Lyndon Johnson declared an unconditional “War on Poverty” in his 1964 State of the Union address as part of his Great Society – the utopian delusion that, among its other government wealth transfer schemes, brought us Medicare and Medicaid.
In the intervening 46 years, state and federal governments have burned through more than $15 trillion fighting a losing war on poverty, which never fell below 10.5% of the population during those years and in fact has oscillated between 11% and 15% since 1966. Nevertheless, last week’s announcement by the Census Bureau that the number of people living below the poverty line – $10,830 for one person and $22,050 for a family of four – had risen to 14.3% last year from 13.2% (year over year), set off a cavalcade of liberal op-ed essays decrying the fact that state and federal governments weren’t doing enough.
The “spend more” crowd should ask itself how does a family of four live on $22,050 a year or less? It doesn’t. The federal government's poverty stats count only income. That fails to take into account the public programs that help low-income Americans such as food stamps, housing subsidies, child care expense, and government health insurance plans.
The federal government now has 122 separate anti-poverty programs that spent nearly $600 billion last year. That amounts to almost $15,000 for every poor man, woman and child in America. Given the poverty line thresholds above, it would have been cheaper just to mail every poor person a check for $11,000, making sure all were above the poverty line.
Also ignored by the “spend more” crowd is that poverty today means something different than poverty a generation ago. By the standards of 30 years ago, many of today’s poor families would be considered members of the middle class. A federal government survey in 2001 determined that 91% of the households classified as poor owned color televisions, 74% had microwave ovens, 55% VCRs, and 47% dishwashers. When Johnson declared war on poverty there were rural poor who had no electricity, no running water, and no primary school education. Now most rural towns have access to satellite TV, and even the worst of public housing have solid roofs and indoor plumbing.
The poor have also been helped by our market-based economy – despised as it is by liberals, chief among whom is the current president. In Johnson’s day a 21-inch B/W tabletop TV cost about $1,800 in today's dollars and could receive only a handful of channels, a refrigerator with freezer cost the equivalent of $1,510 in today’s dollars, and a two-speed automatic washing machine, primitive by today's standards, cost the equivalent of $1,100. Only 12% of homes had air-conditioning versus over 88% today.
Liberals want welfare spending to increase without regard to its failures. If the job of the welfare state is to alleviate poverty, what does that mean? The average income of an American taxpayer in 1929, using today’s dollars, was about $16,000 a year. The entire middle class, in other words, was poor by modern standards.
I’m not railing against helping the poor. When someone in the crowd asked Jesus, “Who is my neighbor?” he answered by telling the story of the good Samaritan. As a society grows richer, it not only obtains a greater ability to help the poor, but it also can afford an expanded definition of what it means to be poor – someone who needs and deserves public assistance – although my personal opinion is that individuals, churches, and private organizations should be the chief sources of charity, not the government.
What bugs me is that we have 70 different federal bureaucracies in at least six agencies to help feed hungry people without any metrics to measure their success. If helping the poor is a legitimate federal role and a good use of 650 billions of taxpayer dollars, why not have one or two programs to perform that role instead of 122?
As a taxpayer, I am disgusted by the cavalier manner that government programs are launched without any accountability to measure their success or any sunset date to shut them down unless they can justify re-funding them. Predictably, government programs take on a life of their own even when it’s obvious that they are failing to achieve their goals or stay within the projected future costs, as is the case with both Medicare and Medicaid. Equally aggravatimg is the willingness of federal law-makers and presidents to spend billions based on bad science, junk science, or no science.
Here is some context.
The Orshansky Poverty Thresholds are the basis for the current measures of poverty. Mollie Orshansky was a statistician working first for the Agriculture Department and later the Social Security Administration in the 1950s and 1960s. Orshansky worked out a series of diets designed to provide poor families with adequate nutrition at minimal cost. In painstaking detail, her food plans determined the amount of meat, bread, potatoes, and other staples that families needed in order to eat healthily. These were “by no means subsistence diets,” Orshansky later wrote. “But they do assume that the housewife will be a careful shopper, a skillful cook, and a good manager who will prepare all the family’s meals at home.”
