Jacinda isn’t just channelling Bob Hawke, but also LBJ, and he failed too

I pointed out yesterday that Australia has had a war on poverty that has largely failed. So too in the US where there has been a “War on Poverty” since 1964.

Lyndon Baines Johnson famously declared a War on Poverty back then, so how have they done?

Not well. a 2014 article shows why politicians declaring war on anything is a sure sign that the war is already lost, or not even possible to win.

In his January 1964 State of the Union address, Johnson proclaimed, “This administration today, here and now, declares unconditional war on poverty in America.”[1]

Since that time, U.S. taxpayers have spent over $22 trillion on anti-poverty programs (in constant 2012 dollars). Adjusted for inflation, this spending (which does not include Social Security or Medicare) is three times the cost of all military wars in U.S. history since the American Revolution. Despite this mountain of spending, progress against poverty, at least as measured by the government, has been minimal.

They’ve got an offical measure, just like what Jacinda Ardern has proposed…and it hasn’t made much of a difference.

Overall, 100 million individuals—nearly one in three Americans—received benefits from at least one of these programs. Federal and state governments spent $943 billion in 2013 on these programs at an average cost of $9,000 per recipient. (Again, Social Security and Medicare are not included in the totals.)

Today, government spends 16 times more, adjusting for inflation, on means-tested welfare or anti-poverty programs than it did when the War on Poverty started. But as welfare spending soared, the decline in poverty came to a grinding halt. As Chart 2 shows, the more the government spent, the less progress against poverty was made.

How can this paradox be explained? How can government spend $9,000 per recipient and have no apparent impact on poverty? The answer is that it can’t.

The conundrum of massive anti-poverty spending and unchanging poverty rates has a simple explanation. The Census Bureau counts a family as “poor” if its income falls below specific thresholds,[3] but in counting “income,” the Census omits nearly all of government means-tested spending on the poor.[4] In effect, it ignores almost the entire welfare state when it calculates poverty. This neat bureaucratic ploy ensured that welfare programs could grow infinitely while “poverty” remained unchanged.

And here we are going to measure poverty as a percentage of a median, likewise indicating, if you passed NCEA level 1 maths, that the result will be the same as in the US. No demonstrable decrease in poverty.

Because the official Census poverty report undercounts welfare income, it fails to provide meaningful information about the actual living conditions of less affluent Americans. The government’s own data show that the actual living conditions of the more than 45 million people deemed “poor” by the Census Bureau differ greatly from popular conceptions of poverty.[7]Consider these facts taken from various government reports:[8]

  • Eighty percent of poor households have air conditioning. By contrast, at the beginning of the War on Poverty, only about 12 percent of the entire U.S. population enjoyed air conditioning.
  • Nearly three-quarters have a car or truck; 31 percent have two or more cars or trucks.[9]
  • Nearly two-thirds have cable or satellite television.
  • Two-thirds have at least one DVD player, and a quarter have two or more.
  • Half have a personal computer; one in seven has two or more computers.
  • More than half of poor families with children have a video game system such as an Xbox or PlayStation.
  • Forty-three percent have Internet access.
  • Forty percent have a wide-screen plasma or LCD TV.
  • A quarter have a digital video recorder system such as a TIVO.
  • Ninety-two percent of poor households have a microwave.

For decades, the living conditions of the poor have steadily improved. Consumer items that were luxuries or significant purchases for the middle class a few decades ago have become commonplace in poor households. In part, this is caused by a normal downward price trend following the introduction of a new product. Initially, new products tend to be expensive and available only to the affluent. Over time, prices fall sharply, and the product becomes widely prevalent throughout the population, including poor households. This is a general sign of desirable economic progress.

I will bet a dollar to a knob of goat poo that it would be exactly the same in NZ. Observant readers of my pimping the poor series have noted Sky dishes, flat screen TVs, copious alcohol and cigarettes all in the houses of supposedly poor people. They’ll all have cellphones and a lot will have smart phones too.

One of Jacinda’s measures of poverty looks at material deprivation. They’ve done that too in the US.

Liberals use the declining relative prices of many amenities to argue that even though poor households have air conditioning, computers, cable TV, and wide-screen TVs, they still suffer from substantial material deprivation in basic needs such as food and housing. Here again, the data tell a different story.

