As the Census Bureau releases its annual report on poverty,
we can look back on 50 years of fighting poverty. That’s right.
This year is the 50th anniversary of Lyndon Johnson’s war on
poverty.
It is estimated that $22 trillion (in 2012 dollars) has been
spent fighting poverty since Johnson announced this new war. This includes a plethora of government
programs that were designed for those with a low income.
This figure doesn’t include certain “entitlement” programs
such as Social Security and Medicare.
It doesn’t include unemployment insurance. It definitely does not include government education, which
serves all levels of income.
There are currently over 100 million people in the U.S. that
receive some kind of welfare specifically for low-income people. That is about one-third of the entire
population of the U.S. I guess you
could say that Lyndon Johnson’s war on poverty has been a huge success in
getting a massive segment of the population dependent on the federal
government.
Of course, all of the money that funds these programs has to
come from somewhere. It is either
through taxes, or through debt and inflation. Middle and upper income earners
pay the large majority. But poor
people pay both also, so they are technically just getting some of their own
money back, with major administrative costs being taken off the top.
While most low-income people don’t pay income taxes, they do
pay payroll taxes if they are working.
They also pay many other taxes including gas taxes, sales taxes, phone taxes,
cable taxes, and the list goes on.
And low-income people certainly take a hit with debt and
inflation. Wages tend to lag
behind in increasing with consumer prices. If a gallon of milk goes up in price by a dollar, who do you
think it hurts the most? A
high-income earner or someone with a high net worth won’t feel it nearly as
much as the guy barely getting by.
A War on Everything
It seems that the government knows how to make a mess of
anything it declares war on.
(Ironically, there hasn’t been an official declaration of war,
militarily speaking, since World War 2.)
When the government declares a war on drugs, then this leads
to more violence and more drug use.
When the government declares a war on terror, this leads to more
terrorists. When the government
declares a war on poverty, it leads to more poverty and more dependence on
government.
Since Johnson declared the war on poverty, the poverty rate
is no better today than it was 50 years ago. You could argue that poor people are a little better off
economically speaking. Some have
cell phones and cable television.
But this is really more of a reflection of the advancement in
technology. If it had been up to
the government, people would be much poorer today than 50 years ago.
It is actually the things that the left hates that have
managed to give some help to poor people.
Think about Walmart. I
don’t love shopping at Walmart because of the chaos there at times, but it has
undoubtedly helped millions of people.
They can buy food and other consumer products at cheaper prices.
The free market, despite the massive government
interference, is what has enabled some people to lift themselves out of poverty
and to prosper. And it is the free
market that has given us an almost exponential growth in the electronics
industry. It has enabled poor
people to afford cell phones, televisions, and computers.
Meanwhile, the government just hampers this process. As both Frederic Bastiat and Henry
Hazlitt taught, a good economist will look at the unseen effects of government
policy. In other words, if the
government hadn’t spent $22 trillion over the last 50 years in the name of
fighting poverty, imagine how much more we would have today. Imagine the inventions and advances
that we haven’t seen because the government deprived the market of this capital
investment.
There would be far less poverty today if the government had
never started a war on poverty.
And we also wouldn’t have a hundred million people dependent on the
government. It is going to be that
much more painful when the government faces major fiscal problems and has to
break some of its promises.
Meanwhile, let’s hope the government doesn’t declare any more wars.