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The Continuing Failure of America’s Welfare State


Unfortunately, no one should have been surprised at yesterday’s Census Bureau’s announcement that the number of Americans deemed to be living in poverty increased in 2010. When wealth-creation slows and unemployment remains above 9 percent, the probability that more Americans will fall into the category of economically poor is magnified.

Of course, ever since efforts have been made to measure poverty, there have been arguments about what constitutes poverty, how relative poverty compares with absolute poverty, and so on. It hardly need be said, for example, that Americans in relative poverty are doing much better in terms of life-span, shelter, and nutrition than most people living in, say, Bangladesh or Zimbabwe. Seen in those sobering terms, very few of the estimated 46.2 million Americans in poverty could be described as destitute.

Then there is the fact that poverty numbers generally don’t take into account such factors as the ever-increasing access to better technology as competition drives the price for such goods and services down over time. Cell phones are perhaps one of the best examples of this phenomenon. As Robert Rector and Rachel Sheffield from the Heritage Foundation remind us in a short and clear backgrounder on poverty in America, what were once considered luxury items are now commonplace throughout the United States, even among relatively poor Americans. They also note that, from a long-term perspective, these new numbers don’t represent enormous change in the poverty rate — especially, it might be added, when we takes into account the overall increase in population.

That said, any growth in the raw numbers of Americans living in relative poverty is nothing to be sanguine about. In fact, it’s downright disturbing.#more# Leaving aside the often-devastating social and moral effects of economic poverty, the fact that an estimated one in seven Americans is living in relative poverty raises questions about the efficacy of the means we are employing to address this problem.

This brings us to the welfare state. It is now surely clear that the trillions of dollars expended on welfare programs since the not-so-glorious days of the 1960s have not apparently made much of a dent in significantly changing the ratio of Americans in poverty.

In some instances, America’s welfare apparatus may have prevented some people (especially the elderly) from falling into abject poverty. There is, however, very little evidence that it has helped millions of people out of relative poverty. There is also plenty of data to indicate that many welfare programs have produced intergenerational dependency on the state – a point that even Bill Clinton seemed to have grasped by the mid-1990s.

We need to keep these serious failures of America’s welfare state in mind because these new poverty numbers will almost certainly be used as an argument by some people of good will (as well as those whose motives are far less noble) to resist any reductions in welfare spending, despite America’s far-from-healthy debt and deficit situation. Yet the sheer size of government spending on entitlement programs (by far the biggest item in the federal government’s budget) makes cuts in these areas inescapable if – I repeat, if – our political masters are serious about wanting to balance the government’s books.

Indeed, such cuts are assuming an ever-increasing urgency in light of the studies which continue to appear indicating that crushing levels of public and government debt run the risk of significantly impeding growth. That’s worrying, not least because a slowdown in growth will hurt those in poverty far more than the wealthy. Strong growth rates are one of the most powerful antidotes to poverty – just ask anyone living in mainland China or India. More welfare spending is simply not the answer.

— Samuel Gregg is research director at the Acton Institute. He has authored several books including On Ordered Liberty, his prize-winning The Commercial Society, Wilhelm Röpke’s Political Economy, and his 2012 forthcoming Becoming Europe: Economic Decline, Culture, and America’s Future.


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