The Armchair Skirmish against Poverty; R. J. Wheeler

It is about time, then, that the poverty problem be analyzed, in rigorous simplicity, as part of the basic problem of the market econ omy: overcoming scarcity. The evidence is that economic progress is rapidly overcoming material impoverishment, and that Mr. Wheeler edited the conservative student journal, Insight and Outlook, at the Univ~r sity of Wisconsin, then worked three years for National Review before resigning to found Rally, a new national monthly journal of opinion geared for the young, to advance free market ideas and provide a new voice for "second generation" libertarians and conserva tives. This' article is slightly condensed and re printed by permission from the Winter 1965 issue of RamPart Journal. ices,. I!JJ6R~.Ltjf!\Sb rea ona ice I den 0 s r to marry to the poor, spe ment for veterans, the insane, widows, children, the aged, i h digab!~'l~E: (;les, and un mployment compensaIndustry! ,.( O~IH~n-"'PQ tion of the 001", free contract, ex:j;;l~f~~~~on and snffr~~~ codes, pure food and drug regula tio, railroad and utility legisla t' .ihwst laws, iwusi g and i 1 e t'd' ina23 24 THE FREEMAN April in the process much of the misery and demoralization that attends economic deprivation is evaporat ing.(This is not to suggest that misery and demoralization and crime are not increasing on the whole: they are, but in my opinion for spiritual reasons.) Therefore, as a tentative hypothesis it would seem that a properly directed in crease in production should form the core of any accelerated attack on poverty, and that, conversely, the kiss of politics should be em phatically avoided.

Panac:eas Past and Present Just about every panacea devis able by man has already been wheeled out against poverty. Few, if any, of these, however, have ever jarred the correlation be tween the expanding supply of goods and services, broadly dis tributed by a contractual economy, and the steady improvement in the lot of the poor. Professor Robert Lampman of the University of Wisconsin has taken note of past legislative at tempts to help the poor. 1 These include: The English poor laws, mini mum income allowances, work houses, orphanages, asylums, alms 1 Robert J. Lampman, "The AntiPov erty Program in Historical Perspective" (a paper presented to the UCLA Facul ty Seminar on Poverty, February 25, 1965). houses, (Bentham's) Houses of Ind ustry, (John Cary's) Corpora tion of the Poor, free contract, ex tension of education and suffrage, work relief for the able-bodied, reg ulation of health and education, abolition of slavery, bankruptcy and usury laws, industrial safety codes, pure food and drug regula tions, railroad and utility legisla tion, antitrust laws, housing and zoning ordinances, antidiscrimina tion laws, minimum wage laws, collective bargaining laws, child labor laws, work-hour regulations, minimum price controls, price supports, social insurance, pro gressive taxation, tariff and immi gration policy, job retraining, pub lic works programs, rehab~litation programs, vocational training, family services, hospitals, schools, libraries, clinics, information serv ices, public housing, nurseries, rec reational facilities, sanitary serv ices, denial of suffrage and right to marry to the poor, special treat ment for veterans, the blind, the insane, widows, children, the aged, the disabled, and the unemployed, tax cuts and rebates, public em ployment agencies, welfare agen cies, and unemployment compensa tion.

Whatever miseries are suffered by the poor, they do not suffer from political neglect. In brief consideration of Pro fessor Lampman's awesome list, it 1966 THE ARMCHAIR SKIRMISH AGAINST POVERTY 25 is readily seen that antipoverty legislation has been· sometimes in effective and often harmful. We might very well wonder if we haven't been killing the .poor with kindness. Pending further analy sis, it might tentatively be sup posed that such programs as have been effective in· helping the poor with no strings attached are pre cisely those which removed legis lative interventions into the pro duction process,· such as the abo lition of slavery and the extension of free contract. Progress in Profile In 1798, Jeremy Bentham wrote: "The multitude included under the denomi~ation of the poor compose the bulk of the community - nine teen-twentieths might perhaps be found to belong to that class."

