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.
Brian Balfour is policy director with the Civitas Institute in Raleigh.
The premise of this article is absolutely astonishingly false. It is amazing how conservative can take every fact and turn it on its ear.
Let;s examine what has actually been done to increase poverty in this country:
a. A financial meltdown which destroyed millions of low and middle class jobs, yet left the wealth unscathed and the job-loss creators unpunished.
b. Slash taxes for the wealthy which pushes a greater burden onto the lower and middle class.
c. Using a massive media based propaganda campaign to raise the fear of deficits so that programs designed to help the poor get out of poverty are slashed – job, food and education assistance
d. Rant about a bloated government employment and then sit idly by while teacher jobs are eliminated by the hundreds of thousands, decreasing the quality of education to those who depend on public schools.
e. Pass laws which restrict access to voting by poor people so that the elected representatives only have to listen to their wealthy donors.
These are the steps that HAVE been taken to deliberately keep the poor and middle class down to ensure that the wealthy class stays in power.
While all of your points have no basis in fact, I will point only one. The minimum wage has been raised repeatedly over the years and every time it is discussed conservative bloviate over how it will kill jobs. The facts are it NEVER has.
Next time try to write something original and just not copy the latest conservative talking points.
Mr. Seaton,
Thanks for your comments. I got a hearty chuckle being chastised for using “conservative talking points” at the end of a tirade riddled with nothing but talking points.
Do you deny that people respond to incentives? Or that demand curves are downward sloping? Or that green energy mandates increase the cost of energy? Or that fiat money creation inflates prices and wages in an uneven manner, harming the poor disproportionately?
Try addressing some of these economic principles upon which this article was based if you expect to be taken seriously.
If I wanted to keep people poor I would do nothing or everything. Same difference. Somebody once said “The poor will always be with you…..” I think it was Jesus? Or maybe Tupac?
At any rate I think the government is good at making people poor but as for raising them from poverty? I don’t see it.
Brian, the problem with your statements are they are mostly replying of conservative myths created by and for the conservative Dmonied interests in washington and in corporate america. You give no facts, no context and no policy solutions (even though you are a policy director).
Do people respond to incentives? In some cases yes and in some cases no. Talk to anyone who has raised a kid. Incentives as an element of public policy are a tricky. Our laws and tax codes are full of them, also disincentives. Some work and some not so much. In your case you don’t offer any specific incentive to give poor people. My assumption is you want to take away the child care assistance etc which then gives some an incentive to go get a better job to pay for child care. You don’t explain how you find that job or get better education when you have children to take care of.
I don’t understand the demand curve slope, you give no context. Economic curves go all over the place and can be subject to lots of interpretations.
You comment on green energy is also totally without context. You might as well argue that cars are more expensive for poor people because they are required to have seat belts.
I love the “fiat money creation” comment. That is a clever bogey man phrase the conservatives love to use. I assume you are referring to the Feds actions over the last several years to address the economic crisis created by wealth, unpunished crooks. Conservatives have been claiming forever that it was going to create runaway inflation. After five years, show me the inflation.
And yes the wealthy have benefited disproportionately during the recovery. Corporations have amassed massive profits due to tax cuts, and despite borrowing rates of 0% have put little money into job creation – there is one incentive that is not working. Of course that is only natural – corporation are not in the business of creating jobs, they are in business to make profits. If they can make profits without creating jobs that is even better.
You may or may not know it, but when you promote these conservative myths, you are nothing more than a pawn and a shrill for people who have very little interest in the well being of you or me or the poor people in America.
Steve,
Thanks for still another laugh: “I don’t understand the demand curve slope.”
Yet in spite of your admitted economic illiteracy, you insist on commenting on topics you know nothing about. So who’s the pawn?
Brian, how about some meaningful policy discussion from the policy director? Meaningless references to a demand curve do not advance a democratic dialogue of how to address the issues we face as a society.
Give my regards to Art.
Steve Seaton
Thanks for commenting with such accuracy, tax breaks for the rich are not a path to a robust economy.
