America’s War on Poverty had its golden anniversary last week. Unlike a marriage that lasts a generation’s time, the celebration for Lyndon Johnson’s other crusade was not exactly joyful. Intellectuals and academics still fret over first worlders stricken by destitution. They decry the parsimonious structure of the American welfare state – even as a record number of citizens are in some way tied to the dole. Plenty of solutions are offered to fix the problem of ongoing poverty, but each turns out to be nothing more than state redistribution.
In his latest apostolic exhortation, Pope Francis implored believers to take a stronger initiative in helping out the less well-off among us. American conservatives appear to have heeded the call, and are beginning to focus attention on an anti-poverty agenda. The hope is to rile up the electorate and shed the conception of hating the poor. Whether these measures will succeed is another question. It’s easy to say “Hey! How about we get everyone out of the poor house!” Putting in place the necessary framework to foster rising living standards takes gumption and knowledge.
To mark the anniversary of Johnson’s welfare behemoth, Florida Senator Marco Rubio offered an alternative to Washington’s current approach to erase poverty. While decrying the government’s rob-and-reshuffle schemes, Rubio proposed to “replace the earned income tax credit with a federal wage enhancement for qualifying low-wage jobs.” Additionally, the political upstart paid lip service to block granting federal dollars to the states – an idea Ronald Reagan floated nearly four decades ago.
If boosting the paycheck of low-income earners is the silver bullet to impoverishment, then it’s a wonder why a litany of welfare benefits haven’t made poverty a foregone memory by now. Aren’t food stamps, subsidized housing, free schooling, and free-of-charge health care all income supplements? It’s hard to see why a targeted “wage enhancement” would slay destitution once and for all. And aren’t conservatives supposed to be realistic and recognize the dependency culture welfare creates? How replacing a tax credit with a cash handout won’t be abused and create more wards of the state, Rubio doesn’t explain.
Even prima facie, the Rubio proposal makes no sense if the goal is wealth creation. Instead of taking the liberal route and robbing Peter to pay Paul, the Florida Senator wants to rob Peter to pay Peter back. Uncle Sam doesn’t get the income to subsidize wages from good will alone. He has to steal first and give back later. The workers who would benefit from the paycheck boost are already paying income taxes as well as payroll taxes. It’s not as if the taxman is leaving them be.
The Rubio proposal shows the intellectual weakness of those looking for government as the solution to poverty. Politicians can’t increase living standards. All the state can do is expropriate resources. Any time a policy is proposed that involves government machinations, the only group who really benefits is the political class.
The hard reality is solving the predicament of poverty cannot be done overnight. If handing out money was all that’s needed to help the poor, the billions spent by Washington would have been widely successful by now. But destitution sticks around, even if the low-class possesses luxuries such as cars, microwaves, personal computers, “smart” cell phones, and air conditioners.
So what then is the real solution?
An economic framework that allows for the market to flourish is an obvious answer. The only way to create wealth is to allow individuals to do it on their own terms. Any kind of government diktats that interfere with voluntary transactions must, by definition, hamper value creation. If given enough freedom, the marketplace does an adequate job of coordinating resources where they are most desired. But even that may not be enough to establish a prosperous society.
In The Atlantic, Derek Thompson recently uncovered a key variable that translates into economic success: marriage. If it seems intuitive that two-parent households are better generators of wealth, that’s because it is. Couples are much more flexible at earning income while meeting the needs of the homestead. Therefore, these families tend to be richer over time. As Thompson points out,
“[A]mong what you might consider “modern families” (e.g. the 61 million people married and living together, both working), there is practically no poverty. None.”
Those families that qualify as impoverished are largely lead by a single parent, namely a mother. Nearly half of all one-parent households lack a full-time worker. Is it any wonder they are struggling to make ends-meet? The only way to create wealth security is to produce more than what’s consumed. That means abstaining from immediate frills. And it means putting in long hours when it’s most uncomfortable.
Pity be with the man who thinks the state can be used to form a culture of thrift. Everything government touches inevitably turns to stone. That is, it sinks even when public servants try to raise it up. As Rod Dreher writes,
“what are the government policies that are going to compel people to put off childbearing till marriage, to seek to get married, and to work hard to stay married? They don’t exist. These are cultural matters beyond the ability of the government to influence strongly.”
The only way to lay the groundwork for economic growth is to establish conditions suitable for capital investment. Said investment cannot occur without prior savings. For anyone pursuing the noble cause of taking care of the poor among us, the solution is not handouts. That’s only a Band-Aid. It fails to set the course for long-term enrichment. Ultimately, it is only private individuals that can serve as a good influence.
While American policy wonks debate over how to best win the War on Poverty, the rest of the world suffers under the same restrictions. Statism is rampant in practically every country. Its partner in crime, moral relativism, is also on the upswing. Governments are gobbling up increasing amounts of resources while central banks are deliberately punishing savers. The only way to beat back the rising threat of bankruptcy and pauperism is to begin rolling back the state. As R. R. Reno writes, “in much of the world, freer markets would improve the lives of most, decrease dependence, and encourage self-governance.” But even uninhibited markets are not enough when a people’s restraint has been worked over by welfare policies. It takes time to re-establish norms that temper short-sighted habits. Unfortunately, time may soon be up for Western nations that have consumed far beyond their means for too long.
James E. Miller is editor-in-chief of the Ludwig von Mises Institute of Canada, where this article was originally published.
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