Acton Institute Powerblog

Conservatives Should Welcome the Debate on Poverty and Income Inequality

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“Today’s welfare state is largely the construction of decades of liberal political activism,” writes James C. Capretta. “If it is failing, and there is strong evidence that it is in many ways, then that is a stinging indictment of the liberal governing philosophy more than anything else.” He argues for more conservative activism on the poverty problem, particularly in education.

An effective conservative critique of existing policies starts with the acknowledgement that a strong social safety net is a must in a modern, market-based economy, and that the safety net built here in the United States, though flawed, has contributed substantially to improving the conditions for the poor. The official measure of the poverty rate is completely misleading in this regard because it does not include transfer programs or the taxes people pay in the measure of income. So, in a very real sense, no matter how much the government spends, the official poverty rate remains unchanged.

But when tax and transfer programs are factored into the assessment, and when the consumption patterns of the poor are examined and not just their cash incomes, the picture changes quite dramatically. The panoply of governmental support programs—Medicaid, Food Stamps, the earned income tax credit, housing vouchers, school lunch programs, and many more—substantially raise the living standards of those who otherwise have very low incomes.

This should not be surprising because the investment, especially at the federal level, has been massive. Contrary to conventional wisdom, programs for the poor have not been squeezed by a political class concerned only with the rich and connected. According to the Congressional Budget Office, over the period 1972 to 2012, the ten largest means-tested programs and tax credits have grown at an average annual rate of 6 percent, raising total federal spending on these programs from about 1 percent of GDP four decades ago to 4 percent today.

Where liberalism has failed is in not providing poor families with the financial resources for a better future. The core problem is a complex combination of poor job prospects for families living in low income areas, an educational system that has failed generations of inner city children, and the continued breakdown of family structure among the poor. The result is intergenerational poverty, where single-parent households that are heavily dependent on government assistance raise children who themselves too often remain in poverty as adults—and suffer from all manner of other social ills in the process. The complexity of the problem is compounded by the fact that the presence of large federal assistance programs for single-parent households is likely enabling the continued breakdown of responsible two-parent families.

Read “The Emerging Conservative Effort to Help the Poor” by James C. Capretta on the Manhattan Institute’s e21 site.

Order a copy of of the Poverty Cure curriculum by going to the Acton Book Shop link below.

And, finally, recall the admonition of Wilhelm Roepke, writing in A Humane Economy, that “the market economy is not everything. It must find its place in a higher order of things which is not ruled by supply and demand, free prices, and competition. It must be firmly contained in an all-embracing order of society in which the imperfections and harshness of economic freedom are corrected by law and in which man is not denied conditions of life appropriate to his nature.”

John Couretas John Couretas is Director of Communications, responsible for print and online communications at the Acton Institute. He has more than 20 years of experience in news and publishing fields. He has worked as a staff writer on newspapers and magazines, covering business and government. John holds a Bachelor of Arts degree in the Humanities from Michigan State University and a Master of Science Degree in Journalism from Northwestern University.

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