mothers were sitting at home waiting for a welfare check rather than coming up with some revolutionary entrepreneurial moonshot? How many Under Armours or Facebooks or Chipotles never got founded because children grew up in poverty with no positive male role models around to help guide them? How much poverty would have been eliminated had each year’s trillion dollars gone into financing new startups rather than creating a dependency ecosystem?

At the end of the day the War on Poverty has been nothing short of a disaster. Not only has it sucked $40 trillion out of the hands of American workers and entrepreneurs, but it has also created an environment where tragic of circumstances have become the norm for tens of millions of Americans. More crime, more broken families and more broken dreams are the outcome of a half century of government failure. The tragedy is that this abject failure took place during one of the most economically dynamic periods in American history, and as a result of another failed government policy tens of millions of Americans found themselves stuck in the quicksand of government dependency and never had much of a shot at pursuing the American dream and seeing what potential greatness they might have brought to the world.

A Little Sugar Coating and Bit of Demagogy is a Recipe for National Suicide by Regulation

One of the most odious aspects of regulation is the fact that it usually comes in a sugar coated package. Typically they are the result of a law that is intended to “help” everyone or “protect” some group or to give an advantage to a group whose members are perceived to be disadvantaged.

It’s that sugar coating that makes regulations so difficult to challenge. If you oppose pouring more money into a failed school system you “Don’t care about the children”. If you oppose solar power funding or excessive energy regulation, you “Don’t care about the environment”. If you oppose a minimum wage increase you are a shill for big business and “Don’t care about workers” and if you oppose Obamacare you don’t care about the poor and you’re racist to boot.

Of course once those regulations are in place, once they’re on the books, they almost never come off. Regardless of their ineffectualness in actually solving whatever problem they were theoretically supposed to solve, or despite their actually making the problem worse, the answer is almost never to repeal the law and send the staff out into the world to find jobs in the private sector. Instead the solution is almost invariably more laws or regulations to try and patch over the “minor” problems with the first law or regulations.

The Head Start program is a perfect example of this problem. Started during the heady progressive days of LBJ as part of his “War on Poverty” the program has been a consistent failure, showing no material benefits, yet it still exists. Not only that, its supporters continue to push for increased funding for the program. But it can’t be killed “because of the children”. Of course, that is just one of the thousands of programs costing hundreds of billions of dollars each year that were put in place to stamp out poverty. Yet, somehow, despite the distinctly changing nature of the definition of poverty, there remain more people characterized as living in poverty in the US today than at any point in our history.

Another aspect of this tyranny of regulations is the fact that that sugar coating is usually delivered via a bullhorn. Whether its teachers unions striking for more education spending or the SEIU picketing for the right to organize virtually anyone who still has a job to illegal immigrants demanding amnesty to the Democrats and the media conspiring to convince the country that the GOP wants to throw grandma off a cliff, the facts about the costs and consequences of regulations are rarely ever discussed. It’s hard to carry on a fruitful discussion when one side simply shouts platitudes and refuses examine the actual causes of the problems. If throwing money at education were the solution, the United States would have the smartest kids on the planet… Alas we don’t. If the only choice is between throwing grandma off a cliff and spending more money on a Social Security system that will crumble at some point in the future… everyone will want to save grandma.

There are few issues in life that whose salient points can be easily captured on a picket sign. Of those, none are solved by government legislation or regulation. Much to America’s shame that fact apparently doesn’t matter. “What do we want... (Insert relevant liberal trope here)” “When do we want it... NOW!”

It’s no wonder that virtually everyone in America knows the name of Al Sharpton and Jessie Jackson but few know Jenny Beth Martin or Thomas Sowell. Sharpton and Jackson are snake oil salesmen with no interest in actually solving problems other than how to increase their media exposure while Martin seeks to solve the country’s problems by shrinking a dysfunctional government and Sowell, as the most lucid and articulate economist in America, simply explains the world as it really is and lets the reader choose their path to solving problems.

Finally there is the single most pernicious aspect of this sugar coated world of laws and regulation: Control. More regulations provide politicians and government bureaucrats with ever more opportunities to persecute those they don’t like and benefit those they do. Not sure about that? Just ask the conservative groups who were targeted by the IRS. How about Gibson Guitars or the insurance companies who criticized Obamacare in 2010. On the other side of the ledger are the green energy companies who’ve just been given carte blanche kill Golden Eagles, illegal immigrants the President has decided not to deport or “community organizing” groups the Justice Department is forcing banks to fund. Not to mention the various unconstitutional delays and waivers President Obama has handed out relating to Obamacare. And those are just federal laws, of which there are tens of thousands. There are hundreds of thousands more at the state and local level. When laws can be implemented arbitrarily the rule of law is gone.

