The Engine of Poverty
posted at 12:28 am on July 22, 2009 by Doctor Zero
Economic downturns make life tough on everyone. Natural disasters can cause enormous human misery, and require massive relief operations, to provide food and medical aid. To cause serious, long-term, grinding poverty, however, you need government involvement.
Big Government is the most formidable engine of poverty the industrialized world has ever seen. The worst famines to sweep the twentieth century were caused by either incompetent or malevolent government, with the Holodomor famine in Ukraine being a particularly horrifying example. Millions of Ukrainians were starved to death in the Holodomor, as a deliberate matter of Soviet policy. The infamous Ethiopian famine of the mid-80s prompted a well-meaning response from the West, including the Live Aid concerts organized by Bob Geldof… but while hundreds of millions of dollars were raised, much of the aid money and relief supplies were simply stolen by the Ethiopian military junta. Collectivist governments around the world have produced uniformly terrible standards of living.
Domestically, the Great Society’s War on Poverty did nothing but waste nearly nine trillion dollars, and create more poverty. Every lower-class social pathology has grown worse since the 1960s, most of them much worse. We certainly haven’t gotten much value for the money we’ve spent on Great Society social programs.
Of course, the meaning of “poverty” has changed a lot over the years. The poor of the United States have a higher standard of living than the middle class in much of the rest of the world. They also have a higher standard of living than the filthy rich of a hundred years ago, or the crowned royalty of the centuries before that. This improved standard of living has very little to do with the government. A poor American might get food stamps from Uncle Sam, but he will use them to buy food of incredible variety and purity from convenient local stores. Why is this high-quality food so readily available? Because people with money pay for it, and grocers compete to win their business. I challenge you to walk down any aisle of a grocery store without spotting at least a half-dozen products that are “new and improved.” The private sector is still improving this stuff long after a government-controlled grocery industry would have decided it was good enough.
If you are motivated by a humanitarian desire to help the poor – the ostensible mission of much of the modern liberal state – you must realize that nothing helps them more than the increased standard of living and economic opportunity brought about by the private sector. Every government action that shrinks the private sector hurts the poor. It hurts everyone else, too, except for the political class, and the plutocrats who find ways to shape legislation to their benefit… but it hurts the poor the most. Consider the “stimulus” travesty Obama and the Democrats shoved down the nation’s throat. It stimulated nothing, and drained billions of dollars away from a private economy that could have used those resources better. It wasn’t merely a waste of money. The value of every wasted government dollar must be judged by what free enterprise could have accomplished with it. The untold tragedy of the economy is the hidden story of all the things free people could do, if we started emptying out some of those fortresses in Washington and returning their money to them. The economy we have today might make you angry, but the economy we could have should make you furious.
Exactly what would the private sector do with its money that would be so wonderful? I don’t know – and neither does anyone else, particularly anyone in Washington. If the six long months of this Administration serve any constructive purpose, it should be permanently dissolving the illusion that a small group of political appointees can predict what the economy will do, and control it to produce an improved outcome. There is a better plan for restoring our prosperity than anything being cooked up by Obama’s brain trust. In fact, there are thousands of them – and no single person knows them all. They are scattered through the minds of people from coast to coast, formulated by small business owners behind the wheels of work trucks, as well as executives in boardrooms. People working within the incentives of the free market – operating in local markets they know personally, or national markets their companies have studied for decades – will always be able to outperform a group of academics, whose first order of business is listing all the things they won’t even consider doing, because it would violate their ideology. You’re always better off placing your bets on organizations that strive to reward their shareholders, over those dedicated to rewarding contributors.
No one benefits more from general economic strength than the poor, and no one suffers faster when the economy hits a downturn. The lowest-level jobs are the first to be filled when a company expands… and the first to go when it needs to cut labor costs. The benefits of technological progress have the most profound effect on the lower class standard of living. Even in the case of charity, the ideal results are obtained when a wealthy society has money to spend on the disadvantaged. The top private charities average about 85 cents on the dollar delivered to beneficiaries. Government welfare hits about 35 cents on the dollar, in a good year. The liberal sneers that we can’t rely on private charities to take care of all the needy. Why not? If we had given $787 billion to the top 50 private charities this year, do you think it would have all vanished down a rat hole, like the “stimulus?” The liberal conceit that only the State can be trusted to address the needs of the downtrodden is one of the most dangerous threats faced by the poor in America. The true sources of liberal disdain for private charity are their lust for power, and their revulsion at the religious character of many top charitable organizations. Nothing frightens them more than the idea that dedicated volunteer and religious groups might actually reduce poverty, because the downtrodden cease to be useful to the Left when they cross the poverty line. What would the federal budget need to be, if it were primarily concerned with defense, law enforcement, and the welfare of the most seriously disadvantaged Americans – and that welfare was administered with 85% efficiency?
The best thing going for the poor is the increase in their standard of living brought about by the energy of free enterprise. The only way they can ever escape from poverty is by obtaining a good education, and getting a decent job. Big Government is a miserable failure at the former, and an active threat to the latter – as can be seen from the obscene cap-and-trade bill, or Obama’s health care proposals. Nothing should be a higher priority for the poor than slashing the size of government and radically cutting taxes. The free markets are always hiring. When they slow down, it’s because they aren’t free.
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