For a mother and father with two children, Orshansky estimated the expense of a “low cost” plan at $3.60 a day, and an even more frugal “economy plan” at $2.80 a day in the mid-1960s. Rather than trying to calculate the price of other items in the family budget, such as rent, heat, and clothing, Orshansky relied on a survey by the Agriculture Department, which showed that the typical American family spent about a third of its income on food. On that basis she simply multiplied the annual cost of the food plans by three. Families on the low-cost plan therefore needed to earn at least $3,955 a year to have a lifestyle in which one-third of the income is devoted to food; families on the economy plan needed to earn $3,165.
Orshansky’s method became the basis for determining eligibility for Johnson’s “War on Poverty” programs. Those original Orshansky Thresholds are still in use despite the fact that falling food prices since the thresholds were conceived have reduced the percentage of family spending that food consumes and food stamps reduce food spending even more. The thresholds are updated annually for inflation using the Consumer Price Index, which is slow to incorporate new consumer lifestyle products (it took 15 years to include cell phones), it doesn’t account for improvements in the quality of goods, and doesn't fully reflect the low prices available to shoppers at big-box stores such as Wal-Mart. Lower prices enable people to get out of actual poverty, so their absence from the CPI causes the Census Bureau to overstate inflation and that and the other defects of the Orshansky percentages keep official poverty thresholds higher than they should be.
Professors Bruce D. Meyer and James X. Sullivan of the University of Chicago and Notre Dame respectively have developed an inflation index that overcomes the flaws of the Orshansky method and CPI. In an opinion piece that came out a few days after the Census announcement on the increase in poverty, “How Census Gets It Wrong on Poverty,” they argue that spending, not income, should be the basis for determining who is poor:
“Since 1980, the poverty rate according to our calculations -- based on a more comprehensive measure of income, that uses a more accurate price index and that includes the Earned Income Tax Credit, food stamps, and other benefits -- has fallen by 3 percentage points more than the official measure. And poverty based on consumption fell by more than 5 percentage points during this same period, which translates into more than 15 million people moved out of poverty.”
Imagine a politician reading the Census announcement with an anti-poverty activist shouting in his ear that the government isn’t spending enough while blissfully ignorant of the work of Meyer and Sullivan.
Instead of the hand wringing that followed the Census poverty announcement, the liberal pundits should have asked the “dog that didn’t bark” question: Why has the poverty rate been so intractable after four and a half decades of depriving taxpayers of $15 trillion they could have spent more wisely? Even if the current recession pushed some people into poverty, which is unlikely, this recession can’t explain the long term poverty rate. My own modest work attempting to understand poverty in Honduras convinced me years ago that there is a cultural adaptation to poverty among poor people. Not having been born or lived in poverty myself, if I became impoverished I would work hard to get out of it. A person born and raised in poverty with few non-poor acquaintances, however, is more familiar with poverty than with its absence, and is more likely to regard his situation as an inevitable part of the human condition – not a problem that he can or should solve.
Studies of the working poor seem to corroborate this. Last year when the unemployment rate doubled to 10% why didn’t the poverty rate go up much more than the 1.1% increase that Census claims? Because of the work behaviors of the poor. Slightly more than 35% of the poor adults over 16 worked in 2009 compared to about 65% of the general population, and less than 10% of poor adults worked full time for the entire year compared to 42% of the general population.
Blaming the current recession doesn’t square with the fact that fewer than 45% of poor adults worked during the boom times of the 1990s. Only 12% attributed their non-work in 2009 to an inability to find a job – slightly more than the 10% in the general population.
Those who fear unemployment are people like me who have a middle class life style to support which requires a middle class job that is not easily replaced. Because sustaining a middle class life style requires a steady income, people in that class work most of the time, and therefore are seldom poor, whereas poor people seldom work, and therefore don’t fear unemployment.
Joblessness isn’t the cause of poverty. Not working most of the time causes poverty. There are and will always be ample jobs for working poor as our immigration problem demonstrates. A poor person who works most of the time will escape poverty just by stint of the federal minimum wage. While those jobs do not pay particularly well, that is due to inadequate education and qualifications of the worker, not inadequate job availability.
The problem that Johnson’s “war” and the anti-poverty activists ought to have tried to solve is how to get the poor to work often enough that they fear the pain of unemployment as much as the middle class. Tying public assistance to private sector employment would bring down the cost of Johnson’s war AND solve the illegal immigration problem.