Despite impressions to the contrary, most of the poor do not experience undernutrition, hunger, or food shortages.[10] Information on these topics is collected by the household food security survey of the U.S. Department of Agriculture. The USDA survey shows that in 2009:

  • Ninety-six percent of poor parents stated that their children were never hungry at any time during the year because they could not afford food.
  • Some 83 percent of poor families reported that they had enough food to eat.
  • Some 82 percent of poor adults reported that they were never hungry at any time in the prior year due to lack of money to buy food.
  • As a group, America’s poor are far from being chronically undernourished. The average consumption of protein, vitamins, and minerals is virtually the same for poor and middle-class children and in most cases is well above recommended norms. Poor children actually consume more meat than do higher-income children and have average protein intakes 100 percent above recommended levels.[11]
  • Most poor children today are, in fact, supernourished and grow up to be, on average, one inch taller and 10 pounds heavier than the GIs who stormed the beaches of Normandy in World War II.[12]

TV newscasts about poverty in America generally depict the poor as homeless or as residing in dilapidated living conditions. While some families do experience such severe conditions, they are far from typical of the population defined as poor by the Census Bureau. The actual housing conditions of poor families are very different.[13]

  • Over the course of a year, only 4 percent of poor persons become temporarily homeless. At a single point in time, one in 70 poor persons is homeless.[14]
  • Only 9.5 percent of the poor live in mobile homes or trailers; 49.5 percent live in separate single-family houses or townhouses, and 40 percent live in apartments.
  • Forty-two percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
  • Only 7 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
  • The average poor American has more living space than the average individual living in Sweden, France, Germany, or the United Kingdom. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)[15]
  • The vast majority of the homes or apartments of the poor are in good repair and without significant defects.

By his own report, the average poor person had sufficient funds to meet all essential needs and was able to obtain medical care for his family throughout the year whenever needed.

It is all very familiar isn’t it. Again I suggest that the situation is very similar here.

So why no progress, and why won’t Jacinda Ardern’s massive expansion of the welfare state likewise fail?

Although President Johnson intended the War on Poverty to increase Americans’ capacity for self-support, exactly the opposite has occurred. The vast expansion of the welfare state has dramatically weakened the capacity for self-sufficiency among many Americans by eroding the work ethic and undermining family structure.

When Johnson launched the War on Poverty, 7 percent of American children were born outside of marriage. Today, the number is over 40 percent. As the welfare state expanded, marriage stagnated and single parenthood soared.

As Chart 5 shows, there has been no significant increase in the number of married-couple families with children (both poor and non-poor) in the U.S. since 1965. By contrast, the number of single-parent families with children has skyrocketed by nearly 10 million, rising from 3.3 million such families in 1965 to 13.2 million in 2012. Since single-parent families are roughly four times more likely than married-couple families to lack self-sufficiency (and to be officially poor), this unravelling of family structure has exerted a powerful downward pull against self-sufficiency and substantially boosted the official child poverty rate.

Could the DPB be the single biggest contributor towards child poverty in New Zealand?

Since the beginning of the War on Poverty, the absolute number of married-couple families with children in official poverty has declined, but the number of single-parent families in official poverty (or lacking self-sufficiency) has more than tripled, increasing from 1.6 million in 1965 to 4.8 million today. When the War on Poverty began, 36 percent of poor families with children were headed by single parents; today, the figure is 68 percent. [24]

The War on Poverty crippled marriage in low-income communities. As means-tested benefits were expanded, welfare began to serve as a substitute for a husband in the home, eroding marriage among lower-income Americans. In addition, the welfare system actively penalized low-income couples who did marry by eliminating or substantially reducing benefits. As husbands left the home, the need for more welfare to support single mothers increased. The War on Poverty created a destructive feedback loop: Welfare promoted the decline of marriage, which generated the need for more welfare.

Today, unwed childbearing and the resulting growth of single-parent homes is the most important cause of official child poverty.[25] If poor women who give birth outside of marriage were married to the fathers of their children, two-thirds would immediately be lifted out of official poverty and into self-sufficiency.[26]

The welfare state has also reduced self-sufficiency by providing economic rewards to able-bodied adults who do not work or who work comparatively little. The low level of parental work is a major cause of official child poverty and the lack of self-sufficiency. Even in good economic times, the median poor family with children has only 1000 hours of parental work per year. This is the equivalent of one adult working 20 hours per week. If the amount of work performed in poor families with children was increased to the equivalent of one adult working full-time through the year, the poverty rate among these families would drop by two-thirds.[27]

The welfare state has embedded poverty, its a trap, a poverty trap, from which the only escape is paid work. In other words growing the economy is how you eliminate poverty, not more welfare.

Jacinda Ardern is committing New Zealand to a war on poverty that is doomed to fail simply because meddling socialists and liberals have no idea about basic economic principles. She is going to fail, history tells us that, but it is going to cost billions more to find that out.

In the end her concern face is not going to help a single person to rise out of poverty.

 

-The Heritage Foundation


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story.  And when he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet.   Cam Slater doesn’t do quiet, and as a result he is a polarising, controversial but highly effective journalist that takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him.  But you can’t ignore him.

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