Why Some Are Poorer; H. Hazlitt

Yet even the United States, the Henry Hazlitt is well known to FREEMAN readers as author, columnist, editor, lecturer, and practitioner of freedom. This article will appear as a chapter in a forthcoming book, The Conquest of Poverty, to· be published by Arl ington House. most affluent of all countries, con tinues to be plagued by "pockets" of poverty and, by individual pov erty. Temporary pockets of poverty, or of distress, are an almost neces sary result ofa free competitive enterprise system. In such a sys tem some firms and industries are growing or being born, others are shrinking or dying; and many en trepreneurs and workers in the dying industries are unwilling or unable to change their residence or their occupation. Pockets of poverty may be the result of a failure to meet domestic or for eign competition, of a shrinkage or disappearance of demand for some product, of mines or wells that have been exhausted, of land that has become a dust bowl, and of droughts, floods, earthquakes, and other natural disasters. There is no way of preventing most of 15 16 THE FREEMAN January these contingencies, and no all-en compassing cure for them. Each is likely to call for its own special measures of alleviation or adjust ment. Whatever general measures may be advisable can best be con sidered as part of the broader problem of individual poverty.

This problem is nearly always referred to by socialists as "the paradox of poverty in the midst of plenty." The implication of the phrase is not only that such pov erty is inexcusable, but that its existence must be the fault of those who have the "plenty." We are most likely to see the problem clearly, however, if we stop blam ing "society" in advance and seek an unemotional analysis. Diverse and International When we start seriously to item ize the causes of individual pov erty, absolute or relative, they seem too diverse and numerous even to classify . Yet in most dis cussion we do find the causes of individual poverty tacitly divided into two distinct groups - those that are the fault of the individ ual pauper and those that are not. Historically, many so-called "con servatives" have tended to blame poverty entirely on the poor: they are shiftless, or drunks or bums: "Let them go to work." Most so called "liberals," on the other hand, have tended to blame poverty on everybody but the poor: they are at best the "unfortunate,"

the "underprivileged," if not ac tually the "exploited," the "vic tims" of the "maldistribution of wealth," or of "heartless laissez faire." The truth, of course, is not that simple, either way. We may, oc casionally, come upon an individ ual who seems to be poor through no fault whatever of his own (or rich through no merit of his own). And we may occasionally find one who seems to be poor entirely through his own fault (or rich en tirely through his own merit). But most often we find an inex tricable mixture of causes for any given person's relative poverty or wealth. And any quantitative esti mate of fault versus misfortune seems purely arbitrary. Are we entitled to say, for example, that any given individual's poverty is only 1 per cent his own fault, or 99 per cent his own fault - or fix any definite percentage whatever? Can we make any reasonably ac curate quantitative estimate of the percentage even of those who are poor mainly through their own fault, as compared with those whose poverty is mainly the result of circumstances beyond their con trol? Do we, in fact, .have any ob jective standards for making the separation?

A good idea of some of the older 1972 WHY SOME ARE POORER 17 ways of approaching the problem can be obtained from the article on "Poverty" in The Encycloped'ia of Social Reform, published in 1897.1 This refers to a table com piled by a Professor A. G. Warner in his book, Ameri,can Charities. This table brought together the results of investigations in 1890 to 1892 by the charity organiza tion societies of Baltimore, Buf falo, and New York City, the asso ciated charities of Boston and Cin cinnati; the studies of Charles Booth in Stepney and St. Pancras parishes in London, and the state ments of Bohmert for 76 German cities published in 1886. Each of these studies tried to determine the "chief cause" of poverty for each of the paupers or poor fam ilies it listed. Twenty such "chief causes" were listed altogether. Professor Warner converted the number of cases listed under each cause in each study into percent ages,wherever this had not al ready been done; then took an un weighted average of the results obtained in the fifteen studies for each of these "Causes of Poverty as Determined by Case Count ing," and came up with the fol lowing percentages. First came six "Causes Indicating Misconduct": Drink 11.0 per cent, Immorality 4.7, Laziness 6.2, Inefficiency and 1 Ed. by Wm. D. P. Bliss (New York: Funk & Wagnalls).

