How to Help the Poor

Mother Jones’ Kevin Drum laments the Democrats’ worrying trend with working class white voters and traces the discontent to lingering unhappiness with the Democratic tax and spend welfare state model. Drum accurately highlights how liberal obsession with food stamps, unemployment benefits, Medicaid and Obamacare can alienate working class whites as they see more and more assistance going to their marginally less well-off neighbors while they get nothing. Personally I think race has very little to do with what is really an economic and a government problem, but since the left can’t tie their shoes without noting the latent racism involved in shoelace production, they have to identify their middle and working class voter problem as one to do with the “white working class.” Fine. Whatever gets them to any level of introspection is only good news for the debate going forward.

In getting to his conclusion that he has no conclusion for how to solve this electoral dilemma, Drum offers this precious piece of liberal self-congratulation:

“Helping the poor is one of the great causes of liberalism, and we forfeit our souls if we give up on it.”

I wonder if the left will ever understand observable reality and change its mind on what constitutes helping the poor. Everyone with a conscience, left or right, wishes to see the plight of the poor improve, the question is how to achieve improvement. I (kinda, sorta) accept Drum and liberals at their word that their aim is true when they advocate for these government programs for the poor; my problem is with their stubborn refusal to be accountable and admit that the ambitious War on Poverty was a failure, especially if viewed in terms of trajectories – American poverty was steadily declining between 1945 and 1965, only to flatten after the Great Society was introduced. The line has remained flat for a generation.

us poverty graph

It is an insult to basic intelligence to suggest these programs were successful at eradicating American poverty. Possessing noble intentions does not automatically translate into good policy, but seeking well-intended results through government is guaranteed to create bad policy because government is inherently inefficient (and likely inherently stupid too).

Whatever merits progressives assign to the Great Society are dwarfed by the incontrovertible fact that its biggest legacy is likely to be the destruction of the black family in America. And not just the black family, either. One of the more fundamental disagreements between left and right is over the matter of incentives. The left doesn’t bother with incentives because, if I may be so bold, they typically don’t care about how their policies cause people to behave; they just care that a policy they came up with is made binding on others. Or if you want to be more generous: the left doesn’t focus on behavioral incentives in law because they don’t believe such things exist. Since most leftists come from academia, they are used to theoretical models that deal in static data. The real world, however, deals in dynamic data, in that there is no way to account for the variable known as “human behavior” in academic models of society or the economy.

Laws create behavioral incentives because humans are not robots. Just because it makes sense on paper to increase government spending in order to stimulate aggregate demand does not mean such policy will work in practice. In fact, we know it does not work because rudimentary market economics informs us that government intervention into the economy only creates distortions and mis-allocation of resources. The left has never understood this basic premise when it comes to – well, everything – but especially when it comes to helping the poor.

By aggressively inserting itself into the lives of inner city and rural constituencies the federal government has wildly distorted the markets for labor, education, spouse and dignity in America’s poverty-stricken regions. Government intrusions in the form of food stamps, unemployment and Medicaid sound benign at the outset. But consider how these benefits alter incentives for the beneficiary. Is a worker in the inner city more or less likely to ardently search for work when 99 weeks of unemployment are on the table? Is a struggling shop-owner looking to hire two extra workers on the cheap (offering them an opportunity out of poverty, perhaps) going to be more or less likely to do so when the price of labor is arbitrarily raised on him via a minimum-wage increase? Most crucially, are a couple with children more or less likely to stay together when there are no consequences to family dissolution thanks to the ubiquitous welfare state that allows single mothers to collect plenty of money with none of the dignity attached.

The $64,000 question is whether the American left, facing its worst political moment in a century (the 1920’s were the last time the party had so few seats in the U.S. House of Representatives and the state legislatures – they were wiped out the last two midterms), chooses to double down on welfare statism or decides to speak honestly and culpably about the failures of their grand experiment in leveraging the public sector to fix poverty. If Democrats really want to speak to the white working class again, or for that matter, the poor and underclass who they today purport to serve, they need to accept that there is one – and only one – proven tool for lifting masses of people out of dismal economic conditions: capitalism.

So that’s where we are. The left’s future as I see it depends on their developing a non-transparent and believable appreciation for what makes economies grow. The fact that the global poverty rate fell from 26.8% in 1970 to 5.4% in 2006 due primarily to the introduction of free enterprise and free trade to the rest of the world is entirely lost on the inhabitants of America’s faculty lounges. If they are even aware of this remarkable 80% decline they shrug and attribute it to government aid or something (seriously). Empowering individuals through trade and entrepreneurship is not some fashionable dream concocted by libertarians but the cold hard reality of the how wealth and prosperity are made. The middle and working classes in America aren’t eager to join the poor in the ranks of the dependent class. The poor themselves do not wish to be pandered to and showered with candy while no observable improvements are made in their communities. People are ready for something different, above all in the country’s approach to economics, employment and welfare.

The good news is that, for all the lefty hand-wringing (and really, there ought to be more than there is) over losing the white working class, there is no way they are going to suddenly become champions of capitalism and that means the right is well positioned to cast some much needed light on the plight of overlooked and left behind Americans.

world poverty since 1970

The Failed War on Poverty – 50 Years of Prog Facepalm

Quite a few depressing anniversaries of late: 100th year of Federal Reserve; 50 years since Kennedy assassination; and now 50 year anniversary of War on Poverty.

First, you can’t declare “wars” on abstract or social phenomena like poverty or drugs or terrorism. We of course have the progressives to thank for this stupid idiom: William James argued that early 20th century progressivism needed to transcend the “moral equivalent of war” to domestic, non-war progressive social policies. If you give something the urgency of “war” you’re likely to get an urgent reaction.

So what have we gotten out of all this asymmetrical “warfare?” Far less than was promised, an exorbitant sum of wasted energy and money, and worse outcomes for those intended to benefit.

The greatest tragedy of the War on Poverty is that it has been on autopilot and is free from critique or reform. If Bono can figure out the secret to solving poverty, surely your average American progtard should be able to appreciate his sentiment: “Commerce [and] entrepreneurial capitalism take more people out of poverty than aid.” (http://bit.ly/1afrqbA)

Bono can’t be accused of not caring. The guy has spent the last 20 years making African poverty eradication his personal crusade. He’s seen plenty of money thrown at the problem, and yet he gradually arrived at where he is because the different outcomes from capitalism and from aid are so striking that even a rock icon and former skeptic of free enterprise can come around.

So if it is now painfully obvious to Bono that foreign aid to Africa is a gigantic boondoggle that has nothing on entrepreneurial capitalism’s ability to lift people out of poverty, why does the progressive left in this country still insist that aid from the government is the answer to poverty, unemployment, etc? Is it because they use the aid as a cynical tool aimed at political gain? Or are their hearts in the right place and they’re just too economically illiterate to understand that there’s a much better way to fight poverty?

Charles Krauthammer was a Great Society liberal working at The New Republic up through the mid-80’s. His principle reason for converting to conservatism was the War on Poverty. He said he was in favor of LBJ’s programs initially, but after 20 years it was impossible to ignore the data; not only had poverty not dramatically changed since the inception of the war against it, it had grown worse and the federal aid had contributed to it. This conclusion was enough for Krauthammer to ditch the Great Society and liberalism, unfortunately he was essentially alone on the left in admitting its failure.

50 years, $20 trillion spent, poverty still winning the war. And the real shame is that progressives won’t admit it, and in fact call for more spending and more aid. The only way to eradicate poverty is to embrace markets and capitalism. But those are bad, scary, evil things that only rich, selfish conservative racists would endorse, or so believes the modern left.