Mr Pope’s economic model can be found in third world countries with a class of supper wealthy and 80% of the population in grinding poverty, high crime, gangs, kidnaping, private police and around the clock guards on private residents. Models of economic justice may be found in Northern European countries with greater personal freedom than the USA and also highly educated, healthy societies with social and economically justice. These countries also have millionaires. The conservatives here would call such a system socialism but the economic system invest in its human capital insuring all are educated, have LIVING WAGE jobs, pay taxes and have universal health care. Those fairly paid citizens are the REAL job creators as they pay taxes, buy food, pay rent, take vacations and spend on life’s necessities. The rich greedy conservatives think half of the citizens in America need to live in poverty so they can buy a burger for a quarter less or stuff from Asia, from an under paid retail employees making a fraction of a living wage for a few pennies less. Lets require any publicly traded corporation to be unionized or pay union wages before that corporation can be traded on Wall Street. Lets tax the rich to the point they had rather pay employees as was done after the second world war then pay taxes. The conservatives have no vision for the future, no plans and no solutions. Imagine if such dimwits as Art Popes had political power when we were starting the space program and the government did a tax cut instead on the space program?Imagine if the Tea Party Mob had political power when Eisenhower had the vision of an Interstate Highway system? Imagine if conservatives had prevented Roosevelt from investing in the TVA projects of Social Security?
The agenda found here at Civitas Institute is not new.
https://www.facebook.com/photo.php?fbid=344854508985722&set=a.175820155889159.40557.175512242586617&type=1&theater
That is a silly opinion.
The article above is written as if those with money to invest have no fault at all, they simply respond to conditions.
How wrong it is to believe that the wealthy who would invest are always right, that they deserve enormous amounts of money for their time while someone else deserves less than minimum wage for theirs.
Fiat money is easy to explain quite simply. Per the constitution Congress was only permitted to “coin money” for the reason that coins would at least be worth the value of the metal. Progressive socialists and conservaturds alike hate those founding fathers for differing reasons but one thing they knew was government takes advantage of people with printed currency via printing off debt. [I purposefully didn’t call it money…] Now examine a greenback’s fine print and look for the words “This note is legal tender….” Cleverly it DOESN’T say “This dollar is LAWFUL MONEY…” does it? Nope…you exchange a largely voluntary means of exchange and few things voluntary are illegal. That was how the government worked around the protection of the people attempted by the founding fathers. If you want a real trip, the federal reserve…which is as federal as federal express…which actually tell you on their website that the NOTES have NO REAL VALUE. As they say a FIAT CURRENCY with the cruelest of tax called inflation because those who are elderly and saved find what they worked for of diminishing worth. [I one time asked an elderly poll worker why he worked and he told me, “I scrimped and saved but what $5 bought 20 years ago barely buys a meal today.”
BTW: You have FDR & Nixon to thank for FIAT currency. At one time GOLD COIN [MONEY per the Constitution] was the “currency”. FDR came along and outlawed gold replacing same with notes…which could be redeemed for money at a future date. [e.g. a silver certificate] Yes…nearly ALL gold was outlawed and you traded your gold for paper notes. [FDR then declared a year later the gold the govt had to be worth nearly twice the number of notes…sneaky eh?] After CONFIDENCE was achieved with the notes, the government removed the ability to trade in the notes for real metal value. Nixon sealed the deal with off the gold standard. The history of all FIAT currencies is EVENTUAL COLLAPSE. When government debt is called, the debt WILL BE PAID. It simply cranks up the press and pays off the debt–hence the images of old women with wheelbarrows of notes to pay for bread in the history books. Its not a matter of IF…its a matter of WHEN. Of course expect the blame to be placed on anything BUT government…so expect blame upon greedy banks, brokerage houses, etc….just like the last time.
Mr. Balfour:
I am stunned at the silliness and ignorance of the comments criticising your article. The poverty rate in the western world (the rate used to be about 75% or more, and as bad or worse outside the West) was steadily shrinking all through the first century and a half of the industrial revolution. By the 1960’s it was down to about 15% in the United States. Then the “War on Poverty” was launched, and the whole thing stalled.
