Democrat and Republican candidates for President are debating one another on nearly every issue--but nearly all are united
on one thing: America faces a crisis of "income inequality." The rich are getting richer, the refrain goes, while the poor
and middle class are held back by stagnating wages, lousy schools, and growing healthcare costs. The solution, we are told,
is more government intervention: spend more on education, provide "universal healthcare," and force employers to raise wages
through minimum-wage increases and union protection legislation.
But all of this outcry is based on a false premise--that income inequality is bad. While some of the problems critics point
to are legitimate concerns, income inequality is not. Income inequality is a natural and desirable part of a free, prosperous
Criticisms of income inequality are always couched in a certain type of language. For example, it is claimed that wealthier
Americans "command" an "unfair share" of our "national wealth." Such language implies that American wealth is a communal pie
that belongs equally to all of us.
But it is no such thing.
The vast wealth that exists in America has been created--through the productive activities and voluntary arrangements
of individuals. And individuals do not necessarily create the same amount of wealth. Compare the value brought into
existence by the entrepreneur whose productivity software is eagerly bought by millions--and the checkout clerk at a store
that sells it. Such vast differences in productivity--which can be caused by vast differences in ability, work ethic, interests,
skills, and choices--are the root of vast differences in income.
Because all wealth is created, it rightly belongs to those who earn it (or their chosen beneficiaries)--and no one can
rightly claim to deserve wealth earned by others. If someone wants to make more money, he is free to enter a new field, gain
new knowledge, start a business, or do anything else to enable himself to create more value.
It is often implied that the rich get richer at the expense of everyone else--that if some get big slices of pie, the rest
get only crumbs. But the exact opposite is true. Since wealth (including pie) is created, there is no limit to how much can
exist--and the wealth of others cannot inhibit us from creating and enjoying our own. Further, the wealth creation of the
richest Americans makes us far more productive and well-off.
Consider how the wealthiest individuals in any free economy, businessmen, make their money. The job of a businessman is
to orchestrate productive enterprises that efficiently coordinate people, resources, and tools to create valuable products.
Businessmen profit when they bring out valuable products at desirable prices; thus, they are continually making more, better,
and cheaper products for everyone to purchase. Businessmen profit when they make others more productive; thus, they are continually
seeking to create new jobs that can add to their bottom line, and providing their workers with as many productivity-enhancing
tools and technologies as they can. Businessmen's pursuit of profit has been the driving force behind the incalculable increase
in our standard of living over the last 150 years--and economic history shows that the freer they are left to make money,
the greater the increase in productivity and wages at all levels.
What then explains the poor educational opportunities, growing healthcare costs, and stagnating wages that are real problems
for many Americans?
Government policies based on the same egalitarian mentality that denounces "income inequality." In the name of giving citizens
"equal access" to education and medicine, the government has virtually taken over these fields, placing crippling controls
on both producers and consumers. In the name of equalizing income, it enforces minimum-wage and anti-firing laws that make
it difficult for eager newcomers to enter the job market. In the name of saving us from the alleged evils of rich, Big Business,
it enforces endless regulations that apply to every business, decreasing the productivity of all and making it hard for new
business ventures to succeed.
In America, equality should mean only one thing: freedom for all. If business and wages were deregulated, we would see
a dramatic rise in economic opportunity. If education and medicine were left free, with America's businessmen, doctors, and
educators liberated to offer education and medicine at all different price points, we would see quality and price improvements
like those for computers or flat-panel television sets. But these benefits of freedom require that we recognize the moral
right of each individual to enjoy whatever he produces--and recognize that none of us has a right to something for nothing.
What is Equality?
For two things to be equal means for them to be identical in some respect. Thus if two trees are both precisely 6 feet
tall, they are equal in height. If two men both earn precisely $9,500 a year, they are equal in income. And if two people
both have the same chance of winning a lottery, they have (in that respect) equality of opportunity.