A century ago, more than half of the U.S. populace was poor by contemporary definitions. Jacob Riis estimated in 1892 that 20 to 30 per cent of New York City lived in penury. Studies made in 1939 and 1949 established poverty lines of $1,950 and $2,500 respectively. The 1965 poverty line, suggested by the President's Council of Economic Advisers, is $3,000 income per family, or $1,500 per unattached individual per year. Since the 1949 survey, by CEA figures, the number of those living in poverty has dropped from 32 per cent to 20 per cent, while at the same time the standard of pov erty rose by $500, or 20 per cent. Both of tbese trends - towards fewer poor, and a rising standard of poverty - have been in effect since Bentham's time. So dramatic has been the improvement in the status of the poor that a truly rev 01utionary belief in the final abo lition of poverty has obtained in the U.S. and Britain since about the turn of the century. "In con trast to the people of less fortu nate lands, who have regarded poverty as inevitable, Americans have tended to regard it as an ab normal condition," writes econom ic historian Robert Bremner. 2 Towards a Sharper Definition The concept of poverty, like art, does not readily lend itself to ob jective definition. This has proved to be the biggest stumbling block for serious analysts.

Dorothy Brady of the Univer sity of Pennsylvania put it suc cinctly: "When faced directly with the problem of determining [pov erty] f or a given time and place, the theorist will deny the possibil ity of a· unique answer and the propagandist will settle for one of 2 Robert H. Bremner, From the Depths: The Discovery of Poverty in the United States (New York University Press, 1956).

26 THE FREEMAN April many solutions if the result suits his purpose." This is not to suggest that pov erty is indefinable, but rather that anydefinition.,..is necessarily arbi trary. There are quite as many definitions as there are poverty fighters. But for economists, per plexed in many cases by an inabil ity to distinguish the poor from the nonpoor, setting workable standards .is the first order of business. Most efforts thus far have adopted either the "poverty line" or the "market basket" approach. The poverty line defines as poor all those whose current cash in come is less than a given amount, $3,000 in the case of the present CEA standard. 3 It is by all odds the least precise method of defini tion, but it has the advantages of being easily understood, simple to work with, and adaptable to re liable and available figures. Market basket studies define poverty as some multiple (usually twice) of the cost of a subsistence diet. They are a great deal more reliable and discriminating than poverty line studies, but chron ically lack. dependable data.

Some effort to cross-pollinate the two approaches has been made, one report concluding that either 3 Economic Report to the President, prepared by the President's Council of Economic Advisers. yielded about the same percentage of poor .. However, the evidence is slight, and no .. information exists abol\t comparable degrees of pov erty. Several highly flexible. defini tions of poverty have been ad vanced by economists who find in superable the difficulties in lump ing together as co-equals. in pov erty a sharecropper's family with nine kids and one tired cow, and a retired couple with a fat portfolio and an urgent desire to do nothing more taxing than rock on the front porch of their retirement bunga low. One school suggests that pov erty is relative; thus, at any given moment, a certain proportion of the population is defined as poor. Allowing for the steady change in socially-determined poverty stand ards, this approach is not as whim sical as it appears at first blush, and in fact has a good correlation with poverty statistics assembled over the years by contemporary investigators.

Another school seeks to define poverty by first establishing who the poor are. This method obliges the investigator to look closely into an individual's circumstances and, by using any or all provisional definitions of poverty, decide whether the individual is poor. Such detailed studies are time consuming, so relatively few cases 1966 THE ARMCHAIR SKIRMISH AGAINST POVERTY 27 can be handled and statistics of this sort for large cross-sections of the population are unavailable. Nevertheless, this method has the virtue of open-mindedness· and is free of the distortions of mass statistics. Once several case-stud ies are collected, the investigator usually has a good idea of the economic characteristics of pov erty, and he may also have good insights into its causes. Rags and Patches? Who are the poor? The question is. troublesome, partly because the poor are rela tively few and often isolated from affluent America, partly because we are blinded to the new poor by lingering images of mortgage fore closures, tattered clothing, dilapi dated hovels, and the other para phernalia of poverty in years past.

