50 Years of Fighting Poverty

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.