However, while two things may be identical with respect to one or a limited number of attributes, no two physical objects
can ever be identical with respect to all attributes. For example, all atoms differ in position, direction and history.
And all human beings differ with respect to anatomy, biochemistry, temperament, knowledge, skills, goals, virtue and a thousand
Here we will primarily be concerned with three types of equality:
1. Political equality, a major goal of both the American and French revolutions, has traditionally meant
equality of individual rights and equality of liberty. Stated simply, political equality means that the individual’s
right to life, liberty and property is respected and that government abstains from conferring any special advantage or inflicting
any special harm upon one individual (or group) in distinction to another. Clearly, political equality is at best only approximated
and never exists completely.
2. Economic equality means in essence that people have the same income or total wealth.
3. Social equality generally means either (a) equality of social status, (b) equality of opportunity, or (c) equality
of treatment. Social equality is also increasingly coming to mean (d) equality of achievement.
Equality and Liberty
A little reflection will quickly demonstrate that economic and social equality can only be achieved at the expense of political
equality. Because people differ in ability, drive, intelligence, strength and many other attributes it follows that, with
liberty, people also will differ in achievement, status, income and wealth. A talented singer will command a higher income
than a ditch-digger. A frugal, hardworking man generally will accumulate more wealth than an indolent spendthrift. A brilliant
scientist will command more respect than a skid row bum.
Nor are all of these differences of social and economic achievement the result of environment. Because people are individuals—genetically,
biochemically, anatomically and neurologically—differences in strength, intelligence, aggressiveness and other traits
will always exist. While environmental factors can and do exaggerate physical and mental differences between people, diversity
and non-equality remain the natural biological order and hence are the natural social and economic order.
There is only one way to make all people even approximately economically or socially equal, and that is through the forcible
redistribution of wealth and the legal prohibition of social distinction.
As Dr. Robert Nozick, of the Harvard Philosophy Department, has pointed out in Anarchy, State and Utopia, economic
equality requires a continuous and unending series of government interventions into private transactions. Even if people’s
incomes are made equal once, they will quickly become unequal if they have the liberty to spend their own money. For example,
many more people will choose to pay $10 to hear Linda Ronstadt sing than will pay $10 to hear me sing, and Linda Ronstadt
will very quickly become far wealthier than I am.
Economic equality can thus only be maintained by totalitarian control of people’s lives, and the substitution of
the decisions of a handful of state authorities for the free choices of millions of men and women.
Political equality is fundamentally inimical to economic and social equality. Free men are not economically equal, and
economically equal men are not free. Because the achievement of social and economic equality inherently requires the forcible
interference with voluntary choice, I will subsequently refer to the doctrine that social or economic equality should be imposed
upon a society as coercive egalitarianism.
Equality as an Ethical Ideal
In reality people are unequal: Americans are—on average—far wealthier than Russians, doctors tend to earn more
than garbage collectors, and so on. But should people be unequal?
At its root, egalitarianism is an ethical doctrine. It is often asserted that “ethics is just a matter of opinion”
and that “one moral system is just as good as any other.” But in fact any ethical code can be judged by at least
three criteria: (1) is it logical—have the basic concepts of the doctrine been meaningfully defined and are the
arguments for it valid; (2) is it realistic—is it a doctrine which human beings can live by, or does it require
that people act in a way which is fundamentally contrary to their nature; and (3) is it desirable—are the consequences
of adopting the doctrine what are claimed, or would they be something entirely different; and if people adopt this doctrine
will it lead to the creation of a society in which they are happy and fulfilled, or will it lead to a society of hopelessness,
repression and despair?
Let us now apply these criteria to the doctrine of coercive egalitarianism.
