The Cato Institute’s Dan Mitchell has a pretty good post about the legacy of Lyndon Johnson’s so-called “War on Poverty” at his blog and it’s not good. Since the Industrial Revolution, wealth prosperity in terms of disposable income and access to essential and luxury goods was increasing by leaps and bounds.
The vast majority of those gains arose from America’s relatively high amount of economic freedom (though by no means totally laissez faire) which drew millions and millions of immigrants from faraway lands to to the country of plenty. As the market progressed and wealth increased, previously impoverished immigrants, as well as Blacks migrating north, were able to increase their incomes by underbidding and outcompeting their competitors.
However, as a nation becomes richer and richer it tends to forget how it got that way after a few generations removed from abject poverty. So naturally people begin to ask the question, “How in a country of such abundance as ours is there material suffering for too many people?” Let’s leave aside the fact that even in societies with a largely free economy, governments still put up huge impediments to poor increasing their wealth and opportunity through such cruel anti-market mechanisms like occupational licensing, minimum wages, rent control and heavy land use taxes/regulations, government monopoly schooling, inflating the currency, eminent domain and asset forfeiture, and many more.
Such a question like “why is there poverty?” is the wrong question to ask. What we should be asking is “why is there wealth?” Why is it that only until relatively recently did material prosperity come into being for the West and increasingly other countries like Chile, Estonia, and South Korea?
The reason is capitalism, or the institution of separation of economy and state where all people are free to engage in whatever trade they want to and to reap whatever rewards that come with customers voluntarily paying them for their services. And filling the foundation of that system is the creation of legal regime of protected and tradable private property rights.
The Peruvian economist Hernando de Soto has argued persuasively and forcefully that it is institutions that build wealth that we should look at, not just the wealth that happens to exist at any given time. “What makes people interested in the rule of law, the first thing that they understand… is that everybody on this earth lives on a plot of land,” he writes. This is the basic realization that all of us have the individual right to call that which is truly ours, ours.
Returning to the issue of welfare statism and the War on Poverty, since all wealth that the state redistributes is money taken by force from the earnings of others, this process necessarily reduces the amount people are going to work and the quality of work that they’re going to do since their rewards diminish according directly to the amount of value they produce for society (their customers). So this means that the welfare state becomes a self-fulfilling prophecy in that it creates a direct incentive to feed off the fruits of one’s neighbors as opposed to being self-reliant and self-sustaining.
The result has left us in a very real situation where the federal government has created over 120 separate anti-poverty programs, which as a 2013 Cato Institute study shows, when coupled with state and local benefits, in the majority of states a recipient of the average number of welfare benefits actually has a higher income than a starting level minimum wage job.
Compounding the problem, since welfare benefits are not taxed but wages are, this makes it even more advantageous to go on the dole than to work.
Such a system described above has had terrible results for liberty, prosperity, and social cohesion for all Americans, but especially Blacks. Pre-LBJ, they had marriage rates higher than whites, unemployment rates relatively on par with whites, and children born out of wedlock was almost unheard of.
After the War on Poverty, we see the immense breakdown of Black America as well as the Hispanic community, too.
Ask yourselves, if the situation were reversed and we had had a War on Poverty starting in the late 19th century with poverty rates dropping every year, only to have the policy repealed in the mid-1960’s and have the calamitous affects that we’re now so sadly familiar with, wouldn’t you call that a failure?
So why do we continue this failed policy of wealth destruction, dependency, and mass community dissolution in the name of “helping the poor”?
If we want to truly help the poor, there has been no greater anti-poverty program than economic liberty and free trade. Period dot.
UPDATE: This is not to look askance at the terrible policy of the Drug War and “Law & Order” extremism that has also had an extremely deleterious effect in aggregating human suffering and tyranny in this country, which were begun by the conservative administrations of Richard Nixon and Ronald Reagan.