War on Poverty

This was so good, I thought it needed its own thread…

Cyn said (scroll down) > (Why don’t we help the poor) by throwing that $1.5 billion into the pot (to raise their incomes).

We’ve tried that. Actually, since LBJ’s famous “War on Poverty” started, we’ve spent between $4.5 trillion and $7 trillion on the “War.” Just as perspecitve, a Trillion dollars is a Million Millions. So if the feds just wanted to hand out large chunks of cash, they could have made between 4.5 and 7 million millionaires in the last 40 years.

My point (and there is one) is that we have tried just throwing money at poverty, and it’s done nothing in the long term to reduce poverty rates. Continuing to suggest “free money” as a panacea is kind of like being the bully punching the wimpy kid with his own hand and repeating “Stop hitting yourself…”

But, even the Census Bureau shows that the poverty rate has been basically unchanged for the last 40 years, even going up significantly under the Carter, Reagan, and Clinton administration. (Although I would be curious to see how the poverty rate is determined).

Taking a rough figure for folks below the poverty line at 40 million Americans, and the lower figure for the “War“‘s cost (about $4 Trillion), we’re looking at about $100,000 PER PERSON over the life of the “War on Poverty.” Granted, that’s only about $2,500/year per head. But that is PER PERSON. Family of 4 living below the poverty line should get an income boost of approx $10 grand, even at the low end. With 2002 figures, the effective poverty line for a family of 4 is $18K, give or take - or one 40 hour/week job with 2 weeks of vacation at $9/hour. Which is pretty close to what McD’s pays around here. That’s with one potential earner staying home the entire time. Add in the $2,500 per head we could give the family if we took all the social programs to straight handouts, they’d be almost to $30K in family income.

Bureaucracies to hand out money are extremely expensive to operate, and generally do a pretty poor job. Granted, it’s not HHS, but when I was using the VA’s GI Bill to pay for grad school, it took me almost a year to get my initial payment. Good thing the GI Bill was gravy and we had the cash to support school.

The other thing to think about - Those 4.5 million millionaires that we wiped out to spend $4.5 trillion on the “War on Poverty” - What’dya wanna guess they would have done with their cash. My guess is not spread it out and roll around naked on it (Though some might have). My guess is that most of them would have gone out and formed some sort of small business.

Using some more figures from the Census Bureau, (I used the figures from 2001, scratch pad is here), we see that 20 percent of the population works for companies of less than 100 employees. A company of 5 to 9 employees has an average payroll of $175K, certainly sustainable for someone with a million bucks to invest. Hey - at an average of 7 employees per firm, those 4 million millionaires that we didn’t create since we were providing handouts instead of letting people keep their taxes would have created 28 million jobs at an average salary of $26K, well above the poverty line, or more jobs than we have people below the poverty line.

My point (and there is one) is that we have tried just throwing money at poverty, and it’s done nothing in the long term to reduce poverty rates. Continuing to suggest “free money” as a panacea is kind of like being the bully punching the wimpy kid with his own hand and repeating “Stop hitting yourself…”

Posted by jank at January 28, 2004 6:15 PM