1. Is coercive egalitarianism logical? Egalitarianism states that all people should be equal, but few coercive egalitarians
As stated previously, complete equality between people is an impossibility, so it can be rejected at once. But we
are hardly better off when we speak of social or economic equality. Does “economic equality” mean equal income
at a given age, for a given job, for a certain amount of work, or for a particular occupation? Does “equal wealth”
mean identical possessions, possessions of identical value, or something entirely different? Does “social equality”
mean equal status, equal popularity, equal opportunity, equal treatment, or what? All of these concepts of economic and social
equality are distinctly different, and until they are defined, the doctrine of egalitarianism is illogical.
2. Is coercive egalitarianism realistic? People are different and have different values. To some happiness requires
many material possessions, to others material possessions are relatively unimportant. To some people intelligence is a great
value, to others strength or beauty are far more important. Because people differ both in their own characteristics and in
the way in which they value traits in others, people will naturally discriminate in favor of some persons and against others.
Since variety and distinction are natural parts of the human condition, by demanding that people abandon such distinctions,
coercive egalitarianism is contrary to human nature.
3. Is coercive egalitarianism desirable? Coercive egalitarianism, the doctrine of complete social and economic equality
of human beings, logically implies a world of identical, faceless, interchangeable people. Such a world sounds much more like
a nightmare than a dream, and indeed it is.
What causes poverty in America?
If you’re like most people, you are concerned about poverty—but probably not your own. By historical standards,
most Americans are quite wealthy. And that’s part of what bothers us. If we were all poor, we might think that’s
just the way things are, but when millions of us are doing quite well while others languish in poverty, it seems that something
is just not right.
Today, 39 million people in America live in households with incomes below the poverty threshold,
and over 13 million of those who live in poverty are children. Naturally, that makes us want to do something to help. The question is: How can we best help?
How Not to Help the Poor
Throughout most of American history, religious and other private organizations provided most of the help for the disadvantaged.
Because these charities tended to be small and local, they could maintain accountability with the recipients of aid and could
provide a personal response to their needs. Moreover, this outreach typically provided a foundation of values that could be
uniquely effective in addressing poverty that is related to behavior and life choices.
By the early 20th century, however, the government was taking on more “social service” activities. Regrettably,
this government “welfare” crowded out charities that dispensed aid within a moral and religious framework and
became the more dominant supplier of social welfare assistance in America.
The welfare state as we know it began in the 1930s under President Franklin D. Roosevelt. Though
welfare was initially intended as a means to end the Great Depression, its roots deepened and its duration lengthened. From that beginning nearly 80 years ago, the welfare system has ballooned to over 77 different federal programs, most of
which were initiated in the mid-1960s with President Lyndon Johnson’s War on Poverty, a part of his Great Society agenda.
The total cost of these welfare programs is staggering. In fiscal year 2010, the government is
expected to spend almost $900 billion on welfare programs, exceeding the entire cost of the war in Iraq during George W. Bush’s
presidency. This immense expenditure is not the result of a temporary, short-term surge: It is the product of a steady four-decade growth
Since the beginning of the War on Poverty in 1965, the U.S. has spent $15.9 trillion on
welfare. Perhaps this price tag wouldn’t be so daunting if the welfare system actually reduced poverty. Unfortunately,
it hasn’t. To the contrary, under the system, the ranks of the poor have continued to swell and welfare dependence has
spread dramatically. While the caseload of the Aid to Families with Dependent Children (AFDC) program was just under a million in 1964, by 1995
it had risen to 4.8 million. Why?
The Welfare Trap
More than 77 government welfare programs—which are spread across several federal departments and provide cash, food,
housing, medical care, and targeted social services to poor and low-income persons—are “means-tested.” That
is, beneficiaries qualify if they are below a specified income level.
A Recipe for Creating Poverty
Jack F. Kemp
What if you wanted to create poverty. What policies and principles would you use to destroy the economy of cities and make
people dependent on government? How would you do it? Let me offer some suggestions:
- Impose steeply graduated and progressive tax rates and then inflate the currency to push people into ever
higher tax brackets;
- Reward welfare and unemployment at a higher level than working and productivity;
- Tax the entrepreneur who succeeds in the legal capitalistic system much higher than in the illicit underground
- Reward people who stay in public housing more than those who want to move up and out into private housing
- Reward the family that breaks up rather than the family that stays together;
- Encourage debt, borrowing, and spending rather than saving, investing, and risk-taking;
- But most of all, if you really wanted to create poverty and dependency, weaken, and in some cases destroy,
the link between effort and reward.
