On Poverty and Why It Is Still a Problem
Bart Hinkle has suggested that the huge amount we spend each year on anti-poverty programs is, at least in large part, wasted. Afterall, it’s a lot of money, and the poor are still with us. And it’s not getting cheaper.1
Washington runs 126 separate anti-poverty programs that collectively spend nearly $1 trillion a year. I got five bucks2 says we could get the same bang for the buck with only 75 programs and by spending one-third less.
So we’re spending huge amounts of money alleviating poverty … but for some reason the poor remain stubbornly with us. A few conservatives have looked at this expense and suggested that this means the money going to these programs is “wasted” or “not working.”3 I think the reason we’re spending this same kind of money year after year is that 1) our anti-poverty programs are rarely designed to end poverty, 2) we happily tolerate systemic pressures that actively cause poverty, and 3) any effort to investigate and address the root causes of poverty is met with massive resistance by the same conservatives who think the poverty alleviation efforts are a waste.
Once in a while I like to stick a fork in my thigh because it gives me a rush.4 Needless to say, I go through a lot of bandaids. My bandaid budget is out of control. And the thing is—the bandaids aren’t working. They generally stop the bleeding, keep the wound more-or-less clean, and mask some seriously unsightly scabs. But they don’t stop me from getting four new puncture wounds every time I stick a fork in my thigh.
It doesn’t take a medical degree to identify what’s going wrong. If we stop stabbing ourselves with forks, we’ll have a lot fewer puncture wounds. Any serious discussion about how to stop the puncture wounds should include a discussion of the fork-stabbing habit. And blaming the bandaids for failing to prevent us from stabbing ourselves with forks is just silly. Tearing off the bandaids because they never accomplished something they were never intended to accomplish is counterproductive.
Unfortunately, this is roughly our approach to poverty. Wealth is growing more stratified. The middle class is looking a bit more lower middle-class. Poverty rates are rising. The downward pressure keeps mounting. None of this is a coincidence. None of this is a surprise. But any attempt to do anything about it is met with fierce resistance. Poverty remains a problem because we’re willing to alleviate suffering on a case-by-case basis, but we’re rarely willing to tackle the forces causing poverty.
Let’s start with an easy example. Credit card debt is crushing a lot of families. We know that. Credit cards are heavily advertised. We know this. These advertisements are created by some extraordinarily intelligent people for the primary purpose of encouraging irresponsible financial behavior in less extraordinarily intelligent people. This too is known. The net effect is that large amounts of discretionary and not-so-discretionary income is funneled from vulnerable people to the credit card companies. We know this. The credit card companies are, in turn, owned by a lot of people who already have a lot of money. We know all of this.
1) We’ve got the equivalent of a giant vaccuum sucking money from people with less money and distributing it to people with more money. 2) We know exactly what’s going on. 3) In the time it took you to read that paragraph, you came up with two or three reasons why we shouldn’t do anything to change any of this.5
If we’re willing to attack poverty at the roots, we know how to do that. Until then, we’re stuck with some very, very expensive bandaids.
Much of the driver of that cost is Medicaid. Healthcare costs have been rising unsustainably for a long time. Medicaid is no exception. So the largest single part of the reason these costs are going up is really a healthcare cost problem, not a problem with our anti-poverty efforts. But let’s look past this. Our antipoverty programs have not succeeded in significantly decreasing the overall poverty rate. ↩
I’d take that bet. Sure, we could administratively consolidate some programs. But the 1/3 cost reduction is improbable, even if we discount the disruption costs of the consolidation. As mentioned in the previous footnote, the big cost driver is Medicaid. The next four are SNAP, SSI, EITC, and Pell Grants. (Yeah, I know. Most people wouldn’t consider Pell Grants an anti-poverty program. But we’re going with CATOs list on this for some reason. Also, don’t take CATO’s list at face value because it looksl ike it does a lot of double counting by including both federal grants to states AND state spending.) So basically, you’re already past 2/3 of your federal spending before you get to any of the prorams where you could see any efficiency from consolidation. (On the other hand, it’s highly probable that CATO could get the 1/3 cost reduction if it stopped double counting. Bart, I’ll take your fiver, contingent on actual costs savings. No credit for fixing CATO’s questionable accounting.) ↩
I really disagree with this assessment. If you pay for the extraction of a festering tooth for somebody who can’t pay the bill herself, you’ve accomplished exactly what you attempted to do. You’ve alleviated a whole lot of pain. And the beneficiary can now go about life unburdened by constant pain and the stinky tooth that made her unemployable. ↩
Do to Tumblr Inc.’s very reasonable policy against glorifying self-harm, I am mandated to state that 1) this sentence is not technically true, 2) sticking a fork in your thigh will not make you cool, and 3) if you want an adrenaline rush that badly, consider an innovative extreme sport like the Segway Luge. ↩
Let me see if I can guess them. First, the people whose money was vaccuumed up weren’t clever enough to protect themselves, so they deserve what happened. Second, the credit card companies buy you plane tickets and you don’t want to risk derailing that gravy train. Third, FREEEEEEEDOM! Fourth, because I chose this example, I must have something personal against the credit card companies, you can probably assume I’m bad at managing my own money and I’m therefor a bad capitalist, a bad American, and definitely not worth listening to. Hopefully you can apply the same critical skills you used to persuade yourself not to care about wealth distribution through credit card debt to your counter-arguments and figure out why they’re all wrong. ↩