I’ll start with an old parable.  One man makes $1,000/day, and another makes $10/day.  The “high income” man then opens a factory and hires the “low income” man, and two or three others, at $100/day.  The high income man, with his factory, now makes $2,000/day.  The income disparity difference certainly has increased, markedly, from the original $990/day to $1,900/day.

But has the disparity increased, really?  The high income man, from his factory and hirings has gone from making 100 times the low income man’s earnings to only 20 times that man’s earnings.  And while the high income man’s earnings have doubled, the low income man’s earnings have gone up 10 times.

This brings me to the subject of my post.

We have poor people exactly because the US is the quintessential country where poor people have the opportunity to better themselves, and to do so a very great deal.  They come here from other countries to take advantage of just such opportunities as the parable illustrates, and other opportunities—to be the one who starts the factory, employs others, and both prospers and gives their employees increased prosperity in return for their work.  The same opportunities exist for those who start out as poor US citizens, also.  It’s economic upward mobility that lets people stop being poor and start being middle class, to continue and join the rich, and to set the conditions for their children to do the same and more.

But there’s another reason we have poor people in this country, also.  Despite having spent $20 trillion on poverty programs (I hesitate to call them poverty fighting programs) over the last 50 years, we still have the same per centage of poor people in our population as we had at the start of LBJ’s War on Poverty: 15% of Americans are classed as living in poverty.

Our anti-poverty programs—or at least our programs intended to be anti-poverty—do not encourage people to get off welfare and get a job or get a better job.  Quite the opposite, these programs engender dependence on government in these people.  Here’s how.

As recently as 2005, for instance, poor families spent about two times their income:

A four person-household is in poverty today, according to federal poverty guidelines, if they earn less than $23,550 per year, but the consumer spending of this same household is around $45,000 per year.

They do this not by being able to borrow the difference but because government welfare payments of a variety of sorts, from “assistance” transfers to (refundable) tax credits, make up the difference.  However, because the payments and credits are keyed to household income and not to efforts to work or improve their training and/or education or otherwise to become more self-sufficient and independent, a family whose wage earner(s) get better jobs that increase their income to $40,000 per year—a 70% increase in income—will lose those welfare payments and credits, and will see a net income drop of $5,000 per year to those $40,000—an 11% decrease in actual family income/spending power.

America’s poor aren’t lazy (indeed, the only ones who say so are political hacks trying to make political points by accusing others of saying so); they’re making entirely rational economic decisions, and maximizing (as they see it) their household income.  They’re staying dependent on government rather than coming to rely on their own devices, and opportunities, by logical choice.

And that’s the dead end of our welfare programs.  As structured, these poverty programs do nothing to help our poor, but they do keep our poor poor—and short circuit their opportunity for economic upward mobility.