Liberals pretty much own helping the poor and economically disadvantaged, at least in the conventional wisdom sense. The reality is far from the truth, however. Let’s look at what liberal policies have done by examining two of the key planks in the liberal economic platform.
For the past 50 years, the government’s annual poverty rate has hardly changed at all. According to the U.S. Census Bureau, 15 percent of Americans still live in poverty, roughly the same rate as the mid-1960s when the War on Poverty was just starting. After adjusting for inflation, federal and state welfare spending today is 16 times greater than it was when President Johnson launched the War on Poverty. If converted into cash, current means-tested spending is five times the amount needed to eliminate all official poverty in the U.S. How can the government spend so much while poverty remains unchanged?
The answer is simple: The U.S. Bureau of the Census official “poverty” figures are woefully incomplete. The Census defines a family as poor if its annual “income” falls below specific poverty income thresholds. In counting “income,” the Census includes wages and salaries but excludes nearly all welfare benefits. The federal government runs over 80 means-tested welfare programs that provide cash, food, housing, medical care, and targeted social services to poor and low-income Americans. Government spent $916 billion on these programs in 2012; roughly 100 million Americans received aid from at least one of them, at an average cost of $9,000 per recipient. (These figures do not include Social Security or Medicare.)
Of the $916 billion in means-tested welfare spending in 2012, the Census counted only about 3 percent as “income” for purposes of measuring poverty. In other words, the government’s official “poverty” measure is not helpful for measuring actual living conditions.
On the other hand, the Census poverty numbers do provide a very useful measure of “self-sufficiency”: the ability of a family to sustain an income above the poverty threshold without welfare assistance. The Census is accurate in reporting there has been no improvement in self-sufficiency for the past 45 years.
Ironically, self-sufficiency was President Johnson’s original goal in launching his War on Poverty. Johnson promised his war would remove the “causes not just the consequences of poverty.” He stated, “Our aim is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.” Johnson did not intend to put more Americans on the dole. Instead, he explicitly sought to reduce the future need for welfare by making lower-income Americans productive and self-sufficient.
By this standard, the War on Poverty has been a catastrophic failure. After spending more than $20 trillion on Johnson’s war, many Americans are less capable of self-support than when the war began. This lack of progress is, in a major part, due to the welfare system itself. Welfare breaks down the habits and norms that lead to self-reliance, especially those of marriage and work. It thereby generates a pattern of increasing inter-generational dependence. The welfare state is self-perpetuating: By undermining productive social norms, welfare creates a need for even greater assistance in the future. Reforms should focus on these programs’ incentive structure to point the way toward self-sufficiency. One step is communicating that the poverty rate is better understood as self-sufficiency rate—that is, we should measure how many Americans can take care of themselves and their families.
[Average American household income declines 36% since 2003, as] the NY Times tells us this morning:
Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.
The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.
The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 95 percent of the population had less wealth.) It found that for this well-do-do slice of the population, household net worth increased 14 percent over the same 10 years. Other research, by economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest 1 percent of households.
Now if you were a low information voter, you might conclude from that excerpt that it is the rotten rich who are responsible for this decline. To do that you have to believe that the economy is a finite pie and when someone takes a big slice, everyone else gets smaller slices. But that’s not the case is it. This really doesn’t have anything to do with income inequality, as the left would have you believe.
Think about it – average income is a total divided by a number. That means that the total income of everyone working is divided by the number of families out there.
So if that’s the case, what’s the key? The number of people working. No work, no income. The families still exist in the same numbers, but the income that has been supporting them is down due to what? Unemployment.
And, of course, because it is bad news for Democrats, we don’t hear much about that anymore. A simple graph, however, will help pinpoint the problem:
The problem certainly isn’t “income inequality”, is it?
Nope. We’ve discussed the load of garbage that is “income inequality” in the past (see here or here), so I won’t get into it again here. The point of this post is to illustrate that if liberal policies — and yes, I know George W. Bush was President between 2003 and 2008; I’m targeting liberal polices, no matter who implemented them, and Bush was a massive over-spender…chump change compared to Obama, but still an over-spender — were to ever work, they would have by now. The reality is that they do not work, and they never will. They are based on a faulty understanding of economics combined with a twisted sense of priority. In most cases, they’re designed to accomplish goals completely unrelated to economic health or development (i.e. Obamacare is about controlling people, not about making health care better or more affordable). As such, they attempt to bend the laws of reality to suit them rather than the other way around, or are outrightly deceitful.
If we want this nation to return to health and security, we need to get rid of liberalism in all its forms, from all its proponents.
There’s my two cents.