…The poor don’t want paternalism, they want opportunity—they don’t want the servitude of
welfare, they want to get jobs and private property. They don’t want dependency, they want a new declaration of independence.
Excerpted from a speech by the late Jack Kemp, former Housing and Urban Development (HUD) Secretary, at The Heritage
Foundation, June 10, 1990.
Regardless of their intention, means-tested programs by their very nature pose disincentives for households to increase
their incomes and risk termination of their benefits. Thus, the welfare system effectively set up roadblocks to the two main
avenues for economic progress: marriage and employment. A single mother would be ensured of her benefits package as long as
she did not take a job or marry an employed husband. Given this scenario, it’s not surprising that dismal societal trends
Unwed childbearing is the major cause of child poverty in America. Since 1965, the rate of unwed births has soared
from 7 percent to 39 percent (and among blacks, to 69 percent). Children born and raised outside marriage are nearly seven
times more likely to live in poverty than children born to and raised by a married couple. Moreover, unwed childbearing
is concentrated among low-income, less educated women in their early 20s—those who have the least ability to support
a family by themselves.
Low levels of parental work is the second major cause of child poverty in the United States.
In a typical year, only about one-fourth of all poor households with children have combined work hours of adults equaling
40 hours a week. The typical poor family with children is supported by only 800 hours of work during a year, an average of
16 hours of work per week. If work in each family were raised to 2,000 hours per year—the equivalent of one adult working
40 hours per week through the year—nearly 75 percent of poor children would be lifted out of poverty.
How Reforming Welfare Reduced Dependence
The Welfare Reform Act of 1996 reduced some of these damaging incentives in one major program, Aid to Families with Dependent
Children. Under AFDC, states were given more federal funds if their welfare caseloads increased, and funds were cut whenever
the state caseload fell. In other words, states were basically encouraged to swell their welfare rolls.
Welfare reform replaced AFDC with a new program, Temporary Assistance to Needy Families (TANF), which provided incentives
to move recipients toward self-sufficiency. Funding to each state remained constant regardless of the size of caseloads, and
states were allowed to retain savings from caseload reductions.
In addition, states were required to have at least half of their welfare recipients engaged in work or activity that would
prepare them for employment. Rather than anticipating depending on the government indefinitely, recipients were limited to
five years on the welfare rolls. (Under the old AFDC program, recipients spent an average of 13 years on the rolls.) These
reforms in funding structure and incentives made a substantial difference.
Despite dire predictions by opponents of reform that work requirements and benefit limitations would lead to a surge in
poverty, just the opposite occurred. States had the flexibility to design programs that best fit the needs of their constituents.
State welfare agencies were transformed overnight into job placement centers, while social workers helped recipients access
child care, housing, transportation, or other support that was necessary to move them into jobs and toward self-sufficiency.
Progress Toward Work and Self-Sufficiency in Jeopardy
One would hope that after the remarkable success of reform following the reform of the Temporary Assistance to Needy Families
(TANF) program similar reforms would be incorporated into the welfare system’s remaining 70-plus programs, but that
hasn’t been the case. Even worse, we are now moving away from such common-sense measures even in the TANF program. The
dramatic reduction in welfare dependence and child poverty that was generated by the 1996 reform is now in jeopardy.
Critical work requirements in the TANF program have been seriously undermined over the past half-decade. In addition, a
policy change tucked into the massive 2009 “stimulus” bill virtually abolishes the history-making reform: For
the first time since 1996, states will be rewarded for increasing their caseloads and adding to the ranks of their dependents.