According to figures developed from the CEA's $3,000 poverty line - bear in mind that these figures are meant to invoke the gloomiest possible view of the problem - 33 to 35 million Ameri cans live in poverty, one-third of them children. These include 9.3 million . families (30 million peo ple) and some 5 million unattached individuals. 4 Again by CEA fig ures, 5.4 million. families have in comes under $2,000 a year, and ( Ibid. 1.3 million unattached individuals have incomes under $1,000. Even if extravagantly over stated, the figures make it clear that poverty is still a serious matter. Poverty in the United States cuts across lines of age, sex,edu cation, race, and locality. But it is by no means random. Persons in several distinguishable categories, the most important of which are the aged, farm families, non whites, and fatherless families, appear among the poor appreciably more frequently than the average.

Curiously, unemployment is well down the list, which suggests that much of the government antipov erty effort aimed at alleviating unemployment is misdirected. Against a figure of 20 per cent poverty overall nationally, statis tics indicate that among the poor are: 5 76% of families with no earners. 48% of families with part-time earners. 34% of families whose heads are unem ployed. 47% of families whose heads are 65 or older. 31 % of families whose heads are 24 or younger. 37% of families whose heads have under eight y~ars of education. 48% of families whose heads are female. 5 Prof. Harry G. Johnson, "Poverty and Unemployment."

28 THE FREEMAN April 44% of nonwhite families. 43% of farm families. 84% of nonwhite farm families. Categories such as these are not to be understood as causes of poverty, but rather as areas that incur a high risk of poverty for other reasons. When the categories overlap, as in the last-mentioned figure, the risk of poverty is much greater. 80 the· statistics unfold. There are, happily, some pleasant sur prises. In Harlan County, Kentucky scene of some of the nation's bit terest labor battles,and by any standard a very poor county, in deed - 88 per cent of the families have their own washing machines (even if they lack running water) ; 67 per cent have television sets; 42 per cent have telephones; and 59 per cent own an automobile. In Tunica County, Mississippi, the poorest county in the poorest state, 52 per cent have television, 46 per cent have autos, and 73 per cent have washing machines. 6 The Michigan 8urvey Research Center reported last year that: - of all families reporting in comes from $2,000 to $3,000 in 1962, 45 per cent owned their own hom~s, and 66 per cent of these had 6 Herman P. Miller, Rich Man, Poor Man (New York: Thomas Y. Crowell Company, 1964).

no mortgage; 42 per cent of the $1,000 to $2,000 bracket owned their homes, and 35 per cent in the under $1,000 bracket. -in 1960, 14 per cent of families with incomes under $3,000 pur chased new cars. 40 per cent of these families owned cars. - of families with less than $3,000· income in 1960, 700,000 purchased television sets during the year; 500,000 bought refriger ators; and 300,000 bought washing machines. The large categories of the poor deserve further note: 7 Tthe aged. Numbering 2,581,000 families, this is the largest group of poor. However, the figure is substantially overstated due to the smaller than average size of fam ilies headed by the aged, and due also to their generally decreased needs and greater assets (the median net worth of the aged is $8,000 as opposed to $4,500 for the population as a whole). At least one upward statistical ad justment is needed, on the other hand, to allow for medical ex penses among the aged two and one-half times the average.

The aged are mostly white, usu ally live in urban areas, and strongly tend to live as couples (two million). In addition, a halfmillion elderly women live with their children. The maj ori ty of 'l Miller, Ope cit.

1966 THE ARMCHAIR SKIRMISH AGAINST POVERTY 29 the aged receive Social Security or a pension; 36 per cent. of them receive all of their income from these sources. Many older people own their own home •. free and clear. Half have incomes over $2,500 a year (half, that is, of the aged poor), and 64 percent have incomes over $2,000, most of whom would be removed from the rolls of the poor given a more realistic estimate of their circumstances. Farm families. The second larg est group of poor is found among farmers, although, again, the num ber is much inflated due to non cash incomes common on farms in the form of food, fuel, and lodging. A lower consumer price index in rural areas also adds to the over statement. About 1,570,000 farm families are counted among the poor, the majority of whom have incomes under $2,000. At the same time, farmers. tend to have relatively high assets. One study of functioning farms in 1963 found average net assets of $35,800. Another sampling, of two million farmers, yielded an aver age net worth of $43,973.

