How We Lost the War on Poverty?

In the post war boom years, President Dwight Eisenhower presented a grandfatherly image that was good for the country. He once commented that “Things are more like they are now than they ever were.” Nobody knew exactly what he meant but it clearly reflected his positive view of the country and of American society. Things were good, except where they were not. (eg. the 30% poverty rate)

Still, until the late 1960s, government help to able bodied persons was always regarded as a “hand up,” never a “hand out.” Even during the Great Depression, when many families were starving, the Food Stamps Program (FSP) was not free, it used surplus foodstuffs and it ended when it stopped being a critical need.

President Kennedy’s revival of the FSP in a time of plenty was intended to help people near the poverty level get over the hump, helping them back on their feet. Kennedy wanted the welfare program to be a force for social progress. The program “must stress the integrity and preservation of the family unit.” He was the first US president to see the federal government in that light.

During the Johnson administration Congress passed landmark legislation in civil rights, medical care, housing, education and job training. And race riots broke out around the country, in Harlem, Rochester, Philadelphia and Watts. The shift from “a hand up, not a hand out” to institutionalized income transfers was in large part a bribe to end the race riots. What is not so well appreciated is that all this new legislation changed the rules of the game for poor people. For the first time it was profitable for the poor to behave in the short term in ways that were destructive in the long term.

The Aid to Families with Dependent Children (AFDC) was a prototype example of a well meaning program that went astray. Started during the New Deal, AFDC was designed to take care of widows with small children. By the 1950s it had grown to a multifaceted program for women who were not usually widows who kept having babies as long as they were paid. A well meaning program led to a breakdown of moral values. Unfortunately, the Great Society programs expanded these boondoggles and the dream of ending the dole morphed into a system of permanent income transfers.

The jobs program was another dismal failure. A study of the effects of vocational training found that wage increases of only 1.5% could be attributed to the training. More often people on welfare did not sign up for job training and many with jobs just quit. Before the end of Johnson’s term, his principal aide Joseph Califano reported the grim news that only one percent of the seven million people on welfare were capable of being given skills and training to make them self sufficient. From the initial premise that poor people were not responsible for their poverty, it was a small step to the belief that it was not their fault for failing to pull themselves up when given a helping hand.

Many forget that the Civil Rights Act of 1964 was intended to provide equality of opportunity for all. The nation was urged to become color blind. Yet by 1967 when Johnson signed the Affirmative Action order, the color blind goal was abandoned. Instead America became Balkanized into “minorities”, first blacks, then unmarried mothers, then women, the handicapped, juveniles, the elderly and now gay people, all seeking equal protection as a group. The socio-economic system that had dramatically reduced poverty in the years leading up to 1965 was now blamed for all society’s ills.

In 1959, fully 58% of working age blacks lived below the poverty line. One decade later the percentage was 30%, a remarkable improvement, mostly attributed to the booming economy. Then, as welfare spending exploded in the 1970s, the percent of black poor leveled off at the 30% level. The primary reason was that many of these structurally poor blacks, mostly young males, had no job. Most discouraging is that in 1950 young blacks had an unemployment rate essentially equal to white youths. By 1980 the rate for blacks was twice that for whites. This large scale voluntary removal of able-bodied males from the labor market was unprecedented.

This is obviously the cause of black poverty; no work, no cash, except for the government handouts. But what was the root cause? Why did the behavior of many decades change in such a short time? I’ll finish this study in the next post.