How to Reduce Poverty: A Look at the 50 Year War on Poverty in America

economics, politics, small businessIn his January 8, 1964 State of the Union address, President Johnson declared an “unconditional war on poverty in America.” Later that year he called for a “Great Society” that “demands an end to poverty and racial injustice.” After 50 years, what has happened? As of today the federal government has spent more than 19 trillion dollars on the War on Poverty. It has 126 separate anti-poverty programs, spanning seven different cabinet departments and six independent agencies. Each year the cost of the war on poverty has increased such that in 2014 federal, state, and local governments will spend nearly one trillion dollars combined. The results are fairly miserable. There have been some gains in some areas. However, poverty continues to be a serious problem, particularly among African Americans. There have been few signs of improvement for several decades. In fact, many of the anti-poverty programs have created unintended consequences that have hurt poor families. Many efforts to reduce poverty have actually created conditions that increase poverty. A recent study suggests that “we are effectively creating and perpetuating a dependent class.” The study goes on to report, “We  actually have a good idea of the keys to getting out and staying out of poverty: (1) finish high school, (2) do not get pregnant outside marriage, and (3) get a job-any job-and stick with it.” Unfortunately many of the anti-poverty programs encourage out-of-wedlock births and discourage work. While there were initial gains in the war on poverty, research shows that the increases in spending have actually yielded diminishing return. The study concludes by stating, “Looked at objectively, continuing the War on Poverty is unlikely to further reduce poverty, increase self-sufficiency, or expand economic mobility. More anti-poverty programs and more welfare spending are not the answer to continued poverty.” Education, traditional family values, and work are the solution to poverty. Since small businesses create most of the jobs in America, the best thing government can do is to reduce the regulatory burden and tax burden on small business, which will stimulate growth. Small business growth equals more jobs. More jobs equals more opportunity for people to work. This, along with traditional family values and education, offers the greatest hope for reducing poverty in America. Just a perspective I hope you will consider. For an Executive Summary of the referenced study see http://object.cato.org/sites/cato.org/files/pubs/pdf/pa761_2.pdf.

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