With this troubling shift in the wrong direction, rather than receiving a temporary hand up and access to the threshold of
economic mobility and the dignity of employment, thousands of low-income families could once again be left to remain in a
state of dependence and intergenerational reliance on the government.
Within 10 years, welfare caseloads shrank by more than half: 2.7 million fewer families were
dependent on welfare checks. As the welfare caseloads fell, the employment of single mothers surged upward, and 1.6 million
fewer children were living in poverty. In 2001, despite the recession, the poverty rate for black children was at the lowest point in America’s history.
Other Venues to Reduce Poverty
The 1996 welfare reform provided a model of how structural reform in government programs can reverse practices that had
once maintained and even exacerbated poverty. Yet an effective, comprehensive response to poverty in the United States must
go beyond reforms in the government’s delivery system of benefits. It will require efforts by policymakers and citizens
that focus on underlying behavior and life choices related to poverty, tapping the resources of social institutions and creating
an economic environment that is conducive to growth, upward mobility, and prosperity.
First Responders to Poverty
At their roots, the problems of poverty are relational and complex, and effective responses focus on restoring relationships
from the ground up. That means individuals, families, churches, and ministries are best equipped to be first responders to
those in need because they can deal with the whole person, face-to-face. People need food, shelter, and clothing, but they
also need relationships that offer love and accountability and that address the transcendent aspects of human existence.
Getting personally involved with another individual’s or family’s needs is a lot tougher than writing a check
or signing a petition. Though those actions can be necessary and important, personal outreach and investment make a difference
on a much deeper level. Serving others isn’t always safe, comfortable, or immediately effective. But when we exercise
personal responsibility for the wounded neighbor in our midst, we can promote the human dignity of those we serve by recognizing
their spiritual and relational—not only financial and material—needs.
Excerpted from lesson six of Seek Social Justice: Transforming Lives in Need, a new DVD small group study guide
from The Heritage Foundation. Visit SeekSocialJustice.com to order free copies.
Strengthening the Institutions of Civil Society
Churches and charities are often closer to the problem and have a firsthand understanding of the needs of the people they
serve. They tend to treat recipients not merely as mouths to feed or “heads in beds” to tally, but rather to appreciate
the people they serve as unique individuals with emotional, relational, and spiritual as well as material needs.
In contrast to bureaucratized government programs, community and faith-based organizations can provide a moral and spiritual
framework that can serve as a foundation for the transitions in behavior and choices that many individuals must make to begin
their journey to self-sufficiency. Often based in the neighborhoods they serve, such groups are frequently more accountable
both to their donors and to those they serve than are large, anonymous government programs.
Transforming Lives in Need
Bob Woodson is founder and president of the Center for Neighborhood Enterprise, which has offered support and training
to more than 2,000 grassroots leaders since 1981. He dubs these community servants as “Josephs,” counterparts
to the biblical figure who guided the Pharaoh through dangers that his court advisors could not foresee:
The answers to many problems America faces can be found in our own modern-day Josephs. Many of these community healers
have come out of our prisons. They have experienced what it is to live in drug-infested, crime-ridden neighborhoods. Many
have, themselves, fallen but have been able to recover through their faith in God. Their authority is attested to, not by
their position and prestige in society, but by the thousands of lives they have been able to reach and change….They
embrace the worst cases and they work with meager resources, yet their effectiveness eclipses that of conventional professional
remedies….The undeniable fact that lives have been transformed through the work of modern-day Josephs must be appreciated
even by observers who may be skeptical about their approach.
Robert L. Woodson, Sr. The Triumphs of Joseph: How Today’s Community Healers Are Reviving our Streets and Neighborhood
In some cases, men and women who provide private-sector outreach have personally and successfully confronted a problem
that had led to impoverishment. This experience allows them to win the respect and response of the people they serve, giving
them “street cred,” and inspires their commitment to help others.
