Not news – nor a surprise: The Government Lost the War on Poverty

Recently the Supreme Court put an end to Joe Biden’s efforts to gift erstwhile college students almost a trillion dollars in “debt relief”.  That’s a lot of money… but in reality that’s a tiny fraction of the money the government has wasted on redistribution, AKA social programs over the last six decades.

Next year the United States will commemorate the 60th anniversary of the War on Poverty, initiated by President Lyndon B. Johnson in 1964. The War’s programs initially started on a modest scale but have expanded almost parabolically since. At the 50^th anniversary of the launch the government had spent more than $22 trillion on various welfare and redistribution programs and today spends $1 trillion a year on said programs… not including various “targeted” expenditures under Social Security or Medicare, which make the true total simply unknowable.  To put that in perspective, $1 trillion is greater than the GDP of 194 of the world’s 213 countries.

Is this massive expenditure justified by the results of the War on Poverty? Initially one might suggest the results say yes. As of 2021, poverty in the United States hovered at approximately 11.6%, down from the approximately 18% rate in 1964 when the War on Poverty began. That’s a reduction of 6.6%, or almost one third.

A closer look however reveals that that 6.6% reduction after an expenditure of $30 trillion seems underwhelming to say the least.  To see the full picture of the failed War on Poverty one need only look at the poverty rate over the 15 years prior to its beginning.  In 1949 the poverty rate in the United States stood at 34%, fully one third of the nation’s population.  Over the next 15 years, without significant government redistribution programs, indeed, without the War on Poverty, the poverty rate fell almost by half, falling from 34% to 18%, a reduction of a full 16 percentage points.  So, without government spending significant money poverty fell 16% in a period of 15 years, or 1.08% per year.  But with government spending more than $30 trillion over the next 55 years it fell by a total of just 6.4%, or .12% per year! That essentially means that without government intervention the poverty rate was falling 10 times faster than it did once government programs kicked in.

And that 11.6% itself deserves a closer look.  In 2014, when the War on Poverty turned 50, the American poverty rate was still at 15%. That means that after spending $20 trillion over the previous half century the government had successfully reduced poverty by a mere 3%. When Barack Obama he entered the White House in 2008 the poverty rate stood at 12.5%.  It jumped up to 15% for four years before dropping back to 12.5% by the end of his presidency and where it was when Donald Trump took the White House. A mere three years later Trump’s economic renaissance had reduced poverty by 2%, bringing it to its lowest level in history, 10.5%, before the Covid scam derailed the prosperity engine. To put that in perspective, Donald Trump’s economy brought poverty down by 2% in 3 years, fully half as much as government spending did in the 53 years between 1964 and 2016.

And of course the income numbers only tell part of the story.  Sadly, there is much more to it.

An unintended consequence of the War on Poverty appears to have been a skyrocketing of single-parent households, which is a significant driver of poverty.  In 1964, around 4% of American children were born to unwed mothers. By 2021, this percentage increased a full ten times to 40%. Under the heading of Unintended Consequences one could observe that the welfare programs intended to save children from poverty, have, by making it economically and socially viable for single-parent households to exist, in fact stranded many children in poverty and worse, inflicting on them the coincident pathologies of poor education and crime, not coincidentally, both also being consequences of government failure.

From another perspective, let’s draw a comparison between the effects of government spending and the impact of private-sector investments. Let’s take just three companies, Apple, Amazon, and UPS who together had about $1 trillion in revenue in 2022, approximately the same amount the government spent on welfare that same year. These companies – and many others like them – revolutionized industries, drove many trillions of dollars of business for customers and vendors and affiliates; directly and indirectly employ millions of Americans who are breadwinners for their families, and at the same time generated trillions of dollars of wealth for investors.

One can only wonder what might have happened if the more than $30 trillion the government wasted on its failed War on Poverty had instead been invested in startups similar to Apple and Amazon.  Not that we want the government taking our money and investing it – WE DON’T – but imagine the impact that money might have had had it somehow been targeted towards entrepreneurship and economic development. The 2% reduction in poverty during Trump’s first three years demonstrated with crystal clarity that market driven prosperity is a far more efficient vehicle for reducing poverty than government spending of any form. At a minimum, a market driven solution would likely have fostered a far more empowered, economically vibrant and dramatically more prosperous population than the generational dependency created by the government with its alphabet of aid programs.

Benjamin Franklin understood this more clearly than virtually any politician in America today, having commented: “I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

Whether it’s student debt or the federal and state welfare perpetuation machines, America would be better off looking to the Founding Fathers for guidance than the grifters at either end of Pennsylvania Avenue…

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