Skip to comments.Who Really Cares About the Poor?
Posted on 10/13/2012 3:40:50 AM PDT by Kaslin
Capitalism favors the rich. Socialism helps the poor. These are core beliefs of almost everybody on the left, including our president. Ah, but it turns out that this worldview is completely wrong.
Economists associated with the Fraser Institute and the Cato Institute have actually found a way to measure "economic freedom" and investigate what difference it makes in 141 countries around the world. This work has been in progress for several decades now and the evidence is stark. Economies that rely on private property, free markets and free trade, and avoid high taxes, regulation and inflation, grow more rapidly than those with less economic freedom. Higher growth leads to higher incomes. Among the nations in the top fifth of the economic freedom index in 2011, average income was almost 7 times as great as for those countries in the bottom 20 percent (per capita gross domestic product of $31,501versus $4,545).
What about the effects on the poorest citizens? In the 2011 report, the average income of the poorest tenth of the population in the least free countries was around $1,061. By contrast, the poorest tenth of the freest countries' populations earned about $8,735. If you are poor, it pays to live where capitalism is less hobbled.
What about equality of incomes? As it turns out there is almost no global relationship between the distribution of income and the degree of economic freedom. But in a way, that's good news. It means that the rich don't get richer and the poor poorer under capitalism. Everybody becomes better off.
There are also non-economic benefits to living in a free society. Comparing the bottom fifth to the top fifth, more economic freedom adds about 20 years to life expectancy and lowers infant mortality to just over one-tenth of its level in the least free countries.
What about within the United States? Some years back the Council of Economic Advisers (CEA) calculated a "predicted poverty rate" based on economic growth alone. In other words, economic growth by itself lifts people out of poverty, even if nothing else is happening. The CEA results suggest that if there had never been a welfare state (no Aid to Families with Dependent Children, no food stamps, no Medicaid, etc.) the poverty rate would be lower today than it actually is! This adds to a wealth of evidence that the welfare state is subsidizing poverty, not eliminating it.
I don't like to get into partisan politics, because, like Milton Friedman, I believe in ideas and not politicians. But The New York Times editorial page is becoming increasingly partisan. The unsigned editorials these days are almost indistinguishable from the Obama campaign's talking points. Far from being thoughtful, they are vehicles for White House propaganda. Many of Paul Krugman's editorials read pretty much the same way.
So let's consider the two political parties. Think of Democrats as being primarily responsible for the structure of the welfare state (social insurance programs) and Republicans as being primarily responsible for tax policy (including the Earned Income Tax Credit [EITC] the embodiment of Milton Friedman's negative income tax). Which policies have been better for poor people? If you buy the CEA analysis and the work of Charles Murray, George Gilder and a host of other scholars, the welfare state has led to more poverty, not less of it. On the other hand, almost every Republican tax change has made the tax code more progressive. That is, almost every time the Republicans change the tax law, the burden of the federal income tax is shifted from low-income people to high-income people! That's why almost half the population doesn't pay any income tax at all.
[As an aside, Democrats have been very reluctant to give money to poor people through means-tested social insurance programs. Whether it's food, housing, education or medical care, almost all the cash goes to a constituency that is definitely not poor. That's why it's hard to know how much anyone benefits from these programs. On the other hand, when the Republican-designed EITC delivers $1 to a poor family, the family gets $1 worth of benefit. Of course, the EITC may do other harm through its implicit high marginal tax rate, however.]
I'm not endorsing everything the Republicans have done. Rather, I simply note that under Republican policies we are likely to have less poverty.
All in all, the welfare state probably isn't the primary reason poor people are poor. The main obstacles to success are (1) bad schools and (2) barriers to good jobs in the labor market.
What is the biggest challenge in making bad schools better? The teachers' unions. They are dedicated to the idea that the school system is foremost a jobs program and only secondarily a place for children to learn. Teachers' unions have steadfastly opposed almost every reform idea that has any promise whatsoever in every city and town throughout the country. As for barriers to entry into the labor market, who is the foremost backer of minimum wage laws, Davis Bacon Act restrictions, medieval-guild-type occupational licensing laws and labor union monopolies everywhere? You guessed it: the labor unions themselves.
Yet who forms the backbone of the Democratic Party? The very same organizations that are most responsible for keeping poor people poor and closing off their opportunities to succeed in life. Further, their perverse political influence disproportionately affects minorities. That is one reason why the black teenage unemployment rate is almost 40% double that of white teenagers! It is one of the reasons for the very large student achievement gap: black student test scores are 70% to 80% of the scores of white students.
And when you compare how countries have done post-colonialism, the result is the same. Those pursuing socialist economies, like Kenya (obama’s father’s heritage), have significantly lagged those pursuing capitalist economies, like Singapore. Unfortunately, we elected the kenyan model.
The left/Obama constantly screech about the evils of capitalism. If I recall correctly, Obama’s mother advocated for some kind of mini loans or grants so that women in third world countries could start their own small businesses. I believe Hilary Clinton at one time was an advocate for this too.
I truly care about the poor. But, we have no poor in America unless created by them or Government. In other countries are LOADS of poor, but they will stay that way because every dollar donated goes to despotic regimes and the .10 cents that go to the poor is ripped off by selling inferior foodstuffs to them (reference the foodstuffs shipped from the oil for food program the UN schemed on). African LEADERS have begged the West to stop sending subsidies to them, because it never impacts them in a good way and stifles their productivity. What to do as a caring conservative? Keep your money so you don’t become poor (help family out if you can and they deserve it but make sure they know you expect it back) and strive to improve. Everybody else? They know they have good scam working and will strive to take more of your livelihood, if they get a chance. Don’t be a sucker. JM2centavos.
The Poor have become a Thriving Industry,and more and More Poor are being created everyday. No fear there are More Government Bureaucrats are on the Horizon to Lord over all of them.I am one of the few slobs going out everyday to support all of them,while trying to Keep from falling into the web of Helplessness and Despair known as The Democrat Utopian paradise
Socialism enslaves the poor. We will always have poor people and there is nothing we can do about it. It’s a vicious circle. Socialism takes from the productive to give to the poor. The productive then raise the cost of theiir goods and services which costs the poor more which then forces the socialists to tax the productive.
Unless someone is starving to death in your gutter, there is no such thing as poor.
I’m with you on that. The notion that the bottom 10% of our society is always “poor” is a fallacy. The “poor” in that strata in the US today live better than royalty did a couple hundred years ago.
If I were Romney when Obama mentions the 47% I would just say we aren’t talking about the 47% that can’t and need help we are talking about those that won’t and are taking advantage. We will eliminate waste save money and be able to help those that really need it more
Want to shock a socialist? Tell them that in many ways in 1900, the working poor in the tenements of Manchester England, or NY, NY lived better in some ways than Boyars (minor Russian Noblemen). The Boyar seldom had running water, almost all of the tenements had cold running water and many (most?) had hot and cold running water. The tenement dweller may have had as many changes of clothes as some of the Boyars (the poorer ones), possibly less than 10 in both cases. The Tenement dweller would have had better access to fresh meat, even if they could not have afforded to take advantage of it every day. Note the Tenement dweller would have been working for an extremely exploitative industrialist.
Like the ad by the immigrant billionaire - “sure s the rich will be poorer, but so wil the poor”. Speaks volumes about socialism.
-- Rush Limbaugh