For example, throughout the nation, the outreach of former gang members has transformed and salvaged
the lives of adolescents who were headed down a path of violence. Those who have overcome addiction or faced the challenges of single parenthood have motivated and guided their counterparts
to achieve similar success. Such community servants and others motivated by their faith and compassion have provided the consistent, personal long-term
outreach—far beyond the life of a typical program or grant term—that has made a substantial and sustainable difference
in the lives they’ve touched.
More often than not, material poverty in the U.S. is a symptom of some prior relational problem. Consider, for example,
the fact that thousands of people in America spend any given night on the street. What we need to know is not merely how many
people are homeless, but why. In many cases in the United States, the root causes of the plight of the dispossessed are ultimately
not economic, but rather such factors as mental illness, drug and alcohol addiction, abuse, or abandonment. Personal ongoing
contact and commitment is necessary to identify and address each individual’s unique spectrum of needs.
Offering that outreach, faith-based and community efforts that deal comprehensively
and specifically with the unique situations of the individuals they serve are typically more successful than their government-run
counterparts, which must treat people much more generically and in terms of material needs alone. If dispensing food stamps and checks from Washington could cure poverty, we would have discovered that several trillion dollars
Encouraging Strong Marriages
When it comes to child poverty, the decline of marriage is the topic that people seem to avoid mentioning. Yet decades
of research have brought forth incontestable evidence that the decline of the family and marital dissolution are strongly
linked to the financial status and long-term prospects of women and their children.
Marriage isn’t exclusively a values or social issue; it’s also an economic issue
(the economic issue as far as children are concerned). When compared to counterparts raised by two married biological
parents, children raised in single-parent homes are far more likely to live in poverty and more likely to end up on welfare
in adulthood. They also are more likely to fail in school, abuse drugs or alcohol, become pregnant as teens, suffer from emotional
and behavioral problems, and end up in jail as adults.
The Facts: Why Marriage Matters
The results of decades of research on the impact of family structure on economic well-being are presented at FamilyFacts.org,
including the following findings:
- Married couples are less likely than cohabiting couples to be in poverty.
- Children living with married parents are less likely to live in poverty than peers
in other family structures.
- On average, married mothers have much higher per-capita family incomes than peers
who are divorced, single, or cohabiting.
- Married men tend to have higher incomes than men in cohabiting relationships—as
much as twice as high.
On average, married-couple families accumulate significantly more assets than female-headed households—as
much as nearly four times more.
The good news is that a large percentage of unmarried mothers have some prospect for marriage at the time of their babies’
birth. Nearly half of the women who give birth outside of marriage are cohabiting with the baby’s father. Another 25
percent are in a romantic relationship with the father. In these situations, both parents tend to have positive attitudes
toward marriage but don’t think it is important to be married or in a stable relationship before having children.
Contrary to stereotype, most of the non-married fathers-to-be are employed; on average, their
earnings are higher than the mothers’. In fact, if poor single mothers simply married the fathers of their children,
almost three-quarters would immediately be lifted out of poverty.
Regrettably, most non-married fathers leave the mother a few years after the child’s birth. This means that if pro-marriage
messages reached the couple at the critical time just after their baby is born, life prospects for both the mother and child
could be significantly changed.
Civic institutions, including churches, synagogues, and supportive community entities, can and do provide positive role
models and promote the cultural traditions and mores that discourage unwed childbearing. In addition, government policy and
programs could be designed to promote healthy marriages (or at least not undermine the institution of marriage), especially
in low-income communities where family dissolution has taken its greatest toll. For instance, the government could reduce
the anti-marriage penalties embedded in means-tested welfare programs.