Half the poor farms are in the South. The number of Negro farmers has dropped sharply in recent decades, and the exodus of Negroes to urban areas is con tinuing. Colored farm families presently number only about a quarter of a million. Three-hundred thousand farm families are headed by men over sixty-five, but over half are headed by men in the thirty-five to sixty five bracket. Farm families headed by women are rare. Fatherless families. Sometimes called broken homes, 1,560,000 families are counted in this group, almost all in large metropolitan areas. One-third of all fatherless families are colored (as opposed to a tenth of the general popu lace), a disproportion sociologists feel reflects the relatively greater instability of Negro marriages. Nonwhite families. The last ma jor category of poor is the non whites, of whom 950,000 families live under the poverty line, or al most half. the total Negro popula tion of 2,030,000 families. It is al together likely that the number of Negro poor is understated, al though not seriously. In a number of ways, American Negroes still must deal with markets and em ployment opportunities constricted by discrimination, voluntary seg regation, and a variety of other causes. As a result of the dimin ished supply of goods and services available to him, the .Negro's cost of living rises, especially for hous ing.

Hidden Roots The causes of poverty resist economic analysis. They may be 36 THE FREEMAN April lost in the secrets' of' the mind,' as in'the case ,of men too lazy or too nervous' to hold a job.··Or they may be lost in complex external events, such as caste, custom, or· dogged misfortune. Or, routinely~ poverty can be caused by the interaction of the internal and the external the vexing Negro',' question is a case in point. What the economist may say js that the market assigns a high risk of poverty to the unproductive and the' underproductive. This is corroborated by the high incidence of poverty among sman family farmers, the market for whose product has long been depressed, or among fatherless families, in which the mother must stay home and care for her children rather than obtain outside employment, and so on. It is worthy of remark that one major cause of poverty is poverty itself.

Professor' Lampman has ob served, "It is interesting that few children, even those of below-av erage ability, who are not born and raised in poverty, actually end up in poverty. This suggests that pov erty is to some extent an inherited disease. "8 Poverty perpetuates itself from 8 Robert J. Lampman, "Approaches to the Reduction of Poverty" (a paper pre pared for the American Economic Asso ciation meeting in Chicago, December 30, 1964). generation to generation by deny ing to those in its grip the essen tial means to escape-education, in formation, training,opportunity, moti vation, and even health and strength. The poor are more frequently ill than the average; they stay ill longer, and their illnesses tend to be more severe; they lose more time from work than the average; they suffer higher than average rates of infant and maternal mor tality, they are subject to more severe mental disease, and they die younger. 9 In severe cases, the poor are constantly wrapped up in sheer survival. When one must worry where .the next meal is coming from, one's potential····and aspira tions are sure to be stunted. There is no time to spare, no will to di versify interests, and no impulse to gain skills or training, or to embark on programs of self-im provement. In time, bitterness or apathy can consume the poor, and thereafter their chances to escape their plight are slim.

Where Next? Poverty exists and works its hardships, we may conclude, al though it is extremely difficult to know with exactitude its charac teristics and causes. And we pay 9 Michael Harrington," A Glib Fal lacy," The New Leader, March 30, 1964.

1966 THE ARMCHAIR. SKIRMISH~GAINST POVERTY 31 twice for poverty, it has been said; once in wasted· potential, again in diverting resources to··al leviate its hardships. Even as a warehouse fire in Hong Kong or tornado damage on the Great Plains eventually makes.itself felt, through the interdependence ·of market effects, in our own pocket books, so do we very literally pay for thEf existence of poverty whether we are taxed because of it or not. Thus, even those among us .who prefer not to .be their brothers' keepers have· an interest in invest ing in the eradication of poverty. The question ,is,of course, how shall we set about to achieve this end? "Weare going to try," said the President a year ago, "to take all of. the money that we think is un necessarily being spent and take it from the 'haves' and give it to the 'have nots~·. that need it so much." Of course Robin Hood and his merry men made a good thing out of it, but the approach isre~ pugnant. It is also self-defeating.

