Bacon's Rebellion

Democracy Thrives in Sunlight

Second Chart of the Day: How Not to End Poverty

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by

James A. Bacon
in

Poverty in the United States declined dramatically in the Post World War II era until 1970 or so, and then it plateaued. In other words, poverty fell until the federal government declared war on it. Then the very institutions that the welfare state erected to ameliorate poverty ended up perpetuating poverty. (Source for the chart: the Cato Institute.) If you’re looking for an explanation of the yawning income gap, this is part of the story. The enervating effects of welfare reduce the incentive for the poor to increase their income. Talk about a high tax bracket! When benefits like the Earned Income Tax Credit, food stamps, housing assistance, Medicaid and more are peeled back  as a poor household earns more money, it’s remarkable that people work as hard as they do! — JAB

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2 responses to “Second Chart of the Day: How Not to End Poverty”

  1. larryg Avatar
    larryg

    of all the welfare “entitlements” – they are pikers compared to K-12 schools that require 10K in tax dollars per kid per year and the kids who come from these demographic circumstances are harder (more expensive) to teach.

    and what do we get if we walk away from it?

    I’m not buying the CATO blather on this though.

    these kids of these demographic circumstances have ALWAYS been hard to educate – and when we integrated the schools – here’s what DID NOT HAPPEN.

    We did not take blacks who were wonderfully educated .. put them in White schools and watch them fail and grow up without an education that then let them go on welfare.

    poverty in the US declined when blacks were given more equal treatment in the military… but then after the war they came back home to segregated schools and segregated job opportunities.

    but where the wheels come off the CATO jalopy is when you ask them what we should do about the problem and their answer..usually implied is.. cut off the child credits…etc..

    I just want to point out that far, far more people get the child credits than food stamps and if someone wanted to convince me me… they’d list of the costs of each of these entitlements to the US treasury and I’m betting right now that the child credits and other tax credits have a far, far bigger cost than food stamps or even MedicAid or housing vouchers…

    in other words.. we incur HUGE costs from ALL parents taking the child credits….

    Cato and Heritage disturb me in the way they “shape” information… more than enough of it tends to cherry-pick out of context…. to support a thinly-veiled agenda…

  2. Hydra Avatar
    Hydra

    People in poverty are there for reasons, many reasons, and none of them have anything to do with the idea we have made it easier to be
    poor. One could just as well read that chart to mean that we have done as well as to be expected: we have reached the floor of hard core poor.

    It was also around 1970 that real income for all workers began to stagnate due to numerous corporate actions to reduce labor costs. The gap between almost everyone and the wealthy “job creators” has increased, not just the poor. While people do move from decile to decile, the defiles themselves have been stagnant but for the top.

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