Hillary’s anti-poverty achievements

13 thoughts on “Hillary’s anti-poverty achievements”

1. Just like my body isn’t designed to be a footballer, and my brain isn’t structured to be a cardiothoracic surgeon, and my ego isn’t fit to be a politician, is why some people will remain poor no matter what we do to get them out of poverty.

2. Since the “poverty line” is not a fixed goal but a moving yardstick, “the poor will always be with us” (as Jesus said). The 2015 poverty line for a family of 4 is declared by the US government to be around $24,000, which would make you comfortably middle class in many countries.

   If the poverty line was fixed and most Americans moved above it, then whole vast bureaucracies of the government, state, local and Federal, the whole enormous poverty industry from which millions derive their livelihood (I’m not talking about the “beneficiaries” but those who administer and feed off the system) , would have to put themselves out of business. You KNOW that’s not going to happen, ever.

3. Read the Manhattan Contrarian to find out the sordid details.

   E.g.,

   The government “antipoverty” programs are specifically and intentionally designed to make absolutely sure that nobody who takes the handouts ever escapes from poverty. Far and away most of the government handouts are either post-tax or in-kind rather than cash (examples: food stamps, public housing, Medicaid, EITC, clothing and energy assistance). The official definition of “poverty” excludes all post-tax and in-kind benefits. Then there are benefits distributed in cash, notably TANF and SSI. These things count in the definition of “poverty,” but the level of the handouts is very specifically and precisely set to be sure that it is always just below any applicable poverty thresholds.

   http://manhattancontrarian.com/blog/2015/11/3/no-subject-generates-more-ignorance-than-poverty

   Note that there’s plenty more.

   I have found that government programs to solve some issue plucking at our heartstrings as a rule reduce to sources of government jobs and patronage without any improvement. After all, it would be stupid to turn off the cash spigot, wouldn’t it?

4. It’s actually an interesting story. During the 1990s, Bill Clinton pushed to replace the existing federal welfare program, AFDC, with a temporary two-year “welfare-to-work” program, TANF, along with an expansion of the Earned Income Tax Credit, which supplements low-income wages. The deal received bipartisan support. With the economy running at full employment, the welfare reform appeared to be quite successful; the poverty rate dropped from 15.1% in 1993 to 11.3% in 2000. Wikipedia.

   But once the economy slowed down, and in particular during the brutal post-2008 recession, the limitations of TANF became obvious. Usually we think of $2/day as being the threshold for absolute poverty in the Third World. But there’s now something like 1.5 million families with children living below that threshold in the US, with nearly zero cash income. Most poor families aren’t receiving welfare assistance. In 1979, 82% of poor families with children received welfare. In 2016, only 25% did. Washington Post.

   So if you’re a libertarian or conservative who thinks that government is the problem, and that the US should try getting rid of welfare, that’s pretty much what’s already happened.

5. The impoverished should owe a penalty tax for not being able to buy unemployment insurance.

6. That’s kind of what welfare is: a form of insurance. Joseph Heath, Economics Without Illusions, paraphrasing a bit:

   … granted, people make choices and moral hazard effects may occur; but these costs have to be balanced against the benefits of the broader risk-pooling arrangement. In the case of welfare, these benefits are significant. It is important to remember that the single most serious economic risk that women in our society face is divorce and, in particular, male abandonment of dependent children. Every society invests an enormous amount of moral energy in controlling this sort of behavior (from honor codes to shotgun weddings), yet no society has ever succeeded in extinguishing it entirely. Furthermore, it is precisely the sort of risk that women could benefit from “pooling” (whereby those who get lucky and don’t suffer abandonment compensate those who do). Unfortunately, any such arrangement is beset by huge moral hazard problems.

   … We are unwilling to allow children to suffer the full brunt of whatever decisions their parents have made. Inadequate or bad insurance would almost certainly be better than no insurance. And this is, of course, precisely what we provide — inadequate, bad insurance, commonly known as “welfare.” It is provided at a very low level precisely because of the incentive problems it creates.

