War on Poverty Bolsters… Poverty


Here’s another data point for your “not what I was told to believe” file:

In Thursday’s Wall Street Journal, John Early and Phil Gramm share some depressing numbers about growing dependency in the United States:

During the 20 years before the War on Poverty was funded, the portion of the nation living in poverty had dropped to 14.7% from 32.1%. Since 1966, the first year with a significant increase in antipoverty spending, the poverty rate reported by the Census Bureau has been virtually unchanged…Transfers targeted to low-income families increased in real dollars from an average of $3,070 per person in 1965 to $34,093 in 2016…Transfers now constitute 84.2% of the disposable income of the poorest quintile of American households and 57.8% of the disposable income of lower-middle-income households. These payments also make up 27.5% of America’s total disposable income.

This massive expansion of redistribution has negatively impacted incentives to work.

Incentives aren’t only relevant to welfare recipients, but also to government and the politicians who populate it.  The progressive concept of scientific governance — setting experts to make the “right” decisions for everybody — requires that the people making decisions will make them honestly.  But when government begins giving things out, the incentive is to keep doing so whether it achieves the desired policy outcome or not, because at the end of the day, the desired outcome is votes.

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More broadly, the incentive for the bureaucracy is to keep having things to do, like processing benefits, and to sell government as the solution for problems.  For all of these reasons, the incentive is to never honestly assess whether a War on Poverty has actually helped maintain poverty levels while causing a host of unexpected social ills.  Alternately, the incentive is to keep adjusting the definition of “poverty” so that the rate never changes even if the experience of the population does.

  • Rhett Hardwick

    “that which you subsidize, you increase”

  • Northern Exposure

    What is given can never be taken away because of the fear of losing the next election. Nothing changes, it only gets worse.

  • BasicCaruso

    “Since 1966, the first year with a significant increase in antipoverty spending, the poverty rate reported by the Census Bureau has been virtually unchanged…”

    Of course the poverty rate reported by the Census bureau changed quite a bit over that time, initially calculated as the cost of purchasing basic food supplies times three and adjusted for family size. Compare apples to apples and the conclusion is quite different.

    “Our estimates…show that historical trends in poverty have been more favorable—and that government programs have played a larger role—than [previous] estimates suggest… Government programs today are cutting poverty nearly in half (from 29% to 16%) while in 1967 they only cut poverty by about one percentage point.”

    • Rhett Hardwick

      Noting that your attachment is almost 5 years old, suggests that the “measurement” of poverty is determined by the result desired.

      For instance, I think it is well known that a large proportion of the women “enlisting” for military service are doing so to obtain insurance and support for their children. Is this “welfare”, or “practicality”. I guess that depends on who’s looking, and what they are looking for. I understand the major obstacle is proving they have someone to care for their children if they are deployed.

      • BasicCaruso

        Interesting you bring up the dates. Justin chooses to ignore inconvenient info in his simplistic analysis.

        And if we’re truly in favor of work, how about raising the minimum wage? Subsidize work and get more of it, right? What how quick that argument falls apart when you suggest that to the RICFP!

        Up through the mid-1970s, most observers agreed that the War on Poverty had been largely successful. From 1965 to 1978, the share of the population living in poverty dropped from one in five to one in nine. After 1978, however, much of the effort to end poverty among children and adults under sixty-five was not only abandoned but actually reversed, as Republican-led administrations refused to increase the minimum wage and the Clinton administration “ended welfare as we know it.” From Reagan onward, the federal government also largely abandoned any role in providing housing assistance for low-income people.

        Amid this federal pullback, the face of poverty has changed. In 1962 a fully employed worker guaranteed that the family would live above the poverty line, while today one half of families living in official poverty have a full-time worker in the household. In part, this is due to the corporate assault on union strength (in 1962, 30 percent of U.S. workers belonged to a union; today only 12 percent do). The wages at the very bottom have failed to keep up with inflation; nearly one-quarter of full-time jobs in this country do not pay enough to lift a family of four above the family poverty line. Two-thirds of those who hold such jobs are female and one-half of low-wage earners are people of color. This decline in real wages is part of the reason why in the U.S. today over 22 percent of children live in poverty, while no European member of the Organization for Economic Co-operation and Development (OECD) has a child poverty rate higher than 10 percent.

        Raising the minimum wage to its 1962 real level, $10.10, would, according to University of Massachusetts economist Arindrajit Dube, take 4.6 million additional people out of poverty and strike a blow against racial and gender inequality. If the minimum wage rose commensurate with the increase in productivity of the average U.S. worker since 1962, it would stand even higher, at a robust $17.20. This is why the “Fight for 15” demand is far from utopian. A $15 minimum wage would lower the existing poverty rate from 15.1 percent in the United States to less than 10 percent.

        • Rhett Hardwick

          I note that your post refers to “families”, “households” and other arrangements without distinction. I think this serves to confuse who is “in poverty”. Then we have “15.1 percent” poverty rate, which I think is lower than I have seen anywhere else. Couple this with “in the U.S. today over 22 percent of children live in poverty”, and it truly does become confusing. I am sure it could be elucidated, but I am not so sure that anyone truly desires that. I think that would point to a great deal of socially undesirable behavior.

  • Joe Smith

    “If the minimum wage rose commensurate with the increase in productivity of the average U.S. worker since 1962″

    • Rhett Hardwick

      I have noticed that Japan is rapidly advancing “robotics” in agriculture because the average farmer is 67 years of age. If that migrates to America, what will happen to the need for migrant workers?