Poverty, Inequality and Mobility in a Free Society: Can We Do Better?

There has been a lot of public attention given to these topics recently.  Our stagnant economy since the end of the recession almost five years ago has meant high levels of unemployment and underemployment which naturally causes widespread discontent.  The 50th anniversary of President Johnson declaring War on Poverty provides an opportunity to look back and evaluate its success.
A very good summary of where we stand on poverty was given two years ago by Robert Rector and Rachel Sheffield of the Heritage Foundation: “Understanding Poverty in the United States: Surprising Facts about America’s Poor”.  The authors used 2010 census data for their study.  Poverty was defined to be a cash income of $22,314 or less for a family of four in 2010 (which increased to $23,550 in 2013).  They pointed out, for example, that “96% of poor parents stated that their children were never hungry at any time during the year because they could not afford food.”  The chart below shows that poor households, in general, have many of the common amenities.
CaptureIn other words, the close to $1 trillion spent per year ($871 billion in 2010) by federal and state governments on means tested assistance for the poor has largely eliminated destitute poverty in the U.S.  Further progress will require successfully addressing both the collapse of marriage and the lack of parental work in low-income communities.  These very difficult problems can only be addressed with a long term educational effort to turn poor children into productive citizens.
Conclusion:  the War on Poverty has had reasonable success at huge cost and further gains will be more expensive and more drawn out over time.  We’ve already started on this second phase by emphasizing early childhood education and so the focus now should be to implement this new direction.
Next step: it’s now time to direct our serious attention to the issues of inequality and mobility.  That will be the subject of my next post!

Who Are the Enemies of the Poor?

 

In his usual provocative fashion, New York Times columnist Paul Krugman says that Republicans are “Enemies of the Poor” because “they’re deeply committed to the view that efforts to aid the poor are actually perpetuating poverty, by reducing incentives to work.”
CaptureBut the Heritage Foundation’s Robert Rector has recently pointed out in the Wall Street Journal, “How the War on Poverty Was Lost”, that “the typical American living below the poverty line in 2013 lives in a house or apartment that is in good repair, equipped with air conditioning and cable TV.  He has a car, multiple color TVs and a DVD player.  The overwhelming majority of poor Americans are not undernourished and did not suffer from hunger for even one day of the previous year.”  In fact we are now spending $600 billion a year of our $3.4 trillion federal budget and another $230 billion by the states to fight poverty.  The poverty rate was 19% in 1964 and is 16% today (when government benefits are included).
Mr. Rector reminds us that “LBJ’s original aim (in initiating his antipoverty program) was to give poor Americans ‘opportunities, not doles’.  It would attack not just the symptoms of poverty but, more important, remove the causes.  By that standard, the war on poverty has been a catastrophe.  The root ‘causes’ of poverty have not shrunk but expanded as family structure disintegrated and labor force participation among men dropped.”
So what should our poverty agenda look like going forward?  We are already providing the basic necessities of life.  Our future efforts should therefore be focused on improving the quality of life for the poor.  This means more effective education and job training.  It means more effort to keep families together by reducing marriage penalties.  But most of all it means providing more opportunities for employment and job advancement.  This requires faster economic growth.  There are many ways to accomplish this.  Back to square one!
The true enemies of the poor are those who refuse to accept the progress which has been made in the War on Poverty and the need to change our approach in order to make further progress.