Poverty

"The government solution to a problem is usually as bad as the problem." Milton Friedman, Economist

"That some should be rich, shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built." Abraham Lincoln(7)

"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." Ben Franklin(8)

"We have a system that increasingly taxes work and subsidizes nonwork." Milton Friedman, Economist
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Since America became a nation, the traditional way to escape poverty was through education, hard work and an entrepreneurial spirit. From the origins of the country to 1929, there was minimal spending on social welfare programs. The depression of the 1930s was a unique situation in American history with large scale government spending on social programs.  However, even during the depression, Franklin Roosevelt required people to work in order to receive payment from the government and social spending was considered temporary, not a permanent crutch. Lyndon Johnson, the worst president in history, destroyed this noble method of escaping poverty with his mis-named “War on Poverty.” In 1965, LBJ promised to eliminate poverty in America within 10 years at a cost of $60 billion. Redistribution of income through higher taxes became the democratic mantra through Johnson’s “Great Society” programs in the 1960s. The results of the “war” on poverty has been nothing short of a national calamity for receiver and taxpayer alike. We have not eliminated poverty. The government has created an ever increasing dependency class that has gotten so big it is bankrupting the country. What are we doing wrong????
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Sections in this article

What is Poverty?
How 150 years of individual and economic freedom made America Prosperous 
The Great Depression changes the relationship between government and governed
The financial cost of “fighting” poverty since 1965
Causes of Poverty
The Non-Solution
The Real Solution
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What is Poverty?

As times change, definitions of poverty change. Being poor in America is relative to the living standard for the American middle class. For instance, if you had indoor plumbing or owned a car one hundred years ago, you were rich. Due to America’s continuous improvement in the standard of living, what is considered a luxury for one generation, is considered common in the next.  As society prospers, the standard of poverty rises.

How 150 years of individual and economic freedom made America Prosperous 
America mounted the most effective war on poverty ever seen in the world after America became a nation. The government confined itself to its proper role as protector of liberty by keeping the peace. For the first 150 years of America’s existence, governments at all levels played a minimal role in social welfare. In 1831, Frenchman Alexis De Tocqueville toured the United States to try to find out why the American Revolution succeeded so brilliantly while the French Revolution of the 1790’s failed completely. De Tocqueville made many interesting observations. “The citizen of the United States is taught from infancy to rely upon his own exertions, in order to resist the evils and the difficulties of life.”[1] He also noted “Nothing is more striking to a European traveller in the United States than the absence of what we term the government.”[1]

Americans pulled themselves out of poverty through hard work, inventions and business creation which produced wealth. Those of unfortunate circumstances were helped through civic and church organizations, which were supported by fellow citizens. De Tocqueville was amazed at this “art of associating together.” “In the United States, associations are established to promote the public safety, commerce, industry, morality, and religion. There is no end which the human will despairs of attaining through the combined power of individuals united into a society.”[1]

The 1800s produced the most incredible birth of private charitable organizations and fraternal organizations ever seen in world history. When people saw a problem, they banded together to resolve it. American generosity became the marvel of the world. These organizations played a critical role in American life before modern insurance and the welfare state. These organizations provided financial assistance when a member became sick, unemployed or died. These organizations worked because they carefully screened individuals who wanted help. There were no welfare cheats prior to government welfare!

By 1900, the United States had one of the highest per-capita incomes in the world[3] and 46.5% of the American people owned their own homes.[4] All of this was accomplished in a century that saw six economic downturns, a horrific civil war that tore the country apart, labor unrest and millions of impoverished immigrants flooding our country. And all this was accomplished starting from zero. "As late as 1929, before the onset of the Great Depression, federal, state, and local welfare expenditures was only $90 million."[2] In inflation adjusted dollars, that would be under $1 billion today. [3]

The Great Depression changes the relationship between government and governed
The massive unemployment of the depression overwhelmed private charities and local government programs. Poverty was no longer relegated to a small portion of the population, rather it affected a significant number of the middle class. Hard work was no longer enough to keep a job. Americans demanded help to cope with a situation beyond their control. Changed attitudes about entitlements lead to passage of Social Security in 1935 and was the first large entitlement initiated by Franklin Roosevelt. In the decades that followed, Medicare and Supplemental Security Income where enacted into law.

