Solving Poverty

By Sam Huntington

Poverty is a real thing in America, but I often wonder, given the amount of tax dollars that has been earmarked or spent trying to eradicate poverty (estimated at $1.5-trillion since 1930), why poverty continues to exist.  Surely by now we should have solved this problem once and for all[i].

There was a time in America (and other countries) when we defined poverty as utter human destitution; people died on our city streets.  They starved or froze to death.  They had no money to purchase food.  This was the state of poverty in the United States between 1870 and 1930.  If this continued to be our definition of poverty, then we should argue that the problem has been almost (although not completely) eradicated.

Citizens continue to die on our streets, but now it is  more often attributed to mental problems, alcoholism, or drug abuse.  Today, the essential task of feeding, sheltering, and clothing the poorest among us does get done.  Ultimately, our answer to the question “What is poverty” depends upon what society thinks one must have in order NOT to be classified as poor[ii].

To help us with that, the US Census Bureau measures American poverty according to a formula devised in 1960 by the Social Security Administration: poverty thresholds from the cost of a minimum food diet, multiplied by three.  In 1980, the poverty threshold for a non-farming family of four was $8.400.  In 2017, the poverty threshold for a family of four was $24,600.  According to the US Census, the terms “poor” and “below the poverty level” are used interchangeably.

We may get high marks for defining poverty, but we aren’t doing as well in resolving it.  In the 1930s, caring for the poor was largely the responsibility of extended family members and local communities —which is to say, from direct sources familiar with conditions within the family.  The Great Depression presented the United States with literally missions of people who were classically destitute.  The collapse of the stock market meant that communities were economically barred from offering relief to those in need.  Under these circumstances, FDR’s New Deal was warmly received.  This federal Intervention was unprecedented, but it was understood then that once the crisis was over, family and community obligations would be restored.  Since then, through depression, world war, regional crises, to LBJ’s Great Society, more and more people have turned to the government as the ultimate problem-solver.  Metaphorically, we went from providing an ambulance to a mass transit system of welfare assistance.

Some will argue that by offering Social Security benefits, food stamps, and earned-income tax credits, that we have lifted 40-million people out of poverty.  This is totally not true.  These things might lessen poverty (giving people money makes them less poor), but it doesn’t reduce the numbers of poor people or the numbers of people who are dependent upon government assistance.  Poverty remains with us and all we’ve managed to achieve is the creation of a poverty industry.  The industry accounts for hundreds of agencies, thousands of social service employees, highly-paid bureaucrats, and business owners and land-lords whose own financial success rides on the back of America’s poor.  According to Robert Woodson (National Center for Neighborhood Enterprise), 75% of all expenditures intended to care for the poor goes not to them, but those who service the poor.  If true, it is a situation that goes a very long way in explaining why we’ve not solved the problem of poverty in America.

Today, the American taxpayer spends around $250-million annually to fund welfare assistance programs, and yet 30 to 40-million people remain below the poverty line.  At least one-third of black communities remain trapped in the cycle of poverty.

We can always count on the political left for their stock solution: according to Peter Edelman (Georgetown University), what we need to do is make the rich pay more, increase the minimum wage, and increase government subsidies.  I should add here that we never really know who the left is talking about whenever they say, “make the rich pay more.”  Is it George Soros, who is worth around $9-billion on any given day, or are they talking about Mr. & Mrs. John Q. Citizen whose annual earnings are less than $80,000.00 per annum?  The fact is that our welfare assistance programs create disincentives which prevent people from helping themselves[iii].  It also rewards failure in the sense that if you are poor and truant, poor and alcoholic, poor and pregnant, poor and addicted to drugs —there are programs that address these problems.  There are no programs for someone is poor and abides proper social protocol.   

No leftist politician or surrogate is interested in reducing poverty because, politically, it is the gift that keeps on giving —and these politicians and bureaucrats have become quite clever in masking the ways in which “poor people” are kept on poverty rolls.  Here’s one way: a citizen receives $400 a month in food stamps.  This equates to $5,000 a year.  This is a gift from the American taxpayer.  The $5,000 is not added to his annual income, so this poor person remains officially poor in perpetuity.  Politicians, bureaucrats, state-funded university researchers, think tank experts, social workers, and dozens of others work diligently to design solutions that never work.  When the programs aren’t working, the scapegoat becomes insufficient money for additional personnel or defective programs (the latter necessitating more expenditures in research studies).  The bottom line here is simply more money being earmarked for inadequate programs. The system is horribly corrupt.

Still, even as poverty is our common enemy, let’s not operate on the patient until we have a thorough understanding of the disease and the cure.  Before we reach that point, however, we have to come to a common understanding.  First and foremost, the poverty industry robs our citizens of their dignity.  The poor aren’t allowed to participate in the discovery of solutions to their own problems. This probably explains why poor recipients of substantial gifts from the taxpayer often end up despising the gift-giver: they are not simply poor, they’re also angry.  Second, the bureaucrats treat the poor as if they are too irresponsible to make informed decisions about their own lives; well-paid experts are available to do that for them.  Conservatives are just as bad because they’ve never understood that in order for poor people to participate in the economy, they must first be able to access sources of information and know how to put that information to good use.