The welfare system effectively set up roadblocks to the two main avenues for economic progress: marriage and
Young low-income couples should have access to life-skills training to plan more realistically for the challenges of conception,
childbirth, and child rearing. Education and counseling should be offered on a voluntary basis to young adult women who are
at risk of non-marital pregnancy and childbearing, with a focus on helping them understand the benefits of commitment and
marriage for their children and themselves. This service could be offered through referrals from Title X birth-control clinics
that provide contraceptives to more than four million low-income, young adult women each year. Public education campaigns
about the value of marriage could also be initiated in low-income communities where the institution of marriage has been deeply
Any serious effort to address poverty must necessarily include initiatives to promote and sustain healthy marriages. As
a Time magazine cover story recently declared:
There is no other single force causing as much measurable hardship and human misery
in this country as the collapse of marriage. It hurts children, it reduces mothers’ financial security, and it has landed
with particular devastation on those who can bear it least: the nation’s underclass.
Facilitating Entry into the Free-Market Economy
For most Americans, the word “poverty” suggests destitution: an inability to provide a family with nutritious
food, clothing, and reasonable shelter. This lack of basic needs is often referred to as “absolute” poverty. But
only a small number of the 37 million persons classified as “poor” by the Census Bureau fit that description.
That’s because poverty in America denotes conditions relative to the median family income in the nation. This comparative
economic status is known as “relative” poverty.
While real material hardship certainly does occur in the United States, it is limited in scope
and severity. Most of America’s “poor” live in material conditions that would be judged as comfortable or
well-off just a few generations ago. Today, the per-person expenditures of the lowest-income one-fifth (or quintile) of households
equal those of the median American household in the early 1970s after adjusting for inflation.
According to the government’s own data, nearly two-thirds of households defined by the census as “poor”
have cable or satellite television; 85 percent have air conditioning. Overall, the typical American designated as “poor”
by the government has a car, air conditioning, a refrigerator, a stove, a washer and dryer, and a microwave, as well as two
color televisions, cable or satellite TV reception, a VCR, a DVD player, and a stereo. He is able to obtain medical care.
His home is in good repair and is not overcrowded. By his own report, his family is not hungry, and he had sufficient funds
in the past year to meet his family’s essential needs.
It should be noted that the living conditions of the average poor American should not be taken as representing all
of the nation’s poor. There is actually a wide range in living conditions among the poor. For example, although nearly
60 percent of “poor” households have cell phones and a third of them have answering machines, approximately one-tenth
have no phone at all. While the majority of poor households do not experience significant material problems, roughly a third
do experience at least one problem during the year such as overcrowding, temporary food shortages, or difficulty getting medical
If poverty were measured with regard to the median standard of living and income worldwide, America’s
poor are comparatively well-off, materially speaking. One-third of deaths around the world—some 18 million people a
year or 50,000 per day—are due to poverty-related causes, which have been virtually eliminated in the U.S. In the developing world, some 1.4 billion people (one in four) have incomes estimated below $1.25 a day.
A Tale of Two Economies
Of course, material measurements of well-being are limited. As the late Jack Kemp, former Housing and Urban Development
(HUD) Secretary and a 2009 recipient of the Presidential Medal of Freedom, observed:
[T]he ultimate richness of our society is not measured in creature comforts. It’s
measured in opportunity…opportunity that holds out the hope of any man, any woman, any child of God, reaching his or
her potential. And having the opportunity to know the dignity and the justice that go with a good home, a good education,
a chance to raise your children in a decent and honest environment, with a school that teaches them the basics and believes
in character and has accountability and choice, and believes that at the end of that education, there’s going to be
a job, not on the public payroll, but in the private, entrepreneurial, free enterprise system.
Free markets have encouraged economic growth and led to material benefits for American society as a whole. The American
system of free enterprise has created enough wealth so that we have virtually eradicated “absolute poverty” (i.e.,
dire material conditions) within our borders. Yet the question remains: How best do we address the relative poverty that millions
of Americans experience?
The key to solving relative poverty is based on the same idea by which absolute poverty in the nation has been virtually
eliminated: free enterprise. Yet, ironically, typical programs for the poor overlook this crucial vehicle for upward mobility.
