The War on Poverty Makes Poverty Worse

by State Brief


The city of San Antonio’s Status on Poverty Report was released recently, and the response was predictable. “I just want . . . some sort of an action plan.” Council should “better direct” taxpayer dollars “toward helping all San Antonians thrive.”

If officials had a decent grasp of history, they’d know the likely outcomes from such efforts: more of the same.

Poverty is the natural, initial state. Society wasn’t just born into affluence; it had to be created. As new Argentine president Javier Milei reminded attendees at the World Economic Forum in Davos, Switzerland, last month, humans trudged along for hundreds of years at little more than subsistence level.

Then, at the elbow of the classic hockey stick graph he cited, economic growth started skyrocketing. A few things coincided with that.

The Industrial Revolution and the publication of Adam Smith’s Wealth of Nations were two. If the only achievement of that book was promoting the virtues of specialization, it would have been enough.

Another thing happened the same year that Mr. Smith’s book was published: the United States was born. When a society prioritizes simplicity in government, citizens are freer. When they’re freer, they produce and trade more. That is what immigrants found when they came here.

Fast forward a couple centuries.

Poverty was in a free fall after the dust had settled from World War II. We had learned the lesson from protectionist measures like the Smoot-Hawley Tariff Act of 1930. The General Agreement on Tariffs and Trade was formed, and trade barriers started falling.

Bretton-Woods fixed numerous currencies to the dollar, which itself was pegged to gold. This stable measure of value enabled more certainty in investment, which is the driver of prosperity.

President Dwight D. Eisenhower determined to keep the federal budget balanced, which emboldened John F. Kennedy to cut marginal tax rates. Then Lyndon B. Johnson declared war on poverty, and the free fall stopped.

Financial hardship can be a complicated circumstance for an individual: job loss, divorce, death of the primary earner, substance abuse, mental health issues, etc. Emerging from it can be a challenge. There is one easy way for the community to help: stop government from making it worse.

Just like the real world, government is no doubt populated by people with good intentions. But the programs set up by elected representatives, by and large, do not help. When you subsidize something, you get more of it.

To compound matters, some people profit off poverty.

According to civil rights activist Robert Woodson, $0.70 of every taxpayer dollar spent in an effort to alleviate poverty goes to those who administer it. That includes the folks we see on TV whipping up a fury and tugging at heart strings.

Since you don’t ascend to such a position without some smarts, these grievance hustlers must have an inkling of the damage done on the front end that makes this apparatus possible: taking from citizens with the tax bill.

The levies imposed on income, savings, investment, and our homes are particularly counterproductive.

When you tax savings, you get less investment and subsequently less job creation. Taxing labor gets you less savings. And as if the costs of owning a home are not high enough, property taxes put homeowners one step closer to downgrading to a less safe area, further away from family, or worse.

Putting jobs and shelter further out of reach inevitably pushes people closer to destitution.

However, when politicians try to “move the needle,” it reliably fails. Look no further than Alamo’s Ready to Work program. With roughly $163 million in tax revenues, and $61 million spent, more than five hundred people have been “placed in a quality job.”

That’s more expensive per graduate than college these days, and that’s saying something!

No government employee or bureaucracy can pretend to know about an individual/family’s plight. The solution to poverty on their end is very simple: stop making things worse.


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