I would also invite your wealth-hating critics to consider that most of the great inventors in history, from Cyrus McCormick to Steve Jobs, got their brilliant ideas made into market realities by the financing from rich investors — McCormick had his William Ogden, Jobs had his Mike Makkula. Take away the wealth of the rich and you are left with a huge gap in economic progress. It was that free market progress, not the intervention of the state, that almost eradicated poverty in this nation and many others.
Mr James
You misunderstand the debate, no one is against wealth but that wealth should not be used to bully, buy elections and government for the benefit of the wealthy. People like me are opposed to greed, injustice and paying employees half a living wage, cutting the foundation of equal opportunity like education. Let give organized labor a seat at the table of free market prosperity and see where wages go. Jobs are created by those with income not rich folks with tax cuts. Let the wealth pay the same tax rate as a wage earner making $113,000.00 by removing the cap on social security.
Haven’t the very “liberal agenda” that has been carried out for decades in the United States created the most wealth ever accumulated in any one country?
With the exception of speculative bubbles and the collapse of the Randian fantasy of “markets regulating themselves” our economy has been a rising tide lifting all boats.
One of the common denominators about poverty is it’s concentrated in red states and the higher the conservative voter turn out the higher poverty rate. the link below is about Owsley County KY the poorest county in the nation, mostly white and votes Republican 4 to 1.
The folks at Civitas Institute never let facts get in the way of their myths. http://www.dailyyonder.com/speak-your-piece-owsley-county-breakdown/2014/01/12/7122
Good Morning, Mr. Balfour,
LOVED this article.
We have lived at or barely above the poverty level forever & raised 4 kids without state assistance – all of whom are gainfully employed or own their own business, partially because I stayed home to home school them. Since they have all been on their own since 16/17 yrs of age I entered the work force at the lower pay scale due to lack of recent employment. My husband was a self-employed builder & is a disabled Vietnam Vet who hasn’t been able to work a great deal in the last 10 years, so I have been trying to build our savings for “OLD’ age – (we are both in our early 60’s now)- & intended to keep working for some time. Well, I just fell off the “Obamacare Cliff.” IF I continue working I will have to pay premiums on something I do not want – (I do not use allopathic medicine & am only 1 year away from Medicare coverage anyway) – & would STILL not have much left ‘to put aside for our retirement’ after fixed work expenses such as gas & car maintenance; OR I can NOT work, NOT secure our old age & perhaps get an exemption for Obamacare. ..or at least a “FREE” waste of your tax dollars. SO next year our income will be below the poverty level, I won’t be putting any $ aside for old age BUT I will not have to work to pay for something I do not want & would probably NEVER uses.
Blaming the poor for poverty as you fight for tax breaks for the rich.
IT”S TRANSPARENT – we can SEE what you are doing!
Lonnie,You said u were a small business man.Do u hire union workers.I think your business is a one man hobby.As such you have never had to pay half of your employes Social Security and Medicare.Never had to pay all of their unemployment.So,u can whine about Art Pope who is paying this for thousands of people.The only thing u can do is whine about race hustlers like The Reverends not being able to rip off the tax payers more than they already do.
Steve,You say show me the inflation.How about gas was 1.84 a gallon when Obama took office.A pound of bacon is over 6.00 a pound.You must not buy groceries or you would know everything is 20 to 30% higher than a year ago?Everything I buy has gone up a lot.When Obama shut down the coal industry,energy prices soared.When that happens everything that has to be moved has to go up.I guess the history you look at to say higher min.wages don’t lose jobs must be the Huffington Post,Look at the Gov.stats.on 16 to 24 yr.unemployment rates and see what they are.
People seem so gullible and give up so easy. We make the wealthy rich. All we have to do is take back our lives and just start caring about our own families. I would outlaw sex without marriage. I would give young people a good start in life regardless of the position of wealth or poverty, an equal standing, they go through 12 years of school and then forced out in a world they have no knowledge of. Once true caring is established you will see people with a better outlook on life and with a hope in their heart. Which is way better than this forlorn establishment of attacking the weak.