Shiftlessness 7.4, Crime and Dis honesty 1.2, and Roving Disposi tion 2.2 - making a total of causes due to misconduct of 32.7 per cent. Professor Warner next item ized fourteen "Causes Indicating Misfortune" : Imprisonment of Bread Winner 1.5 per cent, Or phans and Abandoned 1.4, Neglect by Relatives 1.0, No Male Support 8.0, Lack of Employment 17.4, In sufficient Employment 6.7, Poorly Paid Employment 4.4, Unhealthy or Dangerous Employment 0.4, Ig norance of English 0.6, Accident 3.5, Sickness or Death in Family 23.6, Physical Defect 4.1, Insan ity 1.2, and Old Age 9.6 - making a total of causes indicating mis fortune of 84.4 per cent. No Objective Standards Let me say at once that as a statistical exercise this table is close to worthless, full of more confusions and discrepancies than it seems worth analyzing here. Weighted and unweighted ave rages are hopelessly mixed. And certainly it seems strange, for ex ample, to list all cases of unem ployment or poorly paid employ ment under "misfortune" and none under personal shortcomings.

Even Professor Warner points out how arbitrary most of the figures are: "A man has been shiftless all his life, and is now old; is the cause of poverty shift18 THE FREEMAN January less ness or old age? . . . Perhaps there is hardly a single case in the whole 7,000 where destitution has resulted from a single cause." But though the table has little value as an effort in quantification, any attempt to name and classify the causes of poverty does call at tention to how many and varied such causes there can be, and to the difficulty of separating those that are an individual's own fault from those that are not. An effort to apply objective standards is now made by the So cial Security Administration and other Federal agencies by classify ing poor families under "condi tions associated with poverty." Thus we get comparative tabula tions of incomes of farm and non farm families, of white and Negro families, families classified by age of "head," male head or female head, size of family, number of members under 18, educational at tainment of head (years in ele mentary schools, high school, or college) , employment status of head, work experience of head (how many weeks worked or idle), "main reason for not working: ill or disabled, keeping house, going to school, unable to find work, other, 65 years and over"; occu pation of longest job of head, number of earners in family; and so on.

These classifications, and their relative numbers and comparative incomes, do throw objective light on the problem, but much still de pends on how the results are in terpreted. Oriented Toward the future A provocative thesis has been put forward by Professor Ed ward C. Banfield of Harvard in his book, The Unheavenly' City.2 He divides American society into four "class cultures": upper, mid dle, working, and lower classes. These "subcultures," he warns, are not necessarily determined by present economic status, but by the distinctive psychological ori entation of each toward providing for a more or less distant future. At the most future-oriented end of this scale, the upper-class in dividual expects long life, looks forward to the future of his chil dren, grandchildren, even great grandchildren, and is concerned also for the future of such ab stract entities as the community, nation, or mankind. He is confident that within rather wide limits he can, if he exerts himself to do so, shape the future to accord with his purposes. He therefore has strong incentives to "invest" in the improvement of the future situation - i. e., to sacrifice some present satisfaction in the expec tation of enabling someone (him2 Boston: Little Brown, 1970.

1972 WHY SOME ARE POORER 19 self, his children, mankind, etc.) to enjoy greater satisfactions at some future time. As contrasted with this: "The lower-class individual lives from moment to moment. If he has any awareness of a future, it is of something fixed, fated, be yond his control: things happen to him, he does not make them hap pen. Impulse governs his behavior, either because he cannot discipline himself to sacrifice a present for a future satisfaction or because he has no sense of the future. He is therefore radically improvi dent: whatever he cannot con sume immediately he considers valueless. His bodily needs (espe cially for sex) and his taste for 'action' take precedence over ev erything else - and certainly over any work routine. He works only as he must to stay alive, and drifts from one unskilled job to another, taking no interest in the work."3 Professor Banfield does not at tempt to offer precise estimates of the number of such lower-class in dividuals, though he does tell us at one point that "such ['multiprob lem'] families constitute a small proportion both of all families in the city (perhaps 5 per cent at most) and of those with incomes below the poverty line (perhaps 10 to 20 per cent) . The problems that they present are out of proportion 3 Ibid., p. 53.

to their numbers, however; in St. Paul, Minnesota, for example, a survey showed that 6 per cent of the city's families absorbed 77 per cent of its public assistance, 51 per cent of its health services, and 56 per cent of its mental health and correction casework services."4 Obviously if the "lower class cul ture" in our cities is as persistent and intractable as Professor Ban field contends (and no one can doubt the fidelity of his portrait of a sizable group), it sets a lim it on what government policy mak ers can accomplish. By Merit, or by Luck In judging. any program of re lief, our forefathers usually thought it necessary to distin guish sharply between the "de serving" and the "undeserving" poor. But this, as we have seen, is extremely difficult to do in prac tice. And .it raises troublesome philosophic problems. We common ly think of two main factors as determining any particular indi vidual's state of poverty or wealth - personal merit, and "luck."