   To forestall some immediate objections (what about child support?), I should note that we’re talking about low-income parents, not the kind of high-income parents frequently discussed here.

7. “So if you’re a libertarian or conservative who thinks that government is the problem, and that the US should try getting rid of welfare, that’s pretty much what’s already happened.”

   Except the programs are still there and the money is still being spent. Oh, were you only talking about TANF, not about food stamps, public housing, Medicaid, EITC, clothing and energy assistance, and some 120 other programs.

   When most Americans think of welfare, they think of the cash benefit program known as Temporary Assistance to Needy Families (TANF), formerly known as Aid to Families with Dependent Children (AFDC). But in reality TANF is only a tiny portion of a vast array of federal government social welfare programs designed to fight poverty. In fact, if one considers those programs that are means-tested (and therefore obviously targeted to low-income Americans) and programs whose legislative language specifically classifies them as anti-poverty programs, there are currently 126 separate federal government programs designed to fight poverty.

   http://www.cato.org/publications/policy-analysis/american-welfare-state-how-we-spend-nearly-$1-trillion-year-fighting-poverty-fail

   Cost: nearly $1tn/year. I assume that does provision a number of good bureaucrat jobs.

   However, just by counting the handouts more honestly, the poverty rate could be cut substantially. See here for more details: http://manhattancontrarian.com/blog/2015/11/28/how-a-new-president-could-reduce-the-poverty-rate-by-90-in-a-first-term

   On the other hand, who wants that?

8. Won’t somebody think about the children?

   I’m sorry, hasn’t the view of welfare as ‘insurance’ been discredited since the 1970s or thereabout? It’s really not. It does sound nice yet tough though.

9. Maybe what’s needed is simply to resettle the victims of poverty in less blighted areas? I propose a Moon Shot, a War Against Cancer: Generous Section 8 housing for the most desperate black people in Cambridge, MA.

   Let them come from Chicago, from Baltimore, from Birmingham and Detroit. Good schools for the poor will take them out of poverty and into the upper middle class, and where are there better schools than in the Boston area?

   Harvard, fund this project generously from your vast endowment. Let’s make the dream come true!

10. Setting aside students, freeloading heiresses, and other measurement errors, if the poverty rate measures the fraction of the population which would be poor BUT FOR for aid programs (as Tom argues), the fact that it hasn’t changed much in 50 years doesn’t provide an indication (one way or the other) of the effectiveness of or need for those programs.

11. It is extremely unlikely the “no cash income” households have no cash income. What they have is very little reported, legally stated cash income. But there I go again, deriving things from experience around actual poor people.

12. Because of of the way the poverty line is calculated, there will always be 12-15% below it no matter how much economic progress is made.

13. The presence of subsidies of course distorts the activities of the recipients. See Manhattan Contrarian for examples regarding this case, like not reporting income, working in the black economy, or working less. (Search term ‘poverty’.)

    However, it is also very interesting to note how it distorts the activities of those from the government who are there to help. For example:

    The official definition of “poverty” excludes all post-tax and in-kind benefits. … the level of the [cash] handouts is very specifically and precisely set to be sure that it is always just below any applicable poverty thresholds.
    …
    Now why would the government intentionally design “anti-poverty” programs to keep the level of measured “poverty” up? … If the number of people in “poverty” actually shrank, then the public’s willingness to support huge anti-poverty spending would shrink, and the bureaucracies would be threatened. From the bureaucracy’s perspective, it is absolutely essential that the number of people counted as being in poverty be kept high.

    That’s why relying on government to solve these sorts of problems is misguided, as I alluded to previously. Connoisseurs of Public Choice will appreciate how this unfolds, I’m sure.

    Furthermore, the labyrinthine complexities of how metric P is computed leads to well-meaning but ineffectual proposals from third parties like “increase EITC” (which is not counted by P and so won’t lift anyone out of poverty).

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