Have you heard the good news about global poverty? The number of people living in abject poverty — defined as living on less than $1.25 per day — has been halved since 1990. Steve Davies of LearnLiberty explains how that happened and how in the near future we may be able to eradicate extreme poverty.
During the late 1970s and early 1980s I spent two extended periods living below the poverty line. The first experience came as I entered the first grade. My father was a chronically unhappy man who was skillful and ambitious, yet prone to wanderlust. Every few months we would move to a new city so that he could try his hand at a new occupation—a truck driver in Arkansas, a cop in West Texas, a bouncer at a honky-tonk near Louisiana. We were always on the move, always a few weeks away from the next paycheck. At the lowest point we had nothing to eat but a half-loaf of Wonder Bread, a five-gallon bucket of unshelled peanuts, and tap water. That lasted for a two-week period in August that stretched across my seventh birthday.
Eventually my father settled down, found steady work, and we inched our way slowly toward the lower rungs of the working class. This period of financial tranquility lasted until I was eleven, when my father walked out on my mother, my younger brother, and me. Brokenhearted and dead broke, we packed the car and moved again, my mother having acquired the nomadic tendency to run away from adversity. (By the time I graduated high school, I had changed schools thirteen times.) Single parenthood tipped the scales and we slipped, once again, beneath the poverty threshold. We survived with the aid of food stamps and government housing until my sophomore year, when my mother remarried and our lives returned to a level of economic normalcy.
I’m always hesitant to share this story because we in America tend to have a knee-jerk sympathy for the “down-and-out.” There are, however, many times, as in my family’s case, when pity is completely unwarranted. A lifetime of foolish decisions by my parents, rather than a dismal economy or lack of opportunity, led to our being poor. We reaped what they had sown.
If you are looking for good data to provide a reminder that America has lost the “War On Poverty,” Michael Tanner has compiled helpful information explaining the current state of the union in the study titled, “The American Welfare State: How We Spend Nearly $1 Trillion a Year Fighting Poverty — And Fail.” Tanner begins by noting that we are now at a point where annually,
[T]he federal government will spend more than $668 billion on at least 126 different programs to fight poverty. And that does not even begin to count welfare spending by state and local governments, which adds $284 billion to that figure. In total, the United States spends nearly $1 trillion every year to fight poverty. That amounts to $20,610 for every poor person in America, or $61,830 per poor family of three.
While welfare spending has continued to increase, poverty rates in America have basically remained the same as they were 40 years ago. In fact, though we as a nation have spent nearly $15 trillion in total welfare spending since Lyndon Johnson declared war on poverty in 1964, several families in rural and inner-city America continue to be trapped in generational cycles of dependency. Something is not working.
While that may seem too obvious to mention, it’s surprising how many times that question is not given serious consideration. In the past this has been particularly true of poverty-reduction measures. Too often the solutions were judged mainly on motives and emotions rather than effectiveness. If the solution was proposed in a spirit of goodwill and generosity or if it made both the giver and receiver feel good, then why not try it?
Over the past few years, though, there has a been promising shift within poverty-fighting circles. A prime example is TOMS Shoes rethinking of its ‘buy one, give one’ model of helping the needy. The California-based company’s model of giving a pair of shoes to a child in need for ever pair bought by it’s customers has spawned copy-cats in various industries — from baby goods to solar panels. Yet as PRI notes,
Conversations about economic development often gravitate toward such topics as monetary policy, trade regulation, tax structures, infrastructure, etc. These are critical pieces of the puzzle indeed, but there exist even more primary components of prosperity that are often skipped over.
Rule of law is essential if you want to have a functioning economy. You cannot have a functioning economy without secure property rights. You cannot have a functioning economy unless contracts are enforced. You cannot have a functioning economy if government officials can act in an arbitrary fashion.
The Property Rights Alliance, a Washington D.C.-based think tank, publishes research concerning private property and rule of law. Earlier this month, the organization released its annual 2013 International Property Rights Index (IPRI), which measures the intellectual and physical property rights of 131 nations from around the world, representing 98% of world GDP.
The 2013 IPRI represents the seventh edition of the index and focuses on three core components:
- Legal and Political Environment
- Physical Property Rights
- Intellectual Property Rights
Countries received a score (on a scale of 0 – 10, where 10 is the highest value for a property rights system and 0 is the lowest value) in each of these areas; those scores were then averaged to calculate the “IPRI score.” The countries receiving the top five IPRI scores were Finland, New Zealand, Sweden, Norway, and the Netherlands. The United States claimed the 17th spot.