The cost of “fighting” poverty since 1965
Over the past 40 plus years, TRILLIONS of dollars have been redistributed to solve America’s social ills. These programs have been reformed repeatedly to make them work, yet nothing stops the flood of money from the taxpayer to society’s takers. If poverty programs worked, America should be utopia by now. The truth is, most of this money has been wasted. Hardworking American taxpayers have lost TRILLIONS of dollars in taxes that they could have spent helping themselves and their children.

There are various estimates on the total amount of money spent on the “war” on poverty since 1965. Robert Rector of the Heritage Foundation estimated $5.4 trillion had been spent on poverty - direct and indirect payments - by 1995.[2] Rector reported in 2007 the total spent had risen to $11 trillion. Columnist George Will, known for his factual accuracy, reported $6.6 trillion spent on “strictly defined” anti-poverty programs by 2005.[5] Jenifer Zeigler, a welfare policy analyst at the Cato Institute reported the total spent by 2004 at $9 trillion.[6]

Because there are so many programs, many of which overlap and so much is in indirect payments, determining the total cost of poverty spending in not easy. However, we have spent a lot and it hasn’t solved the problem.We need a radically different approach.

Causes of Poverty
The American system of fighting poverty makes no moral judgments in allocating economic rewards. This system promotes antisocial behavior and fosters an attitude of “you owe me.”
Poverty in America is the result of either:

1) People who won’t work. This is the dependency class and it is growing. Any money spent on these people is wasted. These are the people who are unemployable - and they made themselves that way. These are the people who engage in irresponsible, self destructive behavior. The people who think the world owes them a living, have a poor work ethic, etc., etc. These people cannot be helped until they change on the inside and have an attitude adjustment. Yet billions of hard earned tax dollars are spent on people like this every year and has done nothing except perpetuate poverty and photo ops for liberal politicians who love spending your money.

2) People who can’t earn enough money to make ends meet. These are the working poor, and these people must be helped.  The issue is how best to help them without corrupting them. It's important to note that many poor people are poor because they are not thrifty - they don't manage money well.

The Non-Solution
It is morally wrong to spend hard earned taxpayer dollars on irresponsible, lazy people, yet liberals will always throw money at a problem whether any good is accomplished or not.  This is one of the fundamental difference between the liberal and conservative approach. Conservative want people to take care of themselves.  Liberals want people dependent on their generosity - actually the taxpayers generosity.  There is no such thing as an efficient government program. Experience with the welfare states of Western Europe prove that fraud is an ever increasing problem, especially in Britain and France. There are always people who will manipulate their circumstances so they can receive some type of government aid.

In addition, most poverty money is wasted. Studies show that only about one-third to one half of money goes to people. The rest is overhead or lost through fraud.

There are many problems with anti-poverty programs and the welfare state it promotes.

1) They don’t solve the problem. Social programs lead to more social programs which lead to more social programs, etc. And the problems are NEVER solved. The truth is, they create problems. The more handouts you give people, the more corrupt and irresponsible they become. Poverty programs promote fraud on a massive scale and increase the size and cost of the dependency class. Costs NEVER go down. Even after the much heralded 1996 welfare reform bill signed by Clinton, costs continued to increase. There is no such thing as welfare reform. They just change names. With each passing year, these programs become: a) more expensive b) more inefficient, and c) more politicized and corrupt. 

2) These programs have a hugely negative effect on the people who work.  Why should you work hard and do what’s right when someone else is manipulating the system, receiving disability or welfare and food stamps?

3) The cost of these programs has reached the point where our nation’s economy is being adversely affected. Historically, when a nation’s combined tax rate goes over 35%, taxes paid versus money kept from your paycheck gets out of balance.  So much money is being redistributed to the dependency class that people lose too much in taxes, which affects their own well being.

Today, there are STILL leftwing politicians and advocates who believe we haven’t spent enough money. This “logic” borders on insanity and is more proof that facts mean nothing to the left. Only effort counts - even if it is a total failure. So what would constitute enough spending in the minds of the angry anti-poverty advocates?   The truth is, no matter how much we spend, IT WILL NEVER BE ENOUGH!!! Why? Because a system that is a fundamental failure by defying human nature can never be made to work, regardless of how much money we spend. All we will do is destroy our economy. The more we spend on anti-poverty programs, the more poverty we create! 