We must also understand that giving money to people (whether we drop money into their cup while they sit idly on our sidewalks, or through electronically transferred government disbursements) doesn’t make them less poor.  It only gives them more money.  Giving someone more money may temporarily change their immediate situation, but it does nothing for their condition.  Perhaps at this point, we can agree: (1) Poverty is not the absence of money; (2) Giving someone money doesn’t make them less poor; (3) Having access to money isn’t the same thing as having access to wealth; and (4) Wealth isn’t a bank balance, it is a value.

If wealth was money, we could solve the issue of poverty by printing more money, but this is a silly idea since printing money only adds to inflation.  The more dollars there are in circulation, the less their value.  Whenever economists talk about wealth, however, they speak of it in terms of its relative use, and its quantity.  The more useful something is (it’s utility), the more valuable it becomes.  Thus, if we want to solve the problem of poverty, we must create and sustain wealth.

There are three things we can do with wealth: consume it, save it, or invest it.  By consuming wealth, we end up with less of it.  By saving wealth, we set it aside for consumption or investment later on.  We invest our wealth with the expectation of increasing it.  So, how do we invest our wealth?

We know that poverty is a social problem, but we may not understand that there are conditions that sustain it.  These are, in my opinion, ignorance, disease, apathy, dishonesty, and dependency.  This is not a judgment; it simply explains why we have poor people and blighted communities.  If we Americans want to reduce poverty, then we will have to address these conditions. These factors, by the way, have a negative impact upon our economies, result in poor community infrastructure, lead to inadequate governance, contribute to under-employment, reduce human skills, increase absenteeism, and reduce available capital.

The American people, through various tax schemes, provide free education to everyone (even illegal aliens). Education is one of our “equal opportunities.”  When people refuse to avail themselves of opportunities, they climb upon the first rung on the ladder to poverty.  Students drop out of school because they don’t value education.  In most instances, children don’t value education because they emulate their own parents.  It isn’t sufficient to force a child to remain in school against their will until they reach a certain age.  If we want to avoid poverty, we must recognize whenever children exhibit low levels of interest in learning, and then we must intervene to change their perceptions. Not every child will end up in college; not every child should.  There are other important and readily available educational pathways.  Through education, children develop skills, self-esteem, goals —each of which will lead them to prosperity and personal fulfillment —or, wealth— particularly as they then become productive members of society. Through sensible education programs, we can attack three important conditions of poverty: ignorance, apathy, and dependency.  In this example, I have outlined a wise investment in our time and resources.

Disease is another important factor of poverty; sick people do not work.  We know that people suffering the effects of disease are less productive in society than those who are healthy.  We can address this problem by adopting more aggressive programs toward the prevention of disease.  We will increase human productivity by wisely investing resources toward a healthful society —and this is something that can only be done within local communities.

Finally, we come to the issue of dishonesty. Welfare fraud is a problem, but I’m not necessarily writing about dishonest poor people.  I am, rather, talking about what appears to be an over-abundance of dishonest politicians and bureaucrats who devise expensive programs that do nothing to cure poverty, but actually perpetuates it —and by propagating it, guarantees to themselves a hefty portion of the free stuff pie.  We need to change this.

What is wealth?  It is utilizing our limited resources wisely to produce greater wealth. Educated, healthy, involved, motivated, non-dependent, and honest citizens contribute to our national economy, rather than detracting from it.  If we wanted to end poverty, we could —but not from an incompetent and dishonest federal bureaucracy thousands of miles distant.  As much as possible, these efforts must originate and operate within local communities.  It is not something for the welfare office alone.  A meaningful program will demand the involvement of community leaders, faith-based organizations, public schools, volunteer citizens (retirees come to mind), local health care facilities, and non-political service organizations.

Life is all about making decisions —good as well as bad.  Our citizens always have choices.  Our poor should always be in a position to decide whether or to what extent they want to participate with society in our war on poverty.  Of course, for those who refuse efforts to take them out of the category of America’s poor, then perhaps they should no longer be entitled to access the public safety net.  It would at least reinforce personal responsibility.

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[i]The number of slum-lords who benefit financially from government housing subsistence payments, and who do, or have served at high levels of government is disturbing —Valarie Jarrett being one of these, Franklin Raines being another.    

[ii]The term “American poor” will differ from how “poor” is defined in other industrialized nations.

[iii]Typically, government “experts” complete needs assessments by going into low-income communities to conduct interviews.  From this, they define the pathology of the impoverished.  Rather than examining capacity, they focus their attentions on incapacity, or in other words, instead of evaluating what it takes to be successful, they focus on how poverty is created.