Good ends cannot be gained through bad. means, simple theft in this case. The notion of stealing for the good of the poor contains the massive •presumption that a third party, here the. government, c~n comprehend completely .the lives and goals of two· individuals, and adjudge with cosmic wisdom that both would ~be better off if one were forced to hand over some of hispropetty to the other. The human race.· in ·.general, and its governments in particular, are a Iittle· short of .. that· sort of cosmic wisdom. Consider ~he Job Corps Fora .typical· example of this, contained in the Economic Oppor tunity Act, consider the Job Corps. Authorized under Title I of the act, the Job Corps is the most.im portant, the most expensive, and the·mostballyhooed of the ·admin istration's antipoverty programs. It is for youth of either sex from sixteen to twenty-one who are out of school... and unemployed. The youngsters serve in conservation camps or training centers, and re ceiveroom, board, clothing and es sential services, .living and travel expenses, and· leave allowances.

The cost per capita works out to some $4,700 a year ,enough, some hostile editorialists· have .pointed out,to send a young man to Har vard and pay for his tuition, room, board, books, pocket money, and installments on a sports car. But it is not only the expense of the Job Corps that appalls;· it is the misdirection as well. The corps. maybe ·a yummy way· to deal with .dropouts .... and delin quents, but what has it to do with poverty? And what will· have been 32 THE FREEMAN April achieved when the youngsters de camp? - the art of planting trees is not, after all, a highly market able skill. Moreover, the young sters eligible for· the program are likely to be the least responsible of their afie groups - not so· much the deprived, but the drifters and troublemakers. Removing them from whatever disciplinary influ ence their parents still wield and turning them loose in the north woods may result in top-grade mayhem. 1o Such is the cosmic wisdom of two billion dollars' worth of War Against Poverty. The state of New Jersey has already witbdrawn from the Job Corps program be cause it was aggravating rather than solving the school dropout problem. It never occurred to the planners that offering attractive situa tions to school dropouts would attract students to drop out of school, but of course that's just what happened in New Jersey and is probably happening elsewhere.

Two billion dollars would buy a lot of bread for the hungry. Why not let the hungry keep it? We will never be able to say with certainty what income and what resources distinguish the poor from the nonpoor. Neither 10 Since written, this prediction has been borne out by numerous news paper accounts of Jof> Corps incidents including rape, dope-addiction, and all kinds of violence. will we ever be able to say with certainty what causes poverty. But we can observe that poverty is al ways, to a greater or lesser de gree, a matter of economic want. We may infer, therefore, that poverty is curable by alleviating want. That is simply a market problem. Mass Production through Private Enterprise '''e Best Hope The real war, the natural war, against poverty lies in the ability of the market to bring more and better goods and services to the poor more cheaply. It lies in im proving entrepreneurial ability to discern the special needs of the poor and satisfy them at prices the poor are willing to pay. It lies in increasing the mobility of the market by removing the fetters and regulations that bind it down, cutting away the tax burden that eats away its productive capacity, and investing our utmost energies into its functioning. It lies, ulti mately, in our resolve to be free.

Virtue is not at cross purposes. As we strive to improve our own values and our resources, we help rather than harm those whom we influence morally and economi cally. Under the contractual econ omy, one man's productivity is not another man's loss; everybody gains. In a very real sense, we render the poor great service by 1966 THE ARMCHAIR SKIRMISH AGAINST POVERTY 33 leading the best lives we can. True self-interest is profoundly charita ble. But the charity of selflessness has its place, too .. One of the most onerous by-products of state wel farism and the ideology that nour ishes it is the stultification of our impulse towards charity. Not only does the state seize our means to be charitable, it steals our will to be charitable. In short, the state takes a decent human instinct and converts it in to the dole. It should not be so. There are many ways we could ex tend a helping hand to the poor that would not attack their pride and initiative. It is not so much a matter of taking a basket of fruit to the slums over ·theholi days, but of tactfully sharing our experience, training, insights, as pirations, to impart to the poor the will and the knowledge of the way to escape their dilemma. • HANS F. SENNHOLZ NOT LONG AGO, a small Pennsyl vania corporation received the Presidential "E" award for its contribution to export trade and the nation's balance of payments.