The best way to help people is to create the proper conditions so people can help themselves. If they choose to remain poor or homeless by failure to work, then that is their problem - not society’s.

The Solution
There are two opposing views on how to help people. Liberals want you dependent on their generosity - actually the taxpayers generosity. Another way - the correct way - is to let people keep more of what they earn and cut out the middleman - the bureaucrat. The United States needs to go back to the traditional method of people getting out of poverty - through work and education and a safety net run by charitable/religious organizations that are already in place.
If we could go back and take all the trillions spent on poverty programs, and spend it differently, what would we do? What we could have done is to use that money to balance the budget and eliminate corporate income tax, so millions of jobs would not have left the country. But we have to deal with the current situation. See economic reforms for complete details.
The following changes should be implemented to help individuals and families:

How to help the working poor while eliminating the bureaucrat:
1) Eliminate federal taxes for single people making under $30,000 a year and couples making less than $60,000 a year.  Taking these people out of revenue generation will not cause the deficit to grow, as poverty programs will be ended when these tax changes take effect. Any money a single makes over $30,000 or a couple makes over $60,000 is taxed at the current rate.
2) Double the tax deductions for the first 3 children.  After that get birth control or pay up.
3) Raise the minimum wage. The minimum wage was last increased in 2009, when it went from $6.55 to $7.25 per hour. We believe the minimum wage should now be a two tier system. The rate should be raised in increments to $9 an hour except for people in banking and food preparation. Their minimum wage should be $10 per hour.
     In attacking poverty, the minimum wage can NOT be the only method used to ensure a middle class lifestyle. It would have to be raised too much. It is part of a combined attack. Other ways for the poor to better themselves is the Earned Income Tax Credit, a graduated income tax that increases in one percentage increments, higher deductions for dependents and last but not least, continuing education. (See: Minimum Wage)
 4) For people who run up against life changing circumstances, low cost housing run by charitable/religious organizations should be used until people get back on their feet. This option is only for people with a good work history and would be in a decent location (not some inner city slum) for a limited time.

How to help the lazy, the drug abuser, the unemployable who can’t get or hold a job:

There are 4 options:
1) When welfare is ended, many of the peope who were on it will be angry at America, since they believe the world owes them a living. These people should be offered a one-way ticket to another country provided the person can find a country dumb enough to take them and then the person renounces his/her US citizenship. Good riddance.

If these people don’t want to renounce their citizenship or can’t find another country to take them, then we go to steps 2, 3 or 4.

2) Live in housing run by social or religious organizations that charge minimal rent and keep most of your money in a savings account for you. These organizations already exist in most every city in America. When you get a handle on your problems, you leave the program and you get all your money they have held for you.
3)  The hardcore unemployable will report to programs styled after those used during the depression. Some people need a controlled environment to live in. They self-destruct in a free society. The government will pay you, but you will be working on something. Once you get your life straightened out, you leave the program and rejoin society.
4) Some people would rather commit a crime and go to jail where they have free meals, a bed and can lay around all day. Jail is home for some people. Send these people to low cost barrack type jails. If this is how they want to live their life, so be it - BUT - no intimate visits with a member of the opposite sex. This is jail - not a hippie commune.


1. Democracy in America, by Alexis De Tocqueville - originally published in 1835
2. "America’s Failed $5.4 Trillion War on Poverty," Robert Rector and William Lauber, published in 1995
3. Mackinac Center for Public Policy   http://www.mackinac.org/article.aspx?ID=7050
4. www.census.gov/hhes/www/housing/census/historic/owner.html
5. http://www.washingtonpost.com/wp-dyn/content/article/2005/09/12/AR2005091201260 .html
6. http://www.cato.org/publications/commentary/$9-trillion-didnt-end-poverty-what-do
7. Reply to New York Workingmen's Democratic Republican Association (21 March 1864)
8. On the Price of Corn and Management of the Poor (29 November 1766)