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Peddling Poverty
Posted by: Jon Henke on Friday, February 22, 2008

This recent line from a Paul Krugman column....
Mainly, however, excuses for poverty involve the assertion that the United States is a land of opportunity, a place where people can start out poor, work hard and become rich.

But the fact of the matter is that Horatio Alger stories are rare, and stories of people trapped by their parents’ poverty are all too common.
...reminded me of this...
While there are 74 Forbes 400 members who inherited their entire fortune, 270 members are entirely self-made. Though many attended Harvard, Yale and Princeton, there are countless stories within of high school and college dropouts, not to mention others who grew up extremely poor.
Tom Maguire has more.

However, I really want to focus a bit of attention on this accurate-but-deceptive point Krugman makes...
L. B. J. declared his “War on Poverty” 44 years ago. Contrary to cynical legend, there actually was a large reduction in poverty over the next few years, especially among children, who saw their poverty rate fall from 23 percent in 1963 to 14 percent in 1969.
There is a reason Krugman uses the dates he does. For instance...

Krugman refers to the date that Johnson "declared" the War on Poverty (January, 1964), rather than talking about how Johnson's anti-poverty programs reduced poverty. He does that, because it makes it appear as if there's a significant causal relationship between the reduction in the poverty rate and Johnson's programs. In fact, there is not. The first "War on Poverty" anti-poverty programs were relatively miniscule.
In 1965 when Lyndon Johnson launched the War on Poverty, aggregate welfare spending was only $8.9 billion. (This would amount to around $42 billion if adjusted for inflation into today's dollars.)
And that was aggregate welfare spending at all levels. Johnson's primary contribution was the The Economic Opportunity Act of 1964, which primarily focused on "job training, adult education, and loans to small businesses" - programs to reduce poverty over time, not immediately. Johnson may have announced a "War on Poverty" in early 1964, but it wasn't until 65 and 66 that more direct-subsidy anti-poverty programs were brought into legislation, and initial spending was very, very limited.

In fact, Paul Krugman says "progress stalled" after 1969, but take a look at when welfare spending really began...



Right around....1969.

Prior to 1969, there were some anti-poverty programs, but there simply wasn't a great deal of welfare spending. And that gets to the most deceptive trick Krugman pulls on his readers. Remember how Krugman focused on the decline of poverty between 63 and 69? Why would he use those dates?



Poverty was declining long before the anti-poverty programs of the mid-60s. Poverty had been declining since the late 1940's, when poverty was measured as high as 39.7% in 1949.

The Census Bureau lists the Poverty rates over the years starting in 1959...

  • 1959 - 22.4%


  • 1963 - 19.5%


  • 1965 - 17.5%


  • 1969 - 12.1%


Yes, poverty did decline after the introduction of LBJ's War on Poverty....at about the same rate as it declined prior to the introduction of LBJ's War on Poverty.

And then it stopped declining in 1969. At about the same time welfare spending rocketed upward.

I am not suggesting there is a direct causal connection between increased welfare spending and stagnant poverty levels - perhaps there is, perhaps there isn't - but there's certainly more evidence for causality there than there is for causality between LBJ's relatively limited 64-65 programs and the decline in poverty that Krugman cited between 1963 and 1969.

There may be things that can be done to reduce the Poverty Rate in the United States - e.g., training and education - but government redistribution of wealth and welfare subsidies are not among them.
 
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Previous Comments to this Post 

Comments
both obama and edwards prove that the horatio alger myth of upward mobility is very much alive.

what is truly bizarre is that both of their campaign center on the idea that upward mobility is severely damaged or dead.

yet they are living proof it is not.

apparently, their performances leave their followers so dazzled they cannot see this hypocrisy at all.

 
Written By: reliapundit
URL: http://astuteblogger.blogspot.com
Well, it’s just that Obama and Edwards are *special*. Ordinary Americans are dependent on the ’kindness of strangers’ in the government to help them make it. Krugman knows.
 
Written By: JorgXMcKie
URL: http://
Now now Jon... You should know better than to use facts and hard data to make your points...
 
Written By: Scott Jacobs
URL: http://
Excellent article Jon. Those of us that lived through the periods (I’m 66) you’re talking about have felt it in our bones. The graphs and text you present make one go "Aha."
 
Written By: tom scott
URL: http://
And "welfare as we know it" began to recede in the 90’s.............
But I still can’t afford to insure my family.
The "war on poverty" is more than welfare......... perhaps too subtle an idea for all those who know the truth
 
Written By: darohu
URL: http://
The "war on poverty" is more than welfare......... perhaps too subtle an idea for all those who know the truth
I clearly distinguished between the programs that actually could have a long-term effect to reduce the poverty rate (skill/job training, education) and those that were merely income transfers and subsidies which do not affect the poverty rate (welfare).
 
Written By: Jon Henke
URL: http://QandO.net
So, I’m not quite sure here, is the "War on Poverty" a quagmire after all ?
 
Written By: Neo
URL: http://
And Krugman is so smart too. What a waste. It’s a shame he will likely never read this, because If he did, it might make him think for a minute what he’s doing to his reputation.
 
Written By: peter jackson
URL: www.liberalcapitalist.com
But what the libs don’t seem to realize - or won’t admit to, is that income re-distribution - just GIVING to everything to the poor DOES NOT WORK! People need incentive to better themselves...if not self-motivated, it is up to government - society as a whole to force them to do SOMETHING for themselves - and their progeny which they just keep having. and why not? every baby means MORE money! Look what happened in New Orleans after Katrina! If most of those folks hadn’t been totally dependent on welfare, the result would not have been as bad - and I don’t think anyone can argue that point! Other areas have suffered total devastation, and the folks juts pick up, pitch in, and get themselves back on track...with little or no government interference. It keeps going back to education and employment....but if you take money away from those who ARE WORKING - and the harder they work, the less money they make, you’re going to DE-INCENTIVIZE them...and will have another whole group of welfare recipients.
But this is what the Libs want! they want ALL of us to be slaves to the state...if we are dependent on them for everything, then THEY can control our every move! We are talking total socialization...and THAT is the goal of the liberal left....including Barack Hussein and Hillary! It has been hard-working, dedicated, INDEPENDENT Americans working to make this nation strong...and our Judeo Christian values are what sustained us..as we throw those values out, our mass-crime is increasing (look at all the school shootings, the mothers killing their own children!) We MUST stop kicking God out of this country....And we MUST regain our principles and MORAL VALUES - without them, we are lost.....all we need do is look what is happening in Europe....we should be alarmed by that and guard against this happening here....but now it’s far too much of a ME state - and the hell with everyone else! Hey, all! Remember that document - called the "greatest civil document in world history"...it’s called the CONSTITUTION! We need it!
 
Written By: Litl Bits O’ Life
URL: http://

 
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