If I wanted to keep poor people poor
Published January 1, 2014
by Brian Balfour, Civitas Institute, published in Charlotte Observer, January 1, 2014.
If I wanted to keep poor people poor, there are several government policies I would favor.
For starters, I would advocate for a robust and ever-expanding welfare state. Programs like Medicaid, food stamps, unemployment insurance, etc.? Perfect poverty traps.
I would recognize that a perfect recipe for keeping poor people poor is to create incentives that push them into decisions that prevent them from climbing out of poverty.
Case in point: This year the Fiscal Research Division of the General Assembly analyzed the decisions confronting individuals and families enrolled in various government welfare programs. A single mother with two children ages 1 and 4 earning $15,000 a year through work would be eligible for government benefits (such as Medicaid, housing vouchers and subsidized day care) equivalent to roughly an additional $35,000.
Such a scenario puts this woman in a bind. If she finds a better job paying more, she risks losing substantial amounts of benefits. She would make her family worse off even though her paycheck would be bigger. Just to come out even, once taxes are factored in, she would need to find work paying about $55,000 a year. Not many low-skilled workers can make such a leap.
This scenario is commonly referred to as the welfare cliff. Fear of falling off that cliff is perfectly rational, but it also serves as a highly effective tool to trap people in a life of poverty.
If I wanted to keep poor people poor, I also would finance the welfare state poverty trap through punitive taxes on the job and wealth creators of society. The key ingredient to economic growth, and thus a higher standard of living for society’s poor, is through productivity gains made possible by capital investment. High marginal taxes on profitable companies and small businesses alike discourage capital investment. As businesses decide to either not expand or take their businesses to friendlier areas, job opportunities dry up.
If I wanted to keep poor people poor, I would advocate for higher minimum wages. The law of supply and demand tells us that the higher the price of a good or service, the less of it will be demanded. The demand for low-skilled labor is no exception. Higher minimum wages will price more and more low-skilled people out of the labor market. Such laws are an effective tool to cut off the bottom rung of the career ladder for those most in need of establishing work experience.
If I wanted to keep poor people poor, I would support government “green energy” initiatives that make energy more expensive. State and federal initiatives that mandate more expensive “renewable” energy mean that – in the words of President Obama – utility bills “necessarily skyrocket.” Poor people trying to scrape by just to stay even can scarcely afford higher electricity bills.
If I wanted to keep poor people poor, I would see to it that government imposes many costly regulations on businesses. Such tight restrictions discourage businesses from starting or expanding, meaning fewer job openings for those most in need of opportunity. And mountains of red tape force business to expend scarce resources on compliance costs rather than investing in their businesses and creating jobs.
If I wanted to keep poor people poor, I would support “quantitative easing” policies. Under such programs, the Federal Reserve creates money out of thin air. The inflated money supply then erodes the value of the dollars sitting in your wallet or bank account. The poor are hit hardest by this inflation because their limited skill set makes it far more difficult for their incomes to keep up with the rising cost of living.
In short, if I wanted to keep poor people poor, I would fully support the liberal “progressive” agenda that has been carried out for decades, and indeed ramped up during the last five years.
January 1, 2014 at 9:06 am
David Lewis says:
This is a brilliantly written piece. Far too often the threat of falling off the cliff of benefits forces people to choose not to actively better themselves for fear of actually going backwards In net benefits for their families or more abstractly not earn extra money for fear of "it all going to the tax man." Our punitive income tax system and the difference between what someone is paid and what they are actually allowsed to take home is, I think, the biggest obstacle to working families' ability to better themselves. We, as a society, can and must do more to unharness our citizens potential. Again, great article. .
January 1, 2014 at 11:16 am
jacob jacobs says:
It is the trickle down economics of the Republican Party that has created and maintained this poverty state, redistribution of wealth, and vast inequality over the past 30 years. The true "welfare queens" are all the corporations and the super rich who pay little to no taxes, hide money in offshore accounts, and create plenty of jobs, but only for people in foreign countries! If I wanted to keep people poor, I would vote Republican in 2014.
January 1, 2014 at 12:14 pm
Pete Kaliner says:
How is the failure of the Great Society a product of supply-side economics as espoused by the GOP?
You actually are not making an economic point here - just a political one. Wealth disparity is not a cause of poverty. Claiming otherwise is an attempt to distract from the argument Balfour makes.
The philosophy you assert is rooted in envy: If only we took more money from some people, we could give it to others.
Balfour's point is this is already occurring. You're ignoring that.
In the example of the single mother, she's receiving income + benefits totaling about $50,000 per year. Is that not adequate? Or do we need to take more money from businesses to boost that number? If so, what's the appropriate amount?
