A Poor Investment

The Census Bureau today released the latest figures on poverty in the U.S, showing that 12.3 percent of Americans (roughly 36.5 million people) live below the poverty line. Nothing could better illustrate the continued failure of the American welfare state. Despite spending more than $477 billion on some 50 different programs to fight poverty last year, the actual reduction in poverty was trivial. Indeed, since Lyndon Johnson declared war on poverty in 1965, the U.S. government has spent more than $11 trillion fighting poverty without success.

One definition of insanity is doing the same thing over and over and expecting different results. Perhaps its time to try something different.

Observers have known for a long time that the surest ways to stay out of poverty are to finish school; not get pregnant outside marriage; and get a job, any job, and stick with it. That means that if we wish to fight poverty, we must end those government policies—high taxes and regulatory excess—that inhibit growth and job creation. We must protect capital investment and give people the opportunity to start new businesses. We must reform our failed government school system to encourage competition and choice. We must encourage the poor to save and invest.

More importantly, the real work of fighting poverty must come not from the government, but from the engines of civil society. An enormous amount of evidence and experience shows that private charities are far more effective than government welfare programs. While welfare provides incentives for counterproductive behavior, private charities can use their aid to encourage self-sufficiency, self-improvement, and independence. Private charities can individualize their approaches and target the specific problems that are holding people in poverty.

The big question is how much more money–and how many more lives–will we waste until we realize that, as Ronald Reagan used to say, “government isn’t the solution; government is the problem.”