In the intervening 46 years, state and federal governments have burned through more than $15 trillion fighting a losing war on poverty, which never fell below 10.5% of the population during those years and in fact has oscillated between 11% and 15% since 1966. Nevertheless, last week’s announcement by the Census Bureau that the number of people living below the poverty line – $10,830 for one person and $22,050 for a family of four – had risen to 14.3% last year from 13.2% (year over year), set off a cavalcade of liberal op-ed essays decrying the fact that state and federal governments weren’t doing enough.
The “spend more” crowd should ask itself how does a family of four live on $22,050 a year or less? It doesn’t. The federal government's poverty stats count only income. That fails to take into account the public programs that help low-income Americans such as food stamps, housing subsidies, child care expense, and government health insurance plans.
The federal government now has 122 separate anti-poverty programs that spent nearly $600 billion last year. That amounts to almost $15,000 for every poor man, woman and child in America. Given the poverty line thresholds above, it would have been cheaper just to mail every poor person a check for $11,000, making sure all were above the poverty line.
Also ignored by the “spend more” crowd is that poverty today means something different than poverty a generation ago. By the standards of 30 years ago, many of today’s poor families would be considered members of the middle class. A federal government survey in 2001 determined that 91% of the households classified as poor owned color televisions, 74% had microwave ovens, 55% VCRs, and 47% dishwashers. When Johnson declared war on poverty there were rural poor who had no electricity, no running water, and no primary school education. Now most rural towns have access to satellite TV, and even the worst of public housing have solid roofs and indoor plumbing.
The poor have also been helped by our market-based economy – despised as it is by liberals, chief among whom is the current president. In Johnson’s day a 21-inch B/W tabletop TV cost about $1,800 in today's dollars and could receive only a handful of channels, a refrigerator with freezer cost the equivalent of $1,510 in today’s dollars, and a two-speed automatic washing machine, primitive by today's standards, cost the equivalent of $1,100. Only 12% of homes had air-conditioning versus over 88% today.
Liberals want welfare spending to increase without regard to its failures. If the job of the welfare state is to alleviate poverty, what does that mean? The average income of an American taxpayer in 1929, using today’s dollars, was about $16,000 a year. The entire middle class, in other words, was poor by modern standards.
I’m not railing against helping the poor. When someone in the crowd asked Jesus, “Who is my neighbor?” he answered by telling the story of the good Samaritan. As a society grows richer, it not only obtains a greater ability to help the poor, but it also can afford an expanded definition of what it means to be poor – someone who needs and deserves public assistance – although my personal opinion is that individuals, churches, and private organizations should be the chief sources of charity, not the government.
What bugs me is that we have 70 different federal bureaucracies in at least six agencies to help feed hungry people without any metrics to measure their success. If helping the poor is a legitimate federal role and a good use of 650 billions of taxpayer dollars, why not have one or two programs to perform that role instead of 122?
As a taxpayer, I am disgusted by the cavalier manner that government programs are launched without any accountability to measure their success or any sunset date to shut them down unless they can justify re-funding them. Predictably, government programs take on a life of their own even when it’s obvious that they are failing to achieve their goals or stay within the projected future costs, as is the case with both Medicare and Medicaid. Equally aggravatimg is the willingness of federal law-makers and presidents to spend billions based on bad science, junk science, or no science.
Here is some context.
The Orshansky Poverty Thresholds are the basis for the current measures of poverty. Mollie Orshansky was a statistician working first for the Agriculture Department and later the Social Security Administration in the 1950s and 1960s. Orshansky worked out a series of diets designed to provide poor families with adequate nutrition at minimal cost. In painstaking detail, her food plans determined the amount of meat, bread, potatoes, and other staples that families needed in order to eat healthily. These were “by no means subsistence diets,” Orshansky later wrote. “But they do assume that the housewife will be a careful shopper, a skillful cook, and a good manager who will prepare all the family’s meals at home.”