Obamacare is the perfect example of legislation which was sold with sugar coating and whose opponents were pilloried as racists or who didn’t care about the poor. Today, simply because Obamacare was so overarching and so spectacularly dysfunctional, Americans are beginning to see that more laws can’t make everything better. Indeed some are even starting to understand that government action can and often does make things worse. The problem is however that most legislation is not of the supernova sort, but of the rather pedestrian sort that is passed and simply blends into the disordered order of the universe of regulations we’re expected to obey. Eventually the stars of regulation will become too numerous and will block out the dark matter in between them, i.e. the freedom upon which America was founded. At that point we will become a nation where every move, every step, every thought are regulated by the state. We are not quite there, but we’ve seen the future and it is North Korea. When we finally get there we’ll wonder what how we got there because all of the “solutions” we were swallowing tasted so sweet.

The Debt Ceiling and the Democrat's Xbox War on Poverty

The debt ceiling talks fell apart on Friday as President Obama insisted on $400 billion in new taxes to pay for more government spending. Imagine if he didn’t have to spend those $400 billion over the next decade.

Is it possible that there is $400 billion of waste in the budget somewhere? Where might that be? How about amongst the impoverished?

What do most Americans think of when they think of the word poverty? Homeless is likely at the top of the list. Lack of adequate or any food is probably not far behind. Not enough money to have heat in the winter might be another. Lack of medical care. There are no doubt others, but those likely the things most Americans think of when they think of the poor. And that’s not by accident.

According to the U.S. Census Bureau, 30 million Americans are living in poverty. That number has remained largely stable for decades. When the nightly news reports that fact and couples it with pictures of people sleeping on grates around the National Mall or a woman and her children huddled in a homeless shelter, most people with a heart feel like there must be a problem if such poverty can exist within the borders of the richest country on the planet? Unfortunately however that is base manipulation.

The Heritage Foundation recently reviewed a variety of government data and found a picture much different than what the left would like you to believe. They reviewed data from the Census Bureau, the agency that defines how many people are living in poverty, and the Department of Energy, that produces a survey looking at what amenities people have. Looking at the poor through DOE data paints a slightly different picture than what the media paints with Census Bureau data.

According to DOE data, 99.6% of poor households have a refrigerator, 97.7% have at least one TV, 97.7% have a stove & oven, 81% have a microwave, 78% have air conditioning (vs 84% for the general population) 64% have a DVD player, 63% have cable or satellite, 54% have a cell phone (vs 76%) 29% have a video game system (such as Xxox or Wii) (vs. 31%). Forty-three percent of all poor households own their own homes and the average poor American has 16% more living space per capita than the average person living in France, Germany, the UK or Japan. While households with such amenities may be considered poor, they can hardly be considered to be living in poverty in the clearest sense of the word.

The goal here is not to diminish the notion of poverty in America. Indeed there certainly exists poverty in the true sense of the word: According to the US Department of Housing and Urban Development a person classified as living in poverty had a 1 in 25 chance of spending at least one night in a homeless shelter during 2009 vs. 1 in 195 for the average American. And there really are families that end up in homeless shelters with no other place to go. At the end of the day, statistics are statistics but life is life. If you are one of the people who are living in a homeless shelter or on the street or hasn’t had anything to eat or can’t find a safe bathroom, it doesn’t matter what the average square footage a European gets by with is. What matters to you is what is going on at that exact moment.

And that’s where the problem as defined by progressives and Democrats comes in. By defining poverty so broadly they do a disservice to the truly poor. How? By perpetuating programs that send resources to those do not need them. Every time a taxpayer stands in line at the grocery store and watches a welfare recipient talk on her cell phone and pay cash for cigarettes and lottery tickets while using food stamps to pay for food it diminishes support for all government programs. It also keeps dollars from those programs which target the truly needy.

Rather than having programs that could help those with significant problems, we have welfare programs that simply perpetuate more welfare. Between 1965 & 2008 the United States spent $15.9 Trillion in its War on Poverty (vs $6.4 on all real wars) yet 10% of the population is considered to be living in poverty today.

Despite the War on Poverty’s abject failure, it goes on. And here’s where it hurts. Even now amidst the toughest economic environment in half a century, with urban unemployment in the double digits, when the government has to borrow a trillion dollars to pay its bills President Obama and the Democrats continue to play politics. When the GOP seeks to reduce government by cutting wasteful programs, the left accuses them of wanting to cut the safety net out from under America’s most vulnerable. That’s John Edwards lie of Two America’s all over again, and it’s still a lie.

The DOE’s numbers clearly demonstrate that there is a distinct difference between those considered poor and those in need of real help. While the most effective strategy would most certainly be to eliminate all government welfare programs and allow private charities to take over, that is unlikely to get by a donkey led Senate or the progressive in the White House. More realistically, by painting an accurate picture of poverty in the country, Uncle Sam could more precisely tailor programs to help the truly needy. Doing so would help those in need by being more effective, it might help restore the American taxpayer’s opinion of government in general and would save hundreds of billions of dollars just at the time when America finds itself broke.