This devastating irony was perhaps best described by Jack Kemp:
America is not divided immutably into two static classes. But it is separated or divided
into two economies. One economy—our mainstream economy—is democratic and capitalist, market-oriented and entrepreneurial.
It offers incentives for working families in labor and management. This mainstream economy rewards work, investment, saving
and productivity. Incentives abound for productive economic and social behavior.…
But there is another economy—a
second economy that is similar in respects to the East European or Third World socialist economies. It functions in a fashion
opposite to the mainstream capitalist economy. It predominates in the pockets of poverty throughout urban and rural America.
This economy has barriers to productive human and social activity and a virtual absence of economic incentives and rewards.
It denies black, Hispanic and other minority men and women entry into the mainstream. This economy works almost as effectively
as did hiring notices 50 years ago that read “No Blacks—or Hispanics or Irish or whatever—Need Apply.”
irony is that the second economy was born of desire to help the poor, alleviate suffering, and provide a basic social safety
net. The results were a counterproductive economy. Instead of independence, the second economy led to dependence. In an effort
to minimize economic pain, it maximized welfare bureaucracy and social costs.
Kemp did more than issue a clarion call demanding a new paradigm to address the poor that could lead to self-sufficiency
and even prosperity: He translated that ideal into action. As HUD secretary, he launched the Office of Resident Initiatives,
which empowered a nationwide band of hundreds of visionary and committed public housing residents to manage the properties
in which they lived. His philosophy guided the design of policies and programs that would engender self-sufficiency and upward
mobility for the poor:
class="insettext">We do need security in the form of a safety net under which people—the
poor, the disadvantaged, the handicapped, those who, for one reason or another, cannot compete—will not fall. We must
not only…protect the safety net for all people in this country who are in need; we must also [provide] a ladder—the
ladder of opportunity.
To read more on these topics, see:
- Robert Rector, “Understanding and Reducing Poverty in America,” Testimony
before the Joint Economic Committee, United States Senate, September 25, 2008, at http://www.heritage.org/Research/Welfare/tst040209b.cfm.
- Jennifer A. Marshall, Robert Lerman, Barbara Dafoe Whitehead, Hon. Wade Horn,
and Robert Rector, “The Collapse of Marriage and the Rise of Welfare Dependence,” Heritage Foundation Lecture
No. 959, August 15, 2006, at http://www.heritage.org/Research/Welfare/hl959.cfm.
- Robert Rector, “Welfare Reform and the Healthy Marriage Initiative,”
Testimony before the Subcommittee on Human Resources of the Committee on Ways and Means, U.S. House of Representatives, February
10, 2005, at http://www.heritage.org/Research/Welfare/tst021005a.cfm.
- Robert Rector, Katherine Bradley, and Rachel Sheffield, “Obama to Spend
$10.3 Trillion on Welfare: Uncovering the Full Cost of Means-Tested Welfare or Aid to the Poor,” Heritage Foundation
Special Report No. 67, September 16, 2009 at http://www.heritage.org/Research/Welfare/sr0067.cfm.
- Robert Rector and Katherine Bradley, “Stimulus Bill Abolishes Welfare Reform
and Adds New Welfare Spending,” Heritage Foundation WebMemo No. 2287, February 11, 2009, at http://www.heritage.org/Research/Welfare/wm2287.cfm.
- Robert Rector, “How Poor Are America’s Poor? Examining the ‘Plague’
of Poverty in America,” Heritage Foundation Backgrounder No. 2064, August 27, 2007, at http://www.heritage.org/Research/Welfare/bg2064.cfm.
- Christine Kim and Robert Rector, “Welfare Reform Turns Ten: Evidence Shows
Reduced Dependence, Poverty,” Heritage Foundation WebMemo No. 1183, August 1, 2006, at http://www.heritage.org/Research/Welfare/wm1183.cfm.
- Jay W. Richards, Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem (San Francisco:
HarperOne, 2009), chapters 2 and 4.
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