Over at the New York Times, economist Jeffrey Sachs opines about the need for greater measures to “end poverty” in countries across the world where people are truly suffering. Using data from the World Bank, Sachs reports that the proportion of households in developing countries below the extreme-poverty line has declined sharply from 52 percent in 1980, to 43 percent in 1990, 34 percent in 1999, and 21 percent in 2010. Sachs then explains what is needed in order for this to continue:
Here are the basics: economic growth, and hence a market economy, is vital. Africa’s poverty is declining in part because its growth rate picked up from 2.3 percent per year during the lackluster years of 1990-2000 to 5.7 percent during 2000-10. Without economic growth, there cannot be sustained gains in income, health and other areas. Continued progress depends on heavy investments in major infrastructure — water, electricity, waste management — and these in turn depend on large-scale private financing, hence a suitable market framework.
So anti-market sentiment is no friend of poverty reduction. But neither is free-market fundamentalism. Economic growth and poverty reduction can’t be achieved by free markets alone. Disease control, public education, the promotion of new science and technology, and protection of the natural environment are public functions that must align with private market forces.
At this point we can begin to see the lack of social imagination in the goal of simply “ending poverty.” The Christian tradition, instead of focusing on only two spheres of society — government and the economy — pushes the conversation forward toward human flourishing and sustainable economies because people are made for more than simply living in a less-bad world. Christian teaching places emphasis on the moral, social, political, and economic contexts that contribute to societies where humans can flourish in morally excellent ways consistent with their creational design. Sachs completely misses, then, the importance of mediating institutions.
The latest census figures show that in the U.S. women are more likely to live in poverty than men, particularly if they’re raising families alone. In total, 14.5 percent of American women lived in poverty in 2012, compared to 11 percent of men. At every age women are more likely to be poor than men. Even girls under age 18 are slightly more likely to live in poverty than boys are. What could be causing this disparity?
As James Taranto explains, the difference can partially be explained by the advantages — biological, cultural, and legal — women have over men. For example, the reason why there are more girls than boys living in poverty is because girls are less likely to die than boys:
Over at Neighborhood Effects, James Broughel asks the question, “Has the Sequester Hurt the Economy?”
So have the sequester cuts hurt the economy? One possible answer comes from a new paper by Scott Sumner of Bentley University. Sumner argues that cuts to government spending don’t have serious deleterious macroeconomic effects when the Federal Reserve is targeting inflation. This is because the Fed ensures that prices stay stable under an inflation targeting regime, which keeps demand stable even in the face of government spending cuts. Similarly, when the Fed stabilizes the price level it also offsets any beneficial effects that fiscal stimulus might have, which helps explain the lackluster results from the 2009 American Recovery and Reinvestment Act (aka the “stimulus”).
Implicit in Sumner’s theory is that expansionary austerity, or the idea that the economy can grow even in the face of large government spending cuts, is indeed possible. Some of my colleagues at the Mercatus Center have described other ways in which expansionary austerity is possible.
First of all, I would like to be clear that I do not disagree that “expansionary austerity” may be possible. Nor do I disagree that the sequester cuts have not significantly hurt the economy. However, while the sequester included spending cuts and, therefore, technically qualifies as “austerity,” it was not what everyone was making it out to be. (more…)
Peter Beinart at the Daily Beast writes a fascinating article about the way the “left” is currently being reshaped. It seems that young adults in the Democratic Party are far more radical than what America saw in the Clinton White House. In fact, as the article notes, Bill de Blasio’s Democratic Party nomination to run for New York City mayor is a signal of this new direction. If those who love liberty are not paying attention to this shift, they should: we are likely to see more and more of de Blasio’s platform at the local and state level. Here are just a few things de Blasio wants to accomplish in New York City if elected:
Peter Greer has spent his life doing good, from serving refugees in the Congo to leading HOPE International, a Christian-based network of microfinance institutions operating in 16 countries around the world. Yet as Greer argues in his latest book, The Spiritual Danger of Doing Good, “service and charity have a dark side.”
Pointing to a study by Fuller Seminary’s Dr. J. Robert Clinton, Greer notes that “only one out of three biblical leaders maintained a dynamic faith that enabled them to avoid abusing their power or doing something harmful to themselves and others.” From King David’s power trip with Bathsheba and Uriah to Jonah’s end-of-life anger and selfishness, the Bible is filled with examples of self-destruction amid service.
“When I looked to Scripture for guidance, what I found troubled me,” Greer writes. “Men and women who had heard from God—who even performed amazing miracles—were just as likely to blow it as everyone else.”
And alas, in all of our discussions about how to best serve our neighbors, how often do we focus on surface-level externalities to the neglect of the human heart? How often do we narrow down our “metrics for success” to exclude any discussion or contemplation about the motivations driving our actions or the potential for pitfalls along the way? (more…)