"Luck" we tacitly define as any thing that causes a person's eco nomic (or other) status to be bet ter or worse than his personal mer its or efforts would have earned for him. Few of us are objective in 4 Ibid., p. 127.

20 THE FREEMAN January measuring this in our own case. If we are relatively successful, most of us tend to attribute our success wholly to our own intellec tual gifts or hard work; if we have fallen short in our worldly expectations, we attribute the out come to some stroke of hard luck, perhaps even chronic hard luck. If our enemies (or even some of our friends) have done better than we have, our temptation is to attribute their superior success mainly to good luck. But even if we could be strictly objective in both cases, is it al ways possible to distinguish be tween the results of "merit" and "luck"? Isn't it luck to have been born of rich parents rather than poor ones? Or to have received good nurture in childhood and a good education rather than to have been brought up in deprivation and ignorance? How wide shall we make the concept of luck? Isn't it merely a man's bad luck if he is born with bodily defects - crip pled, blind, deaf, or susceptible to some special disease? Isn't it also merely bad luck if he is born with a poor intellectual inheritance stupid, feeble-minded, an imbe cile? But then, by the same logic, isn't it merely a matter of good luck if a man is born talented, brilliant, or a genius? And if so, is he to be denied any credit or merit for being brilliant?

We commonly praise people for being energetic or hard-working, and blame them for being lazy or shiftless. But may not these quaH ties themselves, these differences in degrees of energy, be just as much inborn as differences in phy sical or mental strength or weak ness? In that case, are we justi fied in praising industriousness or censuring laziness? However difficult such questions may be to answer philosophically, we do give definite answers to them in practice. We do not criti cize people for bodily defects (though some of us are not above deriding them) , nor do we (except when we are irritated) blame them for being hopelessly stupid. But we do blame them for laziness or shiftlessness, or penalize them for it, because we have found in prac tice that people· do usually respond to blame and punishment, or praise and reward, by putting forth more effort than otherwise. This is really what we have in mind when we try to distinguish between· the "deserving" and the "undeserving" poor.

What Happens to Incentive The important question always is the effect of outside aid on in centives. We must remember, on the one hand, that extreme weak ness or despair is not conducive to incentive. If we feed a man who 1972 WHY SOME ARE POORER 21 has actually been starving, we for the time being probably increase rather than decrea.se his incen tives. But as soon as we give an idle able-bodied man more than enough to maintain reasonable health and strength, and espe cially if we continue to do this over a prolonged period, we risk undermining his incentive to work and support himself. There are unfortunately many people who prefer near-destitution to taking a steady job. The higher we make any guaranteed floor under in comes the larger the number of people who will see no reason either to work or to save. The cost to even a wealthy community could ultimately become ruinous. An "ideal" assistance program, whether private or governmental, would (1) supply everyone in dire need, through no fault of his own, enough to maintain him in rea sonable health; (2) would give nothing to anybody not in such need; and (3) would not diminish or undermine anybody's incentive to work or save or improve his skills and earning power, but would hopefully even increase such incentives.

But these' three aims are ex tremely difficult to reconcile. The nearer we come to achieving any one of them. fully, the less likely we are to achieve one of the others. Society has found no perfect solu tion of this problem in the past, and seems unlikely to find one in the future. The best we can look forward to, I suspect, is some nev er-quite-satisfactory compromise. Fortunately, in the United States the problem of relief is now merely. a residual problem, likely to be of constantly diminish ing importance as, under free en terprise, we 'constantly increase total production. The real problem of poverty is not a problem of "dis tribution" but of production. The poor are poor not because some thing is being withheld from them, but because, for whatever reason, they are not producing enough. The only permanent way to cure their poverty is to increase their earning power. ~ IDEAS ON LIBERTY Self-Help THE SPIRIT of self-help is the root of all genuine growth in the individual; and, exhibited in the lives of many, it constitutes the true source of national vigor and strength.

SAMUEL SMILES ECONOMICS: A Branch of Moral Philosophy THE AUTHOR of The Wealth of Nati,ons (1776) is frequently classed as an eighteenth century economist. 'But Adam Smith was primarily a professor of moral philosophy, the discipline which I believe is the appropriate one for the study of human action and such subdivisions of it as may be involved in political economy. Moral philosophy is the study of right and wrong, good and evil, better and worse. These polarities cannot be translated into quantita tive and measurable terms and, for that reason, moral philosophy is sometimes discredited as lack ing scientific objectivity. And it is not, in fact, a science in the sense that mathematics, chemistry, and physics are sciences. The effort of many economists to make the study of political economy a natu ral science draws the subject out of its broader discipline of moral 22 LEONARD E. READ philosophy, which leads in turn to social mischief.