For a mother and father with two children, Orshansky estimated the expense of a “low cost” plan at $3.60 a day, and an even more frugal “economy plan” at $2.80 a day in the mid-1960s. Rather than trying to calculate the price of other items in the family budget, such as rent, heat, and clothing, Orshansky relied on a survey by the Agriculture Department, which showed that the typical American family spent about a third of its income on food. On that basis she simply multiplied the annual cost of the food plans by three. Families on the low-cost plan therefore needed to earn at least $3,955 a year to have a lifestyle in which one-third of the income is devoted to food; families on the economy plan needed to earn $3,165.
Orshansky’s method became the basis for determining eligibility for Johnson’s “War on Poverty” programs. Those original Orshansky Thresholds are still in use despite the fact that falling food prices since the thresholds were conceived have reduced the percentage of family spending that food consumes and food stamps reduce food spending even more. The thresholds are updated annually for inflation using the Consumer Price Index, which is slow to incorporate new consumer lifestyle products (it took 15 years to include cell phones), it doesn’t account for improvements in the quality of goods, and doesn't fully reflect the low prices available to shoppers at big-box stores such as Wal-Mart. Lower prices enable people to get out of actual poverty, so their absence from the CPI causes the Census Bureau to overstate inflation and that and the other defects of the Orshansky percentages keep official poverty thresholds higher than they should be.
Professors Bruce D. Meyer and James X. Sullivan of the University of Chicago and Notre Dame respectively have developed an inflation index that overcomes the flaws of the Orshansky method and CPI. In an opinion piece that came out a few days after the Census announcement on the increase in poverty, “How Census Gets It Wrong on Poverty,” they argue that spending, not income, should be the basis for determining who is poor:
“Since 1980, the poverty rate according to our calculations -- based on a more comprehensive measure of income, that uses a more accurate price index and that includes the Earned Income Tax Credit, food stamps, and other benefits -- has fallen by 3 percentage points more than the official measure. And poverty based on consumption fell by more than 5 percentage points during this same period, which translates into more than 15 million people moved out of poverty.”
Imagine a politician reading the Census announcement with an anti-poverty activist shouting in his ear that the government isn’t spending enough while blissfully ignorant of the work of Meyer and Sullivan.
Instead of the hand wringing that followed the Census poverty announcement, the liberal pundits should have asked the “dog that didn’t bark” question: Why has the poverty rate been so intractable after four and a half decades of depriving taxpayers of $15 trillion they could have spent more wisely? Even if the current recession pushed some people into poverty, which is unlikely, this recession can’t explain the long term poverty rate. My own modest work attempting to understand poverty in Honduras convinced me years ago that there is a cultural adaptation to poverty among poor people. Not having been born or lived in poverty myself, if I became impoverished I would work hard to get out of it. A person born and raised in poverty with few non-poor acquaintances, however, is more familiar with poverty than with its absence, and is more likely to regard his situation as an inevitable part of the human condition – not a problem that he can or should solve.
Studies of the working poor seem to corroborate this. Last year when the unemployment rate doubled to 10% why didn’t the poverty rate go up much more than the 1.1% increase that Census claims? Because of the work behaviors of the poor. Slightly more than 35% of the poor adults over 16 worked in 2009 compared to about 65% of the general population, and less than 10% of poor adults worked full time for the entire year compared to 42% of the general population.
Blaming the current recession doesn’t square with the fact that fewer than 45% of poor adults worked during the boom times of the 1990s. Only 12% attributed their non-work in 2009 to an inability to find a job – slightly more than the 10% in the general population.
Those who fear unemployment are people like me who have a middle class life style to support which requires a middle class job that is not easily replaced. Because sustaining a middle class life style requires a steady income, people in that class work most of the time, and therefore are seldom poor, whereas poor people seldom work, and therefore don’t fear unemployment.
Joblessness isn’t the cause of poverty. Not working most of the time causes poverty. There are and will always be ample jobs for working poor as our immigration problem demonstrates. A poor person who works most of the time will escape poverty just by stint of the federal minimum wage. While those jobs do not pay particularly well, that is due to inadequate education and qualifications of the worker, not inadequate job availability.
The problem that Johnson’s “war” and the anti-poverty activists ought to have tried to solve is how to get the poor to work often enough that they fear the pain of unemployment as much as the middle class. Tying public assistance to private sector employment would bring down the cost of Johnson’s war AND solve the illegal immigration problem.
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