January 2, 2014 at 9:06 pm
Rip Arrowood says:
"Wealth disparity is not a cause of poverty."
But poverty is a result of wealth disparity.
January 1, 2014 at 11:37 am
Norm Kelly says:
Once again we find a conservative using logic and facts to counter the 'feelings' and 'emotions' of libs. When the majority of voters, people who turn out to vote, are the ones receiving government subsistence benefits, we can NOT expect them to give 1 whit about logic. Libs are BUYING votes, and there is very little the rest of us can do about it. Every time we turn around, the libs are finding more ways to support their supporters, with the goal of getting or staying in power. Whether its court cases that fall to the minority side for no logical/legal reason, or it's providing more or better benefits to the 'needy'/'poor', libs are hell-bent on making sure their supporters are supported.
Take gay marriage as just one example. Should it be allowed for the majority in a state to pass a law or constitutional amendment to ban gay marriage and then have a single, solitary federal judge override the will of the people? Of course not. But keeping the support of this group fits with the needs of the libs in power. Just have a judge overturn a lib idea and watch how negatively they react - all of a sudden we have an activist judge overriding the will of the people. And libs turn out to protest and demand change.
Of course, though it's not necessary, we could also look at the illegal alien vote. Not only are the libs courting the illegal vote at every turn, they are disparaging those of us who support voter id as haters of immigrants. They don't bother to try to explain that they (the libs) are actually in favor of continuing to allow illegals to vote so they can stay in power. They frame it as a discrimination, hatred issue. But then conservatives ask why it should be that illegals be allowed to vote and possibly sway an election outcome. They insist they are not trying to support illegals voting, and they are not claiming that unregistered voters or fraudulent voters should be allowed to vote without question. They claim they are against discrimination. Their case doesn't hold water, but we're not supposed to notice.
Logic makes sense. Emotions rarely do. Trying to get a majority to think seems to be a difficult proposition. Maybe it's because too many have been indoctrinated in the public school system. Perhaps this is why libs are so opposed to charter schools, school vouchers, and school choice. Allowing parents to make education decisions takes POWER away from libs and their supporters. Doubt me? Watch your next election cycle. Who does the education establishment/big education in your district support? Who does your 'local' newspaper endorse? If you read the N&D, don't expect them to endorse or even have anything polite/kind to say about a Republican. They've shown over the years that if they can't endorse the Democrat, they are loathe to make an endorsement. And they find it very difficult not to endorse the Democrat. If the Democrat has been convicted of raping a child, and is currently sitting in jail for said offense, then perhaps/maybe the N&D won't endorse that Democrat. But for any other reason, they'll endorse anyway.
And big education? They have a vested, financial interest in supporting libs. Without libs, it's possible that education wouldn't be a monopoly. Without libs, parents and families would have choice. Just like libs, big education doesn't want choice, doesn't want competition. Every other aspect of life is better off with competition, but education is a special case where competition MUST be banned. (actually, i'm no longer sure that libs think any competition is good for anyone. witness the take-over of private businesses by government agencies. it's difficult to deal with any government agency because they know they are the only option. some lib says 'there oughta be a law', and suddenly some government decides that's a good idea, they take over, and eliminate competition. ultimately making the business that much less effective and that much more expensive. maybe the lib idea is that big education/the education monopoly is an example to be emulated throughout life and society.)
January 1, 2014 at 8:59 pm
John B. Egan says:
If I wanted to keep the poor poor, I'd push for austerity, cut food stamps and unemployment while keeping wages low and destroying any chance of job creation while cutting as many government jobs as possible to swell the ranks of the unemployed.... Oh..wait... The Republicans are already doing that.... Nevermind.
January 1, 2014 at 11:33 pm
Tom Hauck says:
Thank you for an excellent column Mr. Balfour.
I would only add, "If I wanted to keep poor people poor, I would limit their children's choice of schools to the public school where the education establishment could continue to blame "the parents" or "lack of money" on the disgraceful disparity in test results.
The North Carolina 2011-12 (the latest available) public School results were that ED or Economically Disadvantaged children passed the ABCs End-of-Grade Tests at 54.2% and NED or Not Economically Disadvantaged children passed at 84.1%. White children passed at 79.3%, Black children at 49.4% and Hispanic children at 55.1%.
January 2, 2014 at 5:07 am
J E Butler says:
Perfectly said... We are killing ourselves and diminishing our future.
January 2, 2014 at 6:44 am
jimmy rouse says:
If I wanted to keep people poor I would do nothing. The poor will always be among us. Now where I have heard that before?
Eliminating the poor will be accomplished at the same time that eating doughnuts will make you lose weight.
If the Republicans wanted to eliminate the poor they would have done it by now.
If the Democrats wanted to eliminate the poor they would have done it by now.
